PODCAST: Exports key to the future of Australia’s defence industry, Richard Marles, opposition spokesman for defence

Tune in as the Victorian MP takes us through the commitment both major political parties have to reaching a 2 per cent of GDP spend on defence, policy stability, the evolving geopolitical security situation in the Asia-Pacific region and the role of defence in the context of Australia’s foreign and strategic policy.

Enjoy the podcast,

The Defence Connect team.

Listen to previous episodes of the Defence Connect podcast:

Episode 510: CONTESTED GROUND: Iran’s collapsing sphere of influence
Episode 509: DEFENCE PROPERTY PODCAST: Understanding the ever-changing landscape of regional property investment
Episode 508: PODCAST: A proud history of providing debate and connecting sailors, with Mark Schweikert, federal president, Navy League of Australia
Episode 507: SPOTLIGHT: GWEO – protecting Australian sovereignty, with Lockheed Martin Missiles and Fire Control’s James Heading
Episode 506: CONTESTED GROUND: Ukraine’s freedom of manoeuvre in the information domain
Episode 505: SPOTLIGHT: AUKUS Pillar II – how technology sharing is strengthening our national security, with FAS Stephen Moore and Dr Nigel McGinty
Episode 504: PODCAST: Unleashing Australian know-how to grow military power fast, with John Storey, Institute of Public Affairs
Episode 503: CONTESTED GROUND: The intersection of national security and Australia’s declining economic performance
Episode 502: SPOTLIGHT: Developing risk frameworks for Defence, with Atturra’s Andrew Balmaks
Episode 501: CONTESTED GROUND: Maritime competition drives need for an Australian Coast Guard, with Jennifer Parker

Announcer: Welcome to the Defence Connect Podcast, with your host, Phil Tarrant.

Phil Tarrant: Good day, Phil Tarrant here, I'm the host of the Defence Connect Podcast. Thanks for joining us at Pacific 2017. I have in our mobile studio, we're not in our home turf right now, Richard Marles, who is the Shadow Defence Minister. Richard how you going?

Richard Marles: I'm very good Phil.

Phil Tarrant: Welcome back.

Richard Marles: Well thank you, and good to be here, and good to see you here at Pacific 2017. It's a pretty extraordinary event.

Phil Tarrant: It is an extraordinary event, I think it's one of the sort of watershed events for Australian Defence Industries. Not very often over the years past we've had the projected level of spending in defence moving forward.

Richard Marles: Look I think that's right, and there's an extent to which that puts us on a global map, and so the level at which defence industry around the world is represented here today in Sydney is pretty remarkable, but also the sense that you've got about other navies around the world, something like 17 or 18 chiefs of navy who are here for the Sea Power Conference, which is happening in conjunction with Pacific 2017, says something about where Australia is at, the way we are being seen, and I think that that's a good thing, because at the end of the day what that means is that we are being taken seriously.

Phil Tarrant: I've seen your counterparts quite active around the floor here of Pacific, the Minister of Defence and also the Defence Industry Minister, they have been hustling hard, they've been out there seeing a lot of people. What have you been up to the last couple of days?

Richard Marles: Well, doing the same really. There's a high degree of bipartisanship when it comes to this area. The key procurement projects that are on foot enjoy the support of both the major parties, as Strategic Outlook enjoys the support of both the major parties. That message is being sent loud and clear, but it's been very instructive for me to speak to all the major bidders, for example in relation to the Future Frigate Programme, which is the next really big decision that's about to come up in the maritime domain. They're all here and here in force and very much selling their wares, and it's a fantastic opportunity to hear from them.

Phil Tarrant: A question I have for you, and I'll put on a question I got today and try the pass on bit, so I was asked by two very senior people of the Royal Navy who have chosen the BAE solution, the Type 26 Frigate, for their navy moving forward, and they said, "Phil, what would happen if the government changes in Australia? Would this level of investment still remain? Will the same path be continued in terms of this investment into naval shipbuilding?" What's your view on it?

Richard Marles: Yes. There's a very short answer to that question.

