AUS Minister for Defence Interview Transcript 1-2-11

MINISTER FOR DEFENCE
STEPHEN SMITH, MP
TRANSCRIPT: JOINT PRESS CONFERENCE WITH MINISTER FOR DEFENCE MATERIEL JASON CLARE, CANBERRA
TRANSCRIPTION: PROOF COPY E & OE
DATE: 1 FEBRUARY 2011

TOPICS: ADF support in responding to the Queensland and Victorian floods; Cyclone Yasi; Egypt; Enhanced force protection in Afghanistan; Update to Project of Concern; the RAN’s amphibious vessels; Defence budget; and ADF leadership.

STEPHEN SMITH: I'm very pleased to be here with Jason Clare, the Minister for Defence Materiel. We have a range of announcements today but before I deal with those joint announcements can I just make some general remarks? We always knew that this year would be a big year for Defence particularly in terms of procurement and capability and reform in those areas but it's already been a big year for Defence with the work that Australian Defence Force personnel have been doing, assisting in the floods in Queensland and Victoria. Can I again compliment the good work of our Defence personnel.

At its peak we had about 1900 personnel in Queensland. Currently we have a substantially smaller complement assisting in Queensland and also in Victoria and that will continue in specialised areas.

Can I just make some remarks about the cyclone off the Queensland coast? It currently is suggested the cyclone will bear down either on Cairns or Townsville. We, of course, will monitor it and take it step by step but firstly we have assets, of course, in Townsville so we're taking our own precautions in terms of readiness for any possible cyclone but secondly, as we've indicated privately to Queensland authorities, and indicated publicly, that if there is any assistance that Defence can provide in the aftermath of any such cyclone, and we receive a request from the Queensland emergency management authorities then of course we will respond positively.

Can I just also indicate so far as Egypt is concerned, that the Prime Minister and the Foreign Minister have made extensive remarks on that but just to indicate that, as part of the increased assistance and additional resources to our mission in Cairo, that eight Defence personnel will join the mission on a temporary basis to assist with communications and logistics and to assist the mission staff in the consular assistance they provide to Australian citizens

Jason and I today are making three announcements and those papers have been distributed. I'll make some general remarks and then give Jason the opportunity to make some remarks on some of the detail.

Firstly, in terms of force protection in Afghanistan, you'll recall that my predecessor, Minister Faulkner, put in place a Force Protection Review in 2009. That saw 48 recommendations for improved force protection by 2012-13 with an all-up cost of some $1.6 billion. Minister Faulkner and I have reported regularly either publicly, or to the Parliament on the implementation of that review.

I'm pleased to advise that 40 of the 48 recommendations have either been completed or are on track. Of the eight remaining, six are subject to monitoring and oversight and two projects will not proceed. One is to do with hearing protection. The technology is not available to deliver that so that project will not continue. A second project, a high technology anti-IED measure will also not proceed on the basis that the technological application is not currently available.

I won't go into too much detail on the outstanding measures but, as I've said in the past, one includes additional hardening of accommodation in Tarin Kowt

Importantly Minister Clare and I are announcing that since 28 December, C-RAM, the counter rocket, artillery and mortar mechanism has been in place. This is a substantial improvement on the predecessor which was provided by the Singaporean Defence Forces. There's been a substantial technological upgrade. It has been successfully implemented and it has seen successful operation on two separate occasions. It gives our people on the ground more time to take precautions and evasive action when rockets, artillery or mortars come into our base at Tarin Kowt. In the course of 2011 we will be extending this facility to our forward bases.

Secondly, we're announcing changes to the projects of concern list. We're announcing that the watercraft project has been cancelled and will not continue. That's a project which has been outstanding for some time. It was started by the previous government in 1997.

The great tragedy of this project is that when the watercraft were produced, they were not in a position to be utilised by Australian Defence Forces so that project, regrettably is cancelled at a cost of some $40 million to the Commonwealth. It's a longstanding project and, as a consequence, very many of the lessons learnt from that project have already been caught by the changes or improvements made in the procurement area following the Mortimer and Kinnaird reports.

But I indicated at the end of last year, in the first quarter of this year the Government is looking, on my recommendation and Minister Clare's recommendation, to make further changes and reforms in the procurement and capability area We need to have early warning mechanisms to avoid these outcomes occurring in the future.

