Radio Interview, ABC Illawarra

SUBJECTS: AUKUS; French submarine deal; Defence spending

NICK RHEINBERGER [HOST]: Let’s turn our attention once again to the AUKUS deal. This is the most significant investment that Australia has ever made in defence, and it is, of course, part of a partnership between us and the UK. In this latest edition of Australian Foreign Affairs Magazine, we’ve been following a lot of the people who’ve made the analysis. We spoke to the independent economist Saul Eslake the other day about the costs, and today I’m bringing you an interview with the Assistant Defence Minister, Peter Khalil, who has offered the defence of AUKUS itself and why we need it. So first of all, here he is talking to me just yesterday. 

PETER KHALIL [ASSISTANT MINISTER]: It is quite an experience, actually. I stood on the USS Vermont when it was berthed at HMAS Stirling in Western Australia, and just standing on this type of technology that, you know, one of the largest subs in the world was really quite an experience. Touring it, it’s a complex machine, one of the most complex ever created by human beings. And that actually the berthing there and many others that have berthed there have already started to do some maintenance at our base out in Western Australia, which is quite significant. So, it kind of gave me a clear indication about the importance of this critical technology, this critical capability, that we would be – our Royal Navy would have these technologies is something that’s very important for our ability to defend Australia’s maritime domain and defend our national interests and protect our way of life. 

RHEINBERGER: Why nuclear submarines? What is it about Australia’s geography that makes them essential in your view? 

KHALIL: That’s a really good question. I mean, obviously the Collins-class submarines, which we have had in service for a number of decades now, have been a wonderful boat, a wonderful submarine. They’re diesel electric. The difference, though, with nuclear-powered submarines and diesel electric submarines is that the diesel electric submarines surface – have to surface quite regularly, whereas the nuclear-powered submarines can stay underwater effectively indefinitely, so long as the food supply lasts. Now, what does that mean, Nick? It means that it gives that capability even longer range, longer endurance, longer stealth. It’s able to provide a capability that goes right across our maritime domain without being tracked, for example, because you don’t have to surface. And that gives us a greater advantage in protecting our sea lanes, our sea lanes of communication, our trade networks, underwater sea cables and so on. And nuclear-powered submarines have that advantage over diesel-electric so far as their range and their speed as well. 

RHEINBERGER: Is that particularly important with Australia’s geographic position in the world that we have so much further to go? 

KHALIL: It is. I think for a couple of reasons. One, Australia is a trading nation. It’s an island continent nation. The maritime domain – what I mean by that is the seas, the oceans around us – are so critically important for our trade and our security. All of our trade, around 90 per cent-plus of our exports and imports go through the maritime domain. They’re critical to our prosperity as a trading nation. We want to see countries abide by the rule of law, the law of the sea and so on. We also need to protect that maritime domain from various threats, whether they be from adversaries, from piracy, from anything that may threaten our ability to trade freely across those international waterways. And those nuclear-powered submarines are the best capability available in order for our Australian navy to do the work that’s necessary to defend our interests, our national interests, and our trade. And so, you know, that geographical aspect is a reality that we have to face, and Australia has had to face for generations. It is even more important now, Nick, because we’re in a world in the Indo-Pacific region which we live in. It’s one of the most important regions in the world, if not the most important region for the world for the 21st century. What happens here actually matters around global security. 

RHEINBERGER: Okay, I’m going to quote you here… for Australia, nuclear-powered submarines are justifiable, vital, proportionate and unavoidable. Even if you accept that, why have we gone with the Americans to supply submarines when it’s highly likely they can’t supply enough for themselves and this is a vital part of the AUKUS contract – that they have to sign off or the President at the time has to sign off that their underwater capabilities will not be depleted. Are we going to get these in the end if the Americans cannot build them fast enough? 

