ASPI Defence Conference, Q&A

SUBJECTS: Defence Delivery Agency reforms; Domestic defence sovereign industrial capability; Strategic partnerships in the Pacific.

MIKE HUGHES, DIRECTOR OF DEFENCE STRATEGY, AUSTRALIAN STRATEGIC POLICY INSTITUTE: Good morning, everyone. I’m Mike Hughes, the Director of the Defence Strategy Program at ASPI. Great to have you here today. And a real privilege [indistinct] Minister for Defence Industry and the Pacific Islands, Pat Conroy. Minister, thanks again for joining us today. We’ve got a full schedule. We’ve got lots of questions to be asked as there’s quite a span that you cover. So, I think we’re going to get straight into the questions on a variety of issues. And just, you know, just to forewarn everyone, we’ll have 10 minutes at the end for questions so you can start preparing those now and focus on being succinct, direct and short to enable the minister to respond appropriately to your questions. 

So, minister we’ll get stuck in, so let’s get into it. I guess starting off on the defence industry side of your portfolios, you know, Australia spent years discussing sovereign capability. It’s come up several times already this morning at the conference. Noting the parlous strategic environment that Australia is facing – and we certainly completely agree with the government’s diagnosis on the strategic circumstances that we are facing and that are accurately reflected through the National Defence Strategy – really keen to hear from you what are the most important industrial capabilities that Australia not just generate but sustain and continue to operate [indistinct] support of Defence and operate effectively in the coming months? 

PAT CONROY, MINISTER FOR DEFENCE INDUSTRY: Well, thanks for the question, Mike. And this is a really important forum to flesh out these ideas and have a really good debate where contestation is a fundamental principle for that. So glad to be here. 

Well, we’ve long articulated an approach through our Defence Industry Development Strategy which will be – the ’26 version will be launched next week at the National Press Club by myself on Thursday. But our approach to sovereignty is grounded in a systemic approach, the key one being the seven Sovereign Defence Industrial Priority areas. These are seven areas that we say must occur in this country. They’re essential to sovereignty, and I happen to have one of them from the ‘24 DIDS here. This one is SDIP 2, continuous naval shipbuilding, where we’re saying that it’s critical that we have a continuous naval shipbuilding industry in this country. 

And, importantly, a big change from previous governments where they’ve talked about this – both Labor and Liberal, so this is not a political point – is two innovations is we’ve put two single lines of accountability for SDIPs. I can tell you who is the capability manager and the delivery manager for each of these SDIPs. SDIP 1 is the ability to maintain, repair, overhaul and upgrade aircraft. The two people I have to make sure are managing that properly is the Chief of the Air Force and the head of CASG until the 1st of June – 1st of July, rather. 

And the other important innovation is that we’ve got a decision from government that will intervene the Integrated Investment Program to make sure that these seven SDIPs are healthy. 

There’s lots of other things that we do where sovereignty matters, but this is the base Australian defence industry that we must have in this country to have sovereignty in this country. We’ve got accountability there and we’ve got funding streams to make sure that it happens. 

HUGHES: Excellent. Thank you. I’m going to leave any more comments on sovereignty for the audience. I’m sure there’ll be a question on that later. In the interests of time, if I can now switch us to your other portfolio responsibility in the Pacific Islands. The government has been very open about Australia being in a permanent contest with China. Yourself, Minister Wong in particular, are on the public record acknowledging that and talking about that. I was hoping, could you give us, you know, your understanding of what is China’s intention in the Pacific? You know, how does that challenge or undermine our interests? And I guess in a way, what is it that we’re in competition for? 

CONROY: Yeah, no, I appreciate the question. Both Penny Wong and I have been very clear that we are in a permanent state of contest. We’ve also been very overt about what is the goal of the countries in the region, one being China. And China is seeking a permanent security presence in the region. And they have been doing that through a number of means; the most prominent one is policing cooperation in the region. 

We think that security should be provided for the Pacific from the Pacific, and that’s not just a view of the Australian Government; it’s the view of the Pacific Islands Forum and the collective wisdom of the Pacific leaders through the 2022 PIF leaders communique, saying if there’s a gap in any Pacific country’s security they should look to the Pacific first to fill that. And as a proud member of the Pacific family, that’s what we’re going to do. 

