Senator the Hon. Simon Birmingham
Minister for Finance
Leader of the Government in the Senate
Senator for South Australia
Date: Sunday, 19 September 2021
David Speers: Simon Birmingham, welcome to the program.
Simon Birmingham: Good morning, David, good to be with you. David Speers: Were you expecting France to recall its ambassador?
Simon Birmingham: David, this was always going to be a difficult decision in relation to France. Now, the reactions that they take and the decisions that they take are, of course, matters for the French government. It in no way changes the extremely high value that Australia places on France's knowledge, history, experience and ongoing engagement in the Indo-Pacific region. We value that enormously and we will continue to encourage France to do so, to welcome that and to pursue that at every possible opportunity with our French counterparts.
David Speers: Part of the anger though seems to be the lack of adequate proper consultation. Less than three weeks ago, for example, the French and Australian defence and foreign ministers met, and according to their joint statement, they said they underlined the importance of the future submarine program. The Australians presumably knew at that point that that deal was dead?
Simon Birmingham: What we have announced with the Australia, UK, US, strategic security partnership arrangement there is, indeed, one of the most profound changes in our security posturing.
David Speers: I'll come back to that in a minute. My question was about the...
Simon Birmingham: I understand that.
David Speers: Less than three weeks ago, it was an important program, but they knew that it was dead.
Simon Birmingham: And the context I'm putting here is that in such a profound discussion with our UK and US counterparts, in which they have agreed to share nuclear-powered submarine technologies with another country for the first time ever, of course there have been enormous sensitivities to get to the point of announcing that discussion. Now, we've made it public at the earliest available opportunity. We informed the French government at the earliest available opportunity, before it became public. And indeed prior to that, we have been engaging with the French in terms of the changes that we've been observing in our region, the changes to the strategic nature of competition in the region, the changes to the challenges of the operational capabilities of conventionally powered submarines and the reasons we've been looking at the nuclear-powered submarine alternative are because of those different changes. And so, this has been very sensitive to get to this point in time. We don't underestimate the importance now of working with the French in the future around their engagement across the region and ensuring that we reestablish those strong ties with the French Government and counterparts long into the future. Because their ongoing engagement in this region is important, alongside these decisions that we've made.
David Speers: It's also an expensive decision to scrap this deal. There will be a cost of cancelling the contract. You said on Friday, "This will be made public once it's settled". The Prime Minister said that the figures will remain confidential. Which is it?
Simon Birmingham: The Prime Minister has also indicated that they will be made public once all details and costs are settled. Now, there may be certain elements of commercial settlements that remain confidential. That will depend upon the nature of the commercial discussions with Naval Group and other commercial parties. But the Government's intention is that full costs will be transparent, as we've been in relation to the full costs of expenditure on the submarine program to date. As politicians, we're...
David Speers: Are we talking more than a billion dollars here or less than that?
Simon Birmingham: I don't want to speculate on the costs going forward. We've been open that $2.4 billion has been expended in relation to the attack class program, now that has enhanced Australia's skills and capabilities in a number of ways so it is not all lost expenditure.
David Speers: But some of it is to be fair. You can't pretend $2.4 billion. Part of that has gone to a building at the Cherbourg in France. A test site building for a diesel propulsion system we're no longer going to need. A fair bit of this $2.4 billion is wasted isn’t it?
Simon Birmingham: David, as I just acknowledged, that's the cost to date. Some of it ensures that we start the new program with better skills, better capabilities. But indeed, some of it is a sunk cost. There's no doubt that the short-term politics, or indeed, short-term diplomatic relations, would be have been easier for us just to continue down the previous pathway of building the attack class. However, that would have betrayed Australia's long-term interests. So this difficult decision was taken in the interests of the nation - not just in the next year or two, but in the decades to come, to equip us with the capabilities that we need. It was taken in light of changed evidence and changed information that came to Government over the course of the last five years, and that's why we've gone down the path of this difficult decision. And we don't step away from those challenges in terms of cost, diplomacy or disruption to workforce, but we're going to work through all of those, confident that the pathway we're now on gives Australia the absolute best potential military capabilities for our security and the peace and security of our region.
David Speers: Let's talk about that pathway. The new nuclear submarines. Have you really committed to something without knowing the cost? Because I seem to recall the Coalition had some pretty strong views about doing that at the last election?
Simon Birmingham: We've committed confident that Australia can meet the costs and that we must meet the costs of embracing this type of platform. We've done so confident because we've been able, as a Government, to increase our defence spending from lows when we came to office that hadn't been seen since before World War II, to now clearly in excess of 2 per cent of GDP. And we need to maintain and possibly even increase that level of defence expenditure.
