Australian Government coat of arms

Prime Minister of Australia

The Hon Malcolm Turnbull MP

Joint Press Conference with Senator the Hon Marise Payne, Minister for Defence and Air Chief Marshal Mark Binskin, Chief of Defence Force

25 February 2016

ADFA, Canberra

Prime Minister

Minister for Defence

Chief of Defence Force

E&OE

PRIME MINISTER:

I hope you enjoyed the briefings and the information you received from the lock-up and Marise and I and the CDF are here ready to take some questions from you.

JOURNALIST:

Prime Minister, could I ask first of all, its’s a very ambitious spend that you’ve got outlined and its great that you've got an annual breakdown of the figures, but by 2025-26 you're looking at an annual increase in funding of $7.2 billion and this is a slightly glamorous way of saying where's the money coming from? Isn't that positively in the sort of ‘Gonski-esque’ increases in funding in the longer term?

PRIME MINISTER:

This is a commitment of the funding that we need to acquire the capabilities that we’ve determined after a very thorough process, and necessary to ensure our security and the Government is absolutely committed to ensuring those funds are available. But you’re talking a long way out, obviously beyond the forward estimates there.

JOURNALIST:

But will some of it come from other organisation’s budgets, for example the innovation component includes references to work with the CSIRO. Can you envisage cross-portfolio funding of some of these defence initiatives?

PRIME MINISTER:

Laura, I am not going to speculate about a budget that is well over a decade away. But what we have to do in this area in particular given the long term nature of the investments and the capabilities. In fact I might ask Marise and the CDF just to comment, to discuss just explain how long-term these plans are. You mention 2025-26, we talking about investing in capabilities that will be in operation well beyond the middle of the century. Perhaps Marise…

DEFENCE MINISTER:

Sure I said in my remarks that we were in part talking about capability that would be in operation decades hence. Now, that development process, for example if you want to take the continuous ship-build process, which was brought forward in August of last year. That's cutting steel in 2018, for example, in relation to the offshore patrol vessels, 2020 for the future frigates, and then starting that process of the build. But that takes you even further beyond the sort of years you're talking about. So these are periodic processes if you like, but we have set out with the integrated investment program and most particularly with the external cost assurance process that we used for that, a platform and a plan that enables us to build on each stage as you move through the future Budget processes.

JOURNALIST:

Prime Minister, those 10 Budget bottom lines you've given us on the table in the book for 10 years -are they aspirations, or can we come back each year to a Turnbull Government, check the May Budget figure on Defence and say, "Well hang on, you haven't met it?” Can we measure you, can we hold you to that commitment?

PRIME MINISTER:

Well you certainly can hold us to that commitment. This is a fully costed plan. This is a fully costed, externally cost-assured plan, and we will obviously be doing everything we can and this plan will go on well beyond my time in Government. We are talking many decades out into the future. My Government and I hope every government, will seek to ensure that the capabilities which have been determined are necessary. These are the investments in a modern Navy, and in all of those additional capabilities that have been described, that that investment is procured and maintained at the best possible price. The job of the Department of Defence is to…once the Government has set out the capability, its agreement to secure the capabilities that are needed, the job of the Department of Defence is to ensure that it spends that money as efficiently and effectively as possible. So, this is a fully costed plan, but that's not the end of the work obviously. Now it has to be implemented and it has to be implemented and it has to be implemented with the most rigorous financial discipline.

JOURNALIST:

Prime Minister, the document talks about the delicate balance between China and the US relationships, and it also talks about Australia's interest in upholding freedom of navigation in the South China Sea. In that context, would Australia's interest be served by Australia looking at a freedom of navigation operation within the 12 nautical miles?

PRIME MINISTER:

We support and practice freedom of navigation in accordance with international law, but we are not going to canvass, forecast, future ADF operations.

JOURNALIST:

It's all on the table?

PRIME MINISTER:

It may be on your table, but we are not going to canvass or forecast future ADF operations.

JOURNALIST:

CDF, you must be a happy man today, have you got everything you wanted and what does this mean for you and your force?

CHIEF OF DEFENCE FORCE:

A lot of analysis has gone into this future force. This is two years in the making to get here, analysis of where we've had capability gaps, capabilities for the future, how we tie in industry, because that's a key part of sustaining capabilities into the future. But if you look at really what we've got here it's a foundation for the future force where there will be equipment procured that my grandchildren will be serving in or flying in. And so it's a good long-term plan. Having it released here at ADFA who are the future leaders of our organisation, they'll be entrusted with the responsibility that these capabilities will bring. It's a pretty significant day for us.

JOURNALIST:

The White Paper talks about six various threats, which is the greatest and why?

CHIEF OF DEFENCE FORCE:

For us as a balanced force, we look to have a force capable of being able to react to any of the security threats that might threaten Australia's national interest. We don't focus on any one per se, but we've got to have a force capable of being able to respond to any security issues that might face us.

