SENATOR THE HON PENNY WONG
LEADER OF THE GOVERNMENT IN THE SENATE
MINISTER FOR FOREIGN AFFAIRS

Subjects: AUKUS Agreement; South Australian manufacturing industry; Construction of new shipyards; Defence skills.

PENNY WONG, FOREIGN MINISTER: Thanks very much for being here. It’s great to be here with Premier Malinauskas and the Deputy Premier Susan Close here in South Australia to talk about this extraordinary announcement.

I want to start by saying this, this is the biggest investment in Australia’s national power in the nation’s history, in the nation’s history. It’s also the biggest investment in South Australia in the nation’s history and this will transform not only our defence capability, where we will become one of seven countries to have this capability, but it will transform our state.

It will transform our state. In the same way that the state was transformed by the decision by previous governments decades past to invest in the auto industry, this will transform our state for decades. And that is a good thing. We will see investment in the near term, over the forward estimates, but we will see investment for decades to come. The submarine construction yard will be created for the build of our next-generation nuclear-powered submarines will be three times larger than the yard forecast for the Attack program. And that work will begin right away.

What was laid out today is the optimal pathway. It’s the pathway to get us to the 2040s where we will have the delivery and the construction of the SSN-AUKUS built here in South Australia. But what the government has had to do to get to that point is to create a phased approach. That phasing will enable us to deal with two key points. The first is Australia’s defence capability where we were left a gap by the previous government. Talked a big talk, delivered a capability gap.

But the second, and this is where I know South Australians are very focused, is it gives us the time to invest in our people, in our skills, in our infrastructure, to be part of the biggest undertaking this state has ever seen. And that’s what we will be doing. So, it is a tribute to those who worked on this, but it’s also, frankly, a tribute to South Australians who for a very long time now have had to campaign for submarine jobs here in South Australia.

We’ve seen the Japanese submarine announcement, we’ve seen the French submarine announcement, we’ve seen a lot of Ministers make a lot of announcements. Well, we are focused on delivering. And we’re focusing on delivering not just the capability but on delivering the uplift in our industrial capacity here in South Australia in our people, in our infrastructure, in our workforce so that this state can be part of this most complex of engineering undertakings for decades to come.

As I said, work will begin straight away. At its peak, we anticipate 4,000 to 5,500 direct jobs on the construction of the submarines and 4,000 workers employed to design and build the infrastructure. So, this is, as I said, a massive undertaking and it’s one that we’ll do in partnership with the Malinauskas Labor Government. Peter has been brought into this very early. He has been part of the discussions. He understands very clearly the nature of this undertaking and we are very pleased as the Federal Labor Government to be working in partnership with Peter, Susan and their colleagues to deliver this for South Australia.

I’ll hand over to you, Premier.

PETER MALINAUSKAS: Well, thank you so much Foreign Minister for your extraordinary contribution to our state but also particularly to the nation at what is a really important time for our region and international affairs more broadly. South Australians are exceptionally well served by your service and I, too, am wrapped to be able to work with you and Susan on this historic occasion, because today’s announcement is truly historic not just for South Australia, but for our nation as a whole and the opportunity for South Australia to play such a significant leadership role in building up the industry that will be required to keep our nation safe is something I’m exceptionally proud of and I hope South Australians more broadly are too.

We should be under no misapprehension around the significance of today’s announcement. Today’s announcement is very good news for the short term in South Australia. It’s massive news for the medium term. And in the long term, it’s game-changing news for the people of our state. This is a big deal. Let’s step through some of the detail that has been announced this morning.

Firstly, construction of the new shipyards that are going to be required to build the submarines of the future starts this year. Today, the Commonwealth has announced that 4,000 workers will be required to build the submarine construction yards down at Osborne. Now let’s put that in a bit of context: 4,000 workers is almost three times as many workers that were working at Holden when it closed down. $2 billion dollars has been announced today to be spent over the next four years at Osborne to build the submarine construction yards. Again, let’s put that into context. The Federal Government has today announced expenditure that is largely equivalent to building a brand new Royal Adelaide Hospital–type development again down at Osborne. A massive commitment. Then of course, we know that the numbers only scale up from there. 5,500 direct jobs potentially employed in the construction of the nuclear submarines and that’s before we talk about the indirect jobs.

