ABC Radio Adelaide Breakfast

MATTHEW ABRAHAM: Let’s go right to the US now and Washington, where Christopher Pyne is newly arrived. He’s the Minister for Defence Industry. And Christopher Pyne, welcome to the program.

CHRISTOPHER PYNE: Good morning Matt, it’s good to be with you again.

MATTHEW ABRAHAM: It’s nice to have you on the program. Christopher Pyne, how do you respond to this statement by Defence SA that South Australia may end up with only 10-to-15 per cent of the shipbuilding and sub work?

CHRISTOPHER PYNE: Well it’s completely nonsensical. And Defence SA quite frankly wouldn’t know, because Defence SA is not involved in building the submarines. Our submarines project is an Australian Government project. I’ve always said from the very beginning of the project, once I’ve secured it for South Australia, that a local build meant around 60 per cent of the project. Now because there are obviously some things that we don’t do, like we don’t build combat systems.

DCNS says that they thought it would be around 90 per cent of the submarines, which is fantastic. But that was never the Government’s figure. But of course it’s not just the submarines, Matt, it’s also the nine future frigate worth $35 billion, the Offshore Patrol Vessels and the Pacific patrol vessels. I think out of that, around $90 billion, South Australia will get by far the lion’s share …

MATTHEW ABRAHAM: [Interrupts] Are you now winding it back to 60 per cent from 90 per cent during last year’s federal election campaign?

CHRISTOPHER PYNE: No Matt, the 90 per cent estimate was from DCNS, the submarine builder. The Federal Government never said that. I always said, and I consistently say and I’m still saying, that around 60 per cent is defined as a local build, because obviously we don’t make torpedoes, and we don’t make all sorts of other things that go on the ship. If DCNS can get to 90 per cent, I’ll be the happiest person in South Australia, but that was never the government’s figure. And Defence SA simply wouldn’t know what the percentages were, because they actually don’t have anything to do with the program.

MATTHEW ABRAHAM: Now can we be quite clear, what do we mean by local build? Do you mean South Australia, or do you mean Australia?

CHRISTOPHER PYNE: No, South Australian. So the idea that- we will have 5000 workers at Osborne in the shipyard and the submarine yard by the mid-2020’s. So we have to massively expand the workforce, which is why I announced the naval shipbuilding college a couple of weeks ago in Adelaide, to help train that workforce. We have the businesses in Adelaide. Of course the submarines, the ships will be built in Adelaide. We are talking about a South Australian build. And I hear what the Western Australian Labor Government says and in fact Martin Hamilton-Smith might want to talk to them about that, since he’s in a state Labor government.

But the truth is they can wish all they like, the decisions have already been made. Osborne will be the centre of the submarine build and the major platform ships like frigates and the Offshore Patrol Vessels will start in Adelaide. So that decision- that horse is well and truly bolted and the Western Australian Labor Minister is just tilting at windmills.

DAVID BEVAN: Right. And I’m sorry if we’re sounding pedantic, but it is a huge project, and it’s enormous amounts of money and lots of people. So you’re saying 60 per cent of the submarine project would be built in South Australia. How much of the submarine project would be farmed out to other Australian states?

CHRISTOPHER PYNE: Well there’ll be nothing farmed out. There are some businesses around Australia, of course, that will make things for the subs, as they will for the frigates and the Offshore Patrol Vessels. This is the largest national infrastructure project in our history. It dwarfs the NBN. Of course it massively dwarfs the Snowy Hydro scheme. So of course there’ll be work shared all around the country. But it doesn’t make any sense for the majority of the work not to be done in South Australia because that’s where, for example the infrastructure…

DAVID BEVAN: [Talks over] So if South Australia gets 60 per cent, how much do the other states get?

CHRISTOPHER PYNE: Well I haven’t- Dave I haven’t broken it down state by state, because that’s a rather pointless exercise DCNS right now …

DAVID BEVAN: [Talks over] Well not if you’re in Perth.

CHRISTOPHER PYNE: Hang on, hang on. DCNS right now are in the process of identifying those Australian businesses that’ll be part of the Australian industry content. Now I haven’t broken that figure down state by state or business by business, that’s the job that they are doing. But I can tell your listeners that South Australia can’t help but win the lion’s share of that spend, that $90 billion spend, because this is where – well I’m in Washington – you are where the submarine and the ships are going to be built. So this scaremongering by Defence SA and others in South Australia is really quite frankly, quite irresponsible.

MATTHEW ABRAHAM: Are you saying they don’t know what they’re saying? I mean you’ve described this on Twitter as fake news.