David Speers: So you're confident that you can meet the cost. You just don't know what that cost is?
Simon Birmingham: We don't have all of the final costs because we're going through it.
David Speers: You don't have any costs.
Simon Birmingham: We're going through a comprehensive 12-18-month process in assessing what type of platform and design and what type of infrastructure is going to be best be able transferred to Australia by the UK and the US in a partnership to build these.
David Speers: OK, so is it a blank cheque at the moment? Or is there some sort of an envelope or upper limit?
Simon Birmingham: We'll be looking to do it within the most efficient cost, and also the most efficient time frame. These are the important considerations and that's the analysis which has necessitated to now announce publicly.
David Speers: What is the upper limit? $200 billion or something? There must be a limit?
Simon Birmingham: I'm not going to put figures to shape public speculation about it David, because it is important that we go into this with the UK and the US able to extract the best possible arrangements for Australia. But we do so knowing that we have incredibly willing partners who, as two countries, these aren't commercial engagements where we've engaged any other company. In this case, we've engaged with two countries, our closest of allies who are deeply committed themselves to Australia not only having the capabilities of nuclear powered submarines into the future, but having the capability to build them, to sustain them.
David Speers: Sure, but there is an element of commercial engagement here. I mean, what's your negotiating position really like? You said that you're going to buy them? They can name the price, can't they?
Simon Birmingham: No, David. As I said, they have strategic interests themselves in ensuring that Australia has this capability. And capability not only to operate them, but to be able to build and sustain them. That's an important part of the nuclear stewardship arrangement but it is also a crucial part, as allies and partners, increasing our overall shared capabilities you want to, as you heard Peter Hartcher and others saying before, have increased presence in the region to provide the balance to provide regional peace and security and support for international norms and laws into the future.
David Speers: Do you think we'll have to lease or buy one or two submarines from either the US or the UK before we build one in Australia?
Simon Birmingham: Doing that wouldn't necessarily increase or wouldn't increase the number of submarines and the capability across all of our partner nations. But indeed doing so may provide opportunities for us to train our sailors, provide the skills and knowledge in terms of how we operate, provide the platforms for us to upgrade the infrastructure in Perth, that will be necessary for the operation of these submarines.
David Speers: Sounds like a good idea.
Simon Birmingham: I expect that we will see, whether it is lease arrangements or whether it is greater joint operations between our Navies in the future that sees our sailors working more closely and indeed, potentially on UK and US vessel tolls get that skills and training and knowledge. That will be crucial parts of the analysis to be undertaken. But as Joe Biden, himself, said in the announcement the other day - this is about ensuring that our sailors, our scientists and our industries work more closely together. Not just on submarines either, but, of course, across a whole suite of technology platforms - be they artificial intelligence, quantum computing, guided missile technologies. These are all different fields that we expect this strategic partnership to enable Australia to more closely collaborate in with these partners
David Speers: And the subs we build here, are we talking about assembling them here? Or are we going to try to manufacture them from scratch?
Simon Birmingham: Again David, that goes to the aspirations. Not just of Australia but of the UK and the US to see capability enhancements in the construction and building realm, as well as in the operation realm.
David Speers: So is that still being worked out?
Simon Birmingham: It means that we'll be building as much as we possibly can. Obviously, we've explained already that one of the things that has changed dramatically over the last few years is that in relation to submarine technology, they are now able to operate off of a nuclear reactor that lasts for the lifetime, the 30-plus years.
David Speers: And we can't build them. So that's the main part of the submarine. We won't be building that here.
Simon Birmingham: So that's why I highlight that. But then again, the Collins class initial vessels, we were importing the motors from Sweden. So it is not unusual for certain key components for us to be bringing that in, and in relation to the nuclear reactors, there's good reason, and it is what has enabled us to make this step change in considering nuclear-powered submarine because we won't have to have a civil nuclear industry, we won’t have to be enriching uranium ourselves or changing those fuel rods. We will be able to put the reactor in. But we want to build as much of the rest of the submarine as possible. And importantly, with the US and the UK, they have willing partners who want us to have the capability to build and sustain them ourselves.
David Speers: Given the unknowns about how much will be built here and the cost and how many, leasing and buying maybe a couple. Can you give any guarantee that there will be just as many jobs as under the French contract?
