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Transcript of interview with Melissa Clarke: ABC24 :27 July 2012: RIMPAC; Defence spending; Kurnell refinery; Force Posture Review; Defence White Paper

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Minister for Defence - Interview with Melissa Clarke, ABC24

27 July 2012



DATE: 27 JULY 2012

TOPICS: RIMPAC, Defence spending, Kurnell refinery, Force Posture Review, Defence White


MELISSA CLARKE: Stephen Smith, thanks very much for joining us.


MELISSA CLARKE: You’re just back from the Exercise Rim of the Pacific, based out of Hawaii,

which has been one of the largest joint exercises for some time in the region. How did those joint

exercises go, given they were involving such a large number, and disparate group of nations?

STEPHEN SMITH: They have gone and are continuing to go very well. Australia’s got about 1100

personnel and some naval and aerial assets, as well as some Army personnel. In particular we’ve

got our submarine, HMAS Farncomb there, and our frigates, the Darwin and the Perth. And for the

first time, we are actually in command of the maritime part of the exercise, so that’s a very good


But there’s over 20 countries, and it’s a very good exercise, it enhances interoperability, and it

makes sure that we keep training and exercising in our maritime and aerial space. And that’s a

very good thing given that we are an island country, and an island continent, and we’re always of

course conscious about our northern and western naval and aerial approaches.

MELISSA CLARKE: You’ve also met with the head of the US Pacific Command, Admiral Locklear.

Did he raise with you - at any stage - any concerns about the level of Defence spending, which

we have heard some criticisms of in recent times?

STEPHEN SMITH: No he did not. I spent two days there, 48 hours. The first day we spent

extensively in discussions with Admiral Locklear, the Commander of the United States Pacific

Command, which has responsibility essentially for all of the Pacific and the Indian Ocean, so it’s a

very wide area of responsibility, but also all of his command - that’s his Marine commanders,

Army, Navy and Air Force commanders. We really spoke about firstly, the strategic issues it faces.

We also spoke about the force posture review arrangements, and US Marines rotating out of

Darwin, and the prospect of enhanced aerial access. We touched upon budget matters for about

two minutes, and-

MELISSA CLARKE: In what context?

STEPHEN SMITH: That conversation was- well, in this context that his boss, the United States

Secretary of Defence, Leon Panetta, went to the Shangri-La Dialogue, and said to all concerned

we now live in a new fiscal reality. The United States is reducing its Defence budget by nearly

$500 billion, so half a trillion dollars. We’ve reduced in the last budget our budget by $5 billion.

And we are all suffering fiscal constraints - and we need to recognise that. But I made it clear to

him - as I have in my discussions with Secretary Panetta - that we are making sure that we ring

fence our essential operations, whether it’s Afghanistan or indeed the things that we do with the

United States arising from the Force Posture Review and our activities in the Pacific.

MELISSA CLARKE: Is it appropriate that Australia’s Defence spending is at the level of a

percentage of GDP that it is? Tony Abbott has been saying in the US that it’s down at record lows,

that it hasn’t been as low as a percentage of GDP since the 1930s. Is that a level of Defence

spending you’re comfortable with?

STEPHEN SMITH: Well, a proportion of GDP is not the sole or the only measure. Yes, of course, as

Defence Minister I’d prefer that we were closer to 2 per cent of GDP than 1.5, which is where

about - which is where we are sitting in the course of the forward estimate years. But we continue

to be the fourteenth or fifteenth largest defence and peacekeeping spender, together with


We are, per capita, the second largest, if you take the major countries and China, we’re the

second largest per capita spender, and our budget in the 2009/10 year, for the first time, touched

the $100 billion mark. And it still remains in that area. So yes, we are subject to constraints, but

I’ve spoken to the Secretary of Defence for the United States on three occasions about our budget

pressures. And his response has essentially been that we shouldn’t believe that we are an orphan.

