Pacific Sea Power Conference 2017

04 Oct 2017 Speech

It is a pleasure to be here, in Sydney, at the Pacific 2017 Sea Power Conference.

I’m here to talk about the most exciting and long-term re-capitalisation of the Royal Australian Navy’s maritime capability for decades.

I know this room appreciates the sovereign importance of a sound naval shipbuilding enterprise in Australia.

But first I want to touch on why we need to embark on this.

A nation girt by sea is inevitably a maritime nation. It is a nation in fundamental need of sea power.

Australia’s fortunes are, and have always been, tied to the sea.

Our economic security, our national security and our security in regional and global contexts are inextricably linked to the oceans around us.

The Department of Foreign Affairs and Trade calculated that Australia transacted 525 billion dollars in physical goods trade in 2016. The vast bulk of this was sea-borne.

As successive Coalition Governments have demonstrated over time, our national and border security can only be secured by a strategic presence in the waters around us. The opposite can be true in the absence of that presence. And as we know, that can have tragic results.

Prevailing uncertainly on the Korean Peninsula and events in the South China Sea focus us further on Australia’s need to remain invested in regional and global security.

Such circumstances underscore the need for naval forces that can positively shape events beyond our shores.

Australia has always been a willing participant in global strategic action.

We have been called upon time and again to provide support and help shape outcomes in our region and beyond. This has included contributing naval capacity.

We will be further entreated in future to provide similar contributions as circumstances become more complex and demanding, and as tensions and sensitivities fluctuate in our region and beyond.

As you know, being prepared for such eventualities requires long-term planning for strategic readiness and capability.

Modernisation of our naval forces to meet the challenges we face now and will do in the future is a complex, generations-long national challenge.

To achieve it, we must look not only to the next 10 years, as important as they will to the challenge, but to the distant horizon – the next 100 years.

I mention Australia’s economic security for clear reasons. Our task as a Government is not only the obvious one – that of ensuring Australia’s naval capability and security is continuous and sound. Its equal is to see this renewal impact positively upon all our national fortunes.

Such an approach provides an opportunity to enhance economic growth, maximise opportunities for industry and promote participation.

Strongly encouraged and supported with real investment, it can secure thousands of jobs for decades to come. It can build a skilled and modern workforce that is up to the task here and elsewhere.

The Turnbull Government is determined to create these conditions with long-term investment by the Australian community, backing its own industries and businesses. We will provide a clear roadmap so all who wish to, can join in with confidence.

The 2016 Defence White Paper and the 2017 Naval Shipbuilding Plan depicted an Australian naval shipbuilding and sustainment capability as a strategic asset.

They laid out our intent to develop and invest in a sovereign Australian capability.

They foresaw a naval shipbuilding enterprise with Australian workers, in Australian shipyards, supplied by Australian resources.

The Government’s investment of nearly 90 billion dollars to create that as a reality, is unprecedented.

A rolling acquisition program will see 12 submarines, nine frigates and 12 offshore patrol vessels – plus up to 21 Pacific patrol boats for our neighbours – on continuous build from now until the middle of the century.

Infrastructure investment of more than 1.3 billion dollars will help enable it.

Construction has begun, and will directly impact two states, in creating modern shipyard and building capacity.

Initial work at the Osborne South Shipyard in South Australia began on the 23rd of August. I had the privilege of turning the first sod at Osborne, a 530 million dollar project that is fundamental to the build program.

Osborne South’s new capacity will be in place by the time construction starts there on the Future Frigates. That will be in 2020, after the first two Offshore Patrol Vessels, currently in production there, are transferred to Western Australia.

A similar investment will be made at the Osborne North site, to support the exciting construction of the Future Submarines in 2022‑23.

The Government has also made a 100 million dollar allocation for the modernisation of naval shipbuilding infrastructure in Western Australia. This includes the Henderson Maritime Precinct and the Defence estate at Fleet Base West – HMAS Stirling.