So we are looking to a reform package in the first quarter of this year, to add to the measures the Government has already put in place, including, of course, the Projects of Concern.

We're also announcing that the helicopter project, the proposed replacement for the Sea Kings and the Black Hawk will be the subject of a fully fledged diagnostic review. That project has been the subject of delays and technological difficulties.

Finally and very importantly, we are announcing that I have asked Navy and Defence to provide a comprehensive new transition plan for moving to the amphibious vessels, the Landing Helicopter Dock. These are two very large vessels under construction in Spain. The first hull goes into the water in Spain later this month.

Until very recently, the transitional arrangements provided for us to continue to use our current amphibious vessels, the Manoora, the Kanimbla, and the Tobruk, to transition to these large Landing Helicopter Docks.

In the course of January and on Friday I have received advice to two effects. Firstly the Manoora and the Kanimbla were put under operational pause in September-October of last year and are subject of a seaworthiness report. The advice that I've received in the course of this year from Navy and Defence is that the Manoora should be decommissioned and the Government has accepted that advice.

The most recent advice I have received in respect of the Kanimbla, as late as Friday, is that the Kanimbla also requires substantial remediation work and we're not expecting to see now the Kanimbla back in operational activity until at least the middle of 2012.

As a consequence of that I've asked Navy and Defence to produce and provide to the Government a new transitional plan. One part of that, of course, which I've already indicated publicly, is the prospect of acquiring, either by lease or by purchase, from the United Kingdom, a Bay Class amphibious vessel. This was a matter that I raised with UK Defence Secretary Fox at the recent AUKMIN meeting and I'm proposing to have a further conversation with Defence Secretary Fox in the course of this week.

That's essentially the framework of the announcements. I'll ask Jason to make some remarks in respect of the detail but I'll finish on this general point which is we have seen successive Australian governments get into difficulties so far as projects are concerned. The Government has made a very strong effort to put Defence procurement, Defence capability and Defence expenditure subject to external parameters.

What we now need to meet those external parameters of the White Paper of Force 2030. The Strategic Reform Program requires much more internal rigour and early warning mechanisms to avoid these projects going off the rails as they have in the past. You can expect further reforms to be announced by the Government in the course of the first quarter of this year. Jason.

JASON CLARE: Thank you, Stephen, and as Stephen has mentioned, it's going to be a very busy year for Defence and in particular for Defence Materiel. We've already seen the good work that our troops and our defence equipment have done in the floods in Queensland over the course of the last few weeks.

In Afghanistan we've now delivered into service the C-RAM system at Tarin Kowt and that's providing important support for our troops that are based there in Afghanistan.

I want to take this opportunity to thank Army and thank Saab, the company responsible for putting that equipment into service ahead of schedule and, as the Minister has said, this is equipment, an early warning system for rockets, that provides extra warning for our troops and the extra opportunity to take cover And an extra few seconds can be all the difference between life and death

In addition to that we're also delivering into service in Afghanistan this year new combat body armour. Last week I visited Bendigo, the Australian Defence Apparel Company, where they are now producing new combat body armour. It's a lighter, more comfortable body armour that the Third Mentoring Taskforce will take with them when they deploy into Afghanistan in the middle of the year.

In addition to that, you might recall that last year I announced a new combat uniform for our Defence troops, in particular for the mentoring task force, and that new uniform will be available for our troops in Afghanistan in the next few months. It's a big year for air force. We'll take delivery this year of the remaining Super Hornets for the air force, as well as transition into service the Wedgetail air craft.

And as the Minister has mentioned, it'll be a very big year for navy as they transition to the new landing helicopter dock ships. These ships are bigger than any ships navy's ever operated before. They're bigger than our last aircraft carrier, HMAS Melbourne.

They're two football field lengths in size. They can carry up to 1000 troops. They can carry up to 100 armoured vehicles as well as 12 helicopters. And the way they operate will be very different to the ships that we've got now.

Because of the decommissioning of the Manoora as well as the age of our other amphibious ships, we've asked Defence to come forward with a comprehensive new plan to make sure we have a smooth transition to the introduction of these new large amphibious ships in the middle of this decade.