This is a problem shared - not just by him, but by others. And I actually spoke to him when I

arrived in Hawaii. I wanted to have a conversation with him about the run up to AUSMIN in

Australia and November this year, and he again made it clear to me that he entirely understood

the pressure we were under, because he’s under comparable pressure, and he was also absolutely

convinced and confident that we were doing everything that we needed to do to make sure we

continue to be a good ally and partner, and to work closely with the United States in the Asia


MELISSA CLARKE: And, as you say, Australia is certainly not the only country looking at budget

measures, and we’re seeing some very harsh austerity budgets, particularly in Europe. Do you-

and/or our US allies- have concerns about the Defence cuts we’re seeing in the UK and in France,

and whether that might have any impact on Australia and the US in terms of future joint

operations with NATO, and their capabilities to be able to act as global citizens when it comes to

defence and strategic matters?

STEPHEN SMITH: Well again, when I have my conversations with Defence Ministers or Secretaries

from the United Kingdom, from France or from Canada or indeed any of our partners and friends,

generally we are all going through the same difficulties and we understand that. And that’s why,

for example, when the NATO Secretary-General Rasmussen was in Australia a few months ago, he

made it crystal clear that one of the things that he is working very strongly on is what he

describes as smart Defence. In other words, NATO and partner countries like Australia and

constituent countries doing things together. Whether that’s joint approaches to capability, sharing

Defence platforms and the like, but so far as Australia is concerned, the most important thing for

us is are we continuing to do the things which are strategically required and necessary for us.

And my very strong view is that we are, we are protecting our core capability, and we are making

sure that as the world moves to our part of the world, to the Asia Pacific, to the Indian Ocean,

that we are making sure that we are strategically thinking about our part of the world. And that’s

what RIMPAC was about, the largest contingent of Australian personnel to that exercise.

MELISSA CLARKE: Can I ask you about a strategic matter that comes about as a result of the

closure of one of the oil refineries in New South Wales, the Caltex Kurnell refinery. Australia is

slowly, one by one, losing its capacity to refine oil onshore and will rely increasingly on imported

refined oil. Is that of strategic concern to Australia given that we’ll now be reliant on some

troublesome shipping straits in order for there to be a regular supply of refined oil for Australia’s


STEPHEN SMITH: Well a couple of things; you might recall that about 12 months ago I instituted a

Force Posture Review or our own to make sure that we were geographically appropriately

positioned, and the Prime Minister and I released that Force Posture Review report by two former

Secretaries of Department, Allan Hawke and Rick Smith in March of this year. And that makes the

point that we do need to now focus on our northern and western approaches, and logistics and

supplies is part of that.

In terms of energy, whether it’s oil or other forms of energy, the Australian Defence Force, like

Australia, has always relied upon a mixture of import and domestic consumption. So clearly we

monitor that very carefully. I don’t want to identify one particular closure, but we have always

relied upon a mix of overseas energy supply and domestic production. And historically in recent

times, the last 20 years, Australia has moved from production of oil to production of gas, so

there’s a change in the mix as well. And one of the key features of the exercise I’ve just come

from was a display by the United States Navy of moving its energy reliance to renewable

energies, which is what we are also, as other countries are, looking at very carefully.

MELISSA CLARKE: And if I can just finally ask you about that, you say, renewed focus on the

north and north west, does these sorts of closures or changes mean that there needs to be an

acceleration perhaps of development of be it port facilities or transfer facilities in the north and

north west of Australia?

STEPHEN SMITH: Well, strategically over the next few years you’ll see a transition out of

Afghanistan, a transition out of the Solomon Islands, a transition out of East Timor, our three

main overseas operations. And that not only gives us the opportunity, but also requires us to

think strategically about that, so the Force Posture Review does look at some crunch issues.

Whether, for example, we need to have a naval base or access to naval facilities north of Sydney

on our eastern seaboard, the extent to which we need to enhance what we have in the north west

of Western Australia and at HMAS Stirling as we see the rise of India and the growth of

importance of the Indian Ocean strategically. But also what we’re doing in terms of access to our

airports in the north of Australia, whether that’s northern Queensland or the Northern Territory.

So all of these issues come at a very important time for us, and that’s one of the strategic reasons

why we’ve brought the next White Paper forward from 2014 to the first half of 2013- so that we

don’t make the same mistake that we made in Vietnam, which was that after a withdrawal from a

conflict not think strategically about what we needed to do for our national security and Defence


MELISSA CLARKE: Stephen Smith thanks very much for your time.

STEPHEN SMITH: Thanks, Melissa. Thanks very much.