Phil Tarrant: Are you sure? That's what I assume.

Richard Marles: The answer to that question is yes. Ultimately the answer to that question lies in the commitment that both parties have to reaching a 2% of GDP spent on defence. Again, there is a unity ticket between Labour and the Conservatives in respect of that, and that's what then drives the major procurements around Future Frigates in that instance, but also the other major procurements, the Future Submarine Programme is another example. I think that provides the major defence primes with a sense of confidence that there is political stability, or policy stability, within Australia around this question. Hopefully that also is a good basis upon which we can move forward and see us engage in this capitalization that we are doing of the navy but also the defence force more generally.

Phil Tarrant: I think externally also, I spent some time with some UK businesses who are looking to enter into the Australian supply chain. Obviously it's a lot of money going to get spent over the next 10 years or so, $195,000,000,000, it's considerable. Should they go into confidence and say there is stability in defence industry, there's stability in all these programmes, because they're going to stay and run the course over time?

Richard Marles: Yeah. I think they can have a lot of confidence in that. There really is policy stability here in respect to that, but the opportunity that then provides is to really leverage off that to build an export-based Australian industry. That's where we've got to get our thinking right, that this is a once in a generation opportunity to create a defence industry, and I think the maritime space is front and centre in that, where we can build our own primes ultimately with the sort of technology transfer that comes with the current procurement programme, and get to a point where we've got Australian companies who are able to export their wares within the defence industry globally, because that's going to be ...

If we want to have a defence industry in Australia it needs to be one that has the capability of exporting. From my point of view what that also then means is there's something complimentary about that in terms of what defence does more generally. Having an export based defence industry in Australia, I think adds to Australia being taken more seriously around the world, and that's one of the most important factions that the ADF has itself.

Phil Tarrant: Just on that theme, so to step outside the defence industry for a moment and talk about sort of the evolving geopolitical security situation in the Asia Pacific, obviously we have what's happening in North Korea right now, the South China sea, the Turnbull government just recently announced that the new combat system has been chosen for the Future Frigate Programme and a lot of the rhetoric associated with that, and rhetoric is probably not the right word but I'll use that, was around this evolving security threat. What's your read on where Australia sits in the Asia Pacific right now, and how real is this threat that faces us?

Richard Marles: You look at North Korea now and you can't help but be concerned about the way in which that is playing out, the instability that it has the potential to drive, and what that then implies in terms of our needs. I think even beyond, say, the immediacy of the question of North Korea, this is a part of the world, which is evolving and changing in its nature and we need to be ready for that, but Australia is also a country where being taken seriously I think is really critically important for us. We are a middle power and we have the capacity to be taken seriously, and that in turn enables us to better understand the region in which we are involved, the world in which we are involved, and therefore to be able to guide our way through that in a very changing environment.

Part of being taken seriously is having a serious defence force, and a capable defence force, and I think that is one of the critical parts of why the capitalization that's going on within the ADF at the moment, and particularly here at Pacific 2017 being demonstrated in the maritime space, why that is so important.

Phil Tarrant: At a point in time, and I'm sure you want that point of time to be faster than what it might become, but if there is a transitioning government and you guys are sort of in seat your in Canberra , how do you see Australia's defence policy evolving under that sort of leadership? Is it going to stay the course? Do you think we've got pretty much right? What would you do to shape is differently?

Richard Marles: Look, as I say I think there has been a high degree of bipartisanship in relation to defence over a long period of time, so I think the first message I'd want to say in relation to that is that we would be a very safe pair of hands in terms of handling our national security and handling the defence and security challenges that we face. I think it is important that we are taken seriously and that we are, as a middle power, operating in an active way within our region and in an active way globally, playing our part, you know, like a commensurate part with the size of country we are, but playing our part within the world.

I think that is happening at the moment. I think it is important though that we are very clear about our narrative as a nation, who we are and what we're on about. Therein I think there can be more discussion about that so that it's very clear what our mission is as a nation and how we see our defence forces in that. Now, that doesn't imply radical change at all, but I do think it does imply a deeper narrative about what we are seeking to do on the global stage.

