Australian Government coat of arms

Prime Minister of Australia

The Hon Malcolm Turnbull MP

Doorstop with Senator the Hon. Marise Payne, Minister for Defence and the Hon. Christopher Pyne MP, Minister for Defence Industry and Vice Admiral Ray Griggs AO, CSC, RAN - Acting Chief of the Defence Force

16 May 2017

Prime Minister

Minister for Defence

Minister for Defence Industry

Acting Chief of the Defence Force

Subjects:

Naval Shipbuilding Plan; National Security; Bank Levy; Eleni Glouftsis

E&OE

PRIME MINISTER:

... Vice Admiral Griggs representing the CDF, Admiral Immediate representing the Chief of Navy and Brendan Sergeant the Deputy Secretary from the Department of Defence. What we are releasing today is our Naval Shipbuilding plan. This is a plan for jobs, it’s a plan for security, it is a plan for the opportunity that investment in our defence industry brings not just today and tomorrow, but for generations to come.

As this plan sets out, this $89 billion investment in the capability of the Royal Australian Navy, will secure the thousands of jobs of the most advanced type in manufacturing, in technology, in software, in construction, every category of skill at the cutting edge, in every respect is going to be required here at Osborne. It is a great national enterprise. This is the largest investment in our defence capability of our Navy ever in peace time. And it is at the very forefront of technology. We are here at Osborne as we begin to make the investments to enable this to occur. As Marise and Christopher will describe, already we are investing over a billion dollars in the facilities here to enable us to build the first two offshore patrol vessels, then the future frigates, then the submarines.

Now, all of these platforms are absolutely at the cutting edge of technology, just as the Air Warfare Destroyers are today. We are continually pushing the envelope because we need to do that in a competitive world to keep Australia secure. That's absolutely critical. But it also has enormous benefits for Australian industry. Defence, by its very nature, is at the forefront of technology, and the spin-offs and the benefits it delivers for industry right across Australia are enormous. Other countries have benefitted from that, as you know. So our shipbuilding plan is already under way, with the construction of the Pacific patrol vessels in Western Australia, and we will shortly be beginning the offshore patrol vessels here, closely followed by the future frigates and the submarines.

This is a great national enterprise. This is nation-building. This is an end to the boom and bust pattern that we've seen with shipbuilding in Australia. Do you know, these air warfare destroyers were a commitment of the Howard Government. In 6 years of Labor, they did not commission one naval vessel from one Australian yard. So abandoned Australian ship-building. We've taken up that challenge and we're setting it right. This is a continuous ship-building commitment, not just for today and tomorrow, but for generations to come. So I will ask the Minister for Defence to talk about the capabilities that we are delivering for the Royal Australian Navy, and I will then invite Christopher Pyne to talk about what this means for the Australian defence industry, and remember, we are doing all of this just a few days away past the 75th anniversary of the Battle of the Coral Sea. You know, we were there honouring in New York President Trump and I and many others, honouring some of those veterans, old gentlemen in their 90s, who had, fighting together, Australians and Americans, two great Navies, turned the tide of war when they were teenagers. We are providing the capabilities for the future, to keep Australia secure and safe, just as they did 75 years ago. Minister.

MINISTER FOR DEFENCE:

Thank you. Thank you very much, Prime Minister. To my colleague, the Minister for Defence Industry, always fabulous to be with you here in Adelaide. To the Acting Chief of the Defence Force, Acting Secretary of the Department, Admiral Mead, ladies and gentlemen, in February of last year, we released the Defence White Paper.

The White Paper set out our plan for developing naval capability to ensure that we have the most capable, agile and potent Australian Defence Force that we are able to achieve, and today's release of the naval shipbuilding plan delivers on the implementation phase of creating that capability. Starting with a plan to acquire 12 regionally superior submarines, a process which will be undergone here at Osborne. To develop 12 offshore patrol vessels and 9 future frigates. This is the essential basis of the development of naval capability that we have been working towards.

If you read the Defence White Paper and you look at the steps that we set out in that process, what you see now in May of 2017 is the delivery of that Defence White Paper implementation process for this capability. The naval shipbuilding plan sets out the implementation arrangements for that. It sets out the essential facets that we need to ensure we are able to start the offshore patrol vessels here next year, that we are able to start the future frigates here in 2020 and that development of the future submarine continues in the strong and successful way it has so far. These are platforms, the future frigates, the offshore patrol vessels, the future submarines - these are platforms that will deliver to the Royal Australian Navy, deliver to the Australian Defence Force the capability that we need to ensure we are protecting Australia and our interests. Australians as well. As the Prime Minister says, that is the first job of the Government of any country, is the job that the Prime Minister and I and Minister Pyne take very seriously, and the announcement today of our Naval Shipbuilding Plan will enable us to continue with the implementation of the development of that capability.

