SIR ROGER CARR, CHAIRMAN OF BAE SYSTEMS: Good morning, everybody. My name's Roger Carr, chair of BAE, as you know. We welcome today the Prime Minister who we're delighted to see to look at a project that has united two countries in pursuit of building one of the most advanced warships in the world. So we've been able to show him that today and reinforce the partnership that exists. So, Prime Minister, please.
PRIME MINISTER: Well, thank you very much, Sir Roger. And to Charles and Simon and the whole crew here who are doing such a fantastic job on what is a vision of the future for the Royal Australian Navy behind us here. Nine of these Type 26, which will be Hunter class frigates in Australia, an investment of some $35 billion. Mid this decade, we'll be cutting steel and we look to get the first one of them later in the decade.
SIR ROGER CARR, CHAIRMAN OF BAE SYSTEMS: Indeed.
PRIME MINISTER: And that's where we're tracking, and we've had a good opportunity to talk about the project today. When I was here in London a few months ago, Sir Roger, Charles and I had another opportunity to meet to talk about the project and how we were proceeding. So it's good to see it in real life and to see- have a vision of what is to come. And it's great to catch up with at least one of the Australians from Adelaide who are here working on the ship today because a big part of this is the skills transfer that takes place in such enormous tasks, of these naval shipbuilding projects. And so this is one of just many as people know, and the partnership with BAE has been very, very positive. And I thank you Sir Roger for the accessible way you've been able to engage on issues. They're difficult projects. All of these are. They have their challenges and their problems. You work through them and that's how you get ships in the water and that's how you look after Australia's national defences. I'm happy to take a couple of quick questions on that if you'd like, because there's a number of other matters I know you're keen for me to address and so am I, but I wasn't going to impose on Sir Roger and Charles others. So are there any questions you wanted to raise on that matter. Not today. Thank you very much.
SIR ROGER CARR, CHAIRMAN OF BAE SYSTEMS: Thank you very much Prime Minister. It's terrific to see you again.
PRIME MINISTER: Thank you. Thank you very much. Well, I want to address a number of the issues that came up when we gathered together yesterday for the press conference. I have no interest in personalising these matters. That's not what this is about. But I thought it would be good to give you some of the background as to where we got to and how these decisions were made.
Certainly, the submarine contract was a significant investment by Australia. A decision taken five years ago. At that point, given the strategic circumstances at the time and the technology available to Australia, the Attack class submarine was the right decision for Australia, but there have been significant changes that have occurred in our strategic environment in the Indo-Pacific, which has completely changed the game. And it's also fair to say that the contract that we had with Naval, had its very significant challenges. There were quite a few issues that went to following through on the commitments on Australian industry content. There was a lot of issues in relation to delays in the project and of course, the costs. These were matters that we raised quite regularly and indeed I raised with President Macron at each opportunity when we either spoke over the phone or we had our bilateral meetings going over a number of years. Those delays and those concerns led me to take a decision early on about 18 months ago or thereabouts, to ensure that if we did have concerns about how this project might proceed, then we would need to have an alternative. And in my view, we had to have a better alternative. I didn't want Australia to settle for less, and we'd always had the aspiration to have a nuclear powered submarine. And so I set in path the process of investigating whether that was possible. That was very tightly held. And frankly, at that point, the likelihood of that succeeding would not have been rated as high.
But we went methodically through that process. Working with both the United States system, it wasn't raised, as I told you before at a political level with the previous administration and wasn't raised with the current administration until well into this year after technical and other issues around nuclear stewardship and Australia's capability had been thoroughly assessed. And fundamentally dealing with those technology issues around the stewardship issues- the nuclear stewardship issues because the reactor technology available from the United States goes into the boat over the course of its life, which of course, as I told you, doesn't then require a civil nuclear industry in Australia to be able to acquire that capability. We pursued that. And as time progressed, we continued to clear hurdles in terms of Australia being potentially able to have that capability.
