Sky News Live Defence Debate with Richard Marles

E&OE TRANSCRIPT

8 March 2019

Sky News Live Defence Debate with Richard Marles

LAURA JAYES: Welcome to the first ministerial debate of this election year 2019, right here live on Sky News. In a moment, we’re going to hear from the Defence Minister Christopher Pyne, and the Shadow Defence Minister Richard Marles. Of course, this is one of the key election issues, it will be a debate. There’s a lot of area of agreement, but some disagreement as well. Now, today is brought to you by the government-relations firm GC Advisory and Thomson Geer Lawyers [sic]. Also, of course, The Adelaide Advertiser and Sky News.

Some special acknowledgements before we start. Could I thank Adam Howard, the principal of GC Advisory, and Adrian Tembel, the managing partner of Thomson Geer Lawyers [sic], for putting on this debate today. We have a live audience here as well. There'll be questions and it will go for the next hour uninterrupted, I'm happy to say.

So I feel very privileged to be actually part of a special edition of Pyne and Marles, two men that apparently only need to be known by one name. Gentlemen, thank you.

RICHARD MARLES: How are you, Laura?

CHRISTOPHER PYNE: It’s nice to be here.

LAURA JAYES: Christopher, good to see you, Defence Minister still, for now, and the shadow Defence Minister. Now, there's some easy questions and not so easy questions. Today, we want to talk about Australia's place in the world, the strategic policy, but also where we find ourselves globally and regionally, and how that feeds into what we do in terms of gearing up our Australian Defence Force. All easy questions, of course. With the rise of China, and Trump in the White House, where do we find ourselves? First, Minister to you.

CHRISTOPHER PYNE: Well it's a very interesting time and it's a very different time than it was 25 years ago. So China has well and truly emerged from that hundred-year period when they were deeply unhappy at the hands of the Europeans. There's no doubt about that. But before that they were a 2000-year superpower, and with Deng Xiaoping changing their approach to economics, and now emerging 25 years on from that time, they are an economic superpower and a military superpower. And what we have to do in Australia and the West is recognise and see China for what it is today, not the way we saw it 25 years ago or 50 years ago. It's not the country of Mao Zedong talking anymore, it’s well and truly a highly developed, quite entrepreneurial one party state. But the United States, of course, is the long standing world superpower for more than 100 years, and so managing the US and China is one of the roles that Australia has to play because we have good relationships with both. But it makes for the South Pacific to be more interesting than it used to be in terms of geo political dynamics. South East Asia, India, the role of China and Japan, our role in the South China Sea, I mean, there’s so many more issues today that are challenging than there were 25 years ago.

LAURA JAYES: Do we have to choose? Do we have to choose between our greatest ally and our biggest trading partner?

RICHARD MARLES: I don't think it's a choice. I think we've got to work our way through this. Hugh White - who's one of Australia's great strategic analyst, I don't agree with everything that Hugh said - described the situation that we're in as being the most challenging set of strategic circumstances since the Second World War. I don't know whether you agree with that, I actually think that's right. It's a big call; it's worth thinking through because since Second World War we've obviously had the Cold War. We're not in the same moment of existential [indistinct] …

CHRISTOPHER PYNE: But there was clarity during the Cold War.

RICHARD MARLES: There was clarity, exactly right there. And there was clearly a good side and a bad side. We had Vietnam, but we're not engaged in that kind of conflict. But even there, it was a binary decision to be involved or not. But I think it goes your point just then, you know, often I’m asked the question, is the rise of China a good thing or a bad thing? But the answer is: it's a good thing. I mean, our economy has clearly benefited enormously from it. But it's a challenging thing, and China - but I say this without any judgment in respect of China at all, China is a great power seeking to reshape the international order which you would expect them to do - but that's an international order which has served us so well since the Second World War and has underpinned our prosperity. So it creates a lot of challenges for us, and I think it's important that we resist the temptation to put a black hat on China. And again, China is not the Soviet Union.

CHRISTOPHER PYNE: Because in international relations, pejoratives like a good thing or a bad thing are quite meaningless.

RICHARD MARLES: It's just much more complex.

CHRISTOPHER PYNE: It’s just a thing. You know, China has gone from emerging Third World country with a backwards economy in the 50’s and 60’s and 70’s, into a world economic powerhouse that wants to be respected. And for 2000 years, was the power in our entire region in the Indo-Pacific. So it's not whether we like or dislike what's happened in China, it's just the way the world is, and we have to learn to live with that.

RICHARD MARLES: It’s coming to terms with it, exactly.

CHRISTOPHER PYNE: But also we have to make sure that our values and our support for the international rules based order is paramount, and we convince the Chinese - which I think we basically have, by the way - but the international rules-based order is one of the reasons they've been so prosperous. Because without that they wouldn't have been as prosperous. Without the free trade and open markets, and sea channels that are open to trade, China would not have been as successful. So the West has actually been a great assistance in helping China reach the state that it's in.

RICHARD MARLES: So I think what that implies then doesn't it, that we've got to be very clear eyed about our national interest and have the courage to express that to China, whilst at the same time, you know, and there'll be human rights issues we raise with China, but also acknowledging China's responsible for the single biggest alleviation of poverty in human history, you know.

CHRISTOPHER PYNE: Definitely.

RICHARD MARLES: That is a human rights achievement.

CHRISTOPHER PYNE: Well over a billion people lifted over time from poverty.

RICHARD MARLES: And it's important that we acknowledge that. But if you take the South China Sea, the UN Convention on the Law of the Sea, is the rules of the road in that area. And most of our trade goes through the South China Sea, it, that underpins a large part of our prosperity, clearly in our relationship with China, we need to assert the primacy of it.