KHALIL: The short answer is yes, we are going to get them. And I was just in Washington a couple of weeks ago with meetings there. And we are getting three Virginia-class submarines that are coming online for our Navy in the early 2030s. That’s happening. There has been a lot of investment in the production line. I know you’re referring to their production abilities, if you like, their capabilities. There’s been a lot of investment into that, both by the US and Australia. And we have the three Virginia-class coming on board. Beyond that, we’re looking at there may be an option for another two, and then the build of the AUKUS SSN, which is the one that we are working with the UK and the US to build, which is the future submarine. And that is happening as well. I mean, if you go to Adelaide to the Osborne shipyards to look at the work that’s being done, the set-up that’s there, the investment that’s happening, that is well on schedule. So I’m very confident that we’ll be getting this capability. The first part of your question, though, Nick, is why the American submarines. Well, that’s a good question. You know, we buy capability or different types of assets from different countries across the world. We produce some sovereign capability as well. AUKUS, it’s not an alliance, it’s basically a tripartite technology agreement which gives us access to technologies that we otherwise wouldn’t have. And, you know, you can go and look at all the different submarines that Australia has gone around and around in circles on this in replacing the Collins-class. The previous government looked at the Japanese submarines, looked at the French submarines and came all the way back around now, we’ve come back to this particular American submarine. So it’s all about the capability, which one is the best for us. Clearly the Virginia-class is the top of class of these submarines. The others are very good, but they don’t have that range that I was talking about. They don’t have the stealth capability, they don’t have the endurance, they don’t have the actual reach that would give us the best advantage in our maritime domain. 

RHEINBERGER: Well, we didn’t just come around and try the French… we had a contract with the French. And we’ve shattered our relationship with the French by having to compensate them for going back on the deal which we had signed. Penny Wong forensically uncovered the gaps in the process which led to AUKUS, which was essentially a tactical idea from Scott Morrison with no needs unless or cost analysis from Defence. Given that, why wasn’t the Labor Party brave enough to put a hold on AUKUS and stick with the French contract? 

KHALIL: Well, all very good questions, and these are ones that historians will delve into in great detail. My recollection from the time as a member of parliament in opposition at the time, of course, was that there were issues that were raised, as you’ve described. We’ve had a lot of work to do as a new Albanese government in repairing the damage with the French government and our relationship with France, and that’s certainly something that we’ve put a lot of effort into. The decision around AUKUS and the tripartite agreement that was being signed by – that was signed by the Morrison government with the US and the UK was one that we as an opposition had to determine whether we supported. We did at the time because, on balance, the importance of those capabilities for Australia and that flow, and the decision was happening. We’ve then gone even further than that. We’ve taken this to the next level. We’re talking about making this a reality and the implementation of this. Now, a lot of people talk about the job creation of this, and there are thousands of jobs that are being created, already have started in all parts of Australia around the industry side of this and the technology and the access to this. Some 20,000 jobs. But I’ve made an argument in this article that this is not just about jobs. We need to be able to have a conversation – which I’m having with you, actually, which is great and the Australian people about why we’re doing what we’re doing in defence. The first set of principles is, should we have a Defence Force? No one really argues against that. Some people do, but most people want it. Should we have – and what capability should we have in that Defence Force? What gives us the best possible chance to defend our interests, our national security and our national interests in trade, ensuring the security and stability of the Pacific region that we live in and the prosperity that flows from that? What are the capabilities that give us the ability and the ADF the ability to do their job? And the next question is submarines. Why submarines? Because they are a critical capability based on what we were talking about earlier, Nick, around the sea, the oceans and the maritime domain that’s so important to us. he next question is, which submarines? And the Virginia-class and the AUKUS SSN will be the best submarines available to us. And that is a no-brainer in many respects…

RHEINBERGER: Well, it’s not necessarily. I mean, there’s plenty of analysis about the French submarines. In fact, the French were pulling out nuclear reactors and putting in diesels for Australia. So we could easily have got a nuclear submarine from the French. 

KHALIL: Yes, but the Virginia-class submarine and if you want to get into the technical specificity of this, to use an old ‘Kevin Rudd-ism’, programmatic specificity I think  and now we’re getting to where the boffins get into the technical side of things. But if you’re looking at speed, you’re looking at stealth, you’re looking at range, you’re looking at the capability of the complex machine that we’re talking about, these are the best submarines in the world. There’s no doubt about that. 