At the same time, we were working through in good faith with Naval to address the problems that we had in the contract. And it's no secret, I'm sure in Australia, that this was a project that had few friends, and that is a point that we had made to Naval and particularly to the French Government. But I appreciated the work that President Macron was doing to seek to solve those problems. And many of them were. And had we been in an ultimate position to go forward on that contract, then we still would have had issues. There were still things to resolve, but I'm confident we would have been able to resolve them. But it was our concerns over the early delays and the delivery on, particularly on things like Australian industry content, time and cost that had raised concerns in my mind. And after the 2019 election, I began to enquire into these issues and tasked Defence to give us options and alternatives in the event that circumstances prevailed that we wouldn't be able to proceed. This is a contract. It has gates in it, and the purpose of this contract was to deliver submarines to Australia that would suit our defence interests and our strategic defences. That's the point of this contract and that's what we were seeking to procure under this arrangement. Now, as we work through this process of enquiring into our nuclear capability and whether we could be able to move into that space, then we got to the point with the United States and the United Kingdom that we were able to elevate this to a political level discussion. And that is the context in which AUKUS was framed and born. And when we went to Carbis Bay and we had that historic trilateral meeting, it was at that meeting that we were now in a position to try and move forward to where we ultimately arrived at.
But I want to stress when we met in Carbis Bay, we had not at that point made a clear decision and neither had our trilateral partners about whether we would be absolutely proceeding with the nuclear submarine option, that was not a finalised arrangement between any of the trilateral parties, but one of the biggest things that had changed over the course of that year and previous was the change in the strategic environment in the Indo-Pacific. At Carbis Bay and prior to it, President Macron had invited me to visit him at Elysee on the way to Carbis Bay. I chose not to do that. At that time, we hadn't settled the arrangements for the trilateral meeting that we had. Once that trilateral meeting was in place and pending the outcome of that, I agreed to go and have that dinner because I needed to share with him where Australia's thinking was. That was the reason I went to that dinner. To let him know after the meeting with the trilateral partners about where we were at, because only at that point had it then escalated to the possibility and likelihood of us potentially going down another track.
Now, at that point I made it very clear that a conventional diesel powered submarine was not going to meet Australia's strategic requirements. We discussed that candidly. I did not discuss what other alternatives we were looking at. They were in confidence and they were subject to the security arrangements we had about those other discussions. And it wasn't appropriate to do that, and I made that point. But what we did discuss was the issues that we were still dealing with, with the Attack class submarines. An important one of those was our view that this project would be further delayed and that would not see a submarine in the water until the late 2030s and possibly as late as 2038. That would mean that this submarine, when it went in the water would be obsolete almost the minute it got [inaudible]. Now, of course, Naval and others disputed whether that delay would actually occur, and President Macron undertook to look at that issue. After our dinner that night, the French defence system swung into full action and engaged in a full court press with all of our officials and others, including Defence Minister and others, addressing this issue around the contract. So their very response indicated that the discussion I had had with President Macron the night before, that night, and the briefing was provided back into the French system they swung into gear and began to raise issues. He said that he would like to send Admiral Morio out to Australia, which he did, to address the issues that we had raised. So that was very clear at that stage that they were responding to the issues that I had raised at our dinner.
At our dinner. I gave the opportunity for the French to respond to the matters that I had raised, and that process took place over the next few months. Now we eventually formed the view that we would agree to disagree, that the Attack class submarine would not meet our requirements. And we decided finally, only in the days before the announcement of the AUKUS arrangement and going forward with the arrangement on nuclear submarines was that decision finally made and that occurred at the same time that I could be assured that we had a clear path forward for a nuclear submarine. I was not going to leave Australia stranded between two projects. The two had to come together, and that's why we worked so closely and so securely over such a long time to ensure that we had a continuity of engaging and creating this capability for Australia. So we took the decision. It was a difficult decision. But a difficult decision that would lead undoubtedly to an impact on the relationship with France and, of course, an offence that would be caused. But in these interests, in Australia's interests, I have to put Australia's interests before any interest that involves in potentially offending others and how they would blowback in terms of their reaction. Australia's defence interests had to come first. This submarine was not the submarine Australia needed. The contract had had its difficulties that had led to me enquiring into potential other options, which for Australia's sake, actually came to fruition and we were able to secure nuclear submarine powered technology, that only two countries in the world possessed. That was worth pursuing for Australia, and I was not prepared to risk it for Australia's future defences. And that is why we took the decision that we did.