LAURA JAYES: Well what’s the motivation of China? If it's not- if the South China Sea and the build-up of the Spratly Islands isn't to dominate the world or become a more dominant power, what is it and how does Australia handle that? Because, you know, you both have talked about the international rules-based order, and the respect or lack of that China has for it, what they say and what they do are two very different things, wouldn't you agree?

RICHARD MARLES: Well I think- there's a- I ask that question a lot and you'll get a whole range of opinions out there about what China seeks to be and what its ultimate aspirations are. It is a great power which is seeking to spread its wings. I mean, I think we can we can see that. And in a way …

LAURA JAYES: How far?

RICHARD MARLES: Well again, a good question. But I think what we need to understand is that that's what's going on, and we therefore need to be thinking or building that into our thinking going forward. And again, it is making sure then that we are- we resist the temptation to put a black hat on China, that would be a huge mistake, and it would be wrong. But that we do have the courage …

RICHARD MARLES: But that we do have the courage-

CHRISTOPHER PYNE: It’s also a bit immature.

RICHARD MARLES: It is. I think that’s right. And I think there is a desire to oversimplify things, as [indistinct] point you made before.

CHRISTOPHER PYNE: Australia is a bigger country than that. We are not a small insignificant military or economic power. We’re the twelfth largest military spender in the world. Our economy’s actually bigger than Russia’s economy, by the way, nobody in Australia recognises that.

LAURA JAYES: That’s a good question, for both of you actually. What is Australia’s place in the world? I describe Australia as a middle power, but where do you see it in a strategic defence position?

CHRISTOPHER PYNE: We’re a G20 country, with a very significant economy, I mean, as big as Russia’s, the eleventh largest economy in the world, the twelfth largest military spender in the world, depending on which internet site you are on, sometimes we’re eleventh, sometimes we’re twelfth, in terms of economy.

LAURA JAYES: I hope you’re not relying on-

CHRISTOPHER PYNE: And we’re taken very seriously around the world by the way, in terms of military, intelligence, economy. Our opinions about free trade carry weight, in some places more than others. I mean, our allies in places like Japan, Indonesia quite frankly, really all the ASEAN nations - we were the first country that ASEAN reached out to over 30 years ago, to be part of the ASEAN Plus Group, because they recognised our heft economically and militarily and we can do so on operations, as well as diplomatically. So the Americans ask us to come to places like Afghanistan, Syria, Iraq, not because they think, we’ll have to carry the Australians but we need another country on the list, because they know they can give us jobs, and they’ll be done well, successfully, because we are a genuinely useful ally.

LAURA JAYES: So is it diplomacy? Is it our expertise? Is it our personnel? Or is it all of the above?

RICHARD MARLES: It’s all of the above. Although I do think on diplomacy, we might be the best diplomats in the world, and I don’t say that lightly. And having had the experience of campaigning around the UN Security Council campaign, and that was an achievement of-

LAURA JAYES: What makes us so good?

RICHARD MARLES: It’s a really good question. Look, I think we-

CHRISTOPHER PYNE: We’re non-threatening.

RICHARD MARLES: We’re non-threatening, we bring to their capability, as Christopher’s just described-

CHRISTOPHER PYNE: We’re straight forward.

RICHARD MARLES: We’re really straight forward, we don’t have baggage, we’re not a colonial power, by and large, which means we don’t have that sort of baggage. Nor do we come to the equation as great power, which also has its issues.

CHRISTOPHER PYNE: We don’t lecture people.

RICHARD MARLES: We’re seen to be an honest broker; we’re easy to work with. I mean a really interesting experience for me was, I did two African Union meetings around the 2012 UN Security Council vote. All but one African nation voted for us, on bloc. The continent actually really-

CHRISTOPHER PYNE: Who’s the one?

RICHARD MARLES: I’m not sure to be honest. I should know that.

CHRISTOPHER PYNE: I always like to know if I’ve lost a vote where it’s come from. [Laughs] Especially in the next couple of weeks.

RICHARD MARLES: Yeah. We are so going to miss you.

CHRISTOPHER PYNE: [Laughs].

RICHARD MARLES: But, the continent liked us, and they saw us as bringing expertise, but without an agenda, without our own agenda, we were just there to help. So I think our diplomacy is excellent. But you and I both have the experience of doing meetings with the US - we were talking about this with you off air, Laura – that I think actually, the US regards us, I reckon more highly than our system understands. I don’t know if that’s your experience as well.

CHRISTOPHER PYNE: I think Australians completely underestimate our relationship with Washington.

RICHARD MARLES: Yeah.

CHRISTOPHER PYNE: They don’t understand the Americans actually regard us as their best ally in the world.

RICHARD MARLES: Yeah.

CHRISTOPHER PYNE: There’s five corridors in the Pentagon, because obviously it’s a pentagon [laughter], and there are five big corridors, five very large corridors.

LAURA JAYES: Today’s lesson, everyone.

RICHARD MARLES: [Laughs].

CHRISTOPHER PYNE: Yes, exactly. And four of them are given over to the services - the marines, the army, the navy, the air force. The fifth one is the Anzac corridor. No other country has a corridor in the Pentagon, and its like a museum, an art gallery, it has a proper curator who’s full time job is to look after that corridor and all of the various memorabilia and documents. Because the Americans take us very seriously, and I don’t think we understand our influence around the world and the way the rest of the world sees us as quite important people to have around.

LAURA JAYES: The Establishment does, the Establishment does.

CHRISTOPHER PYNE: Australians don’t.

LAURA JAYES: But does Donald Trump?

CHRISTOPHER PYNE: Well, the US -

LAURA JAYES: No the Washington Establishment, but does Donald Trump? They’re not on the same page with many things at the moment. Obviously there was the famous phone call. Has Donald Trump come to realise how important Australia is, as an ally?