There is of course not just the job numbers but what matters, I think, more than anything, and that is the opportunity to dramatically uplift the skills base here in South Australia. And to put that in more consequential terms for the people of our state, we’re not talking about massive amounts of jobs. We’re talking about massive amounts of jobs with vastly higher skills. Higher skills means more security of employment and also better remuneration, and what that means is a better standard of living for thousands, upon thousands of families across our state. This is truly a state-changing enterprise and it’s going to be happening here in South Australia and setting us up for decades, upon decades to come.

Another critical piece of news that was announced today, of course, was the Commonwealth’s sustained commitment towards the Collins class Program. The ongoing execution of the life-of-type extension work on the Collins class submarine is vitally important to the Commonwealth so they can meet the security needs around the Collins class submarine, but also essential to defence industry here at home. There’s been a lot of talk over recent decades about not just the capability gap in the submarine program itself but the capability gap when it comes to workforce or what has otherwise been characterised as a valley of death. Those days are over. Those days are over. This is no longer a question of, “is there going to be enough work for our naval shipbuilding program in South Australia?” It’s a question of, “where are we getting the workers from?” And that’s what we must get ourselves dedicated towards ASAP. And, of course, the State Government has already initiated those exercises.

The reason why we commit to building five brand new technical colleges is about today’s announcement. The reason why we commit to amalgamating universities to develop the single-biggest educator of domestic students in the nation is because of today’s announcement. The reason why we reinvest in TAFE is because of today’s announcement. All these combined and more, including our commitment to three-year-old preschool, is about making sure that we have the workforce with the skills that are required to be able to build nuclear submarines forever more. And that’s another third and most critical element of today’s announcement.

This is about the Federal Government of Australia committing to building nuclear submarines here in Adelaide and there is no evidence anywhere in the world of a nuclear submarine production line starting and then stopping. So, once this first sub starts its construction in the second half of this decade, to be in active service within the Navy in the early 2040s, that’s just the beginning of the program that will continue into the future. South Australians can have confidence, particularly South Australian industry, they can now invest with assuredness that the Federal Government has a confirmed plan with already billions of dollars to be expended over the next four years, which means this is real and we get started now.

Just a couple of other important pieces of information before I hand over to the Deputy Premier and Minister for Space and Defence Industries. I would like to announce that tomorrow, following further announcements that we anticipate coming our way from the Federal Government in conjunction with the State Government, I will be travelling to the United Kingdom. I’m very much looking forward to getting on the ground as quickly as possible and striking while the iron is hot. The plan is to fly out tomorrow afternoon and get on the ground in Barrow-in-Furness in the northwest of UK ASAP. Barrow is a place in the world that South Australians are going to hear a lot about over the months and years ahead.

Barrow is where, of course, the current nuclear submarine construction program from the United Kingdom Government is delivered and I want to see firsthand exactly what occurs on the ground there particularly around its training and skills efforts about developing the workforce they require to build nuclear submarines over there. We know that in both Barrow, but also, of course, in the two nuclear submarine construction yards in the US, there are critical skills academies that are orientated towards developing that workforce for the future, and we want to be on the ground seeing that firsthand as quickly as possible, striking while the iron is hot, and I’ll be travelling tomorrow.

I’ll now hand over to the Deputy Premier. But just to round out, this is a big day for our state and just as importantly the 1.6 odd million South Australians that live in it. This is genuinely about a step change in our economy and its capacity to be able to deliver for people. It’s no longer, though, just a question of the Commonwealth helping out South Australia. This is about South Australia stepping up to the plate and meeting our national security needs in a way that will assure prosperity but also most critically peace, hopefully, for many decades to come.

SUSAN CLOSE: Thank you. Around 15,000 South Australians currently work in the defence sector across industry, supply chain, in Defence itself and, of course, already at Osborne and at Edinburgh. What we know now is that that will be escalating over coming decades and in order to fully capture the benefit of that, we need not only to be preparing workers to work at Osborne directly in, first of all, constructing the infrastructure necessary and then working on building the SSN AUKUS submarines, but also all the way through the supply chain. So, the Government’s focus will be not only on preparing direct workers but also on working with local industry in order to fully capture the benefits that this commitment of eight SSN AUKUS ships gives us and indeed the continuous build that this will now give South Australia.

This is going to be transformational for our manufacturing industry, for our IT and technological industry and also for service industries. The capability that will be developed within those industries will lift the entire capability of our South Australian economy, but to do that we need to make sure that we are working with the SMEs who are currently working in Defence and those who are interested in working in Defence and also with the universities, because not only do they train people to work in these sectors, but their research and innovation will be essential to make sure that we are continuously lifting the strength of our local businesses, not only for supplying into the Osborne but being now part of a connected shipyard across the world, able to supply into the build in the UK as well and perhaps into the US. That is absolutely essential so that we benefit fully throughout our economy, throughout our workforce and throughout our future economy in its complexity to fully realise the benefit of this announcement today.