So, we are very clear that we want to be the security partner of choice for the entire Pacific, as well as the development partner of choice, the economic partner of choice. This is not to dispute and say that Pacific countries who are all sovereign can’t have relationships with other countries, but we do want to be the partner of choice. And that’s why we’ve led groundbreaking agreements, whether it’s the Falepili Union with Tuvalu, the Nauru-Australia Treaty, the PNG Rugby League deal which led on to obviously the Pukpuk alliance, we’re close to finalising the Vuvale treaty with Fiji. We’re still negotiating the Nakamal treaty with Vanuatu. We’ve signalled the intention to open negotiations with Tonga and the Solomon Islands. 

So, we want to be the best partner for the Pacific, not just in security but in human development. The closest Pacific island to us is 4 kilometres away – you could swim there if you weren’t worried about crocodiles – and you should be worried about crocodiles. So, our peace, prosperity and stability depends on a prosperous and stable Pacific, and we’re going to do that through investment in health, investment in security, investment in culture and people-to-people connections. 

HUGHES: Fantastic. I mean, sort of, you know, in relation to that, I guess in terms of that strategic thing, you know, last month we had a change of government in the Solomon Islands with a great promise of a bilateral reset with Prime Minister Matthew Wale’s government. Could you give us a sense of what we might expect in terms of future developments in our bilateral relationship with the Solomons in that context that we just described? 

CONROY: Well, it’s early days, and as a matter of course, I generally negotiate with other governments face to face rather than through the media. But we’ve been very clear – and both leaders agreed – to start working towards a comprehensive and strategic partnership. It will be focused on their priorities, and I think that’s the key message. This government turns up, we listen and we act on the priorities of our Pacific partners. That’s why I’ve made 37 visits to the Pacific, including 11 trips to PNG, in the last four years. That’s why Penny Wong’s been to every PIF country. That’s why Prime Minister Albanese walked the Kokoda Track with Prime Minister Marape for three days, sleeping in tents next to each other. We turn up, we listen to their priorities. 

In Tuvalu it was about having – addressing climate change, investing in adaptation, providing migration with dignity through the granting permanent residency to every single permanent resident of Tuvalu, which is an incredible world’s first. For Nauru it was economic resilience and providing banking services. PNG, there’s a whole range of things. So, each country will have different priorities, and it’s our job to act on those priorities and negotiate an arrangement that benefits both countries, and that’s what we’re going to do.

HUGHES: Fantastic. Thanks. Again, having worked on the Pacific for a long time, I just want to acknowledge the government’s efforts in the Pacific and, you know, we’re in a far stronger place with the current initiatives. So, I just want to acknowledge that. 

And I guess just drawing on from that, again, listening to the Pacific, understanding what their needs are and obviously meeting their needs, if we come back to a more, I guess, Canberra or Australia-centric point of view, clearly this contest we’re in – to come back to the contest with China and [indistinct] of statecraft – you know, we know that China certainly uses all elements of statecraft – state-owned enterprises to inform their work, and even organised crime in some cases to pursue its global interests. Could you give a sense of, you know, from the Australian perspective, how do we balance all the elements of statecraft [indistinct] from defence to diplomacy to development aid? You know, what are some of the considerations that you need to engage in in how we utilise those tools in the toolbox? 

CONROY: Well, it’s about maximum effort in using every lever. We’ve got some great advantages in our relationships that we intend to build on. The obviously one is obviously development, that’s a key part but it’s not the only part. We’re the biggest development partner in the region. And the way we approach it actually responds to priorities of other countries. So I stress principles around infrastructure investment, around high-quality, not transactional, acting on the priorities of our partners, maximising local content. 

I’ll give you an example: I announced I think it was about a $60 million – Solomon Islands dollars – road partnership with the Solomon Islands. It was specified in the contract that every single dollar should go to a Solomon Islands company so that they could build their capability. And now we’ve got the first Solomon Islands company that has the ability to provide asphalt and asphalt roads. 

We do that so they get the double dividend of the infrastructure but also the skills development, the payroll, income tax dividend. And I say to every other development partner, if you believe in the Pacific, you should be maximising the spend on Pacific companies. If it’s good enough to spend money in the Pacific, it’s good enough to use Pacific workers doing that development.