Finally, it's a big year for reform. A big year for reform in the area of project management. That deals with the initiation of projects, the management of them once they've been approved by government, but also their remediation. And we've updated the projects of concern list today, cancelling one project - a very old project initiated more than 10 years ago in 1997.

When we came to government we put this on the projects of concern list that we established in 2008, and asked Defence to conduct a review of these ships, and what that found was that these ships weren't the right size and weren't the right weight to sit on the Kanimbla and the Manoora, and they weren't fit for any alternative military purpose.

And that's why we're cancelling this project today - based on the advice of Defence.

We're also conducting a high-level diagnostic review of the MRH 90 helicopter project, and this is an important part of putting more rigour and a higher standard in this process, getting Defence and external experts to look at all these projects, and provide high-level advice to government on how to proceed with remediating and improving and turning these important projects around.

It's one part of a number of reforms that I'll bring forward this year to strengthen the projects of concern process. Another part of that will be meetings that I'll hold with the chief executives responsible for all of these projects.

This month I'll meet with the chief executives responsible for all projects on the projects of concerns list to ensure that at the highest levels of government, the highest levels of Defence, and the highest levels of industry we’re focused on the action that's needed to make sure that we turn these projects around and ultimately get them off the list.

QUESTION: How much are the LHDs, if I may ask, and given that they're helicopters not aircraft, [indistinct] aircraft carrier, what does that say about our strategic understanding of how they'll be used and how [indistinct].

STEPHEN SMITH: Well I'll let Jason deal with cost on the basis of Defence Materiel. But the Landing Helicopter Docks, large amphibious vessels we need for amphibious purposes - for also helicopter landing purposes.

They are part of the Force 2030 strategic force structure, and they're an important part of our amphibious capability.

As Jason has indicated, these very large landing docks will be the largest ships Navy has ever operated - larger than our most recent aircraft carrier. So the Tobruk, the Kanimbla, and the Manoora, which currently provide our amphibious list, and our amphibious docking, have always been scheduled for replacement. Indeed the Tobruk, the Manoora, and the Kanimbla are now some 40 years old.

What we've discovered more recently is the seaworthiness and operational fitness of the Manoora and Kanimbla has been the subject of adverse reports, and we need to take fresh and new steps to make sure that we make the transition appropriately to the new Landing Helicopter Docks.

That's one reason I raised it with Defence Minister Fox. And we'll also be in discussions with other countries to look at the possible leasing procurement or joint utilisation of amphibious vessels.

JASON CLARE: The first of the LHDs will hit the water in Spain later this month, on 17 February, and they'll stay in Spain there for an extra year to do more fit out work.

And then the hull of the first LHD will arrive in Melbourne in the middle of next year. And as I said before these are very big ships. They're different to anything that navy has previously operated. One LHD has the capability of the entire amphibious fleet that navy currently has.

The cost of the project is in the billions and that is why it is important that we take the steps now in 2011 to make sure that we have the transition process right so that when these ships come in to operation in 2014 and 2015, that transition is a smooth one.

As I said, this is a ship that is very different to the ships that we currently operate. It operates a floating dock. They're effectively a moving airport, because they can have six helicopters take off at any one time, and hold up to 12 helicopters. The electrical system that operates is very different in nature as well - and they're a very different ship to drive. It's like moving from driving a car to driving a truck, so it's very important that we get the transition plan right.

QUESTION: All of these changes, taken together, is that going to blow out the Defence budget, or is it all going to be funded within a $20 billion, [indistinct] $20 billion of savings…

STEPHEN SMITH: No no. We are absolutely committed to sticking to the external parameters, as I've described them in the past, as a result of our decisions on the 2009 White Paper, the Strategic Reform Program, and the budget rules.

Part of that requires that $20 billion worth of strategic reform savings be found and reinvested in Defence. So all of this is proposed to be done in accordance with decisions that the Government has previously made, arising from and flowing from the 2009 White Paper and the Force 2030 structure.

I think the important point - that regime, if you like, for the first time in the modern era, probably forever, first time ever, put external parameters sensibly around the Defence budget and the Defence procurement and capability plan.

And we're not unique in this respect. You've seen in recent times Secretary of State for Defence Gates moving to address comparable issues in the United States. And you've also seen Secretary of State for Defence Fox doing precisely the same as a result of the United Kingdom Security and Force Structure review in the UK.

