RN Breakfast

27 Apr 2016 Transcipt

Interview on RN Breakfast with Geraldine Doogue
Date: 27/04/2016

Subjects: Future Submarines build

Geraldine Doogue: Well more than three years after vowing that all new 12 submarines would be built in South Australia, the Federal Government has finally made good on its promise. French shipbuilder DCNS was announced yesterday as the winner of the $50 billion contract to build the short fin barracudas, and that will generate a likely 22,800 jobs at the Adelaide shipyard and throughout the supply chain. So it’s a big boost for the state, just days before the Prime Minister is expected to formally announce the federal election campaign,

Christopher Pyne is the Industry Minister and the most senior South Australian in Malcolm Turnbull’s cabinet – Christopher Pyne, good morning and welcome.

Christopher Pyne: Good morning Geraldine, it’s good to be with you again.

Geraldine Doogue: Yes, and look no doubt a big smile on your face. You must be thrilled with this morning’s front page of your hometown newspaper, The Advertiser – oui did it, spelled the French way, oui O-U-I. First- your response, before I ask you a crude political question, please.

Christopher Pyne: Well obviously I am thrilled, Geraldine, and there’s no doubt this is a shot in the arm for South Australia but also for all defence industry around Australia, and for everyone who’s interested in the manufacturing sector, because the jobs created here will be high tech, advanced manufacturing. Australian manufacturing had its best quarter for 12 years the last quarter of last year. We are back on our feet in manufacturing, and this just confirms that Australia has a big future in high tech and innovative advanced manufacturing.

Geraldine Doogue: Now we’ll get to some of those details later because I think people now are wanting to know a few more details. How many Liberal seats do you believe the $50 billion with sure up in your home state?

Christopher Pyne: Well, that is a crude political question, Geraldine, you’re quite right. Well I don’t think that - the decision yesterday wasn’t about politics, it was about what was good for the national security and the Defence industry. The Prime Minister made it very clear when he became PM in September that the considerations would be number one, defence capability, so we had to have the most regionally superior submarines, which we now will have, but secondly we wanted it to make it work for us. So if we were going to spend $50 billion on submarines, then we wanted to spend as much of it as possible in Australia to drive jobs and growth, and that’s what we’ve achieved.

Geraldine Doogue: But look, we could all see, Christopher Pyne [laughs], we could I think sense the panic that was around in South Australia, particularly with the Nick Xenophon Party starting up. On your face, [laughs] we’ve learned to read you I think, you …

Christopher Pyne: [Interrupts] Well you’ve known me a long time.

Geraldine Doogue: [Laughs] You must … I mean, there were three believed to be at risk, weren’t there – Hindmarsh, which is on 1.95 per cent, [indistinct] 7.1 per cent, and your own seat of Sturt, which is at 10.1 per cent. It was oh, pretty sort of serious times.

Christopher Pyne: Well I never take my seat for granted, Geraldine. I always work as hard as I possibly can, and issues come and go, but there’s no doubt that the South Australian economy, the fact that we are in a serious transition is a big issue here, and obviously we built the Collins class submarines. We wanted to build the next generation of submarines, which we will now do. We’ll build the nine frigates, we’ll start the offshore patrol vessels. So the Government has created a continuous naval ship build for decades into the future, and that does secure jobs, which is good for the families, [indistinct] …

Geraldine Doogue: [Interrupts] Just a few days out from the announcement of the election, so the last sort of big decision, you think, from – before you go into caretaker government mode?

Christopher Pyne: Well Geraldine this is probably the biggest decision that the Turnbull Government has made so far. It’s the largest Defence contract in the world right now, not just in Australia but in the world, and it’s our largest Defence spend ever. So it is a big deal, and Adelaide and South Australia are the big winners.

Geraldine Doogue: Bigger than the Snowy Scheme, I heard last night, do you agree with that?

Christopher Pyne: Oh much bigger, much bigger than the Snowy Scheme, and that’s why it’ll have an impact right around Australia, and it shows that we are investing and backing Australians.

Geraldine Doogue: Okay, well now if – you know, if it’s that big, we better ask some specific details. You’ve gone with the option of a complete South Australian build, even though the French advised it would have been quicker and cheaper if the so-called hybrid option was chosen, that is build the first two subs in France and then transfer the work to Australia. Now why did you ignore that advice?