CHRISTOPHER PYNE: Well the US is an empire, and there are so many different levels in Washington. So the Pentagon regards us very highly, because of the military relationship. Joe Hockey, quite frankly, has done a great job in the White House. And early in the Trump Administration, when a lot of governments had not even talked to the Republicans, Joe had been working as much on the Republicans as the Democrats, because we didn’t know who was going to win. And when Trump won, Joe was one of our highly regarded people by all the people around Trump. And if you remember, despite some of the media hyperbole about the phone call, all the key things that we’ve wanted out of the US, we have achieved - steel tariffs, no steel tariffs for us; aluminium tariffs, no aluminium tariffs for us; a deal to work on trying to get people off Nauru to the United States, which several hundred have been successfully repatriated to America. You know, we can’t point to anything where we’ve been damaged by the White House. So I think the proof of the pudding has been in the eating.

RICHARD MARLES: Yeah and I think-

LAURA JAYES: All good reasons why Joe Hockey should perhaps stay as US Ambassador, don’t you think?

RICHARD MARLES: Well that will- we’ve got to win an election first, and we’ll all see how that plays out, but I mean, Joe’s there on his term. I think the answer to your question is that President Trump does see the value in Australia. I mean he’s obviously unorthodox in the way he has gone about things, and he would claim that as a virtue. But as an interesting example, last week he had the summit with Kim Jong-Un. Matt Pottinger -

CHRISTOPHER PYNE: Yep, yep.

RICHARD MARLES: Who is with the National Security Advisors.

CHRISTOPHER PYNE: He was here last Friday.

RICHARD MARLES: Indeed. So Matt was in the meeting, so Matt works in the White House, to President Trump, a key advisor. He was actually in the meeting with Kim Jong-Un in Hanoi; he flies directly from Hanoi to Australia, where we both get briefed about what was going on in that meeting. Now that’s the American system working to make sure that we’re engaged, and that’s a great thing, but it’s the White House working. I mean, he’s a White House person; he’s a Donald Trump person so I do actually think, yeah.

LAURA JAYES: So, just to be clear, you get briefed on what happens in these summits from the United States? That’s how- on every kind of iteration-

CHRISTOPHER PYNE: We’re one of the very few countries in the world, where the US will call us before significant, very significant decisions are made that they think we’ll be interested in.

RICHARD MARLES: Yeah.

CHRISTOPHER PYNE: So, when President Assad used chemical weapons against his own people and President Trump attacked from the Mediterranean with harpoon missiles, we were given a respectful heads up by Secretary Mattis. When the United States announced that they were going to withdraw from Syria, we were one of the very few, handful or less, of countries that were contacted by the Secretory to tell us that that was going to happen. So I mean, when I travel to Afghanistan, or to Iraq, or to the UAE, and Richard has as well as the Shadow Minister-

RICHARD MARLES: Yeah, yeah.

CHRISTOPHER PYNE: We always meet with the Commander in Chief from the US Forces. I mean, they would be shocked if they didn’t hold a meeting with us. Now they don’t do that with everybody, because they want us to know how it’s going.

RICHARD MARLES: You know I think that the depth of that actually came out in the reaction to that original phone call with Malcolm Turnbull. I mean the response in the Congress, favourable response to Australia was overwhelming and it was a really great thing.

CHRISTOPHER PYNE: And then they wrote that letter.

RICHARD MARLES: They absolutely did and they sent them a card

CHRISTOPHER PYNE: They wrote a letter saying - describe what’s going on, understand we have great- you have great friends in the US Congress.

RICHARD MARLES: And that military- the existing military relationship, but the military history over the last century was absolutely invoked in all of that. But I think I’d like to go back to one of your- your earlier question about where Australia’s place is in the world because I think it is a really important question and one we don’t think enough about. I- It’s my sense, and I don’t say this in a partisan way, it’s more an observation about the system that sometimes the leadership side of our international personality is not as developed as it could be. That it kind of goes to that space that America often asks us questions, often seeks leadership from us more than people would imagine. And sometimes I reckon there is a reticence within our system to move down that path, which doesn’t mean we’ve been getting things wrong, but it does mean there’ve been some blind spots – the Pacific being one of them.

LAURA JAYES: What do you mean by that? And I’ll ask you Minister, if you do agree? When you say leadership personality are you saying that- look, this is my experience when I went to Afghanistan, that our military is very cautious to publicise any of what they do and when they do, they want to micro manage it. And I am critical of that because I think it is detrimental to the work that our men and women do overseas. So are you talking about that in terms of a PR sense? Or not one individual…

RICHARD MARLES: No I think it's a deeper observation than that that I'm seeking to make. Look, people often talk about the US relationship you know: is it a relationship of equals? Well obviously not, I mean they're a superpower and we are the 12th largest economy. But, but it is a mutual relationship and there are areas within it where America absolutely expects leadership from us.

CHRISTOPHER PYNE: Like the Pacific.

RICHARD MARLES: Like the Pacific. So I've done lots of meetings with Americans where- and the American system where they will look to us and in a sense say: we are almost at your disposal, you know, we are a superpower but we want to know what you want and we will follow where you want to go.

LAURA JAYES: And have we not told them?

RICHARD MARLES: Well I think over the journey – and I this is absolutely not a partisan comment and to be fair in the last little while there has been I think a step up in this thinking – but over the journey I think we've been reticent to have a view about where we see the Pacific, how it's going and, and I think that's an issue. Because- it’s an issue in respect of the Pacific, but if we go back to Hugh White's comment, if we are facing the most challenging set of strategic circumstances that we have since the Second World War then we better find that side of our personality if we are going to be able to shape that as best we can.

CHRISTOPHER PYNE: I think it's a personality trait, I think it's an Anglo-Celtic characteristic.

RICHARD MARLES: Do you?

CHRISTOPHER PYNE: No to be wanting to push forward and be the signature tune. I mean, if you-

RICHARD MARLES: Do you draw that from your own retire- retiring demeanour?

