Senator the Hon Mathias Cormann

PRIME MINISTER: Well, thank you very much. I said this is a term of delivery and last night you saw we delivered on our commitment to the volunteer firefighters. Victoria’s volunteers, the Country Fire Authority defend us, they defend the lives and property of Victorians against the worst nature can throw at them. Their volunteerism, their independence, their autonomy is being undermined by a Labor state government, it is supported by the Federal Opposition here at the behest of a militant trade union.

We said we would amend the Fair Work Act to protect them and we have done so. The Senate passed that Bill last night. Now delivering is our mission this term of Government and a key element of our commitment to secure Australia’s future, to secure the capabilities the Defence Minister needs to keep us safe. 

To secure our economic future with the advanced manufacturing and the jobs that our Defence Industry Plan will deliver. To do that, we are making important structural decisions, restructuring announcements today about ASC Limited, Australian Submarine Corporation. Now the shareholder minister, the Minister for Finance, Senator Cormann, will take you through the details of that restructuring in a moment. 

But I want to remind you of the way in which we have tackled this task of shipbuilding, of naval shipbuilding.

We have commissioned, or are commissioning, 54 naval vessels.

In six years of government the Labor Party commissioned not one, not one. They neglected our industry, they neglected our defences.

We are spending $195 billion on defence procurement over the next decade. That will give us the capability that we need to keep us safe, but it will also secure our economic future because these industries, these defence industries, are at the very cutting edge of technology. This is critical investment for our future, for our security.

There is a lot of investment that needs to be undertaken and it is being undertaken. We have shipyards that do not have the capacity to undertake the scale of construction we need. We need to expand ship lift capacity. We need to upgrade infrastructure. We need builders, engineers, metal workers and technical experts, to design and install this infrastructure and looking ahead to the ship builds themselves, beginning with the Offshore Patrol Vessels in 2018, we need the skilled trades to support the structural, paint, part, mechanical and electrical work in production. As well as all the skilled project and supply chain managers and engineering expertise right across Australia.

Now as I said, this stands in stark contrast to the neglect of the Labor Party. They failed to commission a single naval vessel from an Australian yard during their entire time in office. This led to the downturn in our shipbuilding industry - it saw the industry lose hundreds of jobs, skills and experience.

During their time in government, Labor cut $18.8 billion from the defence budget. They delayed 119 defence capability projects. They reduced 43 projects in scope and they outright cancelled another eight, risking critical security and capability gaps.

Now, we have been cleaning up that mess, making up for that neglect, commissioning the vessels, setting out in our Defence White Paper, our Defence Industry Investment Plan, a way forward to secure our future, to secure Australians with the capabilities our ADF needs, and to secure our economic future with the technology, the skills, the employment, the jobs, the advanced manufacturing that will ensure that we are and become an even more advanced 21^st century economy.

So I will ask the Minister, the shareholder Minister to talk further about the restructure.

MINISTER FOR FINANCE: Thank you very much Prime Minister. The structural separation of ASC into a shipbuilding, a submarine sustainment and an infrastructure business will ensure that ASC has the best possible structure to pursue future shipbuilding opportunities and to support the Government’s naval shipbuilding objectives.

The infrastructure company will hold and upgrade shipbuilding and infrastructure assets to support future shipbuilding and submarine programs. The shipbuilding company will employ the shipbuilding workforce and complete the Air Warfare Destroyer project, while the submarine sustainment company will employ the submarine sustainment workforce and sustain Collins Class submarines.

Importantly, these structural changes which we are announcing today, will not impact ASC employees’ terms and conditions. It is a structural separation, which is designed to ensure that ASC is in the best possible position to pursue future shipbuilding opportunities and support the Government’s long term plans for the Australian naval shipbuilding industry.

These reforms build on the successful work we have done to reform the Air Warfare Destroyer Program and the Collins sustainment reforms. Specifically, this reform will deliver a more efficient and flexible approach, to facilitate the necessary investment in infrastructure and workforce capability and the significant ramp up in shipbuilding related jobs required to better support multiple build programs under our naval shipbuilding plan.

The intention is for the full structural separation of ASC to be completed by the middle of 2017.

MINISTER FOR DEFENCE INDUSTRY: Thank you Prime Minister, and Mathias, and Marise. Today is another example of how we are getting on with the job in defence and defence industry. In the last 100 days, we have signed the contract with DCNS for the design and mobilisation of the 12 submarines.