We’ve got the Pacific labour scheme where every month workers are on average sending back $1500 Australian lifting families and communities out of poverty. We’ve got the Pacific Engagement Visa. We’ve got a huge Pacific diaspora now in our country. That is a great benefit to the entire Pacific. We use our policing cooperation. The AFP is doing great work through the Pacific Policing Initiative with every Pacific nation. Our security partnerships are going from strength to strength, particularly through the Guardian-class patrol boat. 

But we’ve had Defence attaches and maritime security advisers in countries longer than we’ve had diplomats in some of these countries. So the ADF is a great asset. The cultural connections are important via things like shared cultural past but also love of sport, whether it’s rugby league in PNG, soccer in Vanuatu, rugby union in Fiji. That’s critical. People-to-people connections are part of that as well. And trade, we’re the biggest – ignore the propaganda out there – we’re the biggest export destination for Solomon Islands once you exclude illegal round log trade. We have 50 per cent of the tourists that go to Solomon Islands. So we’re a key partner, and it’s about getting the message out there about how we can support a working partnership. 

HUGHES: Absolutely. I mean, you’ve covered off on a whole range of, I think, you know, what I consider to be natural advantages that Australia has. We need to distinguish, obviously we have our own interests as a partner in the Pacific with our Pacific Island partners. But, again, in that strategic competition context, clearly there’s a range of natural advantages we have that we’re harnessing at the moment. 

Hugh Jeffrey, Deputy Secretary of Strategy in Defence, was just on earlier this morning. He was asked a question in terms of the context of the interregnum in moving from the global rules-based order that we all grew up with to whatever it is that we're moving to and how long that interregnum was going to be. And I think Hugh, again, accurately gave a sense that, you know, we don’t know when that interregnum is going to end. 

If I could maybe channel that, when we talk about strategic competition in the Pacific, it is a relatively new thing. As someone who has worked in the Pacific prior to, say, 2016 where there was no strategic competition, certainly post-2016, certainly there’s been an increase, and you’ve highlighted the reason why in terms of China’s ambitions for the region. Do you have a sense of a time line about – is strategic competition here forever? Are we working towards an end point? You know, can you give a sense of – or is this just now a feature of the world we live in? 

CONROY: Well, we just say it’s permanent. It is permanent. That doesn’t remove our agency and the agency of every nation in the Pacific to control their own destiny. And I think that’s one of the things that this debate ignores sometimes, is that each Pacific nation has agency, sovereignty, and we respect that and we enhance that. And in the end, they will guide their future. And it’s our job to be the best partner and to encourage countries to move beyond transactional playing off development partners to think about where their long-term interests lie. And I’m very clear that that’s with Australia. That’s not exclusive. 

We’ve got very strong trade relationships with China. They’re our biggest trading partner. But we would never dictate who people could trade with or have economic relationships with. But we’re a proud member of the Pacific family and we have elevated our relationships. I’m the longest running Pacific Minister in the Australian government ever. I’m the first to be a permanent member of the National Security Committee. I’m the first to be in cabinet. And that’s an elevation that’s intentional by this government, recognising the state of affairs that we face. 

HUGHES: And if you’ll just allow me to indulge my passion for the Pacific for one more before we go back to a defence industry question, you know, we sat here around about this time last year with PNG Defence Minister Billy Joseph. That was, you know, a few months ahead of the announcement of the Pukpuk alliance, which, again, I think is a fantastic achievement. Australia’s third alliance after the United States, New Zealand and PNG’s first alliance in just over 50 years of independent history. Is there – are there any updates you can give us? Where are we at on our trajectory at the moment [indistinct]? 

CONROY: Well, implementation is going at pace. We’re obviously very close to actually coming into force after everyone’s gone through their internal procedures. But we didn’t wait for that, we’re getting on with it. You’re seeing increased defence cooperation. You’re seeing part of that is PNG uniforms now being made by Australian Defence Apparel in Bendigo. Different pattern, but exactly the same quality as the Australian battledress, and that’s a great sight. We’ve been very open that we’re helping re-equip their military as part of their efforts to increase their capability. We’re also supporting them in humanitarian disaster relief and a whole broad range of security. So it’s going ahead really well, and the relationship is incredibly strong. And being there for the 50th anniversary of their independence was a great joy and privilege late last year. 