Phil Tarrant: We caught up 3 or 4 months ago and we had a good chat, and for our listeners I recommend you go and tune into it, it was a very popular podcast. Has your brief changed from your boss at all during that period of time? Are you still running the course, you still doing what you are like back then or has it evolved at all?

Richard Marles: No, I think my role is very much the same as it's been over the course of the last year. Making it clear that firstly when it comes to national security, there is a sense of bipartisanship that our instinct and our reflexes to engage this in a bipartisan way, that we really want this above part politics. That doesn't mean you don't have debate, actually I think potentially opens the door for great debate, but not debate based on the politics of the moment between the 2 parties. This is an area where there is significant agreement and where elections are not necessarily won or lost, so I think there is the freedom to have a bigger and a broader and perhaps a freer discussion, but it does flow from this fundamental sense of bipartisanship.

I think it is about trying to be as thoughtful as we possibly can about the role of defence in the context of Australia's foreign and strategic policy, and I think there is room to engage in some deeper that about that. It does come back to what I said earlier, who are we and what are we on about? What role of leadership, for example, should we be playing in the Pacific, which is a particular passion of mine. I think we can do more there in terms of developing a sense of vision about how we see the Pacific evolving. I think it is important that we are playing a strong and leadership role within East Asia, that is expected of us, and I think also playing our part in global affairs, as we very much do, is important as well, and you see that in the way in which we are engaging in the Middle East right now. Being thoughtful about this, and seeing this in the context of a deeper narrative about who we are as a nation, that's the kind of discussion I'd be keen to promote and have people engage in.

Phil Tarrant: Irrespective of this spirit of bipartisanship, which is commendable, if you had the chance to call the Turnbull Government out in terms of its attitude towards defence and defence industry, what would be that one or two things?

Richard Marles: Again, it's not about trying to go out and seek to find points of difference with the government. We could make a critique about how defence industry was handled, particularly in the first term of this coalition government, there are certainly ways in which they went about things that we would have done differently. We are, though, happy that they have ultimately landed in the same place that we've been for a long time around the importance of building sovereign capability in Australia in terms of our defence industry and making sure that having Australian builds of our key defence assets as far as possible so that we do build a sovereign capability, which allows us to sustain and maintain the key platforms that we operate.

That's long been Labour's position in relation to this. It's probably not been the history of the coalition, but they do find themselves on the same page as us right now and so we welcome that. I think from here going forward what we want to encourage is that deeper thinking about what our narrative is as a nation and how that would then apply to defence industry, how that would apply to our role in the Pacific. I think all of that helps build a longer term strategic vision about where we're going in foreign and strategic policy.

Phil Tarrant: It's Pacific 2017, so it's all about naval ship building, and we spoke last time we got together about our capabilities in that regards, but it would be remiss of me as a journalist not to ask you, who do you reckon has got the inside running in terms of these three contenders?

Richard Marles: Look, I probably won't take a bet out on it Phil. I've visited each of them during the course of the last couple of days and certainly they all ... Fincantieri, BAE and Navantia all have an excellent story to tell. I think the decision in relation to the Combat Management System, using Aegis working with Saab, obviously that has Lockheed Martin, it has been welcomed and we welcome it as well, and has been welcomed by each of the three ship design contenders right now. The reality is they would all provide an excellent capability for Australia and I think we're lucky to see that competition play out over the course of the end of this year and the beginning of next. What I think people should take from that, and this is the critical issue, is a sense of confidence that whoever is ultimately chosen is going to deliver an absolutely world class, cutting edge Future Frigate for our country.

Phil Tarrant: Should there be, and there's always a chance for it, a change in government, do you feel the three competing contenders are being active in cultivating relationships with the opposition?