CHRISTOPHER PYNE: [Talks over] Yes, they don’t know what they’re saying.

MATTHEW ABRAHAM: You said this is fake news. But they’re not making it up are they? If Defence SA is warning the state will only receive 10-to-15 per cent of the work, surely they’d be in a reasonable position to know?

CHRISTOPHER PYNE: No they don’t have any idea. They’re not part of any of the briefings to do with the submarine program. They’re not involved in the Federal Government’s program. They quite frankly themselves have said it’s hypothesising. In other words they have no basis in fact for this supposition. What they’re obviously trying to do I think is play politics with it, because Martin Hamilton-Smith’s been trying to get this argument going for some time. But Defence- I never speak to Defence SA about this project, because quite frankly, they have nothing to do with it.

MATTHEW ABRAHAM: But see there might be a lot of our listeners right now who are thinking, look I don’t care about Labor, I don’t care about Liberal, I just want the job to be done.

CHRISTOPHER PYNE: [Talks over] No I don’t either. It’s been done. It’s on schedule, in fact it’s ahead of schedule.

MATTHEW ABRAHAM: But why wouldn’t you cooperate with an organisation with Defence SA. Why not allow them a seat at the table?

CHRISTOPHER PYNE: Because they’re not a part of the project. They’re not putting up any of the money for the project. They’re not part of the planning for the project. They haven’t chosen the submarine builder, or the submarine designer. They’re not building the infrastructure or designing the infrastructure. That’s being done by the Federal Government through the Odense marine technology company, which will hand us their plans for the shipyard in the next month. They don’t run the request for tender. They actually don’t have anything to do with this project. So it’s great [indistinct] …

MATTHEW ABRAHAM: [Talks over] Well they don’t have anything to do with it because you won’t let them have a seat at the table. If …

CHRISTOPHER PYNE: [Interrupts] But what would they do?

MATTHEW ABRAHAM: But if you’ve got a state government that says, look we’re prepared to do some heavy lifting with you here. We’re prepared to cooperate. Now I know that you’ve had this terrible falling out with Martin Hamilton-Smith and people can understand why.

CHRISTOPHER PYNE: It’s got nothing to do with that. We are cooperating with the State Government. I talk to Jay Weatherill about these matters on a regular basis. And I would talk to Tom Koutsantonis about them. And we are cooperating. That’s why the project is going so well …

DAVID BEVAN: [Interrupts] But you won’t talk to Hamilton-Smith or anybody who works with him.

CHRISTOPHER PYNE: Well Defence SA Matthew and David, has nothing whatsoever to do with this project. So therefore, what would we talk to them about? They are scrupulous for South Australia, which they do a great job doing. And I’m pleased as a South Australian they do that. But I’m running the submarine project, not the State Government, not Martin Hamilton-Smith and not Andy Keough from Defence SA. And this report – so called – which they’ve put out, only confirms that they really wouldn’t be very useful to talk to.

MATTHEW ABRAHAM: Well it makes you wonder why we’re paying them, doesn’t it?

CHRISTOPHER PYNE: Yes well that’s an issue for the State Government, isn’t it? It’s not a matter for me.

MATTHEW ABRAHAM: I think they get paid a lot of money. I mean I think there’s more admirals in it then there is in the navy, on Defence SA.

CHRISTOPHER PYNE: And they’re basically advocates for South Australia, for which they do a great job. But they …

MATTHEW ABRAHAM: [Talks over] But can’t we get a PR firm? I mean I’d do that for half the dough. I’m just saying …

CHRISTOPHER PYNE: [Talks over] [Indistinct] you’d be very good at it too…

MATTHEW ABRAHAM: Well far be it. We don’t take money from the State Government to spruik stuff. We’ll leave that to our commercial rivals. But Chris Pyne, if what you’re saying is true – and I’m not saying it’s not – but, are you saying Defence SA is a waste of space? Because …

DAVID BEVAN: Well you’d close them down tomorrow then, wouldn’t you?

CHRISTOPHER PYNE: Look it’s not a matter for me. They’re a State Government instrumentality, it has nothing to do with the Federal Government. So I’m not going to comment on whether the South Australian Government should or shouldn’t keep them. It’s entirely a matter for the State Government, it’s got nothing whatsoever to do with me.

