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Transcript of interview with Lyndal Curtis, ABC24: 27 September 2012: HMAS Choules; Defence budget; White Paper



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Minister for Defence - Interview with Lyndal Curtis, ABC24

27 September 2012

TRANSCRIPT: INTERVIEW WITH LYNDAL CURTIS, ABC24

TRANSCRIPTION: PROOF COPY E & OE

DATE: 27 SEPTEMBER 2012

TOPICS: HMAS Choules; Defence Budget; White Paper.

LYNDAL CURTIS: Stephen Smith, welcome to ABC News 24.

STEPHEN SMITH: Pleasure.

LYNDAL CURTIS: If I could start by asking you about the amphibious landing ship HMAS

Choules, it was bought from the British because Australian ships had so many problems there

were none available for relief operations during Cyclone Yasi, the Choules had a problem with

one of its transformers in June, it’s now found all, I think, six transformers have problems of

premature aging, did the British sell us a lemon?

STEPHEN SMITH: No, we don’t believe so. We’ve obviously been in very close consultation not

just with the British for their experience but also with the manufactures of the transformer.

And so we are working our way through that very carefully.

The premature aging of those transformers is obviously of concern and we’re now looking at

whether we seek to fix those as a job lot. But we’ve got a ship which we believe is in good

condition and if we had our time again we would proceed down the same track but we have

had this unfortunate problem with the transformers which we’ve been working very hard on for

the last couple of months.

LYNDAL CURTIS: Is this likely to be a multi-million dollar fix when it comes?

STEPHEN SMITH: Not multi-million dollar, it will be expensive. We’ll obviously, as I say,

because we’re in discussions with the manufacturers of the transformers over premature aging

there may well be some consequences down the track so far as the manufacturer is concerned

but we’ll work our way through-

LYNDAL CURTIS: So they might have to pay for it?

STEPHEN SMITH: We’ll work our way through those issues. We have detected, regrettably,

premature aging of those transformers but we’ve got - in addition to the Choules we’ve of

course recently purchased the Ocean Shield and we’ve been doing a lot of heavy maintenance

work on the Tobruk. So we remain in a position where we are covered, but obviously we’d like

the Choules back in the water as quickly as possible.

LYNDAL CURTIS: While you were away Tony Abbot outlined an aspiration to return to real

funding increases in Defence of three per cent a year. That was a promise your Government

made in the 2009 White Paper, when will you deliver on that promise?

STEPHEN SMITH: We’ve made it clear that it’s been very difficult in light of the aftermath of

the global financial crisis to meet the on average budget increases set out in the 2009 White

Paper and we’ve been very frank about that. I don’t even describe what-

LYNDAL CURTIS: And in fact you’ve cut the Defence budget in the last two budgets [indistinct]

last budget in May cut it by five and a half billion dollars over four years.

STEPHEN SMITH: Yes, that was a significant contribution that the Defence organisation made

to bringing the budget back to surplus. But I don’t even describe the Tony Abbot’s speech

when I was in Japan as an aspiration. On the one hand he is not committing himself to

reinstituting the money that we took out in this budget, on the other hand he’s saying that he’s

going to take more out on the civilian side.

LYNDAL CURTIS: But what about your side of politics, you’re in Government at the moment.

Can you absolutely rule out that Defence will be called on again for savings as you seek to

return the budget to surplus?

STEPHEN SMITH: Yes, we are in Government at the moment and that’s why we are taking

these things, because they’re national security issues and dealing with difficult fiscal climate

we’re taking these things seriously and not just issuing press releases because it seemed like a

good idea at the time when I went to a particular conference to make a particular speech.

What Tony Abbott’s contribution, if you can put it as high as that, doesn’t acknowledged is

what Leon Panetta describes as the fiscal reality, the new fiscal reality where Australia, the

United States, United Kingdom all comparable countries are having the same difficulty so far as

defence expenditure and restraint is concerned. But we’re - our approach-

LYNDAL CURTIS: But will that fiscal reality mean that Defence is called on again to find savings

in order to return the budget to surplus?

STEPHEN SMITH: I’m not going to get into the rule in rule out game for budgets down the

track, but again while I was away in Japan the Finance Minister unveiled some further

efficiency savings across the board, Defence was exempt from those because Defence had

made its own substantial contribution.

So people should not get ahead of themselves. And in the meantime what we’ve done with

Defence expenditure is to make sure that our core capability continues to be protected, that

our overseas operations, in particular Afghanistan, continues to be protected, that our military

numbers continue to be protected. And that is a sensible way for moving through what is a

difficult but nonetheless a manageable situation.

