ADELAIDE CONVENTION CENTRE
WEDNESDAY, 25 MARCH 2015
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Good Morning Everyone
“Whatever has been done; whatever must be done; and all that we can hope to do in the future, are predicated by the stern realities of war.”
This is what our great wartime Prime Minister, John Curtin said, as Opposition Leader in 1940, making the case for a modern, evolved and well-equipped defence force.
More than any of his predecessors, Curtin was focused on Australia’s independent strategic capability.
He looked over the horizon, he understood Australia’s need for the technology, flexibility and agility to act for our own interests, and in our own defence.
And Curtin’s truth endures.
Today, this conference assembles to discuss a keystone of our next generation of Australian defence capabilities: our future submarines.
As another great Australian leader, former Chief of the Defence Forces, and current Governor-General, Sir Peter Cosgrove has said:
“Submarines are essential strategic defence assets.
They are covert, have long reach and deploy a powerful set of weapons and sensors.
On the seas, they are our most effective deterrent.”
The term ‘next generation’ has an important meaning in the context of this debate.
Because building and delivering Australia’s new submarine fleet is an inter-generational decision.
We are talking about a project that will develop and evolve until halfway through this century – beyond the life of any one government.
Future Prime Ministers, from both sides of politics, will have to live with the consequences.
Two generations of workers will contribute to this project – some of them haven’t even been born yet.
And it will be, without doubt, the most significant procurement decision of our time, with billions of dollars’ worth of construction and maintenance over the life of the project.
One early error, committed in haste, would be compounded and magnified over the life of the project – and its costs could total in the billions.
To me, all this underscores one simple truth: it is essential that we take the time to get this decision right.
Yet despite the scale and significance of the moment before us.
In the last 18 months, we have witnessed this project…worth tens of billions of dollars, and thousands of jobs…used as a bargaining chip to save one job.
We have seen a decision encompassing years of intellect, industry and effort…fall victim to uncertainty, secrecy and misinformation.
A decision central to Australia’s national security…degraded by internal party politics.
We live in hotly contested political times, and many speak longingly of a lost golden age of bipartisanship.
But before the last election, the future construction of Australia’s submarine fleet was bipartisan.
Labor and Liberal were of one voice: the next generation of submarines would be built here in Australia.
Since the election, we have all suffered through the unedifying spectacle of the Government trying to crab walk away from this solemn commitment.
In the process, a Defence Minister has come and gone…but the paralysis has persisted.
So, I have come here today to offer the Government a way forward, a bipartisan solution to the gridlock that currently holds sway.
A solution that will deliver the best submarines, at the best price.
A solution for high-quality Australian submarines, and high-skill Australian jobs.
A solution that begins with a competitive tender process.
Labor is proposing a twelve to eighteen month process, involving a Request for Proposal, followed by a Request for Tender.
Under this process, Australia would invite the most prominent relevant submarine designers from Germany, France, Japan and Sweden to participate.
Each would receive $7 million from the Commonwealth to be involved in this process.
Following the request for proposals, the Government would down-select two submarine builders to provide full design definition and fixed priced contract bids.
The two parties selected would receive an additional $8 million to provide more detailed final tender bids.
There are three non-negotiable conditions for these tenders:
- a guarantee of submarine performance
- Australian ownership of all intellectual property
- And the next generation of submarines must be built, maintained and sustained in Australia
Labor’s proposed process would deliver a final decision by the end of 2016, ensuring that the first future submarine in the fleet would be in the water by the middle of the next decade.
This morning, I want to take the time to step through the detail of each of these commitments.
- The importance of an Australian Build
- The best way of guaranteeing value for money
- And taking the time to make the right decision
In doing so, I hope to address the misinformation and myth-making that has lately distorted this important conversation.
Australian Build
First, let me explain the full meaning of ‘built in Australia’.
We will always have to co-operate with overseas firms, as we have no design or weapons systems of our own.
A tender process that guarantees an ‘Australian build’ would include the construction of the submarine hulls, and the installation of the combat and communications systems in Australia.
It would mean that all of the through-life support and maintenance would also be done in Australia.
In times of peace, this local support capability is a valuable efficiency, as well as an important investment in Australian jobs and skills.
In times of conflict, it is central to our national security.
We have to build here so that the expertise for self reliance in times of conflict is here, not dependent on overseas interests.
I think the head of the Australian Industry Group, Innes Willox put it best when he said:
“We can hardly be towing submarines across hemispheres for repairs”.
We cannot predict every future threat to our security, we cannot foresee every future conflict.