MATTHEW ABRAHAM: If you’ve just tuned in, we’re talking to Christopher Pyne, South Australian MP, who’s the Minister for Defence Industry. He’s talking to us from Washington because for a few days now the Government has been sending out signals that we’re only going to get- the State Government, we’re only going to get a fraction of what you thought we were going to get in terms of jobs. Now Christopher Pyne, before you leave us, we’ve been talking quite specifically about the sub jobs. Does this get more complicated when we bring in the frigates? Because, how much of the $30 billion frigate program is South Australia going to get?

CHRISTOPHER PYNE: Well a local build again is defined as being around 60 per cent. That’s a $35 billion project. All the frigates are being built in South Australia, as were the air warfare destroyers. So again, the lion’s share of all that work will go to South Australia.

MATTHEW ABRAHAM: [Talks over] That’s at least 60 per cent.

CHRISTOPHER PYNE: And again there are things that we don’t make like missiles and other- some of the technologies that will be used in the future frigates. And of course there are businesses around Australia that will also contribute to that project. So the vast majority of the spend will be in Osborne and in South Australia, including the steel of course.

DAVID BEVAN: So that is, to be quite specific – and again apologise for being pedantic, but it’s a big project, lot of jobs. We will get at least …

CHRISTOPHER PYNE: [Talks over] I know it’s a big project.

MATTHEW ABRAHAM: … At least 60 per cent of the frigate program, will be made here in South Australia?

CHRISTOPHER PYNE: And that would be my expectation. That would be the minimum of what we would get in South Australia because …

MATTHEW ABRAHAM: [Talks over] Is that an expectation or a promise?

CHRISTOPHER PYNE: [Laughs] Well I just said to you, I think will be the minimum. A local build is defined as around 60 per cent. So I have promised a local build. There will be a local build. There’ll be 5000 jobs at Osborne in the shipyard and the submarine yard. The projects are on schedule. The submarine project is ahead of schedule. The Future Frigates project is on schedule, the Offshore Patrol Vessels project is on schedule. I’ve been making sure of that for the last nine months in my job as Minister for Defence Industry. It’s only good news for South Australia. And anybody who tries to run it down, quite frankly, either doesn’t know what they’re talking about, or are being deliberately mendacious.

DAVID BEVAN: Alright, now Minister, we’re about to talk to Martin Hamilton-Smith and we’re also going to talk to Glenn Thompson from the ANWU. You’re more than welcome to hear what they have to say and respond. Or if you want to move on, that’s fine, but you won’t be able to respond- if you’re happy to give them the last word, that’s fine.

CHRISTOPHER PYNE: No I never like to give anybody else the last word, gentlemen, so I’m very happy to stay on the line.

MATTHEW ABRAHAM: Okay, that’s fine. Let’s go to Martin Hamilton-Smith. He’s in Bandung in Western Java. He’s the SA Minister for Defence Industry. Martin Hamilton-Smith, welcome.

MARTIN HAMILTON-SMITH: Good morning Matt, good morning Dave.

MATTHEW ABRAHAM: Martin Hamilton-Smith, if Defence SA is wrong or is trouble-making or deluded and have nothing to do with the submarine or frigate project, why are we the taxpayers, paying them handsome salaries?

MARTIN HAMILTON-SMITH: Well first of all this is not Defence SA’s submission, it’s the South Australian Government’s position. I took it to Cabinet some weeks ago and it’s our official view. So let’s just take Defence SA out of it. The second point is, listening to Mr Pyne, all I could say is some cooperation would be handy. This is only going to work if there is complete cooperation between industry, unions, federal and state government.

We are- in fact Minister Pyne would well know that we’re negotiating at the moment with a future tech port which we put hundreds of millions of dollars into building. Which is crucial for the entire project. We train the workforce. We’re involved with universities, the TAFEs, all of the infrastructure needed. We are a partner, and a bit of cooperation would be good. Secondly …

MATTHEW ABRAHAM: [Interrupts] Well. That really is Jay Weatherill’s judgment in appointing you, is it not? Somebody who is kryptonite to the Liberal Party.

MARTIN HAMILTON-SMITH: Well, Mr Pyne likes to play the politics. The State Government and myself just want to get results for South Australia.

MATTHEW ABRAHAM: No, exactly.

MARTIN HAMILTON-SMITH: So we’ll deal with whoever we have to deal with.

MATTHEW ABRAHAM: I’m just saying, you’re kryptonite. You’re kryptonite to people like Christopher Pyne. They’re not going to touch you. Not even with lead-lined gloves, they’re not going to touch you. Are they? Why would they?

MARTIN HAMILTON-SMITH: Well, Mr Pyne needs to recognise that people are sick of the party politics. They just want their politicians to get results for them, and look, I just don’t want to dwell on that, because I don’t think that’s the substance of the issue. I want to get to the more important issues that Mr Pyne’s raised.