Defence is assessing the infrastructure needs at Henderson. These will be closely tied to the outcome of the competitive evaluation process for the Offshore Patrol Vessels.

It is intended that Henderson will remain a world-class and internationally competitive facility for decades to come, with more ships being built and sustained at the Precinct, creating and maintaining jobs for the region.

An initial infrastructure master plan for all our naval shipbuilding and sustainment needs in Australia is in the works at Defence.

It will cover the infrastructure we need to support the Naval Shipbuilding Plan right around Australia. It will also identify the advanced manufacturing capacity required. We need modern facilities and processes to drive efficiency, innovation and productivity and secure a long-term platform for growth.

I see the beginnings of all this in the places I visit around Australia as Minister for Defence Industry. It makes me extremely proud to see the work going on. I also get asked about it a great deal in the supermarket aisles, the schools and streets where I talk with the people of my own electorate. There is a genuine buzz about it all.

People in the street may not know the ins and outs of the White Paper, the Naval Shipbuilding Plan or the Integrated Investment Plan, but they can spot something that promises so much for them, their community and their country.

In government, and in the Department of Defence, we generally talk about our Australian sovereign naval shipbuilding project in the way Australians increasingly perceive it – as an enterprise.

That term conveys the monumental scale of effort and input required to deliver on the Naval Shipbuilding Plan.

It is our great national endeavour.

It involves four things:

Firstly, modern, innovative and secure naval shipbuilding and sustainment infrastructure.

Secondly, a highly capable, productive and skilled naval shipbuilding and sustainment workforce.

Thirdly, a motivated, innovative, cost-competitive and sustainable Australian industrial base which has the capability to not just build, but also to design, support and maintain complex-warships including development and integration of complex combat systems.

And finally – and perhaps most vital – a national, collaborative approach to delivery.

The right workforce is key to this.

The Government is managing the workforce issues in the initial stages of the Naval Shipbuilding Plan. It is collaborating with industry, state and territory governments and Commonwealth agencies, as well as educators and trainers across the country.

We are securing training not only in the key shipbuilding states of SA and WA, but nationally, to encompass existing and future fleet requirements.

The Government’s initial investment of 25 million dollars in a Naval Shipbuilding College at Osborne from 2018 is central to this. The College will operate on a hub and spoke model, extending opportunities to education and training providers across the country.

The College will attract, train and re-train more than 1,500 students across Australia in its first few years. Graduates will be there when we need them.

The College will also manage the rapid expansion of skilled shipbuilding workers in Australia, collaborating with Government and industry to ensure the right workforce supply.

We will put behind us the “valley of death” that imperilled the skills base of the Australian shipbuilding industry and allowed skilled workers to walk away.

Under the Turnbull Government, there will be no repeat of the failure of our predecessors in the Labor Party, who omitted to issue a single order for a naval ship over six years of wasted opportunity to do so.

The Turnbull Government will get on with the job and we will bring industry with us.

Yesterday the Prime Minister announced that for the first time the Australian Government will take an enterprise approach to the way combat systems for our ships are procured.

We will mandate that the Saab combat management system will be used on every ship in the fleet, except the Air Warfare Destroyer and the Future Frigates.

The AWD and the Frigate will have an Aegis Combat Management System with a Saab Australia developed interface to manage the non-Aegis systems like the Australian developed Nulka rocket and the CEA radar.

We estimate that this decision will create hundreds of jobs across Saab Australia, CEA and Lockheed Martin.

Critically this allows Australian defence industry to plan and prepare for the future, safe in the knowledge that the Government is committed in the long-term. This demonstrates that the Government is willing to back in Australian defence industry and make the decisions which will set up our defence industry for generations.

The Coalition is, of course, committed to maximising Australian industry involvement in the enterprise.

The 2016 Defence Industry Policy Statement directed for the first time, that Australian defence industry was to be a fundamental input to capability.

Australian industry is being considered throughout the capability lifecycle, from the early development work in force design, through acquisition to sustainment.