JOURNALIST:

Prime Minister, the decision today to have 12 submarines, has that changed parameters for the three consortiums bidding for the project and the estimated cost around $50 billion for design and construction, that's only part of how much, the whole project is going to cost, isn't it?

PRIME MINISTER:

Perhaps Marise you might address that.

DEFENCE MINISTER:

Sure. It’s entirely consistent within the competitive evaluation process. We're very confident of that. In terms of the costs, you'll see in the documentation we are talking $50 billion in terms of acquisition. Now obviously that's spread over a period of time, because you don't and can't build 12 submarines instantaneously and the costs diminish the further you get through the number of submarines. Most importantly in terms of sustainment costs though, you can't make presumptions. I think there are some floating around in the ether at the moment about the sustainment costs, because that is very much being looked at as part of the competitive evaluation process. So we've incorporated in the documentation today quite clearly the $50 billion and potentially more, that we think acquisition will be in terms of the work that's been done in the external cost assurance process, and as the competitive evaluation process is resolved and advice is brought back to Government then we'll make the decisions consistent with that.

JOURNALIST:

Minister or Prime Minister, the language in the documents, and there may be something more firm that I hadn't got to yet, seems to indicate you're trending towards building the submarines in Australia with benefits flowing on and a lot of the work being done here. Is that right?

DEFENCE MINISTER:

Well we've indicated that by virtue of the size of the project there will always be considerable engagement for Australian works. There is absolutely no question of that and no doubt about that. But I've been absolutely clear that because the competitive evaluation process requested each international participant to provide an assessment based on three variations of build - international, hybrid and domestic - each has delivered that. They will all be assessed against those criteria and we are not going to pre-empt in any way. So, Brendan I can assure you, we are not pre-empting in any way the outcome of that competitive evaluation process at this stage. But what we have clearly indicated and what the continuous build of the offshore patrol vessels and future frigates indicates is a massive investment in Australian industry, in Australian people, to make sure that we restart that process which was subject to so many fits and starts before, and a boom-bust approach to building our naval capability. We are going to smooth that entire process out, make it a continuous ship build so we don't have those gaps, we don't have those glaring holes that mean the workforce suffers considerably. I think that's an important undertaking for Australian workers and for Australian industry.

JOURNALIST:

Can you tell us how the Chinese reacted when they were briefed on the White Paper and on the expansion of the Defence Force that goes with it?

DEFENCE MINISTER:

I'm sure the Chinese reacted entirely appropriately Brendan.

JOURNALIST:

Minister, did I hear you correctly?

DEFENCE MINISTER:

I wasn't there.

JOURNALIST:

Minister, did I hear…

DEFENCE MINISTER:

The international briefings, sorry can I just finish?  The international briefings were done over a period of days by our Deputy Secretary - Strategic and Intelligence, Peter Baxter. Not just in China as I mentioned this morning, but elsewhere - Japan, Indonesia, consultations with the United States, with the United Kingdom.

And I mentioned in my remarks today how much discussion we have had.

I think there is a real appreciation for that undertaking by the Australian Government. A real sense of partnership and gratitude that we are prepared to and keen to engage either by making personal visits or in phone call exchanges where appropriate.

And that's something which we've worked very hard at. As I also said yesterday, the build-up to this process included over 200 consultations with foreign affairs representatives, foreign representatives and diplomats.

That is a very considerable contribution to the strength behind the expanded international engagement and regional engagement that we've included in this White Paper.

I mentioned that we will be funding that as a core defence activity in a substantial way for the very first time. So, we had to do that engagement, but I think it's paying dividends.

JOURNALIST:

Minister can I just, did I hear you correctly in saying that we don't yet know the sustainment costs of the submarines? And if that is the case, how does that fit with us knowing the Budget bottom line on defence for the next 10 years?

CHIEF OF DEFENCE FORCE:

I can answer that, the new submarines won't come into service within that period and so your sustainment costs will be factored in as the Budget’s built over time.

JOURNALIST:

Fair comment, but surely on a purchase that is $50 billion, just in the buying, you've got to have a ball park figure on running costs?

CHIEF OF DEFENCE FORCE:

That's what the CEP will be there to determine and so that’ll be factored in in the decisions of which contractor we partner with to develop the future submarines.

JOURNALIST:

Any ball park, CDF?

CHIEF OF DEFENCE FORCE:

I won't give you a ball park figure, but I will say, you're talking about a fleet of 12 submarines, over a 30 year life, so it's not going to be a tiny figure, really, is it? Just in common sense.

JOURNALIST:

And, in common sense you'd have a figure somewhere on your desk, because you don't spend $50 billion unless you've got some idea?

CHIEF OF DEFENCE FORCE:

We'll let the CEP sort out where we think the sustainment costs will be, because it will be a factor in the decision of what boat we go with.

JOURNALIST:

Generally, the rule of thumb though CDF, and you cited this yourself, has been that sustainment is two-thirds of the cost of a program – does that rule of thumb not apply?

CHIEF OF DEFENCE FORCE:

I don't know boats, I know aeroplanes.