There was a three month period where the issues that had been raised were being discussed between French and Australian officials and the Naval Group, and we finally formed the view, made the decision we had to. There's no easy way to say to a contractor that you're going to not proceed through the next gate of the contract. Oh, I should remind you of this- We were supposed to have gone through the scope two works project gate in the previous December, and those marks were missed. And ironically, had that been achieved, then quite likely all of this would have been moot. That opened up a further opportunity to pursue our alternative, which I did in Australia's interests, and I make no apology for it because I need to ensure that Australia has the best submarine capability in one of the most complex parts of the world in the Indo-Pacific, and so Australia can pursue our defence strategies with the best possible capability. So based on all of that, we made, I believe, the right calls for Australia. I don't wish to personalise this. There's no element of that from my perspective. I must say that I think the statements that were made questioning Australia's integrity and the slurs that have been placed on Australia, not me, I've got broad shoulders. I can deal with that. But those slurs, I'm not going to cop sledging at Australia. I'm not going to cop that on behalf of Australians. I can deal with whatever people throw at me. But Australia has a proud record when it comes to our defence capability. That's why we will be building these. We'll be building others. And Australia’s service record, I think needs no elaboration. And so that's where we are. Happy to take questions. One at a time. Lanai, why don’t we start with Lanai and move around.
JOURNALIST: You said you're not going to accept the sledging of Australia.
PRIME MINISTER: Yeah.
JOURNALIST: So what are you going to do to resolve this diplomatic issue? Because there is a diplomatic issue here.
PRIME MINISTER: Well, Australia will happily work with France on projects of mutual interest. I think it's clear from President Macron's statements yesterday that the level of offence is still very great and we will wait for that to subside. We have a lot of projects to get on with. We have an important role in the Indo-Pacific. We are working with the EU, with NATO, of course, with our other partners in the region. We have much to do and we're always keen and would welcome the involvement of our ongoing partnership with France.
JOURNALIST: With all of that in mind Prime Minister, you've put all of that on the table you said you did, why did he say you lied to him? Is there any [inaudible], do you understand why he might have said that?
PRIME MINISTER: No, I don't. I absolutely don't. But as I said, I don't seek to personalise this. I've made it very clear that we, that we believed absolutely that a conventional submarine was not going to meet our strategic needs. That's why I went to dinner in Elysee. To tell him that. Because that was the precise time, it was only a few days before that I had met with our trilateral partners. And I needed to convey to him very clearly that we had big concerns about that boat meeting our needs. He asked for the opportunity to discuss that further to address our issues. That opportunity was provided. It didn't convince us, and we did not believe we should go through the gate of that contract. This is about a contract to deliver submarines, and that contract had gates in it, which enabled Australia not to proceed if it was not in our interest to proceed. It was not in our interest to proceed. We communicated that. I had hoped to be able to do that directly by phone. We had sought such a call. And indeed, President Macron indicated he wasn't available at that time and was concerned that the nature of the call related to the contract and whether it would be proceeding or not. And he had communicated that to me several days before. I would have preferred to have said I told him directly. But that opportunity, that call wasn't offered.
JOURNALIST: Can you just clarify, when you had the dinner with Mr Macron and you relayed the concerns about the subs, you said you were looking at alternatives or just didn’t tell him what they were?
PRIME MINISTER: Yeah, no, he enquired about that, but I said I wasn't at liberty to discuss those.
JOURNALIST: But was her aware you were be looking at an alternative without going into detail?
PRIME MINISTER: Yes. But I wasn't able to say, I mean, at that time, you'll remember, Phil, because many of your reporting it, I mean, there was discussion about what was happening with the Collins extension and a son of Collins. There were discussions happening with other defence contractors at the time, they were referred to in your own reports, I think, as Plan B options. I mean, when contracts had had the difficulty that we had, then of course it would be imprudent if I as Prime Minister, or the government, wasn't looking to identify alternatives. I just wasn't prepared to let Australia settle for less, if this contract wasn't going to proceed. I wanted Australia to have an even better capability. A supreme submarine capability. And that's what we have now been able to secure.
JOURNALIST: Prime Minister, you said that you weren't able to communicate with the French President. But you were engaged in another discussion, can you be a bit more candid about why? Did the Americans ask us not to ...
PRIME MINISTER: Well, I'm not going to get into that because they're all matters of our respective national security, so I'm not going to go into that. And, you know, leaders understand those things. We all understand there are security issues that apply constraints on what we can and can't discuss. But one point I made very clear on behalf of ultimately the partners, was that Australia initiated this. The United States and the United Kingdom did not come to us and seek to undermine the contract that the Naval Group had with Australia. They did not seek to do this. I was seeking an alternative in the event that a) we wouldn't be able to proceed and b) even more significantly if the conventional submarine option was not going to deliver on our strategic needs. Now we formed the very strong view, the unanimous view of all the Chiefs of our services and Defence Force, that this was a capability that was not going to meet our needs. We respectfully gave the opportunity for France to respond to that. If I, the suggestion that these things were not raised does not gel with the way the French defence system flew into action the next, very next day and other diplomatic engagements we understand were being pursued.