Now, first of all, let’s be clear on this. The $90 billion to build the submarines and frigates is only one-third of the spend. Over the 30 year life of the frigate and submarine projects, $180 billion or more will be spent, mainly in Perth and mainly in Sydney sustaining them for their lifetime. So we’ve got breakfast. New South Wales and Western Australia have got lunch and dinner.

Now, of the 90 billion to build the projects, this is the first time I’ve heard Mr Pyne publicly back down from 90 per cent to 60 per cent, and this is very important. Mr Pyne repeated DCNS’s 90 per cent claim over and over. I’ll post all this up on Twitter and my website later this morning. People can see it for themselves. He was happy to have ownership of it prior to the election. Now it’s apparently dropped back to 60 per cent. Now, what you say before an election I think is something that [indistinct] …

MATTHEW ABRAHAM: [Interrupts] Now wait a minute. Are you playing with figures here? He said 90 per cent. You’re quoting- we’ve got your release of a couple of days ago. You’re saying that it was 90 per cent would be done in Australia. Not in South Australia.

MARTIN HAMILTON-SMITH: [Talks over] In Australia, that’s correct. No, that’s correct. That’s correct. 90 per cent in Australia, and frankly, it’s hard for anyone to quibble about where in Australia. We’ll obviously put South Australia’s best foot forward, but as long as Australian workers and Australian industry get 90 per cent, I think Australians will be pretty happy with that.

It’s our job as a state to try and make sure South Australia gets the best slice of that. But I think you’ll find that Mr Pyne’s backing away from 90 per cent in Australia to 60 per cent in Australia. However, he said 60 per cent in South Australia, so I’ll be interested to talk to him about how he’s going to do that, because this needs to be in the contracts and in the written documentation. It appears not to be. We’ve just had a request for tender for the frigates. I don’t think any of this is in there. It is extremely important for South Australian workers, because there’s not only what goes on at Osborne. There’s the supply chain, because all of the things that go into the submarine and frigates will be produced around the world and around Australia.

So that’s part of it as well. And what we’d really like is some clarity, and that’s why the submission of the South Australian Government has made [indistinct], which is publicly available, and I encourage everyone to read it makes this point.

DAVID BEVAN: Just before you leave us, Martin Hamilton-Smith, the submission that you took to Cabinet, that was based on Defence SA’s advice, yes?

MARTIN HAMILTON-SMITH: Yes, partly, and others.

DAVID BEVAN: [Talks over] Right. Okay. And this is the organisation that Christopher Pyne isn’t dealing with, so. Anyway.

MARTIN HAMILTON-SMITH: Well…

DAVID BEVAN: [Talks over] Because when you say we own this, you say this is the State Government’s submission.

MARTIN HAMILTON-SMITH: It is indeed.

DAVID BEVAN: Actually, it’s based on Defence SA’s work.

MARTIN HAMILTON-SMITH: Well, Defence SA is simply our agency …

DAVID BEVAN: [Talks over] Yeah. It’s all the same.

MARTIN HAMILTON-SMITH: … that provides support, and does it very well, by the way. Angus Houston, a wonderful board. We know exactly what’s going on, and we’re going to continue to fight for South Australia, and we will not be deterred.

MATTHEW ABRAHAM: What’s the minimum- sorry, what’s the maximum salary you’re paying these retired Admirals? On Defence SA?

MARTIN HAMILTON-SMITH: I think we only have one retired Admiral on our board, so that’s not quite right.

MATTHEW ABRAHAM: Right. What’s that worth?

MARTIN HAMILTON-SMITH: And I think it’s a standard board fee. I think they get around about 60,000. I just have to check that.

DAVID BEVAN: But the head of the- the head of the agency, the head of the agency, Defence SA, I don’t know about the current one, but the previous one was on about half a million, wasn’t he?

MARTIN HAMILTON-SMITH: That’s the chief executive.

DAVID BEVAN: Yeah.

MARTIN HAMILTON-SMITH: That’s going back some years when we were building Techport. That’s well before my time.

DAVID BEVAN: Yeah, so what’s the current chief executive?

MARTIN HAMILTON-SMITH: It’s nothing like that now.

DAVID BEVAN: Two hundred? Three?

MARTIN HAMILTON-SMITH: I’ll check all that and provide that to you, but let me just say this: if we hadn’t put the effort we put in as a state, we wouldn’t have Techport, we wouldn’t have had the Air Warfare Destroyers, and we wouldn’t be transitioning into advanced manufacturing. So this is extremely important to SA. That’s why we’re at it.