FOREIGN MINISTER: Thank you. Happy to take questions.

JOURNALIST: Senator, when will steel be cut in South Australia on this project?

FOREIGN MINISTER: The end of this decade. That’s part of the optimal pathway that we’ve announced in order to ensure we have delivery of the first SSN AUKUS for Australia in the early 2040s.

JOURNALIST: So, you and the Premier have said there’s not going to be a skills gap. It was supposed to –

FOREIGN MINISTER: Skills gap?

JOURNALIST: Like a skills gap in terms of the valley of death, what’s previously been –

FOREIGN MINISTER: Sorry, yes. Yes.

JOURNALIST: How are you going to ensure that if it’s going to take that long to actually –

FOREIGN MINISTER: Well, you’ve got a Federal Government that’s serious about training people and we’ve got a proper partnership. I mean the thing that has most struck me and I was observing is that as the Premier was speaking is that we have a Federal Government that wants to deliver this capability and this uplift and a State Government that is working with us and with South Australians to ensure that we develop the workforce. And the point the Premier made, I think, and he may wish to add to it – possibly more eloquently than I – was there is so much work that’s associated now with South Australia. There’s so much work that we are asking as a national government this state to do, you know. Our challenge is people and skills and that’s what we’ve got to focus on. Our challenge is not that there isn’t enough work, which has been the problem under previous governments.

JOURNALIST: Sorry, in terms of the shipbuilding work specifically, is that so called valley of death able to be avoided because of the continuation of the work on the Collins class?

FOREIGN MINISTER: We intend to, for both capability and workforce reasons, to continue the LOTE Program. And if you’d been following – anyone who’s followed this over the years will know I followed this a lot through Senates Estimates in Opposition, and ensuring we maintain that Collins capability is an important part of Australia’s defence capability as well as our sovereign capability here in South Australia.

JOURNALIST: In terms of jobs on the nuclear subs front, will any of those workers start any preliminary work before the end of this decade or is the immediate work for the construction of the infrastructure?

FOREIGN MINISTER: The immediate work is the construction on the infrastructure, but we are going to get to work straight away on the workforce issues, which go all the way from the defence industry points that the Premier and the Deputy Premier has made, to those working on and engaging with the forward rotation of US and UK submarines that was announced as the first phase of this. We need to familiarise ourselves with the platform. We need to engage through the ADF in those rotations so, you know, we see this as an upskilling, a national endeavour across the nation, across both industry and ADF. We are going to be part of a trilateral submarine platform, the US, UK and us. We are going to make this, South Australia, Osborne, one of only four yards in this trilateral partnership that can produce submarines, so this is a massive endeavour, and we have to get to work straight away.

JOURNALIST: Minister, what’s your view on the political risk in any of the three nations ultimately scuttling the Adelaide-based construction of nuclear-powered submarines?

FOREIGN MINISTER: What I would say is that this is a partnership that enjoys political support from across the political spectrum in all three nations. That is a good thing. I would say that all of us recognise the multi decade nature of this investment and the benefits to all our countries. So, I think that is the most effective answer to your question, Paul.

JOURNALIST: Are plans in place at the moment about what will happen with spent fuel from these submarines?

FOREIGN MINISTER: Well, as the Prime Minister and the Deputy Prime Minister announced, it is amongst our obligations for being one of only seven countries. That’s what’s happened today. Australia has joined a very small group, one of only seven countries to have this technology. We are required to deal with spent fuel from the reactors. That is obviously many decades from now given how long these reactors last. The Deputy Prime Minister indicated that he’s asked Defence to look at Defence estate and report back to government about those options.

JOURNALIST: Given we’ve had decade-long arguments about those kinds of facilities in South Australia, whether or not they should go on defence land in South Australia, is this going to be a huge challenge of this project, looking at perhaps a dump at Woomera or something like that?

FOREIGN MINISTER: There’s a lot of hypotheticals in that. We are looking at decades from now and we will go through a proper process which starts with Defence looking at Defence estate for the options on that.

JOURNALIST: Senator, just what exactly is being spent first up on getting the shipyard ready and does the design of the AUKUS sub need to be finalised first before that can be actually finished? Do we need to know how long the submarine is going to be and how big and things like that?