We have chosen Lockheed Martin to be the combat system integrator for the submarines. We have promoted Australia as a maintenance and a sustainment hub for the Joint Strike Fighter and sold Australian exports overseas.

Today, this announcement about the structural separation of ASC is a really important foundational stone in all the next things that will happen for Offshore Patrol Vessels, Future Frigates and the Submarine program, so it is a very significant day.

What it will do is create, at Osborne South, the most modern and one of the busiest shipyards in the world. At Osborne North, straight across the carpark we will establish one of the most modern and busy submarine shipyards in the world. It will bring to Australia, a significant multinational defence subcontractor in DCNS and that will require us to build significant infrastructure at Osborne and eventually at Henderson as well - driving jobs, driving growth, creating high tech advance manufacturing in jobs, the kind of infrastructure that will make Australia one of the centres of naval and submarine shipbuilding in the world and potentially another new export industry for our country. So it is a red letter day for the defence industry. It has been terrific to get it to Simon and Mathias, and the Cabinet and the NSC and the Minister.

MINISTER FOR DEFENCE: Thank you very much, Prime Minister and to colleagues. This afternoon, talking about the structural reform of ASC is a fundamental part of the reform of Australia's naval shipbuilding industry in line with the RAND Principles with which many of us are very familiar.

This is a structural reform which will support the government's shipbuilding industry objectives and our very significant investments in naval shipbuilding capability in South Australia, across many many decades to come.

It is absolutely vital that we have the right shipbuilding structures in place to deliver on what are very ambitious plans to deliver our historic continuous naval shipbuilding program. It is absolutely essential. Whether it is our Offshore Patrol Vessels, our Future Frigates, the 12 Future Submarines and indeed the Pacific Patrol Boats being constructed in advance of those. These are platforms which will not only form a core of our naval capability, in the case of the Pacific Patrol Boats provide much needed engagement and support in our region and they will do that for many decades to come. They need to be delivered when we need them and within the budget allocated.

The Government has taken the decisions that we are announcing today in relation to the Australian Submarine Corporation to ensure that we have the best possible structure in place to achieve that in the timeline that we have advanced in the budget that we have clearly advanced in the integrated investment program and the Defence White Paper. Given the scale and the complexity of the shipbuilding program, this foundation is absolutely pivotal.

PRIME MINISTER: Thank you very much. Can we have some questions on the announcement?

JOURNALIST: Prime Minister, will any of these components of ASC be privatised and what will the relationship be with companies like DCNS?

PRIME MINISTER: Well perhaps I’ll ask the shareholder to address that.

MINISTER FOR FINANCE: The short answer, is no. The Government has no plan to privatise or sell any of the three separated businesses. As I have indicated in my opening remarks, the reason we are pursuing a structural separation is to give ASC the best possible opportunity to participate in the opportunities that come with the very substantial naval shipbuilding plan that the Government has previously announced. All of the other decisions in relation to procurement, in relation to submarines or other shipbuilding programs are a matter for Defence. 

JOURNALIST: Minister Pyne, if I could ask you – what are the job effects here? Will there be a gap, say through the closure of Holden in Adelaide, and the ability of any of those workers to get jobs in the shipbuilding and submarine projects?

MINISTER FOR DEFENCE INDUSTRY: Well, Paul, all the decisions that the NSC and the Cabinet have made for the last couple of have been designed to ensure that the valley of death that Labor left us in terms of shipbuilding is as mitigated as possible. So the Air Warfare Destroyers are continuing to be built at Osborne right now. They will be completed by the end of 2017. In 2018, the Offshore Patrol Vessels begin at Osborne. In 2020, the Future Frigates begin in Osborne. We are trying to make sure that we keep as much of the workforce in place as possible and we need to have a lot of infrastructure built, by the way at Osborne over that time. And early next year that will need to begin. So there will of course be workers who are doing the infrastructure which is an enormous enterprise. For example, the shed that will be needed, or the factory that will be needed at Osborne North as part of the submarines is taller and wider and longer than the Adelaide Oval stadium. It is an enormous thing. You won’t quite see it from space but it will be a very big shed so all that will take a lot of work and as a consequence we want to keep the workforce in place all that time. 

JOURNALIST: So who will build that shed? Will ASC build it or will DCNS? 