CHRISTOPHER PYNE: No. But you think of the countries in our history in the last 119 years, we've been at war with dictatorships, led by huge personalities – Hitler, Kaiser Wilhelm et cetera. We haven't produced those kinds of people in our politics

LAURA JAYES: Thank goodness.

CHRISTOPHER PYNE: Because- no, exactly. But our politics is- we focus on the economy and the well-being of our people. We focus on our national security. We've never built a military designed to invade anyone.

RICHARD MARLES: No.

CHRISTOPHER PYNE: So those sort of big occasions in the last 120 years where the world's been at war, all the Anglo Celtic countries New Zealand, Canada, Australia, Great Britain, we've always been reticent to get into a war or a difficulty with other countries that want to do that. And that's I think part of our Anglo-Celtic [Indistinct]

RICHARD MARLES: Yeah but I think- Can I just

LAURA JAYES: [Indistinct] you ceded some of that power in the Pacific.

CHRISTOPHER PYNE: When it happens though, we're very clear about our values and what we're prepared to fight for and we fight obviously very effectively because we've won both wars but- and others as well, but we don't rush to do that. We really stand back.

RICHARD MARLES: I think, yeah. I mean, I think we're very clear about our values, I completely agree with that. I mean, I think if you look at Britain as an Anglo-Celtic country, it is, I think Britain's completely clear about where it's at. I mean it established an empire and I think it's

LAURA JAYES: Except for the whole Brexit thing. But whatever

RICHARD MARLES: But over the journey.

CHRISTOPHER PYNE: That was a long time ago, the British Empire was sort of the 19^thCentury.

RICHARD MARLES: Yeah, but you're talking...

LAURA JAYES: Can I bring you both back to the Pacific please?

RICHARD MARLES: But you are going- you’re going into the traits which underpin us.

CHRISTOPHER PYNE: The United States started replacing them in the 20^th Century, pretty early in the piece.

RICHARD MARLES: But I think we have that, we Australia, have been reluctant to come forward with strategic leadership and I think we need to.

CHRISTOPHER PYNE: I think that's a good point. I think we could do more. I mean there's some niche areas where we've been the world leaders – capital punishment, landmine clearance, obviously in trade we've been a world leader in GATT et cetera – but we haven't been the country that’s said: let's change everything. I mean, why haven't we been the country for example that said: let us lead a peace process in Israel and Palestine. No, we’ve left it to the Norwegians or the Swedes or other countries. We are an honest broker and that’s an area where I regret that we, in my 25 years in politics, I have never been able to get a government to sort of say - well why don’t we make a proposal to the Palestinians and the Israelis and try and make a breakthrough? That’s- we’ve never seen that as our role and I think we should.

LAURA JAYES: Well why would it be our role to do that? And why is it one of your [Indistinct]?

CHRISTOPHER PYNE: Because we are an honest broker. Because we are straight forward. And everywhere you go in the world as an Australian, as a Minister for whatever portfolio, the number one comment you always get is you Australians are great, you’re very trustworthy, you’ve got great integrity, if you can’t do something you say you can’t do it, you don’t try and fool us.

RICHARD MARLES: All true.

LAURA JAYES: What do you think Australia-

CHRISTOPHER PYNE: And then that’s why we’ve got such good [Indistinct].

LAURA JAYES: - have done in Israel that hasn’t been tried before though?

CHRISTOPHER PYNE: Well, we’ve got to try something because we have to resolve the impasse that’s there. And I think-

LAURA JAYES: Okay.

RICHARD MARLES: But, but-

CHRISTOPHER PYNE: -what we announced, sorry-

RICHARD MARLES: No you go.

CHRISTOPHER PYNE: -about the Jerusalem capital issue – you know, that morphed from Jerusalem being the capital of Israel to the end position, which I had something to do with, which was that we would recognise West and East Jerusalem. West Jerusalem as the capital of the state of Israel and East Jerusalem as the capital of the Palestinian state. That was actually quite a significant decision of any country in the world to actually say we would recognise Jerusalem as a- basically a dual capital. Now the Israeli’s weren’t that pleased about the suggestion, they didn’t say very much about it because they were happy that West Jerusalem would be recognised as the capital of the State of Israel, but they don’t- they would have regarded that as a movement of the discussion on a subject that they really regarded as their own subject rather being interfered with.

RICHARD MARLES: So [indistinct]- I mean, one area obviously then being in the Pacific, I mean I think we have a clear interest in – and I talk about leadership, and in that sense almost by reference of our relationship with the United States, within the Pacific it needs to very much to be a listening leadership and working in partnership with those countries – but we do need to be thinking about how we do something for the 10 million people that live in the pacific, most of whom live in Papua New Guinea, who perform the worst against the Millennium Development Goals, which were a relative measure up until 2015. By that measure, will be the least developed part of the world by the end of the 2020s. Like that's got something to do with us. The two countries in the world got their independence from Australia, and that's Papua New Guinea and Nauru. There's a whole lot of reasons why we need to be involved there, and I think they want us to be involved there and working with them.

CHRISTOPHER PYNE: But you could [indistinct] the Pacific step up [indistinct]…

RICHARD MARLES: No, no. Well, so I think this-

CHRISTOPHER PYNE: …in October.

RICHARD MARLES: Sure. And I do think that the increase in interest in the Pacific, across the board with the Government, but actually in the media as well, is really welcomed.

CHRISTOPHER PYNE: And that’s a big Defence aspect to that.

RICHARD MARLES: There’s a huge Defence…

CHRISTOPHER PYNE: [indistinct] mostly DFAT in the position.

RICHARD MARLES: Sure, and that’s right too.