Thank you very much, Prime Minister.

PRIME MINISTER:

Thank you, Marise?

MINISTER FOR DEFENCE INDUSTRY:

Thank you very much, Malcolm, Prime Minister, for being here in Osborne to mark this particular milestone and my parliamentary ministerial colleague of course Marise Payne.

Today is another milestone in this great national enterprise of Naval Shipbuilding. Can I point out and thank Prime Minister Turnbull because this is the most significant Commonwealth infrastructure project in Australia's history and it is here at Osborne in South Australia. The largest project for any state, any territory, for the whole country, $89 billion of naval shipbuilding, twice the size of the National Broadband Network, much, much bigger than the Snowy Hydro scheme, and it is here in Adelaide. And today marks another one of those milestones.

We have created through the Naval Shipbuilding Plan, the outline of what's needed in terms of skills, infrastructure, industrial capability and collaboration between the states and territories, academia, and industry. But what is also demonstrates is that we are cracking on as a government. In the 14 short months since the Defence White Paper, we've made very significant decisions. We've awarded the submarine project to DCNS and the combat system integration and the submarine to Lockheed Martin and they are getting on with the job. We've closed the tender for the offshore patrol vessels and a decision will soon be announced about the winner of that tender. We've opened the tender for the 9 future frigates. We have asked OMT, Odense Marine Technology to design Osborne South the Naval Shipyard, we have those plans and in July we will turn the first sods on infrastructure down here at Osborne South for the naval shipbuilding part of the overall plan.

And in today’s announcement, we are outlining $1.3 billion at least of infrastructure to be built here at Osborne and at Henderson in Western Australia because this truly is a national endeavour. $530 million on Osborne South, about the same on the submarine yard at Osborne North, and then the $230 million for the entire area, the common user facility and all the land around the ASC, because this is a 100-year project. This is going to be employing thousands and thousands of Australians, at least 5,000 by the mid-2020s, but thousands more for decades into the future as we deliver off shore patrol vessels, future frigates and submarines and then sustain those both here and in Henderson for decades into the future. So we decided it was important to own the entire site, so that all of the various people working here had to deal with one landlord.

All part of our national security endeavour, building our industry, creating jobs and investment here in Australia, rather than sending that money overseas and into other people's economies. The Prime Minister Turnbull decided and of course he was supported by his Cabinet, that that money should be spent here, as much of it as possible, to grow our jobs and our investment and critically our sovereign military capability because industry is part of that sovereign capability. As much as anybody else in the Defence Force, from the CDF to the welder on the air warfare destroyers. They are all part of this national endeavour. Thank you.

PRIME MINISTER:

Any questions?

JOURNALIST:

Prime Minister the plan makes clear that there may not be the skilled workforce here, to ramp up the entire 5,000 people may not be needed immediately, how many people can the government expect to be beginning (INAUDIBLE) 

PRIME MINISTER:

Well, Christopher has offered to respond to that as the Defence Industry Minister.

MINISTER FOR DEFENCE INDUSTRY:

So, we are talking about 5,000 plus jobs by the mid-2020s here at Osborne alone, and that is not including Henderson. We have awarded the contract for the design and building of the submarines to DCNS. We have to learn how to design and build submarines.

Right now we have 60 Australians in Cherbourg in France learning about those skills and the design. They are building an Australia building, right in the Cherbourg shipyard and I hope that Malcolm or I or Marise will get to open it in the second half of this year. We will also be bringing white collar workers from DCNS to Adelaide to train and skill our workforce. It will be small numbers, it will be a minuscule number of the 5,200 plus, but obviously we want them to transfer their intellectual property to our workforce. We can't just learn that from reading a manual, we’ll need them here. So the workforce will be overwhelmingly Australian and there will be a minuscule number of people here training, our Australians, in the skills that DNS CNS need to impart to us to build those submarines.

But can I add another part of this plan is the Naval Shipbuilding College, which will be based in Adelaide but have a hub in other parts of the country to use all the talents that are already there to help grow that workforce. It is a great problem to have, but finding 5,000 skilled workers to do this job by mid-2020 is one of the most significant challenges in the national shipbuilding endeavour and that’s why we have decided to have a Naval Shipbuilding College to turn out 1500 people a year with the skills necessary to be part of naval shipbuilding that will also transfer to manufacturing, agriculture of course as well.

