Your Money with Ticky Fullerton – 25th March News


Transcript of interview with Your Money’s Ticky Fullerton about upgrades to Sydney’s Garden Island naval base.

TF: Sydney’s Garden Island Naval Base today gets a $286 million face-lift to address significant condition, capacity and compliance issues. The Department of Defence awards two of the infrastructure recovery programme to Lendlease, with the programme expected to create 2500 jobs. Well, construction is scheduled to commence in May with completion expected in late 2023. For more on this project and everything else happening on the defence front, I spoke with the Assistant to the Defence Minister Senator David Fawcett not so long ago.

Senator David Fawcett, nice to talk. Now you’ve just turned the sod on the second stage of Garden Island. How important is it to the nation’s defence?

DF: Well, Garden Island is our premier Navy base on the East Coast and the importance of these upgrades, they’re called the critical infrastructure remediation programme because literally they are critical. Where we turned the sod it was just near the main fuel tank and the fuel tank that is there is close to 100 years old, as is much of the infrastructure, and so there are many parts both from a condition and a capacity and compliance perspective on the base that need upgrading which is why we’ve funded this $286 million programme.

TF: Bit of a coup for Lendlease. But I think they were part of stage one as well, so they’d have had to done something very wrong, presumably, not to get stage two.

DF: Well indeed. In fact phase one was a joint venture between Lendlease and Pacific Services Group Holdings and that’s an Indigenous company, and one of the targets we’ve got for phase two is also to see about a 3 per cent Indigenous engagement and based off the work through phase one we’re seeing lots of engagement from people in the Indigenous business community.

TF: And presumably this represents quite a chunk of the Indigenous procurement process as well.

DF: Look this is part, but I wouldn’t say it’s a big chunk. There’s a lot of work happening right around Australia where we are engaging with Indigenous business.

TF: Yeah, and more broadly presumably there’s- it’s a great time to be in defence. You’re spending a lot at the moment, spending a lot up north I notice at the moment.

DF: Indeed. So look, there’s three large things. There’s $200 billion that we’re investing over the decade, that’s for our own defence capability and that’s across both capital equipment – so things like ships and aircraft – but it’s also including the infrastructure – so base infrastructure, information communications technology – and the 2016 White Paper is the first time that we’ve actually incorporated not just funding and identification of the main equipment, but also all of that enabling infrastructure in what we’re calling an integrated investment programme. So that’s a really significant change. But we’re also seeing expenditure not just for our own purposes but with the US Force Posture Initiative. There’s investment that our industry is picking up on behalf of the US government in Darwin, and the Singaporean government is investing some $2.25 billion in central and north Queensland to develop Shoalwater Bay and the Greenvale training areas, which will continue to be owned by Australia and used with us having priority of use but it means that they can now send out some- an increase, about 14,000 of their troops for training.

TF: David, I’m wondering given recent developments in the Pacific, perhaps, and also you know ongoing tensions with China whether it’d be fair to say that some of the spending up north, some of the decisions more recently have been made in the sort of context of bolstering up, given the changes in the Pacific and with China?

DF: Oh look, we for many years, Ticky, have had a defence presence in the north. I think it’s fair to say that around Australia there has been an underinvestment particularly in the infrastructure and certainly, you know, putting my political hat on, a previous government stripped some $18 billion dollars out of the defence budget and a lot of that went to infrastructure that hasn’t been updated. So investment in that, but also things like the Pacific patrol boats. We are building 21 of those as part of a programme with our Pacific neighbours, and in fact the first of those was commissioned to the service with Papua New Guinea in February of this year. So between that, things like the Blackrock peacekeeping centre in Fiji, working with Vanuatu, and helping the Papua New Guineans to rebuild the Lombrum naval base, there’s quite an investment into our region because we want to see it to be a prosperous and safe but stable region.

TF: But in part one would think that that’s been in response to a recent Chinese interest in the region, a bit of rebalancing?

DF: Well it’s been a balance from a range of factors, but certainly we recognise and we welcome China’s involvement. We seek to engage with them both from a military training perspective but also to partner with them in aid. But what we’re keen to see is that nations in our region have the ability to develop their economies and their infrastructure without getting into situations where they are entrapped by debt or some forms of aid that have obligations on them.

TF: And David, the other two huge contracts that we’ve looked at in recent months – the French submarines, the Barracudas and also BAE’s type 2 frigates – now they seem to have- seemed to be rather different projects in the sort of support that they seem to be getting. I mean, are we definitely going ahead with the French submarines?