CHRISTOPHER PYNE: Because that's a big change,

RICHARD MARLES: It is, it’s really important…

CHRISTOPHER PYNE: Because most people haven’t really picked up, but the Pacific step up, a good 50 per cent plus of what we're doing is Defence related.

LAURA JAYES: It is, but did it come too late? Has there been a vacuum there?

CHRISTOPHER PYNE: It hasn't come too late.

RICHARD MARLES: No, no, no.

LAURA JAYES: But China has been able to exert its influence in the Pacific as well. Is that a concern? Has China started to occupy a space that Australia should be?

CHRISTOPHER PYNE: Well-

LAURA JAYES: And just before you finish- sorry, we are going to get questions from our audience here because you two could probably talk under wet cement for the next hour.

[Laughter]

LAURA JAYES: So I just want to- this is your last answer before we…

CHRISTOPHER PYNE: I’ve lost track of time.

RICHARD MARLES: It’s a two hour show?

CHRISTOPHER PYNE: [Laughs]

LAURA JAYES: …not quite- before we get questions from the floor.

CHRISTOPHER PYNE: We always wanted to have a two hour show, didn’t we?

RICHARD MARLES: Yeah, but they never let us…

CHRISTOPHER PYNE: Half an hour’s all we were allowed.

RICHARD MARLES: [Indistinct] stingy.

LAURA JAYES: I don’t know why I’m here sometimes. Minister, please.

CHRISTOPHER PYNE: So the Pacific step up - we are definitely the country that is the security partner of choice across the 22 nations of the South Pacific.

RICHARD MARLES: Yes.

CHRISTOPHER PYNE: I think it’s fair to say in the last several decades across all hues of government, we have focused on virtue being its own reward, which is a good idea. So we through capability building, we focused a lot on capability building through the Department of Foreign Affairs and Trade, and economic capability building. But I think this step up indicates that we are in such a challenging and changing world, that countries that had no interest really in the South Pacific 30 years ago are now interested in the South Pacific. And we are expected, as really the largest power in the region, to protect the security of our region, from not just people smugglers and environmental vandals, and illegal fishers and so forth, but also from countries that might not necessarily always support the international rules-based order. So that- supporting Papua New Guinea with Manus Island, Vanuatu with their police…

RICHARD MARLES: With the base in Manus.

CHRISTOPHER PYNE: Yeah, the joint Australia-PNG Base in Manus Island at Lombrum. Supporting building Black Rock for the Fijians with the Police and Peacekeeping force there. This will continue because it's important for us to ensure that the Pacific is still a supporter of the international rules-based order. I don't think that's under threat by the way, but we need to act now not in 10 years time.

RICHARD MARLES: Yeah. So I think it's not too late in the sense that the game is up; I don't think it is in those terms. I do, kind of inherent in what I'm saying is I think it has taken us a long time to find our place. And I'm interested in what that says about us. And in a broader sense, this, I think, our need to find our place, where it is our place to engage in some leadership. I think what's really important now in the Pacific is that it's great there is a renewed interest or a new interest, but the motivation has to be right. If we are there- if we turn up and say: listen guys, we're here because we don't want these people over here present, that's not going to work. If it's about strategic denial of others, it's not going to work. It actually needs- the focus has to be the 10 million people of the Pacific itself. And the call to action is not the prospect of a Chinese military base in Vanuatu, the call to action has to be, as I said earlier, this is the worst performing population against all the social indicators in the world, and that has something to do with us. We don't- you know, it matters that life expectancy is poor in the Pacific and we need to be doing something about it.

CHRISTOPHER PYNE: There’s one country in the South Pacific which has gone backwards on all five of the Millennium Development Goals, and it's the only country in the world that's done that, which is very disappointing. So we've got a lot of work to do.

LAURA JAYES: Minister Pyne, Mr Marles, I'm starting to realise why you don't have a host in your Friday show on Sky News.

[Laughter]

But look, we are brought to you by Thomson Geer and GC Advisory today, so we thank these two organisations for hosting us here in Adelaide today. It's fitting that we are in Adelaide, of course. I want to take some questions from the floor now. If I could ask you to state your name and where you're from, that’d be great. And if you could stand up.

QUESTION: Paul Starrick from The Advertiser.You’ve spoken about the unorthodox nature of the White House and you've also spoken about Australia's closeness to the United States. How does that forced us- has that forced us to become more self-reliant and allies like us to become more self-reliant? Is that a trend you see continuing?

RICHARD MARLES: It’s a [indistinct] of questions. Do you want?

CHRISTOPHER PYNE: I can go first, if you like. President Trump, I think, made it- he’s very good at messaging, and he went to NATO, I think, and he said: I want allies not protectorates. And it was a very simple message.

RICHARD MARLES: And fair enough.

CHRISTOPHER PYNE: And fair enough. You know, the United States is expected to be the world power, and they’ve wanted to be the world power and that's fine. We obviously support that. But they've been allowed over decades for some of the other nations who are allies of the West, allies of the US, to reduce their spending on their military and consequently put that into other economic priorities. While the US has been expected to keep increasing its spending on the military, and hence protectorates versus allies. There's no doubt that in this new environment, allies like Japan, South Korea, Australia, Singapore need to step up their own military spending to get more- to be more self-reliant, but more importantly, to be a proper ally of the United States not a protectorate. Now happily, Australia is at 2 per cent, or about to get to 2 per cent of GDP spending on the military. This is an achievement and we were on that track…

LAURA JAYES: Not quite yet though, Minister?