So we live in a time where we need to ensure fiscal rigour and value for money, so we work within those external parameters.

The key challenge now - and I think this is the big challenge for Defence, the big challenge for the Government, is to make sure that internal rigour matches those external parameters. And that's why a key priority for Defence - a key priority for Jason and I this year - is to put in place better accountability mechanisms, better fiscal discipline internally within Defence to make sure that we meet - and continue to meet those external parameters.

In terms of Force 2030 or the White Paper, this will also be a big year. Because very importantly, the Defence planning guidelines, 2011, will be the first opportunity to carefully examine the changes in strategy, if any, following on from the White Paper and any changes in need for disposition of capability.

The White Paper itself envisages, on an annual basis, a review of Defence planning guidelines to see whether adjustments are required in the run up to the next White Paper in 2013. 2010, of course, was in the immediate aftermath of the White Paper, so no substantial changes were effected.

But this will be a big year in terms of Defence planning guidelines as its in a sense a halfway point between the '09 and the 2013-14 White Paper, but also the first realistic opportunity to have a look at whether any planning guideline changes are required as a result of any changes in strategic posture.

QUESTION: What exactly are the problems with NFH90? What's that say for NFH90?

JASON CLARE: I can deal with that if you like. There's been some issues with engine failure as well as a shortage in supplies and what that has meant that there's been a delay in bringing that aircraft, those helicopters into service - something in the order of 12 months for navy and 18 months for army.

That's why I'm concerned enough about this project to want defence to do a full diagnostic analysis of it, identify what can be done to remediate the project and bring it back on to schedule and have the project fully implemented as soon as possible.

It's a very important project and part of the rigour that we need to maintain here is to make sure that defence at the highest levels, in this case the deputy CEO of the DMO will chair what we call a gate review or a high level defence review, with the assistance of independent experts, to provide advice to us on what are the necessary steps for government and for defence and for the companies responsible to make sure that this project is fully implemented as quickly as possible.

QUESTION: [Inaudible question]

JASON CLARE: Oh it's a separate and different project. Recommendations about that will come to government later in the year.

QUESTION: What does this - this suite of problems taken as a whole, what does it say about the competence of DMO hierarchy past or present?

STEPHEN SMITH: Well, as Minister for Defence and Jason as Minister for Defence Materiel, we've been working very closely with the senior officers in Defence, in the Services and in Defence Materiel, and I make no reflection on any of those personnel other than to say I continue to be impressed by the professionalism and the dedication that those officers, either in uniform or civilian personnel in defence, display.

But we have to acknowledge in the past and it’s continuing, that we have seen serious difficulties with procurement and capability and we cannot allow that to continue, and that is why, since we came to office, you have seen the reform program already in place, whether it's as a result of the Mortimer Review, the Kinnaird Review or the creation of the Projects of Concern list, all geared to reducing risk and minimising the prospects of these capability projects going awry into the future.

Having said that, when you're dealing with new capability, invariably there will be difficulties of new technology, of new applications. So there is always a risk associated with a large Defence project. What we have to do is to ensure that risk is minimised from day one. We see plenty of post mortems, whether it's by the Audit Office, or whether it's by the Defence Materiel Organisation.

We see plenty of post mortems. We have to get into very much the detail of prevention as the cure to these ongoing difficulties, and we're not an orphan in this respect. Comparable countries, whether it's the US, UK, Canada, or New Zealand, also face similar challenges.

QUESTION: How difficult will it be to make [indistinct]?

STEPHEN SMITH: As you would have gathered from the cancellation of that project, that was not a project which Defence covered itself in glory at a cost of some $40 million to the Australian taxpayer. This is precisely what we are seeking to avoid in the future.

QUESTION: How soon will you be able to acquire a bay class ship from the British?

STEPHEN SMITH: We are looking at either a lease or a purchase of a Bay Class, and I've already had discussions with Defence Secretary Fox and I'll continue those discussions by phone this week. That is one option. What has become clear in recent weeks is that the original transition plan which was dependant upon the ongoing operational capacity of the Manoora and the Kanimbla and the Tobruk will not now be sufficient to make the transition to the new Landing Helicopter Docks.

So we need to put in place a new transitional arrangement. The prospect of leasing or buying a Bay Class amphibious vessel from the United Kingdom is one option. We are looking at other options including the possibility, for example of shared or cooperative service with close countries and allies.