JOURNALIST:

But is it the case of having to bring foreign workers in because there is a shortage of labour generally on site in South Australia for this sort of scoping?

MINISTER FOR DEFENCE INDUSTRY:

No, we have not bringing foreign workers in to build these ships or submarines. We will be asking white collar workers from DCNS to come and train aspects of our workforce in the design and building of the Barracuda Shortfin submarines that are designed for Australian needs.

JOURNALIST:

[Inaudible] is expressing concerns about the timing of the Future Frigates. Would you say it’s pretty tight?

MINISTER FOR DEFENCE INDUSTRY:

Who does?

JOURNALIST:

ASPI. Are you confident of the timing and is there wiggle room in terms of [inaudible]?

MINISTER FOR DEFENCE INDUSTRY:

Well Tory, the truth is that Labor didn't make decisions about naval shipbuilding in six years. That’s created the valley of death for the workforce here at Osborn and Henderson. It is a scandal that was allowed to happen.

Under the Abbott Government and now the Turnbull Government, we’re making the decisions, the National Security Committee is making the decisions, that will try and ameliorate that valley of death, hence the Offshore Patrol Vessels are starting in 2018 here at Osborne and the Future Frigates in 2020.

The timeframes are tight, they’re ambitious but they’re are achievable. We have made the decisions, without wasting time, without delays of our own, we have made the decisions to ensure those timeframes are met. I am very confident they will be met. In fact, that means 2018 for the Offshore Patrol Vessels and 2020 for the Future Frigates and 2022/23 for the submarines.

The Prime Minister is the star of the show, perhaps -?

PRIME MINISTER:

You’re are doing very well, thank you. All the issues are well set out and discussed in the Plan. I’m just looking at the naval shipbuilding workforce chapter in this plan. A great deal of work has gone into this. It is of course, precisely why the Naval Shipbuilding College is being established to provide that training for the workforce.

JOURNALIST:

Outlining the spending, does it help assuage any of the perceptions in South Australia that they were dudded in the budget by a lack of new infrastructure?

PRIME MINISTER:

There is a substantial infrastructure commitment South Australia in the Budget, as you know, well over $3 billion and the potential for more. Particularly with the $10 billion rail fund.

But as Christopher and Marise and I have been describing, the commitment to naval shipbuilding here in this state is the largest commitment of investment, Commonwealth investment, in any single state in the Commonwealth's history. So this is truly nation-building, a great national enterprise. It brings with it that enormous employment boost. As Christopher said, picking up on Nick's question, it is a classy problem to have, that you have got so many great job opportunities, you are having to peddle very fast to make sure you find the people and train the people to do them.

JOURNALIST:

Prime Minister on that point, there has obviously been disappointment from other states with shipyards that haven't got work, Williamstown missed out in Victoria Western Australia, some people there are upset they haven't got more shipbuilding work. Can you take us through the logic of making this the central location?

PRIME MINISTER:

Marise has offered to answer that, so I’ll invite her to do so.

MINISTER FOR DEFENCE:

Very happy to talk about that. The government took a very clear view that we needed to take a responsible approach to naval shipbuilding in this country. What we had had, over years and years, was a boom-and-bust process as the Prime Minister referred to in his opening remarks, which was in fact left in a hole for six years by the Labor Party during their term of government. The Rand Corporation did a review of the naval shipbuilding process in Australia. It’s a comprehensive review, well worth a read, which sets out the strategic changes that we needed to make sure we had a sustainable, productive efficient, naval shipbuilding industry in the country. Part of the process was to look at the sites where we can best make the most of the opportunities that existed, the work that was already done, the workforce base that was there. That essentially turned our direction to Osborne here and Henderson for small small naval vessels.

That is part of the process we’ve undertaken. This is not an ad hoc ‘let’s get up today and decide that’s what we’re going to do’. This is a strategic process, which has been the subject of government decision for it long period of time. In advance of the Defence White Paper when we looked at the force structure review that underpinned that, we looked at the capability requirements that underpinned that, putting all that together, putting the Rand Report into naval shipbuilding in Australia as well, means that to get the best outcome, to ensure we have the best capability for the men and women that go to sea for the Royal Australian Navy, this is the desired outcome.

We will have a naval shipbuilding industry that stands on its own two feet, that is renowned throughout the world and that sets the Australian Defence Force up with exactly the capability that it needs. We make no apologies for that. This is a very strategic process and one which we have taken very seriously.

JOURNALIST:

When it comes to [inaudible], what guarantees does this plan give the local supply chains here in South Australia or broadly across Australia?