CHRISTOPHER PYNE: 2020. We’re a year away- a year early. We promised it in 2021, we’ll do it in 2020. And not least of which because of all the decisions that we've been making; 165 decisions we made in the last three years on priorities to do with military capability, which is a record. So we can say to the Americans: actually we are- we will be at 2 per cent in a year and we announced that before President Trump's speech at NATO. But all countries like us who take themselves seriously, are spending on their military capability, and ours is the biggest since the Second World War, so that tells you something. Japan’s just announced a US$350 billion increase in military spending over the next five years, ours is $200 billion over the next 10 years and I was the- I think I was one of the very first Defence Ministers in the world that actually welcomed Japan stepping up – step up’s become a phrase of the discussion - to not just be an economic powerhouse, but also a powerhouse that supports the international rules-based order through their military capability.

RICHARD MARLES: Yeah so I think-

CHRISTOPHER PYNE: It was a long answer, I'm sorry about that.

RICHARD MARLES: That’s alright I think it was – not so much about President Trump as being the cause here – but I think the strategic circumstances that we find ourselves in absolutely mean we need to be thinking in the frame of self-reliance, no question. And we- again, we were talking about this off air and you were making the point that an aspect of that is building our relationship with our friends in Asia. So I, for example, so I think we both agree on this that relationships with Japan come into a frame now of significance, probably as great as at any moment since the Second World War. I think you probably do- run that same analysis over a country like Korea. So, making sure that we are building as a close a relationships as we can with those sort of countries I think is really important and is part of that equation of self-reliance, as of course is what Christopher said: the bipartisan position we have in this country now of getting our spend to 2 per cent of GDP.

LAURA JAYES: Minister, 2 per cent of GDP was a long aspiration; it wasn't directly related to Trump coming into the White House.

CHRISTOPHER PYNE: No. No. No.

RICHARD MARLES: No.

LAURA JAYES: So is there an example of…

CHRISTOPHER PYNE: Happily, we said that before President Trump was elected, so it wasn’t because of President [indistinct].

LAURA JAYES: No. No. But is there an example…

RICHARD MARLES: But it actually put us in good stead-

CHRISTOPHER PYNE: It did. [Indistinct]

RICHARD MARLES: -just going back to your question earlier about Trump’s view of us, I think it did put us in good stead.

LAURA JAYES: Is there is an example of anything that's changed in Australia in terms of our capability, in terms of new announcements in direct relationship to him coming into the White House?

CHRISTOPHER PYNE: Well, I wouldn't make that causality, but for example, North Korea's bellicose language and testing of ballistic missiles was one of the driving factors for bringing forward the ground based surface to air missile defence system for our forward deployed forces. That was in the Integrated Investment Plan but towards the end of the Integrated Investment Plan. And- but that Plan is a living document, so we brought that forward which meant about $1.9 billion worth of spending which meant other things got pushed back that we regarded as not as important. So that was a direct response to changing circumstances and what was good about that process was that Defence was able to be nimble enough, which we haven't always been accused of being in the past, to actually be able to do that.

LAURA JAYES: Interesting. Our next question.

QUESTION: Yes thank you. Michael Slattery, I'm from a SME in Lonsdale called Rowlands Metalworks. This week we're exporting our first products into Type 26 in Glasgow. So my question is about Australian industry content. How will an incoming government monitor, sustain and complement existing AIC requirements? Thank you.

CHRISTOPHER PYNE: Do you want to go first? I went first last time.

RICHARD MARLES: Well congratulations is the first thing to say and that you're supplying into the British build of their Type 26 I think is fantastic. And it speaks to, I think, the opportunity that building defence industry in Australia has. It's really important that we have as much Australian industry content in that which we procure for our own defence forces, and to be fair to Christopher, he has been very big on this and we completely agree – to have a meaningful defence industry I think you need to be in the place of export which is why your story is really important. What I would say is that it is really important that we think deeply about the strategic rationale for having a defence industry in Australia. There's obviously a great industrial dividend that comes from a defence industry – jobs, capability, technology indeed you go to countries like Sweden and Israel which have big defence industries off populations and GDP’s less than ours and they will talk about how significant defence industry is in terms of building technological capability and their broader industrial base. But again, if you go to those countries, the reason they do defence industry is based on a strategic call and I think for us the strategic call is that defence industry uniquely has an ability to go to the core interests of a nation and it goes to what is most trusted. And it has- having Australian capability and leveraging our current procurement to develop that offers the opportunity for us to export that capability in a way which then sees Australia taken a whole lot more seriously. It is a little bit like American power is aircraft carriers, it’s Marine bases but it's also being the home to companies like Lockheed Martin and Northrop Grumman. And I think that the notion that your company is contributing to the build of a British frigate really helps Australia be taken more seriously and so to me that is –I think we've got a bigger premium on that - but I was…

CHRISTOPHER PYNE: This is a very long answer.

RICHARD MARLES: Alright, I’ll be quiet then.

CHRISTOPHER PYNE: We'll run out of time.

RICHARD MARLES: No that’s- he always does that.

LAURA JAYES: Minister, French submarines.

CHRISTOPHER PYNE: What’s that? I’ll be quick, so that we can have more questions.

RICHARD MARLES: Do you agree with that?

CHRISTOPHER PYNE: I don't disagree with any of that at all.

RICHARD MARLES: Right.

CHRISTOPHER PYNE: I agree with all of it.

RICHARD MARLES: Done

CHRISTOPHER PYNE: But I want to say that something too. When I was in Israel a couple of years ago I had a meeting with Prime Minister Netanyahu and I said: who is the most significant figure in Israeli economic history? And he said: Charles de Gaulle. And I said: that's an interesting answer. He said: well 1967 …

RICHARD MARLES: Seven, six day war.

CHRISTOPHER PYNE: … ‘66, ‘67 the French said they weren't going to sell us anymore Mirage jets or any more military capability and we had to make a decision – do we find another ally who’ll do it, or did we do it ourselves? He said we built some pretty terrible aircraft but we ended up with eventually an amazing defence industry. So they made that investment and that flowed right through their economy as it does today with not just military applications but all sorts of other applications.