MINISTER FOR DEFENCE INDUSTRY: Well, one of these businesses will be an infrastructure business and therefore there will be the shipbuilding business, the submarine sustainment business and there will be an infrastructure business. The intention is that the entire area at Osborne South and North will be owned by the Commonwealth and that will continue to have its ownership of the infrastructure which is why the Prime Minister said before the election that the assets would remain in public hands. To that end actually Brendan, we will be negotiating with the South Australian Government to take over their Techport common user facility as part of their contribution to the future of naval shipbuilding industry in South Australia and so that infrastructure will be part of that business. 

JOURNALIST: DCNS - has it expressed an interest in perhaps acquiring infrastructure down the track? Is that something you would revisit?

MINISTER FOR DEFENCE INDUSTRY: Acquiring infrastructure? 

JOURNALIST: Acquiring bits of ASC? 

MINISTER FOR DEFENCE INDUSTRY: Well, that might be a matter for the shareholder and I don’t think that’s what we’re talking about today. 

MINISTER FOR FINANCE: No, the Government is very clear. This is a strategic asset of national significance and it is explicitly the Government's intention to  maintain the infrastructure business and infrastructure assets in Commonwealth ownership. 

JOURNALIST: Prime Minister on gay marriage, you said… 

PRIME MINISTER: Can we just, before – are we finished on defence, so hang on yes? 

JOURNALIST: Last week, Senator Payne you stitched up a deal last week with Ash Carter on sharing the cost of a pivot in the NT and tomorrow we’ve got the Singaporean Prime Minister here who as well as talking  about trade is going to confirm the expansion of the troop rotation through Queensland. Could either of you [inaudible] the importance of the Singaporean decision tomorrow on regional security? Mindful of concerns about China and so forth. 

PRIME MINISTER: Well I will make a point and then Marise can add to it. The regional security is more important than ever. The relative peace and harmony in our region is the foundation upon which the greatest economic transformation in the history of mankind has been based. We would not have seen hundreds and hundreds of millions of people lifted out of poverty, right across the region, without that relative peace and harmony. Now, that is why all of our efforts are focused on that. That is why Prime Minister Lee's efforts are focused on that and our attentions are as well. So the closer cooperation, the closer integration, the expansion of facilities that we provide to the Singaporean armed forces are a critical element in that. 

JOURNALIST: Prime Minister… 

PRIME MINISTER: We will just let the Defence Minister… 

JOURNALIST: Could you also, if you could - which side is going to be paying with this? 

MINISTER FOR DEFENCE: We will make formal announcements on this later in the week, so if you just hold your horses Phil and we’ll get you a jacket in the meantime. But importantly, in relation to the development of the comprehensive strategic partnership - this is a seminal change in our relationship with Singapore, who is already an extremely important partner. In terms of the capacity of their members of the defence force to train and to exercise, as they are currently doing in Exercise Wallaby at the moment as we speak, to train and exercise in Australia in a remarkable association of reciprocity, I think is ground-changing for us. In the region it sends very positive signals about our preparedness to engage, about our preparedness to support -  as the Prime Minister said - the keys of security and stability in the region. It is a matter which has been applauded around the region, viewed very positively and I think we will see, in terms of its impact in Townsville and the greater area around Townsville, which of course is fundamentally one of our Cities Deal locations and in Shoalwater Bay closer to Rockhampton, the impact of that in the infrastructure development and in the mere presence of the based members of the Singaporean Defence Force, or the located members I should say of the Singaporean Defence Force who are the development team, plus the visiting members who will be here for up to eighteen weeks, that is going to be a real game changer in the regions. 

JOURNALIST: Prime Minister - on a related strategic issue, Paul Keating has rebuked Richard Marles for suggesting that defence chiefs, or the decisions about the South China Sea could be outsourced to defence chiefs. Do you have any issue with what Richard Marles said on that? 

PRIME MINISTER: I agree with former Prime Minister Keating on this point. The decisions of that kind should be taken by politicians, should be taken by governments, should be taken by Prime Ministers and cabinets and defence ministers. Outsourcing that to naval officers, no matter how distinguished, it misses the point. That these are political decisions, these are political decisions that have to be taken by the people’s representatives. 