DAVID BEVAN: Martin Hamilton-Smith, we appreciate it, and we also appreciate you getting up so early in Western Java to talk to us this morning. Before we go back to Christopher Pyne, Glenn Thompson is the Assistant National Secretary of the Australian Manufacturing Workers’ Union, and they’re bussing in about six loads- busloads, six busloads of workers to- from Osborne today to make a point to a Senate inquiry into this very issue. Good morning, Glenn.

GLENN THOMPSON: Good morning, Matt.

DAVID BEVAN: Glenn Thompson, do you take any comfort from Christopher Pyne’s assurance that 60 per cent of both projects – that’s the frigates and the subs – will be done here in South Australia?

GLENN THOMPSON: Well, Matt, no I don’t. Our members don’t take any comfort in that. We’ll be making the point loud and clear and strong today to our members out at Osborne and the Senate inquiry that the RST process needs to be stronger. We’ve got a situation where effectively the minister has encouraged the involvement of Australian industry participation in the program. The Government needs to mandate or put something stronger that Australian companies, along with our supply chain, have a real opportunity to get in. It’s not good enough to just say that Australian companies and 60 per cent would be built in South Australia. There needs to be stronger wording. There needs to be a mandated position from the Government for these jobs.

MATTHEW ABRAHAM: Glenn Thompson, you’d be aware of the fight at the last federal election, how important this issue was. Are you seriously suggesting that Chris Pyne’s just going to walk away from this? He got re-elected on the basis of this. Are you seriously suggesting, even if for nothing else, putting aside the good of the state, but in terms of self-preservation, he’s going to wear this?

GLENN THOMPSON: Well, Matt, what we’re saying is if the Government went to an election promising the build of ships and submarines in Australia, they’ve made that announcement. What we’re saying is we now want them to deliver on that. It’s clear publicly that in the strength of what’s been said to us and workers appeared like [indistinct] statements.

DAVID BEVAN: Okay. Glenn Thompson, thank you, from the Australian Manufacturing Workers’ Union at almost five minutes to nine. Let’s quickly go back to Washington. Christopher Pyne, Minister for Defence Industry, Martin Hamilton-Smith says that what we heard in the last 20 minutes is in fact a retreat from you from 90 per cent. You were happy to repeat the DCNS figure again and again during the election campaign. Now, it’s 60.

CHRISTOPHER PYNE: Well, the good news is that under the Labor Government before we were elected it was 60 per cent of absolutely nothing. And now we’re getting 60 per cent or more of $90 billion. So in fact, it’s a fantastic announcement for South Australia, and the figure of 90 per cent bandied around by DCNS was never my figure. It was always their figure, and that’s- they can answer for that. But the truth is, to talk to the union leader Glenn Thompson, we are getting on with the job. The infrastructure will start being built down Osborne South in the third quarter of this year, ahead of schedule. So that will help keep some of the workers in jobs at Osborne South.

We did announce the naval shipbuilding college two weeks ago. That will help retrain and keep people being trained in the shipbuilding job. So we want to keep the workforce together. The Collins-class sustainment and maintenance of course will continue at Osborne, employing hundreds of workers. So this is a really good news story, and I think anyone playing politics with it is making a mistake. It is the biggest thing to happen in South Australia in our history, and it secures our state’s economic future, and I’m very glad to be the minister who is making it happen.

MATTHEW ABRAHAM: Well, it’s better than being in Opposition, which would have happened it if it hadn’t,

CHRISTOPHER PYNE: Well, there’s no doubt about that.

DAVID BEVAN: [Laughs].

MATTHEW ABRAHAM: Christopher Pyne, thank you.

CHRISTOPHER PYNE: Pleasure.

[Laughter]

MATTHEW ABRAHAM: Minister for Defence Industry.

CHRISTOPHER PYNE: Only thing that’s worse is being at ABC Radio.

[Laughter]

MATTHEW ABRAHAM: Oh, that was a fate. It was awaiting you. There was a seat at the table for you.

DAVID BEVAN: Christopher Pyne, Minister for Defence Industry.

MATTHEW ABRAHAM: That was a close call!

CHRISTOPHER PYNE: Headphones with my name on them.

[Laughter]

MATTHEW ABRAHAM: Close call!

DAVID BEVAN: Talking to us from Washington, Christopher Pyne, thank you. Before that, South Australian Minister for Defence Industries, Martin Hamilton-Smith.