JOURNALIST: PM, you said quite clearly that you wanted to change this contract because the strategic circumstances for Australia had changed.
PRIME MINISTER: Correct.
JOURNALIST: We're now here at COP26. We've been at the G20. Russia and China are not here. Is that not a sign that the multilateral systems of the world are breaking down?
PRIME MINISTER: Well, I think it's very important for like minded countries to work as closely together as we possibly can. And that is why Australia will always remain committed to working with France when they are in a position to want to do that again with Australia. We will go forward and make some suggestions about ways that can be done. But it is clear from President Macron's statements yesterday that I don't think they are of a mind to do that at the moment. I understand that and we'll just get on with it and we'll move on.
JOURNALIST: Why didn't you message him back? So he sent you this message two days out from the AUKUS...
PRIME MINISTER: I did.
JOURNALIST: And what did you message back?
PRIME MINISTER: I said I thought it was very important that we spoke.
JOURNALIST: Which indicated in your mind that ...
PRIME MINISTER: And then when we weren't able to have an agreed time for a call because we had now got to the point we were about to announce this arrangement. And I wanted to tell him personally that we formed that decision because in correspondence as well as my own messages, I'd made it very clear that at the end of the day, Australia's national interest was going to determine our decision. And it did. And we communicated that. So when there wasn't the opportunity for us to speak directly, I forwarded the letter by text message to him that set out our position. And as you know, since then, I've written to him personally by hand and sought to move the issue forward. I understand that he's very personally upset and he's made some personal remarks. I don't intend to do the same.
JOURNALIST: Why was this decision to release the text message from him to you? I notice it has been leaked to the Daily Telegraph. James Morrow has it, it says should I expect good or bad news for our joint submarines ambitions. Why did you decide to leak that text message? And can you confirm that Emmanuel Macron did offer to build nuclear submarines for Australia?
PRIME MINISTER: No, I can't specifically confirm that. But what I can say is that we don't have any interest in that option.
JOURNALIST: And on the first question?
PRIME MINISTER: I can confirm that ...
JOURNALIST: No, the first question was why did you, why did you...
PRIME MINISTER: Well, I'm not going to, I'm not going to indulge your editorial on it. But what I'll simply say is this, is we were contacted when we were trying to set up the meeting, the call, and he made it pretty clear that he was concerned. He was concerned that this would be a phone call that would result in the decision of Australia not to proceed with the contract. And that happened several days before the decision was made. And so it was very clear that they were aware that the contract- I mean, Admiral Morio was sent to Australia to try and save the contract after our dinner in Elysee. So if there was no concern about the contract being under threat, Admiral Morio would never have come to Australia.
JOURNALIST: But Prime Minister, doesn't the text message exchange show that just a few days before AUKUS, Emmanuel Macron, a NATO power and a longstanding ally was still in the dark on the ultimate decision just two days before. Now, didn't Emmanuel Macron as such a strong ally of Australia and head of France deserve more than just that last minute notice of that ultimate decision?
PRIME MINISTER: Well this was a highly secure decision, a highly secure announcement over which we had held these things incredibly tightly. Not just for many months, but in Australia's case for more than a year. And it was my obligation to advise him of that directly. He was clearly aware over some months that there were concerns and they were responding to those concerns, and we had had correspondence and other messaging during the course of that period, and we decided in Australia's interests not to go ahead with the contract. That is what has occurred here. There was a contract, it had a gate. That gate should have actually been passed through last December. Delays in the contract meant that that didn't occur and that it extended out well into July. We had not made a decision which they would have been very well aware of, that we were not, you know, we had still not made a decision on that scope to works and and they were enquiring and they were seeking to respond to that.
But at the end of the day, I'm going to take the tough decisions to ensure Australia gets the best defence capability and you've got to have the strength to put up with the offence that sometimes that may cause. When you stand up for Australia's interests, not everybody is going to like it. It's not going to make everybody happy and you've got to have the strength to be able to deal with that. I'm very confident about the decision that I've made in Australia's interests, and we're going to pursue that decision as we are on many others, just like we're doing here in Glasgow, COP26 and ensuring the security of Australia in our region, in the Indo-Pacific, where Australia has stood up, my government has stood up, I've stood up and I will always do things in Australia's interests. Thanks everyone.