HUGHES: Fantastic, thank you. Now, to bring back – and I hope everyone’s getting their questions ready; we’re about two and a half minutes to go – we’re about a week away. You mentioned you’ve got an appearance at the National Press Club next week on Thursday talking about, among other things I think, the Defence Delivery Agency. We’re about a week away on 1 July from the initial implementation of the reports. You talked about, you know, the Defence Delivery Agency being the most significant reform, I think, since the Tange reforms of the 70s that brought the Department of Defence together. You know, given everything that is going on in the defence space at the moment where we have a now well-embedded National Defence Strategy – which, again, I commend the government for. As, you know, a washed-up public servant, as some of your colleagues would describe me, I think it’s a remarkable achievement that that level of strategic planning and delivery to me is unheard of in Australian bureaucratic history. So, it is a significant achievement in itself. 

We also have as part of that strategy the complete transformation of the Australian Defence Force from a fighting force essentially fit for fighting the low-intensity combat operations that characterised the first couple of decades of this century into a force prepared for modern warfare as we now understand it in terms of generating mass and involved in attrition and the likes which we see particularly in the Ukraine. 

So, with all of that in mind, you know, they’re significant transformations in themselves, what is it about the DDA reforms that make them so significant, minister? 

CONROY: No, I appreciate the question. And there’s a bit of sort of myths out there about what the DDA are and what these reforms are and what they’re not. They are not DMO 2.0. So anyone who argues this is DMO 2.0 is either being mischievous or hasn’t read the detail. It is much more significant. And it’s much more significant for a number of reasons. 

One, we’re moving $35 billion of the just under $60 billion defence budget out of the Department of Defence directly in acquisition and through the services of sustainment into the Defence Delivery Agency, which will be the premier project management organisation in the country. So that’s really important. And around – ball park – 10,000 people will move or 10,000 roles will move to this new agency. So it’s huge. Like, it compares to the Tange reforms. That’s point number one. 

Secondly, direct funding. So people control its budget, its operational budget and it’s capital budget. So we’ll have funding independence from Defence, so the National Arms Director will have the ability to run these projects like a commercial project manager. 

Thirdly, direct lines of accountability to the two ministers. Instead of the DMO CEO reporting to the secretary, he will report directly and be accountable directly to the defence minister and the minister for defence industry. That makes it much more independent and very different from the DMO. 

And then there’s the second part of the reforms, which is unifying capability development under the vice chief of the defence force, bringing it in from its current fragmented silo approach under the services and reversing what I thought were quite catastrophic reforms through the One Defence reform process. 

So that capability development phase complements the delivery phase, and then we have two single people accountable – capability development owned by the VCDF – and capability delivery owned by the NAD, and they’re the two people who will be driving this process. So it’s much more significant than previous reforms. And it will drive better costings, better advice from day zero on commercial and industrial acquisition strategies and change discipline. Change kills projects, kills schedules [indistinct]. We need change discipline that will do that, as well as a stronger focus on understanding why we’re doing development projects sometimes. 

HUGHES: Great, thanks minister. I’ve gone into my 10-minute time, so I do apologise. I’m tempted to ask about a national arms directorate and other things, but I know you’ve got the National Press Club next week, so I’ll just encourage everyone to stay tuned for that. 

Time for questions, everyone. We’re at about 8 minutes, so, yes. 

QUESTION: Commander Ally Withers. The South Australian premier spoke this morning about the need for AUKUS to become national endeavour by the sheer volume of the work that needs to be done. And the deputy prime minister spoke about how we are a three-oceaned nation. And yet it’s not natural within our national psyche for people to recognise that we are a maritime nation. What is being done to engage in wider public but also the broader sovereign industrial base to help them recognise how vital the maritime environment is to our national security? 

CONROY: Yeah, no, thanks for the question, Ally. No, I actually think most Australians instinctively understand it and instinctively support it. Even the latest Lowy report showed increasing support for nuclear-powered submarines, for example, despite the sort of rubbish you might read in some of the media or online. So I think the Australian people back it. 

In terms of industrial mobilisation, we’re full force. We cannot rely on AUKUS being delivered by WA and SA alone. We need a broader whole-of-government approach. And not just for AUKUS but the broader maritime industry. So that was why I christened the first of the 40 Ocius Bluebottles that we’re building in a factory in Lake Macquarie in Morisset right now. They’ll be fitted out there and then down in Sydney. Or the fact that we’re building Ghost Sharks right now in one of the fastest acquisitions in the history of this country, in Sydney. 