FOREIGN MINISTER: We are starting on the construction of infrastructure works, which, you know, have to be commenced this year. I was asked that question earlier today and I made the point, you know, we’re not talking about a capability which is unknown to us. We’re talking about the evolution of the Astute class, which is an existing platform in operation, which will be coming to, the Astute class will be coming to its end of life. What we are looking at is the next evolution of Astute which would be common to both UK and South Australia, sorry, and Australia. So, that doesn’t prevent; in fact, it compels us to start work on infrastructure now. Did you want to add anything, Premier?

MALINAUSKAS: Sure. The scale of the project and the undertaking means that this will be a significantly bigger footprint than what is currently foreshadowed in the naval shipbuilding area within Osborne. So, because this is such a larger exercise than building the former Attack class Program, it is going to require more infrastructure work done at Osborne and that, of course, is more than just building the sheds in which the submarines will be built. We’re also talking about what happens to infrastructure such as electricity infrastructure, gas infrastructure that is currently facilitated for down at Osborne. So, the infrastructure program and a lot of the expense associated with it, isn’t just the things that will be immediately visible to South Australians. There will be other preparatory works and there is absolutely no reason why that can’t be got on forthwith and that’s the type of work I understand will be commencing later this year.

JOURNALIST: How can you give industry a firm guarantee when they’ve been here before? So, for the supply chain when they’ve made huge investments under the French contract, that was torn up. How can they be confident this time to invest ahead of something that’s not going to start being built until the end of this decade?

MALINAUSKAS: Well, because the Commonwealth is making a number of steps that it’s announced today and there will be more to come in the weeks ahead that point to just how seriously the Albanese Government is about delivering on this enterprise and this endeavour, not least of which $2 billion that has been announced today to be expended over the next four years. That is a very significant quantum of funds indeed.

But what we know is that under the leadership of the Prime Minister and the Minister for Foreign Affairs, this is a government that takes seriously the circumstances we currently live within. This ultimately is about the nation’s security, and there is a degree of urgency to commence this project as quickly as possible to meet the nation’s security needs. And South Australia isn’t just the beneficiary of that work. We’ve also got the responsibility to provide our know-how, our experience to deliver the Commonwealth what they require, and South Australia is better equipped to do that than any part of the nation.

The third element, of course, that makes this new is the nature of the AUKUS agreement. This isn’t Australia just building its own submarines. This is us doing it in a trilateral partnership with our most important partners. Today we saw the Prime Minister of Australia, the President of the United States and the Prime Minister of the United Kingdom standing side by side announcing their government’s commitment to the long-term nature of this project. That is something that industry should be able to take to the bank, particularly when you layer on top of it the specific announcements that have been made today about the investments in South Australia.

JOURNALIST: But what about those supply chain companies that were hoping to be well and truly into that, you know, Barracuda build now? What do you say to them?

MALINAUSKAS: Well, what we’ve got now is a continuous pipeline of work. There is the life of type extension program around the Collins class, and we should remember that’s over 1,000 jobs in of itself. We’ve got 4,000 jobs going to be allocated towards building the construction yards down at Osborne and, of course, there is ongoing work happening around the building of the Hunter class Program currently. So, the issue in the past around the valley of the death and the difficulty for private enterprise to invest has been the stop–start nature of policy and today’s announcement, which is on the back of an 18-month program, remember, is a confirmation about the long term continuity of the work going forward. And that’s what industry needs. In fact, more than that, that’s what young South Australians need.

I mean, South Australians have a lot of opportunities to make different career choices at the moment, and I think young people can be forgiven for making choices around “I want to go down a path that provides me the most certainty around a decent standard of living going forward.” And naval shipbuilding has had so much chop changing in policy that it’s been difficult for a young person to make this decision up until today, up until today. Because after an 18 month exhaustive process to analyse the optimal pathway, we now have confirmation of it, which has reaffirmed the commitment to South Australia into the long term. And that makes a lot of choices for both industry and young people a lot easier to make.

JOURNALIST: Is there a target for using local suppliers in the supply chain?

MALINAUSKAS: Well, I think that goes to the more top-line point, which is our focus now is less on what are the mandatory contractual requirements to guarantee certain work to South Australians because we got more work than we know what to do with. So, this is about us grabbing the opportunities to build up our capability to get as much work as we can on the basis of what we can offer not just the Federal Government but indeed other governments around the world. We as South Australians have to be taking this opportunity for what it is and then aspiring to contribute not just to the submarines that are built here in Adelaide but to the ones in the UK as well, and we’re capable of doing it. We know that there is a range of examples where defence industry, primarily from South Australia, has contributed to global security. And we have developed cutting-edge programs that have been put to active use on overseas platforms. So, this is a chance for us to expand on that and that’s where the focus needs to be.

