Joint Press Conference with Minister for Defence Stephen Smith, Garden Island



DATE: 18 JULY 2011

STEPHEN SMITH: Okay. Well thank you very much for turning up. I’m very pleased to be here at Fleet Base East with Jason Clare the Minister for Defence Materiel, Paul Rizzo who has produced his report for us, and Ray Griggs, the Chief of Navy.

And today Mr Clare and I, Minister Clare and I released Mr Rizzo’s report, which is entitled Plan to Reform Support Ship Repair and Management Practices. And can I firstly thank Mr Rizzo for his report, and also thank Neil Smith and Brian Adams, who helped in the preparation of the report.

The report is a damning report of what has occurred in the past. But importantly, it provides us a very clear pathway for the future, and a very clear pathway for reform. Mr Rizzo’s report draws attention to longstanding, systemic and institutional difficulties, but his report provides us with a path for the future which is consistent with the reform that Minister Clare and I have been progressing since we became Ministers for Defence and Defence Materiel respectively.

All 24 recommendations of Mr Rizzo’s report are accepted and will be implemented by Defence and by the government.

One of the recommendations is for Mr Rizzo to chair a implementation committee. We accept that recommendation, and Mr Rizzo will be responsible for chairing an implementation committee.

Some important recommendations – firstly, that [indistinct] appoint a two star navy head of engineering. And Commodore Michael Uzzell will be promoted to fill that position. It’s clear from Mr Rizzo’s report that navy’s engineering capacity has in recent times not been up to the mark. It’s also clear that navy and the Defence Materiel Organisation’s engineering capacity have nowhere near the resources to do the job required of keeping modern ships at sea.

And so we’ve accepted that recommendation – and the Chief of Navy has indicated that Commodore Michael Uzzell will be promoted to that senior position to take responsibility for the rebuilding of navy’s engineering capacity.

At the same time the Defence Material Organisation will add to its resources in its systems [indistinct] office dealing with maintenance and amphibious fleet. And over 20 new positions will be created, and the first instalment of new appointments will occur shortly.

It’s also clear from Mr Rizzo’s report that over the period of the report, there has not been sufficient cooperation and coordination between the Defence Materiel Organisation and the navy. And the new Chief of Navy and the acting CEO of the Defence Materiel Organisation have been charged with the responsibility of ensuring that into the future there is sufficient and appropriate coordination, integration, and cooperation between the Defence Materiel Organisation and the navy.

As I said, the report makes clear there are long-term, systemic longstanding issues of difficulty. In very many respects this comes as no surprise. The amphibious [indistinct] we are referring to are ships which are now 30 to 40 years old, and have been in service for 20 years – but when in February this problem confronted the Government, there are a number of issues which I wanted to ensure the government addressed. Firstly, that there was an independent review so that we could put in to place reforms to ensure that a similar gap in capability did not occur into the future. Secondly, I wanted to ensure that we had a cover for the capability gap that had emerged. And the government’s purchase of the Largs Bay, our agreement with New Zealand for cooperative use of the HMNZS Canterbury, and our leasing of the Aurora Australis has ensured that we have had capability requirements which will suit the demands whilst HMAS Tobruk, in particular, is in maintenance.

And finally I wanted to ensure that these difficulties would not be presented to our successors. One of the difficulties that is drawn attention to – so far as the Manoora and the Kanimbla is concerned – is old ships with a lack of documentation.

We have not made this mistake with the recent purchase of the Largs Bay.

Importantly, this report, and the government’s adoption of it, and its recommendations, set the scene for the next wave of Defence reform – the release and implementation of the so-called Black review, and there is references to the Black review in Mr Rizzo’s report.

I look forward to releasing the Black review in the very near future which will deal with accountability issues, both personal and institutional accountability.

Because we are dealing here in Mr Rizzo’s report with systemic difficulties over a long period of time, it is difficult if not impossible to point to personal accountability, or to lay the blame at any one institution.

It is clearly a long-term systemic difficulty here which the report and the Government’s adoption of the recommendations squarely addresses.

And so in conclusion can I again thank Mr Rizzo for his very valuable report. Can I thank him for agreeing to chair the implementation committee which will oversight the recommendations of the report.

And can I also invite Minister Clare to make some remarks, and then call upon Mr Rizzo and the Chief of Navy to make some remarks, and then we’re happy to respond to your questions.

Thank you.


JASON CLARE: Thanks Stephen. And can I thank Mr Rizzo for his report. This is a very important report. It identifies and confirms some very serious issues with the maintenance of our amphibious ships. And it also sets [indistinct] a plan to address those problems. Often the most difficult part of this is implementing the recommendations of reports such as this – and that’s why it’s very important that Mr Rizzo has agreed to be the chair of the committee that will oversee the implementation of the recommendations in his report.