And I would look for really strong contributions to the maritime supply chain up and down the east coast and into Tasmania, because we need to mobilise a national workforce to do this. The US is recognising that with their own approach as well in terms of their satellite factories for their nuclear-powered – for their nuclear supply chain as well. So I think it’s an area where very advanced in thinking on and we’re starting to implement. 

QUESTION: Emily Hughes, Head of Engineering at Cambridge Aerospace. You obviously spend a lot of time engaging with sovereign defence industry. I’m curious to hear where in the last couple of years you’ve been most impressed with the way that sovereign industries stepped up to the ask from the National Defence Strategy and where you’d like to see us leaning in more in the coming 12 to 18 months. 

CONROY: That’s a good question, and I need to be careful about, sort of, picking out and identifying people and ignoring our negotiating leverage. But I think two areas where we’ve seen big advances in the last couple of years is in autonomous systems. I think that we do lead the world in many areas in autonomy is both Australian sovereign-owned companies as well as international primes who are putting skin in the game in Australian bases. So I think that’s one example. 

The other example I’d go to is drones and counter drones. And I think it’s no accident that I’ve awarded the biggest contracts for Australian drone manufacturing in the last few years because we’ve got great companies doing some really good work there and we’re increasing the drone budget by 50 per cent and massively increasing counter drone investment through a $7 billion line in the IIP to really get at that more fully. 

HUGHES: We had some questions over here earlier. Markus. 

QUESTION: Sorry, guys – two questions in one morning, but my name is Marcus Garlauskas, I run the Indo Pacific Security Initiative at the Atlantic Council’s Scowcroft Centre. And I had the chance to talk to you, you know, Mike Cadenazzi, he’s the assistant secretary of war for industrial base policy. I’m sure you’ve met with him. And I asked him a question, and I’ll ask you the same thing: given there’s so much interest at committee organisations like mine in promoting defence cooperation between the US and Australia, defence industry-technology cooperation, how can organisations [indistinct], how can we help you and help you help Australia? 

CONROY: That’s a great question. I think we’re pioneering first through the ’24 NDS and IIP and now in the ’26 approach around co-design, co-development, coproduction, co-sustainment. And we’re pushing on an open door in the United States as well as other parts of the world. So where we need, I think, greater work is in identifying the barriers to that. Because there’s strong political will, there’s strong financing of it through the IIP, but it’s really understanding what the blockages are and removing them step by step. 

The cost of defence [indistinct], for example, identified opportunities to advance production in certain areas of munitions. I’d question some of their costing estimations for that, but that’s a separate issue. But the main challenge is getting to licensing the certification and getting the sort of middle of each of our respect bureaucracies to open up, take risk and transfer IP effectively. So that’s an area where think tanks and other organisations can help us identify those and work to identify the blockages and remove them. Because we need to get this speed and we’re using pipe cleaners like GMLRS production so that we can then move on to move advanced production of things like PrSM and things like that. 

HUGHES: We have another question over here. 

QUESTION: Good morning, Minister. My question – sorry, Zac Levenson from Nexus APAC Consulting. My question pertains to skill capability building. What sort of skills are most in need or most in shortage in Australia in terms of defence industry, and what sort of role will Australian universities and tertiary institutions play in filling these gaps? 

CONROY: Well, they really play a really strong role, and we’re trying to turbo charge that. That’s why through AUKUS we’re funding 4,000 additional university places in STEM subjects. That’s why we’ve got a range of skilling initiatives. 

You’re asking me where the shortages are. Quite frankly, they’re almost everywhere. And that’s a function of our ramping up of capability. As part of our record spending on defence, we’re seeing defence manufacturing grow in terms of output by 35 per cent since we came to government in 2022. Defence manufacturing employment last year alone grew by 11 per cent. So double-digit growth in employment. So workforce is our massive challenge. That’s why we’re putting helps of resources in it. I’ll have a number of announcements next week in my speech about what we’ll be doing more in that. That’s calls a tease. But it is a critical area, and that’s why we need to mobilise the east coast as much as South Australia and WA. And that’s why we need localised industry that haven’t officially done business with defence. 

HUGHES: And over here. 

QUESTION: Good morning, minister. Yvonne Butler, National Security College. I’m really pleased to hear that the new DDA will not be DMO or CASG 2.0. The reality is, though, that over the last few years the project and program management delivery capability has been hollowed out of that organisation, coupled with the change in government policy around utilising contractors and consultants who typically came in with project program management skills, governance, risk management. So we have a real gap which is going to compromise and is compromising our ability to deliver let alone deliver with any acceleration. So we’re going to have 12 months before that new agency is fully up and running. What are your plans for rebuilding that capability in a very short period of time? 