In terms of local content, well a local build is about 60 per cent, that's what people define it as being. It’s very exciting that in Australia now we're going to have all these different- we have all these different projects which are underway. The Collins Class has achieved about over 80 per cent local build, the air warfare destroyers is over 60 per cent. I don't think there's any possibility that you could build 12 submarines at Osborne, nine frigates at Osborne, 21 Pacific patrol boats in Henderson, 10 offshore patrol vessels in Henderson, two here in Adelaide, 211 combat reconnaissance vehicles in Brisbane, and so it goes, without achieving 60 per cent in all of those projects. The key is to make sure that the contracts and the development of intellectual property transfers, so that in all those contracts when they've finished there is an Australian native industry that has the intellectual property transferred and the capability to do it ourselves next time without anyone else's assistance. So it would be a failure if when the Hunter Class finishes and ASC transfers back to the Government from BAE, which is how I set it up with a sovereign share; if the next round of air warfare destroyers or frigates could not be built entirely from design to production, entirely in Australia by an Australian company. Now we won't know that for 20-odd years so I won't probably have to be accountable for that. But that's our aim.

RICHARD MARLES: So that's it- so that- I agree with all of that as well. Are we there with the submarines? Do you reckon we'll get 60 per cent?

CHRISTOPHER PYNE: Definitely, we'll get 60 per cent. We'll get more than 60 per cent. I'm not prepared to put that in the contract because it means that the bargaining position of the Commonwealth as a- which means the taxpayer because we're bargaining on their behalf, is lost. And if you say it must be a certain percentage, which everyone by the way has argued against, including Labor people when they're in government and Rex Patrick when he was interested in subs but now everyone says must be in the contract. It's not good business to put a specific percentage in the contract because then the pressure is off the Australian businesses to negotiate their best price and produce their best product. Now we want a- a really- the best product for the submarine, for the attack- for the attack class with maximum local content. We can achieve that, it'll be well in excess of 60 per cent.

LAURA JAYES: Okay, I’ve got to stop you there. We’ll come back.

RICHARD MARLES: But in the build of the Collins it was a minimum condition.

CHRISTOPHER PYNE: Well they achieved over 80 per cent.

RICHARD MARLES: Exactly, so- but doesn't that speak to the…

CHRISTOPHER PYNE: The Collins Class was a very troubled project so I'm not sure that's a very good example.

RICHARD MARLES: But it’s a great achievement of Australian industry.

CHRISTOPHER PYNE: It's only just come off the Project of Concern List last year.

RICHARD MARLES: But doesn't the Australian industry content in that speak to the need to have something like that in our relationship with Naval Group?

CHRISTOPHER PYNE: I wouldn't be using the Collins Class as the example of the next contract.

RICHARD MARLES: Yeah I don’t think that was an answer.

LAURA JAYES: Michael I hope that answered your question. I’m not sure it did but let’s go to our next questioner.

CHRISTOPHER PYNE: Vicious attack from Richard.

LAURA JAYES: So please your question.

QUESTION: Well gentlemen, thank you David Ruff from Babcock International and I'd like to keep us on the theme of the attack class submarines. We’ve talked about reshaping international order, rising regional tensions and indeed, competition, and underpinning all of that is our need to maintain the regionally superior submarine capability. Thinking about the technical challenges of converting a nuclear power design into a conventionally-powered finish article and the implicit risks on the program, what is your view on maintaining a regionally superior submarine capability across that geostrategic, geopolitical and technical challenge time and space?

CHRISTOPHER PYNE: Well, the Collins class is the regionally superior submarine despite the so-called armchair experts who apparently know everything about it. It is the regionally superior submarine and the Attack-class will be the regionally superior submarine. And Naval Group were chosen because they don’t just produce- make nuclear submarines, they also make non-nuclear submarines. Whereas in America, the other alternatives make nuclear submarines, that’s why they weren’t part of the bidding process. Similarly, in Japan and in Germany. So, whether it’s diesel or whether it’s nuclear is not going to impact on its regional superiority. But the reason a nuclear submarine wasn’t in the mix is really very simple: we don’t have a nuclear industry in Australia. We don’t have any of the legislative requirements for a nuclear industry. We don’t have community support for a nuclear industry. We don’t have bases that can house 12 nuclear submarines. We don’t produce nuclear power except at Lucas Heights for x-rays and so forth so we would have to build as nuclear power industry; and to be honest, we could be debating that for the next 20 years.

We can’t even get a nuclear waste dump in Australia and we’re one of the biggest countries in the world because of the lack of community support for a nuclear industry. So, I made an assessment when I was part of that decision making process that putting nuclear submarines on the agenda would mean that we’d never be able to make a decision, or we could go with what we have now, which is diesel-powered and build that into a new modern submarine, and then we could get on with it. And I thought after not making a decision for six years, it was time to get on with it.

RICHARD MARLES: So I think that’s the answer in relation to the nuclear side of your question. It is a technical challenge, no doubt, in terms of trying to build the biggest conventional submarine which would be travelling the longest distances in the world. But as you say, Collins is there now and it is the regionally superior submarine. Look, I think it’s a valid question and I think it is going to be a technical challenge but it is really important, and in this sense, it is very much a bipartisan aspiration that we aspire to take that up that challenge and meet it and succeed in it and make sure that the future submarine is the leading conventional submarine in the world and that it does give us superiority in our region; and we’ve just got to make sure that happens.

LAURA JAYES: You’re right about the community attitudes towards nuclear and I know around the fringes of the energy debate, in terms of low emissions, nuclear is often an idea that’s put forward. But there’s just not the leadership to push it and that could be because it’s a product not having community support. Can either of you see that changing as a long-term goal over the next 20 years or so?

RICHARD MARLES: Well, look, I mean, I think …

LAURA JAYES: Christopher is not going to be there. You might be. But you may not be as well. It can be a while.