That will help ensure that they’re implemented not just to the letter, but also the intent behind the recommendations that Mr Rizzo has given us.

Minister Smith and I have made no secret on how serious we think this issue is, or how serious we believe – or how serious we are about fixing the problems with our amphibious ships.

Five months ago when we outlined the problems with our amphibious ships, we said that we’d do three things. First, to address the capability gap caused by the lack of availability of our amphibious ships, and we’ve done that first by purchasing the Largs Bay from the UK Government. And that will arrive here in Australia in five months time.

Second, by commissioning this report, you get recommendations on how to improve the repair and the maintenance of our amphibious ships. And this report is important not just for improving the repair and maintenance of our amphibious ships but also preparing for the future, making sure that we’ve got the systems right, to make sure that we repair and maintain the ships of the future – Largs Bay, the AWDs and the landing helicopter dock ships that’ll arrive in the middle of this decade.

Finally, the third point is making sure we’ve got a transition plan to prepare now for the arrival of the landing helicopter dock ships in the middle of the decade. That means making sure that Navy, DMO and all of Defence are prepared for the arrival of these new large amphibious ships.

So three parts to that. First is dealing with the capability gap by fixing the Largs Bay; second, improving repair and maintenance through the implementation of this report; and then third, preparing a new transition plan for the arrival of the landing helicopter dock ships. We expect to receive that report and those recommendations from Navy later this year.

But as I said before, we make no secret about the seriousness of this issue, and we’re very serious about making sure that we fix it.

PAUL RIZZO: Well, thank you, Minister. Good afternoon, ladies and gentlemen.

The report deals with complex and technical issues, but our conclusions are clear that there has been longstanding, wholesale institutional failures in dealing with them.

The report presents an integrated plan of action. The 24 recommendations are all subsets of an integrated whole. They deal with institutional methodologies and institutional practices which have to be contemporary and holistic. They deal with the need to rebuild the resources, particularly of the navy engineering side and parts of DMO, and they deal with bringing together contemporary and holistic tools with which people can actually do a better job.

So from here on in, it’s all about execution. The implementation committee that I will lead will comprise the new Chief of Navy, the new CEO of DMO, and the Deputy Secretary of Strategic Reform. We’ve given ourselves 18 months to really get the whole thing started and break the back of this so that it’s set up for the future.

Thank you.

RAY GRIGGS: Good afternoon. Just if I could start by saying that I welcome this report. It’s a confronting read, there’s no doubt about that, but it does provide a strong platform for reforming the maintenance of our support ships. And through the recommendations that Mr Rizzo has made and the Government’s accepted, it provides a strong basis for enhancing the support for the remainder of the fleet.

There’s no doubt that we had got the balance between the operational imperative of having to have the ships at sea and the importance of technical integrity wrong. My predecessor started to correct that balance last year when he set up the Seaworthiness Board which in fact led to the operational pause for the Kanimbla and Manoora. That board is providing me with very useful external advice.

But what I want is for my own system to be providing that advice, not externally. And that’s where we will drive towards with the recommendations, the very practical recommendations that Mr Rizzo has put in place.

I’m very pleased that Commodore Michael Uzzell is to be promoted to the head of navy engineering position at the two-star level. This is a critical development to enhance the voice of engineering in Navy. For too long in Navy, we have treated engineering and logistics generally as an overhead and not as the key enabler that it is in a technologically advanced force. We can’t afford to let that happen again.

I believe this is a very good set of recommendations and a good plan for the future of ship repair and maintenance.

STEPHEN SMITH: Well, thanks very much, Ray, to you as Chief of Navy, and to Mr Rizzo. We’re very happy to respond to your questions.

REPORTER: [Indistinct]

STEPHEN SMITH: Well, we have cover for HMAS Tobruk at the moment. That’s through the Aurora Australis. We also have frigates available to assist and heavy landing helicop… landing craft. And since these difficulties came to light in February, we have been conscious, as I and the Minister for Defence Materiel said earlier, of ensuring that we have cover for the capability gap caused by the decommissioning of the Manoora and the extended maintenance period of the Kanimbla and also the ongoing maintenance of the Tobruk preparing for next year’s cyclone season.

So currently we have what we regard as appropriate cover. We’ve been very conscious of that. Into the longer term of course we have the purchase of the Largs Bay which will arrive at the end of this year, early next year. And in addition to the capability cover that I’ve referred to, we have an arrangement with New Zealand to cooperate so far as the use of the HMNZS Canterbury is concerned.

But Minister Clare and I have made no secret of our disappointment that we have been forced to find such a capability cover. But the beauty of the report that we’ve been presented with by Mr Rizzo is that whilst it very clearly analyses the mistakes of the past, it provides a very clear pathway for the future. And the recommendations and the implementation of those recommendations will give us a lot of confidence that the risks that we have been exposed to in recent times will be much better managed into the future.