CONROY: Well, that’s the entire point of the reforms, quite frankly. I think the worst part of the decisions made in 2014 – and I’ll try not to be political, but I’m a politician, so it’s hard – but the Abbott Commission of Audit recommended – or actually recommended and PM Abbott accepted it that Defence no longer be a project management organisation and that it be a contract management organisation. So they abolished the DMO. You saw thousands of skilled project managers leave Defence and outsource project management to industry. And industry has got skills there but it’s actually we need those skills within the department and soon in the DDA to be a good customer for industry. Most of the problems occur before industry come anywhere near a project. Like, most of the problems occur in the acquisition strategy earlier on. And that’s why we need an independent NAD to advise on that. And that’s why we need to invest in the people in Defence. 

We’ve got great people in Defence, but they’ve been set up to fail because the systems have not been there. We need a truly professional acquisition core and project management core, and we need to do that properly. Like, the example I use that we’ve signalled we want to change is the average posting cycle for an ADF officer is two years. We want to look at how we can [indistinct] people in their roles so that they can stay longer and develop and continue to be a professional acquisition specialist. The worst [indistinct] saw in terms of what it found was that for 50 per cent of ADF officers, their first posting to the capability development group was in charge of a multi-billion-dollar project. Those people have very little chance of succeeding if that’s their first taste of capability development. So we need to do better there so that the great people in Defence can succeed, and they will.

HUGHES: We have one over here, Peter? 

QUESTION: Peter Dean from the Australian War College. I want to also stay on the DDA, minister, for a second. Critically, are we going from a diarchy to a triarchy now? And, most importantly, what happens if Defence wants a specific capability but the delivery agency and the armaments director deems is to high risk or is not value for money, how do we resolve that type of dilemma? 

CONROY: The easy answer to that second question, Peter, is that’s resolved by the minister for defence and the defence industry minister making decisions and making them to NSC. Contestability is good in that area, but we already have independent agencies like Australian Signals Directorate. So this will add another kind of agency. We expect them to work together and have a really strong culture where the secretary of the department will be the senior person responsible within the portfolio but really effectively managing it forward. But we want contestability in a respectful manner where we manage risks. So Defence will make the case this capability is really important. The NAD will say, “Yes, the way you’re doing it, we could tweak it to be more commercially realistic,” or “Yes, we’re going eyes wide open that we can manage this development.” 

I’m happy to go for longer, Mike, but I don’t want to blow your schedule out [indistinct]. But I’ve got a few more minutes if there’s any more questions. 

HUGHES: All right, well, that’s an opportunity too good to pass up. So let’s go for maybe two more questions. We have one over here. 

QUESTION: Minister, g’day, Andrew Bottrell. Great to see you again. Look, I think that some of the things you’re looking at for the Defence Delivery Agency make perfect sense. This issue is not new to the department, though. We nearly went there on a previous review where there was a proposal to separate the DMO from Defence. 

CONROY: The [indistinct] reforms. 

BOTTREL: Yeah. So they decided not to go there because they were concerned about Defence’s ability to then change scope or adjust on enduring delivery. Particularly now given the technology cycles, how do you propose that Defence will cope with the need to change technology when they’ve gone to market for an early version? Are you going to get the Defence Delivery Agency to have models that allow them to change in step? How will you deal with the criticism that will come when there is cost involved in that kind of adjustment? Now, I think it’s a brave decision, but how do you propose to deal with it? 

CONROY: Yeah, thanks, Andrew. One, we’re not anti-change, but we want discipline change. Discipline change where you understand implications on schedule and cost of those changes. Too often they may have been absent of that discipline. And in a broader approach is you’ll see more and more projects where we’re looking at spiral development. And the best example of that is Land 156, and I want to pay tribute to [indistinct] and CASG in driving that process where we recognise counter drone technologies are evolving at a rapid rate, and if we accepted what I saw on ASPI Strategist’s website last week, if we just bought 10,000 counter drone interceptors and put them on the shelf, they’d be out of date within three months, and we just would have blown hundreds of millions of dollars. 