RHEINBERGER: Well, just on the jobs, in that same edition of Australian Foreign Affairs, we’ve got Saul Eslake, who I spoke to, said these 20,000 jobs will cost about $18 million apiece. Are you comfortable with that? That the capability that you mentioned is well worth that $18 million per job? 

KHALIL: Well, the capability – sessions around capability when we invest in capability, I’ve mentioned this point, this is not just about the jobs. Jobs are important, but there is a broader issue here, a strategic issue. Why are we investing in capabilities, first and foremost? It is to defend and protect our way of life. And that’s much, much bigger than the 18 million that you’re talking about. It’s talking about the shape of the world that we live in. We want to deter conflict, Nick. I know this sounds counterintuitive to our listeners, but the Australian Defence Force is there to deter conflict, and the best way to deter conflict is to ensure that we have the best – they have the best capabilities, because it sends a really clear signal to adversaries, whether they’re state actors or non-state actors, that the use of force and coercion will not – they will not be able to use force and coercion to reach their objectives because it’s too costly for them. Now, when they see us with our capabilities protecting our sea lanes, doing what we need to do to protect our national interests, that is there to deter conflict. And the reason that’s important and is a much better investment because the amount of money that we spent in conflict is astronomical. In World War II, the largest sort of conflict of the 20th century, we were spending 34 per cent of our GDP on defence. Now we’re just at around 2, 2.2 per cent, and, you know, maybe 2.4 per cent at the moment.

RHEINBERGER: So, the point being that preventing conflict is far more cost-effective than getting into a conflict and having to throw everything at it. 

KHALIL: Correct. Ukraine, which is in the midst of a war of survival, an external conflict now, a war, they are spending 38, 40 per cent of their GDP on defence. Everything is thrown at building out capabilities, drones, tanks, cars. They’re getting capabilities from elsewhere. So, we want to navigate through the 21st century. And the Albanese Government is taking this seriously. We’re not using these things for domestic political point scoring; this is about the national interest. We want to maintain good relations with the countries of our region, to trade with countries like China, which are so important for our economic relationship. We want to deter countries from seeing force and coercion as a way of reaching objectives. Trade and an open and free Indo-Pacific is to our benefit as a middle power trading nation. It’s also to the benefit, by the way, of many other countries, most of the countries of the region, because most of them can’t just force issues through their militaries. And so we have a common interest with our partners and allies in the region to maintain the stability of the Indo-Pacific. Why is that good? It’s good for Australians. It’s good for billions of people in the region. But it’s good for Australians because our quality of life, our way of being and what we’ve got used to over the decades is predicated on a stable and secure region that allows the sea trade that occurs, the maritime trade, and allows for the engagement with our neighbours in a peaceful way. We’ve worked really hard on that. The submarines are one part of that. But diplomacy is another part of that. The work that we've done with our Pacific partners to ensure that, you know, we are the partner of choice, we are engaging with them and not in a paternalistic way, by the way, which previous governments have done but as equal partners. These are all really important elements of ensuring the stability and security of the region. Now, AUKUS is one part of that, Nick. Everyone gets very fired up, excuse the language or the pun, about AUKUS and its weapons and all this kind of stuff. We’re not investing in weapons and capability so that we want to go to war. It’s the opposite. It’s to avoid war. It’s to send a clear message that war is too costly. Don’t, you know, cross that line. You know, the Prime Minister has been fantastic, I think, and the Foreign Minister and our cabinet in engaging with the region and building those relationships. And he said in summary, you know, with our relationship with China, our major trading partner, we’ll agree where we can and disagree where we must. He’s created some very clear lines there. And that is a really important, I think, formulation. Penny Wong, you mentioned Penny, she’s done a sterling effort in getting out there and engaging with the countries of the region. And they understand the defence. I mean, the same investments are happening in other countries like Japan and South Korea to their defence forces, because we’re having to step up. 

RHEINBERGER: That is the Assistant Defence Minister, Peter Khalil, talking to me just yesterday here at ABC Illawarra.

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