DF: Well definitely on both. I think one of the differences that you’re seeing is that BAE already has a well-established presence in South Australia. The design of ship, the Hunter class, is already mature and so what we’re looking at is incorporating some Australian-unique parts to that. For example, the CEAFAR radar, which is by any measure the world’s most effective radar. So that’s, if you like, much quicker to stand up [inaudible] with the attack submarine is that contracts have now been signed and the design work is ramping up but there’s still a period to go before that design work is finished. And so whilst Naval Group is right at the moment looking to reach out to companies to build the submarine yard in Osborne, there is a number of years before people will start seeing the same level of work that we’re already seeing for the type 26. So there’s already $535 million being spent right now in Osborne and as you drive past, there are cranes on the site, buildings are going up and at the same time in the ASC buildings where the air warfare destroyer was built – and that was one of the Howard government programmes – the first of the offshore patrol vessels is being built as we speak in Osborne. So it’s a hive of activity.

TF: And presumably all these sort of contracts, big contracts, now require a demonstration of how they’re going to help the domestic supplier chain, small business, and…

DF: Well it’s more than just an opportunity, Ticky. The whole reason we’ve taken this path is that we saw with things like the Collins that where you have a small fleet of a unique configuration, you absolutely have to have an Australian supply chain and a high degree of control over the design support network to keep those, in this case, submarines serviceable and effective in terms of their combat configuration throughout their life of type. That’s true value for money. And so having put that supply chain in place after the Coles review we’re now getting regularly four and occasionally five boats out of six, which is well above international benchmarks for submarines and so it’s not just creating an opportunity for industry, we’re actually doing this because we believe it’s really important for Australia’s sovereign capability to have a navy which is backed up by a defence industry that, since the first principles review, we now refer to them as a fundamental input to our defence.

TF: And just coming back to Garden Island at the moment, obviously one of the great successes in Sydney Harbour has been the rise and rise of cruise liners. Now as I understand it they’d been looking at trying to get berths at Garden Island. I think they get a couple- rights to a couple a year, but I think more than that defence has been resisting. Are they going to get an opportunity to have more than a couple of berths?

DF: Well look, we’ve certainly resisted moving from Garden Island even what they call the graving dock which is the largest dry dock, I think, in the southern hemisphere perhaps except South Africa. We need that for our vessels. Having said that it’s also used for some civilian vessels, but in terms of the cruise industry, they have an option to ask for up to three berthing slots during the peak season subject to defence requirements and to date over a number of years they’ve never actually sought to use those so …

TF: I mean would it be a security issue?

DF: For defence?

TF: Yeah, to have huge liners with huge numbers of people on them.

DF: Look, would it be our first preference, no, but the offer is there. But as I say the offer has not been taken up. Were it to be taken up and defence security requirements could be met, then certainly we would work with the industry. But to date it hasn’t been taken up and we continue to invest in that Garden Island precinct because it is vital to Australia’s ability to raise and maintain and then deploy naval force into our region, whether for security or humanitarian purposes.

TF: Finally, David Fawcett, just thinking about Gallipoli. Anzac Day is upon us again. Now given the timing of Christchurch of course and indeed those comments by the Turkish President Erdogan, what would your advice be to Australians who might have been thinking of going to Gallipoli?

DF: Well, it’s going to be an individual decision for them. We obviously [inaudible] President Erdogan has moderated his remarks and has given an assurance for safety, but I would advise people to look carefully at DFAT advisories in terms of making their decisions to go over. It’s a significant part of Australia’s heritage. We have built a constructive relationship with Turkey in recent years and I’m very hopeful that that can continue.

TF: Finally we’ve heard, what, four or five different defence ministers since 2013. We’re going to have another appointment yet again come May. What are the chances of it being a Liberal one?

DF: Well I think they’re very good chances. I think the economy is growing strongly. The only reason we can afford to invest all that we’re doing in defence is because we have a government that is running a strong economy and enables us to invest both in defence but also health and education and welfare and infrastructure and all the things that make us a successful nation.

TF: And do you feel buoyed by the New South Wales results?

DF: Well, the people of New South Wales looked at the performance of the Berejiklian Government and made their decision and I trust the Australian people will do the same thing in May whenever the Prime Minister chooses to call the election.

TF: Assistant Minister David Fawcett, thank you very much for joining us.

DF: Thanks Ticky.