As the Naval Shipbuilding Plan makes clear, we will strengthen and build the capability and capacity of Australian companies to take part.

The Plan sets an ambitious but achievable agenda to develop and enhance the industrial base of Australian shipbuilding and sustainment.

It fosters Australian innovation, research and development.

It provides opportunities for large and small-to-medium sized businesses, including through supply chains, to drive investment and growth in local economies.

And without fail, the Government will ensure skills, technology and intellectual property are transferred from experienced international ship designers and builders to Australian companies, as part of the package. That is how a truly sovereign Australian shipbuilding industry will be created.

A shipbuilding and sustainment industry that can deliver on our soil will be an enduring strategic asset for this nation.

Over time, we will see Australian industry take over the roles of those international partners to the greatest extent possible.

This will range from design to complex project management, construction and sustainment. It will enhance domestic supply chains and in the long run, drive our export potential.

The Government will continue to advance the future of Australian shipbuilding enterprise – in the short, medium and long term.

We will utilise the newly established Defence Innovation System incorporating the Defence Innovation Hub and the Next Generation Technologies Fund.

The Defence Innovation Hub, launched in December 2016 enables industry and Defence to collaborate on innovative activities throughout the capability life cycle. This initiative is backed by an investment of 640 million dollars over the decade and money has already started to follow to businesses.

The Next Generation Technologies Fund, backed by an investment of 730 million dollars over the decade, encourages innovative small‑to‑medium enterprises and universities to collaborate and develop game-changing military capabilities. I have already announced several initiatives of the Fund including the Defence Cooperative Research Centres, and 5.7 million dollars in project funding to 22 Australian universities.

With this approach in place, Australian industry can build on its successes in current projects and nurture small to medium enterprises that may not have ever considered contributing to the naval shipbuilding enterprise.

The Turnbull Government is proud to identify innovation as key to a lasting and distinctly Australian naval shipbuilding industry.

We look to companies that are already doing great work, having created successful, globally competitive platforms, products and services for Australian naval capability and export markets.

One example is the Nulka Active Missile Decoy – an important innovation which has become one of Australia’s largest and most successful defence exports, valued at over 1 billion dollars.

Some of you in this room may know or may have served on US warship, the USS Mason, which was attacked around a year ago by Houthi rebels, while off the coast of Yemen. Fortunately, the ship was equipped with Australian-made Nulka decoys which were deployed against what was believed to be land‑based anti‑ship cruise missiles. It is reported that the incoming missiles crashed into the sea.

CEA Technologies is another example of a small to medium enterprise going from strength to strength. It is a key provider of technology.

It has exported more than 260 million dollars of radars and other products in the last five years.

CEA Technologies is collaborating with Defence and Raytheon Australia on domestic and international projects such as the National Advanced Surface‑to‑Air Missile System.

Today, I’m delighted to announce that CEA have won a 148 million dollar contract to deliver new, state of the art phased array radars for Australia’s fleet of eight Anzac class frigates.

The contract is part of the larger program that will modify the ships and integrate the radars that has a total value of over 400 million dollars.

The new radar, developed by CEA Technologies in Canberra, incorporates innovative, leading-edge, technology. Additionally it will assure Defence’s ability to adapt to modern and evolving air and missile threats.

This contract represents a long-term investment in capabilities designed, developed and produced in Australia, by Australians. Furthermore, this project represents a significant investment in Australian Industry and the development of Australian Industry Capability.

The Nulka and CEA Technologies are just two Australian defence industry success stories.

But they shed light on how the Government can support Australian companies to transition innovation into world class technologies that support and protect our service men and women, and our allies, in their capability requirements.

I have every confidence that more Australian industries are capable of this.

The recent so called ‘detailed analysis’ into our $50 billion Future Submarine Program released last week is nothing more than a hatchet job on an important national endeavor instigated by armchair critics with no understanding of the Competitive Evaluation Process undertaken.