But we do know that Australia will always be an island nation, with critically important maritime trading lanes and approaches.
And we can say, with certainty, that we will always need the skills, industry and workforce to build and maintain our own submarines and ships.
Value for Money
I want to turn now to the question of value for money.
The first and most fundamental point here is that the best way of guaranteeing value for taxpayer money is a robust, transparent and competitive tender process.
I want the four best submarine builders in the world, competing for our contract.
We all accept that competition produces the best value in every marketplace – why would we reject it for such an important decision, with such large sums involved.
I also want to say a word or two about the Australians I believe should build our next generation of submarines.
I’ve had the privilege of meeting hardworking men and women at ship-building yards around our nation.
They are highly-trained, highly-skilled problem-solvers, doing intricate and important work.
Yet, as a terrible consequence of this recent turmoil, their abilities, their professionalism and their dedication to task have been unfairly impugned.
Often this injustice has been perpetuated under the cover of ‘cost’.
A range of wildly inflated pricetags have been affixed to the Australian build – but none of them have been substantiated.
Meanwhile, both TKMS and Saab have confirmed that they are prepared to build Australia’s new submarine fleet, in Adelaide, at a competitive price for taxpayers.
I have already acknowledged the significance of the sums involved here.
Not for one minute am I suggesting that building the first submarine in Australia’s new fleet will be cheap.
As with any new major project, there will be a steep learning curve.
But the history of defence builds is that they get better as they go – Collins shows us that.
Every lesson learned on the first vessel becomes a productivity gain on the second.
And this process accumulates and amplifies over the life of the project.
Construction gets better, faster and more efficient each time.
And in addition to the strategic benefits I mentioned earlier, it is, of course, cheaper and easier for our people to maintain and sustain a vessel that they have built themselves.
Labor’s Future Submarines Industry and Skills Plan, released in March 2013, would have delivered this outcome - and put us on the path to a sustainable shipbuilding industry.
Investing in making the right decision
Just as ‘cost’ is used as code for talking-down the capabilities of Australian workers, the term ‘capability gap’ is often invoked as the justification for undue haste.
The process I have outlined today will deliver a considered decision by the end of next year.
And when we consider the rapid improvement and revitalisation that flowed from Labor’s investment in the Collins Class submarine.
And the extension of service life it delivered.
Plainly, any talk of a ‘capability gap’ is just not true.
Given the immensity of the undertaking we are planning – and the decades that the design, construction and maintenance processes will span – it is only sensible to take a few extra months to ensure the decision we make is the correct one.
Labor’s competitive tender process including a funded definition study will cost $44 million.
When the most bare-bones conservative estimate for the cost of the project is $20 billion – we’re talking about a percentage of 0.22
A tiny fraction that could ultimately save billions in the long run.
Skills and Manufacturing
The final substantive point I would make today is about skills and manufacturing.
I believe in utilising essential defence procurement investment to generate broader industrial capacity.
This is not about using defence policy as industry policy.
Our defence industry capacity is about national security, it always will be.
We owe it to our defence force to give them the best equipment we can, to never send them into danger with anything but the very best.
But we can – and should – look to leverage Australia’s defence industry and its workforce to deliver a safer nation, better ADF assets and the skills and technology of the new economy.
Conclusion
Ladies and Gentlemen
I have come to Adelaide today offering a solution and a circuit breaker.
I extend this offer in good faith – and I sincerely hope the Government are prepared to accept it in the same spirit.
I have outlined Labor’s proposed process – and made clear our objectives:
A competitive tender, delivering value for money.
An Australian build and Australian maintenance, drawing on local expertise and supporting local jobs.
Investing in our strategic capability - and the skills of our workforce.
And the time to get this moving is today.
We cannot afford to drift, or delay, any longer.
This decision is bigger than day-to-day politics, it’s too big a question for partisan pride.
So if, by some crooked twist of fate, the Government brings Labor’s proposed process to the Parliament, under a different name and without attribution or acknowledgement – I won’t care.
Indeed I’ll be the first one to vote for it.
My concern is not getting credit – it’s solving the problem.
We can’t wait around for a second attempt at an intergenerational decision, merely in the hope of getting our name in the Parliamentary record book.
Finding a way forward is more important than all of this.
The next generation of Australian submarines don’t belong to Liberal or Labor - they belong to the nation, to the Australia of 2025 and 2050.
And I hope in that Australia, the Australia of the future, people will look back at this summit and this day – the 25th of March 2015 – and say this was when Australia put aside partisan differences and got on with delivering next generation of submarines.
This was when our country set itself up for the future.
We can, we should, we will.
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