Topics:  AUKUS; AUKUS funding, China
08:05AM AEDT
14 March 2023

Patricia Karvelas: Well, as we’ve been reporting, the AUKUS arrangement has been officially announced now in San Diego. The US President Joe Biden, the UK Prime Minister Rishi Sunak and our own Prime Minister Anthony Albanese have announced the deal and it is huge. As we’ve been reporting, up to $368 billion. The shadow foreign spokesperson is Simon Birmingham, and here’s our guest this morning. Simon Birmingham, welcome.


Simon Birmingham: Good morning, Patricia. Good to be with you.


Patricia Karvelas: This is a huge amount of money. Are you fully on board with the plan as unveiled today by the Albanese Government?


Simon Birmingham: We certainly welcome these next steps in the AUKUS partnership. This is a partnership that we are proud to have established as a Coalition government. It was made possible due to the fact that we had restored Australia’s investment in its defence expenditure back up to that 2 per cent of GDP level from what were historic lows when we came to office. It was made possible thanks to us becoming, with that higher defence investment and other critical investments, we were making a viable and credible partner for nations such as the US and UK. Today we’re hearing further details and we continue, of course, to provide bipartisan support to this venture. But there are many questions that of course will come from the high-level announcements that have just been made by the three world leaders around the timing and costs and particularly the impacts of those costs and just there, just how do they break down what is the scale of investment in the US and or the UK? What will the cost of the purchase of the Virginia class submarines be? Are there any cuts to other defence projects and a range of other questions in terms of the investment in Australia; how much will be invested in the near term in terms of capability in Western Australia at the Stirling Naval Base and Henderson shipyards for the uplift there that will come from the rotation of nuclear-powered submarines through those locations; what investment will be made at the Osborne shipyards in Adelaide to prepare them for the SSN AUKUS and in what timeframe; and of course all of the skills and training issues as well to be unpacked in the days to come.


Patricia Karvelas: You’re right, all of that does need to be – there has to be some further clarity, but we do have some details. I mean we now have had the announcement and one of those details is that the first locally made boat due to be delivered in the early 2040s – that’s 20 years from now. So how do you view the implications for your own state of South Australia where you’re a Senator? Are you satisfied by the delivery of the kinds of jobs and production that will be delivered out of the AUKUS arrangement?


Simon Birmingham: Again, Patricia I’ll be keen to understand some more details there. The intention had been that we would see the first new nuclear-powered boat come out of the Adelaide shipyards in 2030s, so this appears to be a little later than had previously been intended. It will be interesting to see, given this is a common platform that will be built in the UK and Australia, when the UK expect to build their first one and how that lines up with Australia.


Patricia Karvelas: So let me just pick you up on that. You’re saying this is later than expected? Does that worry you and is that something you object to?


Simon Birmingham: Well, it’s something that I want to understand entirely what the reasons are. We want to be as bipartisan and supportive of this and we are focused on the national security implications for Australia – on building the defence capability we need – and the industrial capability that we need for the future. And all of that has to be done properly. But we do want to make sure that we also understand what the implications on local workforce are, if there is a delay to what had been previously thought in terms of workforce growth and opportunities in South Australia or across the defence industries generally in Australia and I think that will be critical to understand. Also if there are any implications for the life-of-type extension of the Collins class – that hasn’t been mentioned in announcements that I’ve seen to date. But is the Government still fully committed to putting all six Collins class vessels through the life-of-type extension? Because that is a critical part of ensuring that we maintain capability for a period of time for our Navy and our defence forces. But it is also a critical generator of jobs and economic activity, especially in South Australia.


Patricia Karvelas: OK, $2 billion is expected investment in the next four years from the Federal Government to South Australia and a new skills and training academy to be set up in a joint South Australia-Federal deal. Does that give you some comfort?


Simon Birmingham: Well they are figures that I hear, I’m yet to see any details in relation to how that $2 billion will be invested; how it relates to known or pre-existing investments, such as in the life-of-type extension of Collins class; or whether this is in fact new money specific to preparations for the new SSN AUKUS.


Patricia Karvelas: The other part of all of this is the overall price tag. I began this interview, declaring it’s huge and I don’t think you’re going to contest that as a fact. $368 billion. How is Australia going to pay for it? Last night in an interview on 730 Peter Dutton raised the sustainability of the NDIS – so that’s that’s a program that’s there for people with disabilities. Is that really where you’re going to focus getting the money to pay for such a thing? Where else do we need to be looking?


Simon Birmingham: Well Patricia in fairness last night, Peter was asked about whether we would cooperate with the Government in areas of savings and Peter pointed to the fact that in his budget reply speech last year, he’d made it very clear that in terms of programs that experienced or were experiencing significant growth and where there may be opportunities for savings to be found through efficiencies that could be made to those program operations, we would work constructively with the Government and there’s been no faster growing area of government expenditure in recent years, well above budget forecasts than the NDIS. But there are pressures in aged care and elsewhere and we know that in those sorts of areas for the Government to make decisions about how to manage those programs effectively, they may need bipartisan support for difficult decisions, and we’re willing to be constructive about that and Peter made that clear in his budget reply speech last year.


Patricia Karvelas: He did. He talked about working where you can. I mean the Government also has a more modest plan about dealing with superannuation tax – people with more than $3 million in their accounts would face essentially a higher tax rate – isn’t that, now that we’re looking at this $368 billion program isn’t a modest change to super like that more appealing to you?


Simon Birmingham: Patricia, a couple of points – firstly, as we’ve debated on that topic, is contrary to what the Government said prior to the last election…


Patricia Karvelas: Sure, but I’m trying to juxtapose with this huge price tag to ask the question around sustainability of different programs. Don’t you need to revisit these kinds of decisions now?


Simon Birmingham: Well, you also need to make sure that you focus on the efficiency of government spending wherever you possibly can and that includes in the defence portfolio too. Yes, this will come with significant costs to it. These costs are of course over a very, very long period of time as well – we’re talking many decades into the future and the costs of other programs such as the ones we were discussing before will well and truly exceed this program over the same timeframe. So we have to keep a the sense of perspective there, yes, this is big, but it’s also unusually for government talking about dollars, not just in a four year horizon or a one year budget horizon or even a 10 year horizon – for the naval sustainment and submarine building exercise we’re talking decades of costs aggregated together. But we do need to make sure that we work right across government in terms of efficiency of spending, so that we can keep taxes as low as possible for our economic competitiveness as well – we will be in a world of trouble paying for all of these programs if we don’t have competitive tax systems too.


Patricia Karvelas:  Just a question on China. One of the key reasons for this deal is to secure Australia against a more aggressive China. Overnight, President Xi Jinping has spoken about bolstering their military. What do you make of what he had to say? I mean, are you concerned about the language that was used by the Chinese President?


Simon Birmingham: Well we have seen a significant bolstering of China’s military capability for quite some time now and we’ve seen concerning ways in the way in which that has been deployed or used particularly in relation to the type of assets built up in the South China Sea and some of the claims made in that regard – that we and other nations share. Our investment in or all of our defence capabilities, including the AUKUS partnership is about preserving stability, peace across our region. We want to make sure that the type of deterrence that we build – the type of capability that we have, is all about ensuring that we enjoy a peaceful and prosperous region and that other countries across this region enjoy that type of stability, peace and prosperity too.


Patricia Karvelas: Thank you so much for joining us.


Simon Birmingham: Thank you Patricia, my pleasure.