MINISTER FOR DEFENCE INDUSTRY:

Guarantees that we can give, is what we have done in the past, our performance in the past. The Collins Class submarine is now an 82 per cent local build and sustainment in the state and across Australia. The Air Warfare Destroyers, one of which we are standing in front of, is 60% local built.

So we’re not going to set a percentage target because we are not trying to reach a minimum, we are trying to reach a maximum. We’re trying to maximise as much of the local work as possible. Not just here in Adelaide by the way, this is a national enterprise that will reach across the country, just like the Joint Strike Fighter program. Just like the Collins Class was and so has been the Air Warfare Destroyer. We are spending $90 billion on Pacific Patrol Vessels, the Future Frigates and the submarines and of course, we want to maximise that percentage.

But just picking a figure is an asinine process. I can point to what we’ve achieved so far. Air Warfare Destroyer 60%. Collins class 82%. We regard a local build - the definition of a local build is about 60% or above - I am absolutely certain that will be delivered in these projects.

We are going to make sure it is because we have the defence industry policy statement, putting aside $1.6 billion in the next generation technologies fund. We have the Defence Innovation Hub, we have the Centre for Defence Industry Capability based here in Adelaide, to help our businesses and our companies here to create the skills and the capability to be part of the supply chain.

And it’s happening already. Lockheed Martin is doubling its workforce. Northrop Grumman is doubling its workforce, Raytheon is increasing its workforce, Boeing by 800.  Everywhere you go in Washington and Europe, people are looking to come to Australia to be part of this great national endeavour to help transfer the skills here, those corporations employing local Adelaide people. Saab just started the building of a $40 billion expansion. They are making those decisions here in Adelaide and across Australia because of the government's commitment, not just because it’s a plan for the future, we are actually doing it. Getting on with it, cracking on with the job. That is our demonstration of good faith.

PRIME MINISTER:

See the big objective here, is to make sure that so far as we can, every dollar we spend on defence capability, is spent in Australia. Now, obviously you can't spend every dollar in Australia. But we want to spend as much as we can. We believe that historically we have been too much of a customer and not enough of a supplier for our own defence capability needs. That is the big strategic objective. Now, this is nation-building, it is unashamedly nationalistic. I believe, my government believes, that it is not only in the interest of secures the capabilities, the physical assets that our Defence Forces need, but also it secures our economic future, our industrial future, by having the skills and the industries that enable you to deliver the products of these advanced manufacturing processes in the defence sector right here. It has spill-over benefits into other industries and sectors and industries.

So this is about national security and it is about economic security. It is about security. It is about opportunity.

JOURNALIST:

Prime Minister, the question just out of the Washington Post article, is Australia considering a ban on the use of laptops on flights?

PRIME MINISTER:

Certainly the Government is aware of the changes that have been made and you know, we are looking at it very closely, taking into account all the information and advice we are receiving internationally and working very closely with our partners and in due course, any announcements will be made formally through the Transport Minister.

JOURNALIST:

(inaudible)

PRIME MINISTER:

No, I can't provide any additional details on a particular consular case. But I can say to you that, as Julie Bishop often observes, Australians do, many Australians travel a lot. There is over a million of us at any time overseas. From time to time, Australians get into trouble with the law in different parts of the world. We always provide consular assistance and help. We do so in a manner that is confidential, as between our consular officials and the people involved.

I would say, without commenting on that or any other case though, I do want to make this point to all Australians, particularly those who are overseas or are planning to go overseas. When you travel outside of Australia, remember; you must obey the laws of the country which you are visiting.

Now, they may very often be different from Australian laws. But you must obey the laws of the country you are visiting. We can provide consular assistance, but if you are in a foreign country, your obligation is to act within the law of that nation. That’s very important advice and also play close attention to the Department of Foreign Affairs and Trade Smartraveller site to get updated information about safety and other matters which may relate to your planned travels.

JOURNALIST:

On the banking levy, did you seek advice from APRA before implementing the levy and if [inaudible]? 

PRIME MINISTER:

Well, I can assure you that the regulators were consulted. They were consulted as part of the exercise, as part of the process by Treasury and the Government in preparing that proposed levy. So the answer to your question is yes, the regulators were consulted.

Thank you very much.

JOURNALIST:

Eleni Glouftsis …  the AFL umpire

PRIME MINISTER:

Yes, isn’t that great? I saw her last year when she was first announced as a field umpire and I am just delighted that she is going to be the umpire for a senior game. That is fantastic and it follows on of the success of the Adelaide Crows, in the women’s AFL too, there is a great female tradition and female commitment to AFL in South Australia. Great work Eleni and all the best.

[ENDS]