Christopher Pyne: Well Geraldine, I’m a member of the National Security Committee, and we received a recommendation from Defence which was very clear, and that was that the French bid was superior and that an Australian – an all-Australian build with Australian steel, Australian jobs and Australian subs was a recommendation from the Department of Defence and that’s the one that we took. But I’m not going to get into – and there’ll be lots of- there’s lots of armchair experts out there in Defence, and they’ll all parse the decision, and some will like it and some won’t like it. Some will prefer the Germans or the Japanese; some won’t. There was a very clear recommendation from Defence, and we followed that recommendation.

Geraldine Doogue: It’s just that the DCNS Chief Herve Guillou says the deal will create – I think he might have said this in France, but I’m not sure whether it was or Australia – around 4000 French jobs, and that the French ship builder share of the contract will be around $11 billion. So I mean it’s all well and good touting the Australian jobs, but might it be that the real job boost certainly at the start is not in your state it’s in France?

Christopher Pyne: No, it won’t. And the story in Le Monde is quite wrong, and in fact it said it would mobilise 4000 existing jobs at Cherbourg in France. So it didn’t say it would create 4000 new jobs, so that’s a very important distinction. And in fact the CEO of DCNS Australia, Sean Costello, said yesterday that less than 10 per cent of the work would be done in France. So the facts are it is an Australian build, there will be Australian jobs, using Australian steel. Now the French papers can say what they like, it’s a free country, they’re the facts: all 12 submarines will be built in Adelaide, from the first to the twelfth.

Geraldine Doogue: Oh so not even the first? Because this morning Brendan Nicholson, The Australian’s defence editor, suggests the first would be built in France …

Christopher Pyne: No.

Geraldine Doogue: … with half the work force to come from Australia. That’s not right?

Christopher Pyne: No that is wrong. That is factually wrong.

Geraldine Doogue: Okay. So one of the key things he’s also pointing out, which was very interesting I thought, which allegedly tipped- was sort of significant in winning the French the bid, was that they would be training the engineers of the future too. Because key to a decent submarine fleet is that you can maintenance it, like in the many many years to come you’ve got to have people who have got the skills to maintenance these craft.

Christopher Pyne: Absolutely. And there’ll be more announcements I think down the track around making sure that we keep the workforce as skilled as possible during the building of the offshore patrol vessels, the future frigates, and then into the submarines. And there’ll certainly be training of Australians in France in how to build these submarines, which I think would be a fantastic gig if you can get it to start with, and there will be the training of the engineers of the future. And this is one of the terrific things about the Turnbull Government’s decision; we aren’t going to spend that $50 billion overseas, we’re going to spend it here in Australia, we’re going to make our defence procurement dollar work for our economy.

Geraldine Doogue: And Mr Pyne, I mean obviously the job creation is fabulous, but some are saying it’s good old fashioned protectionism, people like Brian Toohey writing in the Financial Review, but he’s not alone. Does it amount to that?

Christopher Pyne: No. I mean protectionism is usually putting tariffs on your products in order to try and drive out overseas competition.

Geraldine Doogue: Oh, it’s much more complex then that these days though isn’t it …

Christopher Pyne: Well …

Geraldine Doogue: … in terms of- that was the whole argument with the motor industry, that it wasn’t really living up to its- what was being advanced.

Christopher Pyne: I think the Australian people would be vastly preferring that- well put it the other way around Geraldine, if yesterday we announced that we were going to build 12 submarines in France and we were going to spend $50 billion in France, I think people would have thought why isn’t the Government working for Australians? On the other side of the coin we’re building all 12 in Australia, we’re spending $50 billion in Australia. This will have major downstream effects across the country, not just in Adelaide, because there are lots of component manufacturers around the country. There’ll be lots of second round effects in terms of the impact of that dollar, and that is the Government working for our people.

Geraldine Doogue: And look finally, the relationship with Japan. Now is there anywhere- in regional partners, in a region that’s increasingly tense over the rise of China, how can you ensure that we haven’t caused grave offence there?

Christopher Pyne: Well obviously the Japanese entered into the competition with their eyes open, and nobody could assume – neither the Germans, the Japanese, nor the French – that they were going to win it by entering it. And when there’s a competition, somebody wins it. And on this occasion the advice from Defence was that the French had the superior bid. But I think our relationship with Japan is very strong, I’m sure it will be able to withstand this disappointment that they’ve suffered, and we’ll work as closely with them in the future as we have in the past.

Geraldine Doogue: Christopher Pyne, thank you very much indeed for joining us.

Christopher Pyne: It’s always a pleasure Geraldine.

Geraldine Doogue: Christopher Pyne is the Industry Minister.