QUESTION: Are you happy with the performance of Dr Stephen Gumley?

STEPHEN SMITH: Absolutely. I have the highest regard for Dr Gumley, as I have the highest regard for the Secretary of Defence, as I have the highest regard for the Chief of the Defence Force and the Service Chiefs. We're dealing here with an institutional problem that the institution of Defence itself has to grapple with and come to terms with. In the past there has been too much of an attitude or a culture that, irrespective of the cost, irrespective of the outcome, a Defence project was somehow immune from rigour.

That is no longer the case. It has not been the case under this Government and we need to put in place further detailed internal rigour and early warning systems to avoid the sorry repeat of these examples, of which the ones we've detailed today are but one or two.

QUESTION: Sorry, have you been frustrated because defence is institutionally demanding and requesting things that aren't quite ready yet or they're wanting too many additional pieces [indistinct]?

STEPHEN SMITH: I, as Minister for Defence and a member of the National Security Committee, have to make sure of two things - that we work assiduously to make sure that our strategic posture is right, and then, particularly when it comes to Defence, that we have the assets to match that strategic posture. That has proven in the past difficult to effect with efficiency, difficult to effect without mishap, difficult to effect without cost to the Australian taxpayer.

It's that area that we need to do much better. So that is why both I and Jason as Defence Materiel Minister have indicated we see this as in very many respects, our highest reform priority for the first quarter of this year.

QUESTION: Has the Manoora sailed its last operational mission now, [indistinct]?

STEPHEN SMITH: Well the Manoora has been on an operational pause since September, October. It's currently in dock and on the recommendation of the Chief of Navy, it's recommended that it be decommissioned and we've accepted that advice, it will be decommissioned.

QUESTION: And then never again...

STEPHEN SMITH: It will be decommissioned.

QUESTION: And there's a chance that Kanimbla could be decommissioned before it fails as well.

STEPHEN SMITH: I think it's always important to take these things step by step, but when I received the initial advice and when Jason received the initial advice on the Manoora, the advice on Kanimbla was not as adverse as it is now. The most recent advice which we received as late as Friday of last week was that further seaworthiness inspections had indicated further significant difficulties with the Kanimbla.

The current advice is that it will take until the middle of next year for those adverse findings to be rectified. So I hope that that will be the outcome but we need to take that step by step.

QUESTION: Minister, what's the transition plan for the CDF and the Service Chief?

STEPHEN SMITH: Well the Chief of the Defence Force’s term expires in June of this year The other Service Chiefs' terms expire at about the same time, in July. It's not something that I'm proposing, obviously, to speculate about. In due course the Government will make decisions, and when the Government has made decisions about these matters, they'll be announced.

The only point I would make in addition to that is that the Chief of the Defence Force has made it clear publically that he's not proposing to proceed beyond his current term. I saw a report this morning speculating on some ill health Can I just, on behalf of the Chief of the Defence Force, debunk that straight away?

On most occasions when I have my early morning conversation with the Chief of the Defence Force he's either on a five kilometre run, or a 30 kilometre bike ride. So he's in perfect health, but he's made it clear publically that two terms is sufficient for him. And at the appropriate stage the Government, and the defence community, and the Australian community generally, will make its compliments to him for the very fine work that he has done.

QUESTION: Minister, do you have any update on the Australian who was injured in Afghanistan on Friday, and do you have any details as to how he came to be injured in an accidental shooting?

STEPHEN SMITH: Defence has issued a press release earlier this morning. That indicates that at this stage the wounding has all of the appearances of an accident Defence has commissioned an inquiry into this matter, and in those circumstances it would not be appropriate for me to speculate. We should let that standard inquiry run its course.

Suffice to say that the soldier was very seriously injured. It's expected that in the very near future he will be transported to Germany for ongoing hospital treatment. And we of course wish him and his family all the best.

We now have, terribly, some 160 defence personnel who've been wounded in Afghanistan since we arrived a decade or so ago. So our thoughts are obviously with him and his family. But I'm not proposing to speculate on the nature of the incident. I'll leave that for the Defence inquiry in the usual way.

QUESTION: [Indistinct] at the time?

STEPHEN SMITH: Well I'm not proposing to be drawn on that.