No, you're right, I have used it and in a rough rule of thumb that is but let's wait and get the rigour to it. It would be irresponsible to commit the figures now, without understanding the outcomes of the CEP.

JOURNALIST:

Prime Minister, the quickening pace of our defence spending to get to the 2 per cent target three years earlier, what's the impact that has on our Budget repair? Does that push back a date to a return to surplus?

PRIME MINISTER:

Well, it obviously has an impact, but it is part of a critically important investment in ensuring that our Defence Forces have the capability they need. Let me just remind you and remind us all, we should all remind ourselves actually, that underpinning our economy and our ability to take advantage of the enormous economic opportunities particularly in this region, underpinning all of that is security.

So what we are investing in, this can be written up as an investment in defence materiel and defence and it is.

But it's an investment in our economy, it's an investment in the security without which nothing else can be obtained.

I cannot stress to you enough that the extraordinary growth in our region of which we have been enormous beneficiaries and which offer us unprecedented opportunities – all of that depends on a stable regional order.

So our investment in our defence capability is an investment in peace and stability, because it is, it provides an element in ensuring that that security, that stability, that is from which all of this economic growth has been enabled will continue into the future.

JOURNALIST:

Prime Minister, how many armed drones is Australia buying?

CHIEF OF DEFENCE FORCE:

We're not buying any drones, we're buying unmanned aircraft or remotely piloted aircraft.

So, in that sense you're looking at seven Trident high-altitude reconnaissance and surveillance aircraft and you’re looking at a number of aircraft that we'd call battlefield support aircraft, for persistent surveillance over the battlefield and able to support forces on the ground if they need to.

JOURNALIST:

What about the light helicopters to assist the SAS? How many of those?

CHIEF OF DEFENCE FORCE:

I don't have a number yet, we will need to do that as a part of the evaluation of what the capability requirements are but we do need a capability to rapidly deploy and support our Special Forces if they need to and that's what that helicopter’s dedicated to.

JOURNALIST:

Prime Minister or Minister, the number 12 on the submarines, [inaudible] as a Kevin Rudd brain fart, which the Government then backed away from but came back to 12, can you talk us through how you got to the number 12?

DEFENCE MINISTER:

It's kind of ironic coming from you Tory but nevertheless. I think your editor would probably be keen to have 12, if my recollection’s correct. So the process that we have been through is obviously a very considered one and we laid that out in some detail this morning and yesterday when we had an earlier discussion.

So the process of the proposed force structure and that review took place over I think 10 or so months starting in, or 11 months, starting in 2014. So the force structure itself and what we needed in that regard.

The decision making process that the NSC has been through on all of these major acquisition points, all of these discussions in the formulation of the White Paper and the Integrated Investment Program and the Defence Industry Policy Statement has traversed almost two and a half years, as you see and 12 NSCs.

So I think that unfortunate turn of phrase which you attribute elsewhere, that unfortunate turn of phrase I think fails to really acknowledge the depth of that analysis, the depth of that preparation, the rigorous effort that has been put into this process.

If you, I'm sure the Chief of Navy would be more than happy to articulate this in even greater detail. But the key for us by the time we come to the 2030s is that 50 per cent of the world's submarine fleets will be in our region.

We are an island nation and the core of our maritime strategy, being able to make sure that we are properly equipped to look after ourselves and to work in our region and to work further afield internationally is about making sure we have the right capability.

And the decision that we have made in relation to the submarines is as you read today and one which I think will serve us very well into the future.

JOURNALIST:

Are you confident that your focus on cyber and space warfare is in-depth enough to be able to combat what is a growing and evolving area of threat?

PRIME MINISTER:

Let me address that and if I might just add to the Minister's very thoughtful and comprehensive answer to the previous question.

We are a maritime power, we are an island nation. We operate in a region where sea lanes, freedom of access to navigation, where maritime assets in a naval sense are growing, both submarine and surface vessels.

Look, without wanting to introduce an undue partisan note into this happy occasion, the Labor Governments neglected the Navy remarkably. We are picking up that slack. We are making up for the neglect of many years.

An island nation needs a strong Navy and it particularly needs a strong Navy in this environment, for all of the reasons the minister said.

Now turning to cyber, yes, this is a very substantial increased investment in cyber capability. It is a rapidly developing and dynamic area.

We face adversaries, both state-sponsored and not and individuals, organisations, terrorist groups, it's an area where you need to have the smartest people that you can secure, that you can employ working for you using the latest technologies.

And I have to say, while we naturally are more circumspect about this area than we are even about other areas, can I say that the work and the professionalism, the technological ingenuity of our cyber specialists, there is no better in the world.

I won't claim they're the best in the world but there is no-one better in the world than them and they are recognised for that expertise and we will be building on that.

I can assure you, it is in very sharp focus and it's an area I'm not as you know given my own background in government and elsewhere, it's an area I'm not entirely unfamiliar with.

So I think we've come to the end. So thank you all very much indeed.

Ends