Richard Marles: Oh no, they definitely have, and again I think it says something about what I said earlier about the policy stability that exists here, but that I think has been embraced by the defence industry itself, so each of the main contenders for the Future Frigate have all come to see me of their own account, have been very keen to brief me about the proposals that they're putting forward to make sure that there is as much visibility as possible. DCNS Naval Group have been the same in relation to the submarine. I think what policy stability provides is a sense of confidence to defence industry that they can talk to both sides of politics and that's a good thing. I think from where I sit in opposition, it's always better to be in government of course, but from where I sit in opposition there is a high degree of visibility about what's being proposed by each of these companies.

Phil Tarrant: We touched on this last time we got together, but irrespective of who is a successful contender, do you feel as though that have got the people capabilities to actually deal with that? A lot of them have said that there's no ASC as part of this ship build programme. What's going to happen?

Richard Marles: Good question as well. I think we do have the people capability here in Australia. ASC have demonstrated that in the work that they've done on the Air Warfare Destroyer and HMS Hobart was commissioned in the last couple of weeks, it's an excellent vessel. ASC has done a great job on that. A company like Austal have done incredible work in the ship building that they've undertaken, and I'm off to America at the end of this week, I'll be visiting Austal's yard in Mobile, Alabama where they build the literal combat ship for the US Navy. That is a great Australian success story in terms of exporting Australian design capability for our most important bilateral partner, the United States.

There's no doubt that there is the capability that exists in Australia. What's really important, and goes back to a comment I made earlier in relation to the Future Frigate Programme, is that we leverage this to develop a national Australian capability in ship building, which ultimately can drive an export-based industry. I think it is really important that whatever ultimately is the solution here, does deliver that capability for Australia's defence industry.

Phil Tarrant: When we got together last time we touched on this, I spend quite a lot of time the last couple of days connecting with your Parliamentary colleagues and also some advocates from right across Australia in terms of flying the flag for their particular state to try and secure some of these major defence projects. My sentiment towards this, and I've been talking about this for about a year or so, there was a level of hostility between the states for quite some time, but there seems to be a bit of a shift in attitude towards competitive collaboration, where understanding that we can't all win everything so therefore let's be a bit smarter about understanding what we can do and what we can't do, and the benefits for Australian taxpayers number 1, but importantly, the delivery of these capabilities.

Richard Marles: Yeah. Look, I really agree with that Phil. It's understandable that states want a part of the defence industry pie. There are jobs involved here and it's certainly helped build industry within states. I think states putting forward what they're capabilities are and marketing them is totally fair enough. We are seeing, and have seen in the last few years, a high degree of competition, which ultimately has involved incentives being provided to companies to locate their activities in particularly parts of the country. Now, we need to be very careful and mindful about that. I think that those incentives come at the cost of the Australian taxpayer. It needs to be very clear that there is a benefit to the taxpayer by virtue of that.

I think we are getting to a point where we need to be thinking about, in the national interest, how states can perhaps collaborate more and see the opportunity that comes from doing that. I think the kind of full on state-on-state competition does have it's ultimate limits here, and it's important that we are thinking about that, but like you I do detect in the conversations I've had with the states, a bit of a shift. I think they're seeing that as well it can be a pretty expensive exercise to get involved in, and I think they want to make sure that value for money, in terms of taxpayer money, is being ultimately achieved here.

Phil Tarrant: It's good. Richard, I've really enjoyed the chat again, and let's keep connected, and there's plenty of moving parts. I think next time we get together let's chat Land 400 and I know you definitely advocate a selection in Victoria, but ...

Richard Marles: That's coming up as well. Oh no, there is an excellent bid obviously from Victoria, but there's an excellent bid that's going to be based in Queensland as well. What matters here is that there is a capability with Land 400 that meets the needs of the Australian Army and I'm confident that will happen as well.

Phil Tarrant: Thank you. Remember to check out defenceconnect.com.au, everything single morning the latest market intelligence and news around defence and defence industry. You can subscribe defenseconnect.com.au. Any questions for me or even for Richard, we're happy to flick them on and answer them: This email address is being protected from spambots. You need JavaScript enabled to view it.. You can get in touch with the team, we're on all social media, just search Defence Connect and keep abreast of what we're up to. We'll be back again next time, until then bye bye.