Simon Birmingham: The jobs growth into the future is really quite remarkable. And our estimates, there will be in South Australia, some 5,000 jobs supporting our naval shipbuilding industry by 2030. In Western Australia, some 2,000 jobs supporting the naval shipbuilding industry by 2030. And indeed, many others across the rest of the country. That number will only grow into the 2030s as construction of the nuclear-powered submarines ramps up, following on from the types of things we've announced in extending and upgrading the life and the capabilities of the Collins Class and upgrading the weapons systems on the Hobart Class, Air warfare Destroyers and investment in additional missile technologies and capabilities as part of our defence shield into the future. So a range of different areas where we see significant jobs growth, we don't do these things though for the jobs, we do them for the nation's national security interests first and foremost. That's the important part of the principle. Of course, if we see increased rotations of US or other nations' militaries working and operating alongside us within Australia, that also provides certain economic dividends. But again, it is not done for the economic dividends. It is done to help to ensure that our national security is as strong as possible to support and underpin national security and prosperity.
David Speers: Speaking of that, what else does this AUKUS agreement involve? Are we going to see more American troops and ships and planes and even missiles based in Australia?
Simon Birmingham: David, as the US Secretary of State and the US Defense Secretary have been quite clear - there's no quid pro quo attached to the sharing of the nuclear submarine technology.
David Speers: What is Australia's stance on that?
Simon Birmingham: We absolutely expect to see close collaboration into the future. Not just on those nuclear-powered subs, but on the areas of AI, of quantum technology in computing, and on those areas of missile technology.
David Speers: What about basing American military equipment...
Simon Birmingham: I was going to say we he look to the opportunities, we already have US troops and Marines who work in Australia on rotational deployments at times. We already do close integrated operations alongside our US partners as we do with a number of other countries and we always look to explore where they can be enhanced where it is in Australia's national interest to do so.
David Speers: Are there any redlines? Nuclear armed vessels? Would they be ok?
Simon Birmingham: We've been clear, Australia's position in relation to nuclear weapons does not change, will not change.
David Speers: I'm talking about basing American ships here.
Simon Birmingham: We will meet all of our Non-Proliferation Treaty arrangements and obligations and we are not changing any of our policies in relation to nuclear weapons technology.
David Speers: Just to make that clear for viewers. Is Australia's position that we won’t have American nuclear-armed Navy vessels in our ports?
Simon Birmingham: David, our position in relation to the basing of nuclear weapons in Australia remains unchanged.
David Speers: Which is what?
Simon Birmingham: Our position is that we haven't got nuclear weapons based in Australia and we won't be having nuclear weapons by Australia based in Australia, or under other circumstances.
David Speers: Or by the US?
Simon Birmingham: I said or under other circumstances, having nuclear weapons based in Australia. The policy in relation to nuclear weapons does not change.
David Speers: Does not change. Can I ask you about Christian Porter. Should in your view - Ministers of the Crown accept anonymous donations?
Simon Birmingham: Well, David, I'm not going to give a personal opinion. The Prime Minister has done the right thing by acknowledging that this instance raises some serious questions. That's why he has asked for precise and proper advice from his department, and I look forward to that being received and the Prime Minister will, no doubt, then act on that advice accordingly.
David Speers: You're a minister. Surely you can have a personal view. Would you accept an anonymous donation?
Simon Birmingham: I am a Minister and can have personal views but it is not my job to express personal views. It is my job as a Minister to work as part of the Government. The Prime Minister has done the right thing in this regard. We should all act in accordance with the letter and the spirit of the Ministerial Code of Conduct.
David Speers: Sure. But what do you mean that you can't express a view on this, Minister?
Simon Birmingham: David, you're asking me for a personal opinion.
David Speers: I'm asking would you accept a personal donation? Would you accept an anonymous donation?
Simon Birmingham: I'm not going to go into personal opinions. The Ministerial Code is, I think, clear in relation to the fact that we need to undertake a range of different disclosures. The Prime Minister has rightly sought proper advice on that and I expect that he will receive that and will act upon it.
David Speers: Are you honestly saying that it's unclear whether or not it's ok for a minister to accept an anonymous donation?
Simon Birmingham: The Prime Minister has made clear, this question, where a disclosure has been made, but the disclosure itself presents other questions, is an unusual one. That's why he has sought precise and specific advice on that, as he's done in relation to previous questions around conduct and compliance with the Code of Conduct.
David Speers: OK, but finally on this, surely you can see most Australians would agree that the idea of a politician receiving anonymously a donation to deal with some personal bills is not ok.
Simon Birmingham: Well, the reason that we have the Code of Conduct in place, the reason we have disclosure obligations in place is to provide transparency. It's important, as I said before, that all of us abide by the letter and spirit of that Code of Conduct. The Prime Minister rightly seeking that advice to make sure that in this case, where a disclosure has been made, he is appropriately and fully informed around whether that disclosure meets that standard and if it doesn't, what action needs to be taken.
David Speers: Simon Birmingham, appreciate your time, thank you.
Simon Birmingham: Thanks David, my pleasure.