JOURNALIST: Turn that around Prime Minister and pick up Richard Marles’ point. Could you clarify for us - is the Australian Navy authorised to conduct friendly navigation exercises including in the twelve nautical mile zone? And secondly, your recent meeting with Admiral Harris, did you, I mean what was your message to him when you discussed this issue? 

PRIME MINISTER: Well, I hope it won't surprise you to learn that I am not going to canvass matters of this kind in public. And frankly, while being in opposition gives you certain liberties, it isn’t very promising for a party that claims to be an alternative government to be canvassing matters like this in the highly political way they are. It shows a real immaturity and unreadiness to take responsibility for these issues. So I will just leave it there. Our position on the South China Sea is very well-known and very well understood by all the parties, including China, and that is simply this - that we urge all parties to comply with international law. Where there are disputes, or differences of opinion, to resolve them peacefully and in accordance with international law, and to refrain from any actions, of any kind, which are likely or calculated to increase or add to any tensions. 

JOURNALIST: Prime Minister on same-sex marriage, would you allow a free vote at all in this term of Parliament? 

PRIME MINISTER: We have the opportunity on the 11^th of February for the Australian people to have their say. We took that plebiscite proposal to the people in the referendum and we won. We have a mandate for that. Nobody had any doubt that that was our policy. The Bill is in the House, it should be passed by the House this week. It will then go to the Senate and we urge the Senate, we urge the Senators, all the members of the Senate including the Labor Party, to support that Bill and give the people their say on the 11^th of February. Then the matter will be decided by the Australian people. That is our position. 

JOURNALIST: So will you allow a free vote this Parliament? 

PRIME MINISTER: Our position is that the Plebiscite Bill is before the House, I’m not going to entertain, follow Bill Shorten down his highly political road of trying to subvert a straightforward, democratic process, trying to say to the Australian people: “You shouldn’t have a say.” 

There is a mechanism here that can be undertaken on the 11^th of February, now I just remind you that Mr Shorten supported a plebiscite of this kind only three years ago. We have said to him publically and indeed privately, we’ve said if there are matters which you feel, features of our plebiscite proposal that you feel should be changed in order to enable you to support it, let us know. He has decided he doesn’t want a plebiscite on any terms, he doesn’t want the Australian people to have a say on any terms. Well we do. We have a mandate for it and we are asking the Senate to do its job and support it. 

JOURNALIST: In August you said one of the attractions of the free vote is that it would mean the matter is dealt with in this Parliament, resolved, and the more time you could spend talking about the economy, jobs and innovation, the happier you’ll be. Isn’t today actually a good day for you, you get to show leadership as Prime Minister and have the free vote that you advocated only 14 months ago? 

PRIME MINISTER: The Bill is before the Parliament and the Parliament has to do its work. 

JOURNALIST: From the outset of this debate, you’ve expressed confidence in the Australian public’s capacity to have a plebiscite campaign conducted in a civil, respect and non-harmful manner. Since then we’ve seen business figures like Alan Joyce, we’ve seen mental health experts like Patrick McGorry and a cross-section of representatives across the LGBTI community express the fear that that won’t happen, that it will be harmful. What do you say to them to allay that concern? 

PRIME MINISTER: You summarised my views earlier. I have great faith in the ability of the Australian people to have a respectful discussion about this and indeed any other issues as we have done, and as we do and as I’m sure we will in the future. 

JOURNALIST: David’s question seems to be - we know as of today that there are not the parliamentary numbers there for the plebiscite -

PRIME MINISTER: The Parliament has to do its work.  With great – 

JOURNALIST: With great respect to you, with great respect to you, we do know that today that the numbers are not there for the plebiscite to pass the Parliament, so it really is a simple question. The plebiscite will fail - will you allow a free vote in this Parliament? 

PRIME MINISTER: Well with great respect to, not just to you, my interrogator, but to the Senate – Christopher and I are book-cased by two distinguished Senators, we are bookended by two distinguished Senators. Let me say this to you, it’s all very well to say you know the Senate won’t vote for it, you know the senators won’t support it. We respect the Senate. The Bill isn’t even in the Senate yet. The Senate has to deal with the Bill. I’m very confident it will pass the House and then it will come to the Senate and the Senate has to deal with the Bill. So that’s the focus. That is the focus. As I said earlier, this is a term of delivery and we are delivering on our commitment to the Australian people to bring a plebiscite before the Parliament and advocate and argue and contend for its passage. 

Thank you very much.