LYNDAL CURTIS: You are in the process also of putting together a new Defence White Paper,

are you being told that the funding envelope you’re trying to work in won’t deliver the Defence

Force you want?

STEPHEN SMITH: Well we haven’t yet got to that point of consideration. Obviously the White

Paper in the first half of next year will need to have some very careful financial parameters

around it. But I’m not putting the cart before the horse. This White Paper will deal with the

array of issues and challenges that confronts Defence. We’re drawing down from our three

overseas operations, Afghanistan, East Timor and the Solomon Islands, what implications does

that have for the future of Defence in the South Pacific and in South-East Asia? For the first

time in 25 years-

LYNDAL CURTIS: But broadly-

STEPHEN SMITH: For the first time in 25 years we’ve - if you let me finish I can explain it to

you.

For the first time in 25 years we have affected a Force Posture Review which looks are how we

are geographically postured in our own country. And I see in Tony Abbott’s speech he’s saying

that we need to have a look further north. The only two occasions in which an Australian

Government has done that was in the mid 1980s with Kim Beazley and with me some two

years ago so that’s taken care of.

So the White Paper will cover a vast array of challenges for Defence and for the nation in light

of changing strategic circumstances and our financial challenges will be one of those but it

won’t focus only and exclusively on capability and finances which was what the 2009 White

Paper did because that was the first White Paper we’d had after nearly a decade of neglect

from our political opponents.

LYNDAL CURTIS: As I understand it no White Paper has come with a firm plan to attach dollars

and how that money will be budgeted for in the future, in order to guarantee that what is

promised in the White Paper can actually be delivered instead of things being put aside or

shoved out into the future as has happened with so many White Papers, should this White

Paper come with a funding document attached to it?

STEPHEN SMITH: What it will certainly come with, or in association with, will be a funding

document for the forward estimate years. One change that I have made in recent times is to

make sure that the so called Defence Capability Plan, which is a 10 year plan, now has two

parts to that. The Defence Capability Plan which is for four years which has the forward

estimate budget figures allocated to that and then a guide for the following six years and that’s

been warmly received and welcomed by Defence.

One of the great challenges for any Government whether it’s in Australia or overseas is how do

you seek to give both Defence industry and Defence itself security of planning and security of

finances when you know that you are going through now and into the future the potential for

difficult fiscal times. The 2009 White Paper-

LYNDAL CURTIS: [Indistinct] way to do that not to keep cutting the budget?

STEPHEN SMITH: Well the 2009 White Paper made it clear that the single biggest challenge

facing Australia was the aftermath of the global financial crisis. I think most punters are now

saying that the adverse consequences of that are lasting longer than anyone would have

wanted to, particularly the aftershocks in Europe. And that has seen adverse implications for

Defence expenditure in Australia as its seen adverse implications for Defence expenditure in

Australia as it’s seen adverse implications for Defence expenditure everywhere else.

Leon Panetta talks about the new fiscal reality, he’s the Secretary of State for Defense and he’s

taking out a minimum of $498 billion over a 10 year period, nearly half a trillion dollars over a

10 year period and that’s before the congress potentially requires him to do more so we’re not

orphans here, we’re doing it in a sensible way around a new white paper in 2013 but in a way

in which we not just protect our core capability, we’ve been able to, despite the difficult

circumstances purchase more. Whether it’s Growler, whether it’s our military tactical lift planes

the C-27s or whether it’s Bushmasters, 200 of which we’ve ordered after the budget in May of

this year.

LYNDAL CURTIS: One quick final question, there was a report recently that you made changes

to your Defence White Paper team, why did you make those changes?

STEPHEN SMITH: I didn’t make any changes to my Defence White Paper team, my Defence

White Paper team are the two former secretaries, Rick Smith and Allan Hawke together with

Paul Rizzo who form my advisory team. The Department made some arrangements, and

subsequently change those as the scope of the White Paper has become clearer.

So we’ll be doing, and we are very well placed because a lot of the work that we need to do for

the white paper has already been substantially addressed. For example, the force posture

review and the review of our capability plan and the like.

But we’ll be doing all of the things that we need to do to make sure that by the first half of next

year, and I expect April, May, June around that period we’ll publish a White Paper which will

set forward the strategic challenges and the way in which Australia can meet those in a

sensible response, mature way, unlike the press release contribution we saw from Mr Abbott

during the week.

LYNDAL CURTIS: Stephen Smith, thank you very much for your time.

STEPHEN SMITH: Thanks.