Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Wednesday, 24 February 2021
David Bevan: Minister, thank you for joining us.
Simon Birmingham: Hello, David, good to be with you.
David Bevan: Minister, is the government considering its options to terminate the contract with the Naval Group?
Simon Birmingham: Well, David as you know, the chief executive officer, global chief executive officer of Naval Group Pierre Eric Pommellet is in Australia at present. I'm looking forward to meeting with him later today. And I know he's meeting with many ministers. Our priority and our preference is firmly on making sure that the deal as secured with naval group is delivered upon. And that's certainly the message that I and other ministers will be delivering to him, including all commitments that naval group has made.
David Bevan: Yes, but is the government considering its options to terminate the contract?
Simon Birmingham: No, well the government is working on making sure that the next stages of contracting the next scope of work that has to occur in relation to the attack class submarine is negotiated with naval group is contracted with them and contracted with them according to the commitments they've made integrating into our agreements, their commitment to spend at least 60 per cent of the contract value in Australia and to make sure that it is done in a way consistent with the budgets and value for money commitments they've made.
David Bevan: So the report in the Australian Financial Review is wrong, which says a top level study ordered by Prime Minister Scott Morrison of the nation's submarine programme will look at how to terminate the 90 billion dollar project. That's wrong?
Simon Birmingham: Well, David, I'm not going to run speculation on what optionality is or otherwise defence might be pursuing in the background. I know that our top priority is to make sure that we deliver the capability our Navy needs for the future. And that's why we've committed to building 23 naval vessels in South Australia. It has economic benefits for SA and has jobs benefits for SA as we know. But we're doing it first and foremost to give our Navy what it needs for the future for the defence of Australia.
David Bevan: Minister, I don't think anyone doubts that the government would like this contract to go ahead and for everybody to get what they think they signed up for. There's no doubt about that. And there's no doubt about the bona fides of the government in trying to get into this. But it does go to the state of affairs between us and this company. If you have at least considered whether or not there are options to terminate the contract, you might not want to go there, but you want to know what your options are. So if I can ask you again, have has the government has the Prime Minister ordered a report into whether or not we can terminate the 90 billion dollar contract?
Simon Birmingham: David, I don't believe that has occurred, but I do think that it is always prudent to look at contingencies, to know what your options are and to be prepared for them in any eventuality. Now we're here welcoming Mr Pommellet to Australia, to Canberra today, back to Adelaide over the course of the weekend, I understand. And we're doing so working in good faith with Naval Group to secure what is a very big undertaking for Australia and for South Australia and to make sure we get the submarines that we need for the future.
Ali Clarke: So are you walking into this meeting with Naval Group today without the Defence Minister, Linda Reynolds, who is sick and wish her a speedy recovery and all the best. But are you honestly walking into this group today without knowing the back-up options if they're not going to deliver what we want?
Simon Birmingham: Ali, as I said, it's always prudent to understand contingencies and to and to have various plans in place. But our number one objective in the discussions we're having with Naval Group and with Mr Pommellet are about making sure that the commitments they've made around the next scope of work, around the amount of work to be done in Australia, around the costings of it, are met and honoured in the next set of contracting that has to occur. And we're frustrated that that hasn't been done in the timeline that we would have liked it to occur. But we're determined to make sure that we negotiate it in accordance with those terms.
Ali Clarke: Okay. So, you know, all that said, you're not aware, though, if the Prime Minister of this country has actually gone for a report into what those options are?
Simon Birmingham: Look, I have full confidence that the defence will have a number of options, as they always do, in terms of the different contingencies that could be undertaken. But we are not meeting with Mr Palmer to terminate a contract. We're meeting with him to seek to negotiate an outcome in accordance with the commitments Naval Group has made.
David Bevan: Basically, does the Naval Group want free rein to make the first sub without worrying about Australian content and then deliver the local content provisions later in the project?