CHRISTOPHER PYNE: I might make a comeback!

RICHARD MARLES: Who knows? Look, I think there is a sort of a practical reality in the way Christopher answered that question before, which is right. If we walk down the path of a nuclear submarine now, we’d be the only country in the world with one, which didn’t have a domestic nuclear industry. So we’d be trying to do something that hasn’t been done anywhere else in the world.

CHRISTOPHER PYNE: I wish we’d had a nuclear energy industry from the 50s onwards so then this wouldn’t even be an argument.

RICHARD MARLES: So I think-

CHRISTOPHER PYNE: And Bob Hawke said the same thing but I think the horse has completely bolted.

RICHARD MARLES: So I think the reality is we’re in the conventional space. And I think it is a good question like it’s not- it rolls off the tongue easily that we will have the regionally superior submarine. It’s easier to say, much harder to do. But we did do it with Collins, and we just got to make sure that we’ll [indistinct].

LAURA JAYES: It might be your job soon.

CHRISTOPHER PYNE: It’s really a parlour room discussion. I mean, which prime minister of any political persuasion is going to say: I know what we’re going to do, we’re going to start a nuclear energy industry. I mean, we have the most, in some respects, irrational debate occurring around the Adani mine, but people think we’re going to have a new debate about nuclear energy. I mean, it's just not real world.

LAURA JAYES: Good point. Our next question.

QUESTION: Don Bridgman(*) from Easy Skill, an Australian-French engineering consulting company. In short term and focusing on the supply chain, what is your vision strategy to overcome skills shortage in engineering skills in Australia to help kick start the large Defence programs? And if highly skilled immigration is involved, how will company be dealing with security clearances?

LAURA JAYES: Richard Marles, first to you.

RICHARD MARLES: Well, again, a really good question because I think- and it's one that often doesn't get the focus, at least publicly. I'm not saying in government thinking, but publicly, it doesn't get the focus that it should because I actually think making sure there are the skills there to complete the very significant and ambitious program of construction is possibly the most difficult capacity constraints in the system. So, the Naval Shipbuilding College has been the Government's answer to this. We're supportive of that. But I do think we are going to need- it is going to be a big effort to make sure that we are doing all the domestic training that we can to supply the workforce from Australia. Having said that, it is really critical that we try and do that. So, I think that's fundamentally the answer to your question. The Naval Shipbuilding College, though, needs to work. Is it working?

CHRISTOPHER PYNE: Yeah, it is actually. It’s well and truly underway now. I think the skills and workforce part of this jigsaw puzzle is the biggest challenge. It's below the radar. It's kind of counterintuitive to be saying how difficult it’s going to be to fill all these jobs, these skilled jobs, while at the same time, some people on the Opposition are saying there's not going to be any jobs and yet, they recognise fully that it's the biggest challenge finding 4000 new people to work in ships and subs. But I get the-

RICHARD MARLES: We know there are going to be jobs.

CHRISTOPHER PYNE: I get the political rhetoric that has to go with election campaigns but I think there's a-

[Laughter]

RICHARD MARLES: Here’s the master. [Laughs]

CHRISTOPHER PYNE: The skills of the project are going to be the hardest part so we've created the Naval Shipbuilding College, which is now well and truly underway. That's a hub and spoke approach, and that means that they are using the resources that are already available across many different universities, about 16 universities and TAFEs, and placing people in those universities and TAFEs in the skill areas that we need them to be trained. But that takes time and it's unpredictable.

RICHARD MARLES: Yeah.

CHRISTOPHER PYNE: You have to predict that they are going to want to work in shipbuilding and subs. Despite the fact they might start in the shipbuilding and subs, they might get other jobs in construction or mining because these skills are transferable. So, that makes it unpredictable. We created a skills and workforce tsar called Stephen Hayes, who I think is here today. His particular job was to bring everybody together in the industry because when I was examining what was going on, I realise there are a lot of chiefs, not many Indians, and everybody was thinking: if they do well, I might not do well so therefore I'm not going to cooperate. I just got them all together and said: look, there's a certain number of companies, big companies who are doing these big projects, there's a certain number of institutions - you are all going to actually have to work together or by the mid-2020s you won't have the people, and then you'll be complaining about that but it’ll actually be part of your fault for not cooperating. So we need to know how many people you need, in what jobs, so the Naval Shipbuilding College and institutions can train them and you need to be upfront and tell us.

And to be honest, in the last 12 months, there's been a sea change in their cooperation levels. They now have regular, very often, meetings of the key people – Naval Group, ASC, Lurssen, Civmec, BAE, all the various large project contract holders – and they're working with the people who are providing the skills in the TAFE and university side. That is- It just has to be seen to be working over the next few years. I can't tell you it's going to be perfect. There will be people coming to Australia with highly skilled capabilities. We don't have submarine designers in Australia. So, we have about 60 Australians at the moment in Cherbourg in a purpose-built building that we built called the Hughes House where they are learning about designing and building submarines. But there will definitely be – like you here – there will definitely be people from France who are here transferring their skills and intellectual property in submarine building, and that's inevitable. Out of the 4000 new jobs, it will be a handful but there will definitely be a need for those highly skilled people.

RICHARD MARLES: So I get with the Naval Shipbuilding College they’re, you now, are designed not to reinvent the wheel and in a sense, so, the architecture of the Naval Shipbuilding College is that it is a coordinator rather than a service deliverer. But I do get the impression that for them, it has been an experience of herding cats.

CHRISTOPHER PYNE: It has been but it's getting a lot better, and it will become an institution over the next few years that does actually train people themselves. But we had to tool up quickly. So the model was: where can we tool up quickly? Where there is excess capability, capacity, let's use that and then over the next- I think by phase 3, the Naval Shipbuilding College will be training its own courses at Osborne.

LAURA JAYES