Most importantly, the report makes some significant oversights when it comes to our submarine capability in the transition from the Collins Class Submarines to the Future Submarines.

Let me be clear on this;

The Future Submarine Competitive Evaluation Process was overseen by an independent Expert Advisory Panel, chaired by the former United States Navy Secretary Professor Don Winter, and peer reviewed by former senior submarine program managers from the United States – Vice Admiral Paul Sullivan United States Navy (retired) and Rear Admiral Thomas Eccles United States Navy (retired). In addition, the Australian National Audit Office has also thoroughly vetted the process.

It’s remarkable this report has not realised that this issue was addressed over a year and a half ago when the Turnbull Government announced through the Defence White Paper in March 2016 that it would invest in an upgrade of the Collins Class Submarines. Called the Collins Class life of type extension, it will ensure they are a potent fighting force well into the 2030s, at which time our new Future Submarine fleet will enter service.

After years of inaction by the Labor Party, the Turnbull Government has gotten on with the job of acquiring our Future Submarines which are essential for the future national and economic security of our nation.

To that end, our Government is committed to continuing investments in the Collins fleet, including priority capability enhancements, obsolescence management and fleet sustainment in order to maintain regional superiority.

As a demonstration of this commitment, I am pleased to announce that the Turnbull Government has recently approved two major upgrades valued at 540 million dollars which include the submarine's ship control system and the communications capability.

The ship control system project is a two stage project to addresses obsolescence issues and is currently in its final stages of completing the first stage. This is an important project that will help maintain a superiority edge for our submarines in our region. The first installation of this system will be completed in 2018.

The second major upgrade will see improvements to our submarine communications capability. The first stage of this project provides an obsolescence update for the external communications system, with the first installation to complete in December 2017. The next stage will install improved communications capabilities, with the first installation to be completed in 2020. This will include enhancements to both the satellite communications and on-board Information and Communications Technology (ICT) capabilities. These capabilities are essential for our submarines to effectively conduct their principal roles and will provide the ability to rapidly share large quantities of information in high threat environments.

The suite of satellite communications upgrades being installed in the Collins class submarines are some of the most advanced in the world and include the Super High Frequency and Advanced Extremely High Frequency communications platforms. The Super High Frequency band satellite communications will increase information exchange and support core Defence business functions, while the Advanced Extremely High Frequency component will provide satellite communications and supporting capabilities to further enhance operational information.

There is considerable Australian industry involvement in this program which is in the order of 214 million dollars in acquisition and 326 million dollars in operating expenditure, representing an injection of 540 million dollars into the Australian economy over the next 20 years.

ASC, Saab and Raytheon, our prime partners for the remediation control and communications system enhancements, again continue to demonstrate the world-class expertise that Australian industry can provide to our economy and defence of our nation.

A lasting naval shipbuilding enterprise is a long and costly commitment.

But achieving sovereign capacity in the construction and sustainment of naval capability is a noble and necessary enterprise – a very worthy goal.

With Government and industry working in tandem, utilising our best and brightest people and ideas, leveraging and learning from the world, it is a goal within our reach.

The Turnbull Government is determined to see off the boom-bust cycle that has plagued Australian naval shipbuilding.

It is after all, in our DNA to foster innovation. We love creating jobs and opportunities across the nation. We believe in what can happen when government gets the settings right, and works with industry to secure our nation’s future – strategically and economically.

The Government above all will provide certainty for Australian businesses to invest in that future.

For Australian shipbuilding workers, students and trainees there will be long‑term and rewarding opportunities.

There will be strategic partnerships. They will range across defence industry, State and Territory Governments, international partner governments, commercial partners, academia, science, technology and research.

For the community, there will be excellent return on their investment.

And for the Royal Australian Navy, there will be capability, capacity and direction for, we hope, 100 years into the future.

Thank you for the opportunity to speak to you, it is a privilege and a pleasure and I wish you great enjoyment of this Exposition.