QUESTION: How would Australia jointly operate a vessel with, I presume, Indonesia? It would be a first for us [indistinct].

STEPHEN SMITH: I'm not proposing to speculate in that respect. I think if you look at the use of our amphibious vessels, often they have been used not just for defence or military purposes, but for disaster relief.

The Kanimbla, for example, most recently was used for disaster relief in the face of an Indonesian earthquake. We have worked very closely, for example, in disaster relief in our region with New Zealand, and New Zealand have amphibious vessels.

So there is a prospect that we could work closely with New Zealand in that context, and this is something that I will discuss with my New Zealand counterpart when we have the annual Australia New Zealand Defence Ministers meeting in the near future.

QUESTION: Will the HMAS Success report be released?

STEPHEN SMITH: I was proposing to volunteer that, so I'm pleased you've reminded me. The CDF and I are working very hard to put the Government and the Chief of the Defence Force in the position of being able to release a redacted version of that report as soon as possible.

The report needs to be redacted because it deals with individuals who have a right to fair process. We are very keen to put the document into the public arena in a responsible manner as quickly as possible.

The Parliament comes back next week for the first of its sittings. I'm not in a position to undertake that we will be able to make it available in that first week, but we are working very hard to be as transparent as possible, to release that report in a responsible manner, whilst protecting the interests and the rights of individuals concerned, potentially adversely affected.

But I repeat the remarks that I made when I announced the receipt of the report from Commissioner Giles; this is a report which does not make good reading. This is a report which makes and draws attention to very serious issues in terms of discipline, in terms of authority, and in terms of culture on board the Success, and possibly wider.

So we want that process to be transparent. In any event my predecessor, Minister Faulkner, indicated to the Senate Foreign Affairs and Defence Committee, that that Committee would be kept fully informed as to progress, and I propose to honour that commitment.

QUESTION: Minister, what do you make of the situation in Egypt with the apparent move towards democracy? We don't - obviously don't know how it's going to unfold, but if we don't like what the Egyptians decide at any subsequent democratic election, like in Gaza with Hamas, it can be a very unstable region. Are you worried about that?

STEPHEN SMITH: I'm not proposing to be drawn on those issues which have been exhaustively canvassed both by the Prime Minister and by the Foreign Minister, both overnight and early this morning.

Suffice to say, as I did earlier, that in terms of a Defence interest, or a Defence role, as part of the additional resources to be provided to our mission in Cairo there will be eight Defence personnel who will assist on communications, logistics, and general assistance to the mission, as it discharges its obligation to assisting Australians who want to leave Cairo.

We have no Defence assets per se in Cairo. We of course do have Australia Defence Force personnel who are part of the United Nations Middle East Peace Keeping Group, and they of course are situated in the Sinai, near the Israeli border.

QUESTION: Just on the cyclone affair now. You said that there's a - you're willing to help out at the aftermath. Is it - do you think - do you see any role for the Defence Force in preparing the region, like for example, evacuating people?

STEPHEN SMITH: Well again, we take it step by step. Firstly, both in Queensland and also in Victoria on a lesser scale, we responded to requests made to us by the relevant State emergency management authorities, of Queensland and Victoria respectively.

There is a prospect of a cyclone crossing the Queensland coast, and that could be in the area of Cairns or Townsville. So two points, and I'll repeat them. We of course have assets in Townsville, so we're taking our own precautions.

Secondly, if there is an adverse cyclone, and the Emergency Management Authority of Queensland ask for our assistance, then we will respond in the same way and manner that we did with the floods, that is we will respond positively to any request for assistance.

QUESTION: Just also there was a report this morning that the Afghan Government could be walking away from its agreement to take asylum seekers from Australia. Could this agreement be dead before it even starts?

STEPHEN SMITH: Well you'd need to speak to my colleague, Minister Bowen, the Immigration Minister. I've heard reference to that, but I haven't seen a detailed report. So you should address that to Minister Bowen.

QUESTION: On the [indistinct] question, you said it's at dock. Which dock do mean?

STEPHEN SMITH: It's in Sydney, Fleet Base East, in contradistinction to Fleet Base West, which of course is Rockingham and Garden Island in Western Australian, or as I sometimes say, the Garden Island, but that's a West Australian thing.

Okay, thanks very much. Cheers.

ENDS

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