Simon Birmingham: That's certainly not the way it's been put to me, but I will obviously be having those meetings with Mr. Pommellet later today. And so I'll hear more, no doubt, from them around their perspective. I very much welcome the fact that he has taken the time to travel to Australia. He spent his 14 days in in quarantine. He I know is not only meeting with ministers here, but I welcome the fact he's meeting with the ASC while he is in town as well. And I think that provides a good opportunity for him to see the capabilities that exist and the opportunities for enhanced synergies between Naval Group and the ISC and the other enormous shipbuilding activities that we have now underway at Osborne and scaling up over the next few years. And we see Naval Group, I'm pleased to open the headquarters, employed hundreds of people in Adelaide, down at Port Adelaide, BAE employing thousands of people now in their operations and scaling up on the future frigate projects. And together, this is great news still for South Australia. But these are big, complex projects and it does require parties to negotiate hard.
David Bevan: Do they want to assess the local content when they finish building them?
Simon Birmingham: Well, we want to make sure that the commitment which they made in February 2020 very clearly and publicly to spend at least 60 per cent of the contract value in Australia is delivered upon. And is there for Australians to see and to tangibly see. And again, I welcome the fact that when Naval Group opened their headquarters at Port Adelaide, they made some particular announcements about the way they're working to build their supply chain. And we want to make sure that, again, they deliver on those announcements and that we secure the type of work that the South Australians and Australians expect to see occurring in Australia to build that sovereign defence industry capability that we want these projects to deliver for us.
David Bevan: And it must have made your job must have been made more difficult by Linda Reynolds illness?
Simon Birmingham: It's very unfortunate that Linda is unable to participate in meetings these couple of days. But Marise Payne, of course, was previously the defence minister, now the foreign minister, and is acting in defence. So Marise will be having discussions. Many ministers are. I already had my meetings with Mr Pommellet and his team scheduled well before Linda's illness.
David Bevan: Minister, before you leave us. Did you have a conversation with Chelsea Potter, former staffer of yours, who's raised concerns about assaults of women and the way women- and those assaults have been handled by your government? Did you actually get to have the conversation with her yesterday? And how did that go?
Simon Birmingham: Yes, Chelsea is one of many people I've spoken with this week and continue to speak to about the type of review that needs to be instigated to effect real change to the processes, systems and supports that are there to make sure that in the future there is less a risk of these sorts of incidents occurring and comprehensive supports that people have confidence to reach out to and use.
David Bevan: She has tweeted that she gave you a list of women that your office should contact. Is that the sort of practical advice that you were looking for from Chelsea? And you'll be following that up?
Simon Birmingham: I thank Chelsea, for the ideas that she provided in terms of the content of the review, the way it needs to be undertaken, and those that we can engage with, both in setting it up, which I'm seeking to do over the next few days, ideally, we really want to get this settled so that hopefully all parties can agree to it over the next couple of weeks and have it up and running as quickly as possible, but also then importantly to its operation where I would anticipate it. Again reaching out and speaking to many, many former staff and current staff and others about their experiences. And I've had lengthy conversations with the Sex Discrimination Commissioner, Kate Jenkins, and other experts in this field about the way in which they can do that and provide an environment of confidence and confidentiality for people to participate.
Ali Clarke: Do you wish that you'd done this a couple of years ago when Chelsea first reached out to you and you are aware of what had happened in and around her?
Simon Birmingham: Ali, I wish many things that I could change over the past and we would all no doubt wish to do things differently, I think. There is much that we can all improve and learn from these experience and the processes that we're putting in place. And my focus in talking to Chelsea and talking to others is to act in the ways that I can today to be able to affect change for the future to try to make sure, as I say, that and the workplaces that we have the least possible risk of these sorts of incidents occurring and that people have the systems in place where they feel with confidence that they can raise them at the time they occur as I would have wished had happened back then and have the confidence to take them to the relevant authorities where they are criminal matters, that being the police.
Ali Clarke: Ok, Simon Birmingham, finance minister, thank you.
Simon Birmingham: Thanks, Ali. Thanks, David.