So spiral development where we get the architecture in place and we acknowledge a funding line to do spiral development to introduce new capabilities as they develop, as they become mature. So that’s the way we manage that. Because I recognise that technology doesn’t stand still. But through spiral development and prioritising open architecture we can do much better. 

HUGHES: Fantastic. And a final question, thanks, Jen. 

QUESTION: Jennifer Moroney from RAND Corporation. I have a question about the Pacific, which that I don’t think anyone has asked about yet. You mentioned that Australia wants to be the partner of choice in the Pacific, which makes all the sense in the world. Most of the work that I’ve been doing at RAND is on security cooperation, so I’m pretty well across the kinds of engagements that we’re doing across the Pacific. Is there room for being able to partner with the US and other countries to deliver security cooperation across the Pacific? The question sort of stems from what I’ve seen from our US Coastguards supporting PMSP across the region with sort of some tactical training. Just curious for your thoughts on that. 

CONROY: There are opportunities with countries like the United States, France, which has territories in the region, New Zealand. They’re part of the Pacific Response Force and the Pacific Policing Initiative. So there are opportunities. But we’re really respectful of what the Pacific Island leaders have articulated, which is Pacific security should come from within the Pacific. And that will be our primacy. 

Now, Mike, I’m going to take the liberty of finishing on a final message, because I think there’s always – I rarely get this opportunity in front of an open forum, and I don’t want to bring the joint down, but I do think contestability is really important – contestability for government is really important, but contestability for analysts and think tanks is really important as well. And I happened to be flicking through your latest cost of defence – and I’ll give an advertisement for it – but I will point out that we do continue to see errors and simplifications that I don’t think serves the public debate. And I won’t go through all of them, but you can see all my red marks. So I won’t go through all of them, but I’ll give you a few example where I think the debate needs to be more mature if the public are going to understand. 

So, for example, presenting as a cut to the defence budget a $3 billion move in foreign exchange under no win, no loss where ASPI has argued that that’s a cut – a reduction to the defence budget which it’s simply us getting the same material from the United States for $3 billion less because the foreign exchange rate has got more favourable. That is not a reduction in defence spending. 

Or criticising us for our spending this year being slightly less than last year ignoring the fact that we’ve moved four and a half billion dollars into this year. Or, for example, saying we’re not privileging building up a domestic industry in shipbuilding when we’re doing continuous naval shipbuilding and building everything in this country that we possibly can except for three Mogami-class frigates where we want to speed the capability. Or arguing that we could build Tomahawk missiles in this country for $3 billion when I’m not sure where that figure came from – I’d love to write that cheque, but it’s not realistic. Or arguing, for example, that we can instantly turn around GWEO when there was knowing there. 

So I don’t want to be, like, Debbie Downer here, but I do want to be frank that contestability matters, but accuracy matters as well in this environment. And if we’re having a mature debate, engage with us, let us explain things to you. But just plucking figures out of the air or not acknowledging that we brought money forward or that, for example, we increased the budget by $117 billion, of which a quarter is in the forward estimates, just diminishes the public debate. 

But I thank ASPI for your role. It is really important. I look forward coming back and having similar complaints next year, but everyone is entitled to their ideas, but they’re not entitled to different facts, and that’s really important. 

HUGHES: Thank you, minister. We would completely agree with that. You know, you talked about a teaser earlier, so now that everyone knows what that is, I’ll give a teaser of my own: there will be a cost of defence next year. We’re very proud of that product. It is an intense process between the dropping of the budget and essentially two, three weeks later when we try and make that ready for Senate estimates. So we’re always open to feedback. 

CONROY: Happy to give it a plug. 

HUGHES: And I just want to acknowledge that the Department of Defence is probably put through the ringer with that product as well. They do support us on, you know – we check with them for accuracy and figures, but I think in an environment where – I can understand the [indistinct] every year it gets harder and harder to do the costing of defence. Transparency is an issue for us. We do our best. But I do want to acknowledge not just the support of the department but from your office and the DPM and Defence Minister’s office. You have been engaging us on these issues, and we look forward to that continued engagement. Our objective obviously is to provide as accurate as possible analysis for the budget, and we just thank for your continued support, not just for contestability but for [indistinct]. And we look forward to working with you [indistinct] next year. 

Ladies and gentlemen, the minister has been exceptionally generous with his time today covering a whole range of issues. Can you please join him in thanking Minister Conroy.

ENDS