JOURNALIST: Premier, if a future Federal Government decides to order more off-the-shelf submarines from the US, where will that leave the plans for manufacturing in South Australia?

MALINAUSKAS: Well, again, this speaks to something that’s new in its tone and nature out of today’s announcement and this is from the State Government’s perspective, is you’ve now got a Federal Government that has a clear and robust plan that it has announced totally transparently to the world, and that includes the acquisition of submarines from the US Navy. Now, the transparency of this plan is what should be giving everybody confidence about how serious a plan it is, about how genuine the effort is from the Federal Government to get us on track to address the capability requirements of the Navy, but also delivering on the industry uplift that is essential here in South Australia.

So, I don’t think that there is risks about the expansion of that. The Commonwealth has got a specific plan. That plan is put in place to meet the capability gap, which we always knew it had to after 10 years of prevarication on the question. But now that we know what that plan is, we can focus on what’s required today to build the workforce and the infrastructure that is required so we’ve got ongoing nuclear submarine sovereign manufacturing capability here at home.

JOURNALIST: What details can you give to South Australians who might be concerned about a nuclear industry at Osborne? What’s going to happen with that fuel? Is it going to be stored in the submarines here? Can you give some detail on how that will work?

MALINAUSKAS: Well, I can only speak to the detail that is on the public record, which is what we’re all understanding is that the nuclear reactor will come from overseas and be installed in the submarine here in South Australia. This is of course, is a safe enterprise. It’s technology that’s existed for decades. It’s, of course, complex in its nature. I don’t want to somehow suggest this is simple. But what we know from both the US and the UK and the experience of the seven nations that the Minister for Foreign Affairs referred to, this can be done safely, and South Australia will be no exception.

JOURNALIST: Are you concerned that –

MALINAUSKAS: Yes, and I might just invite Penny –

FOREIGN MINISTER: I want to add, if I may, a couple of things. First, on the point about why can industry rely on this. I’d say there’s sort of three points. First is the commitment and transparency that this government has shown. We were briefed about this prior to the election. We backed this on a bipartisan basis. We have worked very hard across government and with the Malinauskas Government to make sure we announced not just an announcement but a plan for the next decades to do with capability and industry. So, that’s what you have in front of you today and I’m sure there will be a lot more, many more questions over the days and weeks to come. And we did so with an understanding of the scale of the endeavour. This is a massive uplift for Australia and for South Australia.

The second point I’d make is bipartisanship. That does matter.

And the third is the trilateral nature of this. We are now working in lockstep with two of our closest partners to develop the capability. As Minister for Foreign Affairs, if you’ll let me, I want to say something about why we’re doing it. Australia seeks this capability because we want to help keep the peace. We seek this capability because we want to contribute to a strategic equilibrium, a balance in our region that is peaceful, stable, prosperous and in which sovereignty is respected. That is why Australia seeks this capability.

And we will do so, we will utilise this, we will engage in this, keeping to the highest standards of safety. And they’re not just words. Australia has an impeccable record when it comes to non-proliferation. And we were, under Bob Hawke, also the country that signed the Treaty of Rarotonga in relation to the Pacific. We will observe to the highest standards our obligations under the non-proliferation treaty, under the Treaty of Rarotonga, and we will ensure that we have at home and part of the work that we have been doing has been on this, the highest standards when it comes to the safety of the construction of this capability.

JOURNALIST: Australia is open to storing waste from nuclear reactors in submarines in the longer term. Is Australia also open to a civil nuclear industry such as nuclear power should that be –

FOREIGN MINISTER: No, that’s not the Government’s policy.

JOURNALIST: Senator, the feeling among manufacturing workers at the moment is that there isn’t enough work continuing to fill the skill gap. Is the Federal Government going to announce another project to maintain the workforce?

FOREIGN MINISTER: Well, I mean, I was the shareholder minister for the ASC and I was, I’ve been involved in many discussions over many years with workers and their representatives, and what I would say is what we have announced today, as the Premier said, is an upscaling of work and capability where our key constraint will be workers and skills. That’s what we have to focus on. There’s not going to be any lack of work. Thank you very much for your time.

ENDS

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