REPORTER: If we had to go right now at a moment’s notice, would we have [indistinct]?


REPORTER: If we had to go right now at a moment’s notice [indistinct]?

STEPHEN SMITH: Well, in terms of heavy amphibious lift, I’ve referred to the capability cover that we have in place. Over the next few weeks, there’s an expectation that the HMAS Tobruk itself will also return from its maintenance period for a short period of time.

So far as our other ships are concerned, including our submarines, the advice I have is that our amphibious and naval vessels are in a position to discharge the operational requirements required of them by government directives. So we have two submarines available and we have the rest of our fleet available.

People should proceed on the basis of understanding that with any navy, both in terms of surface vessels and submarines, not every ship will be in the water at the same time. Some will be being maintained, some will be being utilised for training purposes. But the advice I have from the Chief of Navy so far as our operations are concerned, Navy is in a position to meet operational requirements.

REPORTER: [Indistinct]

STEPHEN SMITH: Well, as I’ve said previously – and there is an express recommendation in Mr Rizzo’s report about the Kanimbla – but as I said previously, we are giving consideration, very careful consideration to whether the Kanimbla should be the subject of further maintenance work or whether it should be decommissioned. And I expect we’ll be in a position to make that judgment in the not too distant future.

But the decommissioning of the Kanimbla is a live option, as I’ve indicated previously, as has Minister Clare.

REPORTER: How far off is the Tobruk?

STEPHEN SMITH: The Tobruk is currently in the last couple of weeks of a maintenance cycle. We’re expecting over the next couple of weeks for the Tobruk to be available. It’ll be available for a short period of time and then we’ll go into a further period of maintenance preparing itself for the next cyclone season. In the course of the Tobruk going into its maintenance requirements, we will put in place other arrangements which Minister Clare and I will announce in due course, ensuring that we have capability cover during the period the Tobruk is in maintenance.

REPORTER: [Indistinct]

STEPHEN SMITH: I’m expecting to release the Black report in the very near future, as I’ve made clear on a number of occasions.

REPORTER: Question for the Chief of Navy, if that’s all right.


REPORTER: [Indistinct] could you guarantee that we’ll never be caught short again, like we were in the summer(*)?

RAY GRIGGS: What I can guarantee is that I will be working extremely hard, both with my DMO colleagues and Mr Rizzo, to implement the recommendations in that – in this report. And I believe that they are a practical set of recommendations that will help us improve ship repair and management practices and avoid what happened in the past.

REPORTER: [Indistinct] have the power to control DMO and make sure that they’re doing [indistinct] required job?

RAY GRIGGS: I don’t think it’s a matter of controlling anybody; it’s a matter of working in a constructive, strategic partnership with the DMO in moving us forward. And I’m very confident, certainly with the acting CEO – I have a very good relationship with him – and I am confident that we will make good inroads [break in transmission].

REPORTER: [Indistinct] with the DMO jobs that’s available, are you confident that you could move a whole lot of troops [indistinct]?

RAY GRIGGS: I’m confident that we can meet the humanitarian disaster relief requirements that we have and we’ve got those arrangements in place – the Minister’s outlined those, I don’t need to go over them – and I’m confident that we can meet government’s directives.

REPORTER: [Indistinct]

RAY GRIGGS: I’m sorry?

REPORTER: [Indistinct]

RAY GRIGGS: I’m sorry, I can’t quite hear you.

REPORTER: [Indistinct]

RAY GRIGGS: Well, clearly, right now, can we put thousands of troops ashore? No. But at the moment we have coverage for the humanitarian assistance and disaster relief which are clearly the most pressing of those operational contingencies. And we have other options, including our allies, if the situation was to deteriorate somewhere.

REPORTER: [Indistinct]

STEPHEN SMITH: Firstly, as Mr Rizzo’s report makes clear, it’s not possible nor advisable, in my view, to seek to try and lay the blame for the difficulties that we’ve had at the feet of any one part of Defence.

Quite clearly there has been a failure on the part of the Defence Materiel Organisation and Navy to properly work together. That can’t be allowed to continue and we’ve certainly received that commitment and assurance from the Chief of Navy as we have from the acting chief executive officer of the Defence Materiel Organisation.

So far as Dr Gumley’s recent retirement is concerned, again, I don’t think it’s fair to lay at any one individual’s feet these difficulties. The report makes it very clear that these are longstanding difficulties, dysfunctions between parts of Defence over a long period of time.

The report also makes clear that there have been any number of previous reviews where the substantive recommendations made in this report or the substantive analysis has been discerned before and so there has clearly been a lack of leadership in terms of implementation of previous recommendations and previous reviews and previous reports and that’s why a very crucial part of the series of recommendations that we’ve adopted is Mr Rizzo chairing an implementation committee.

What we do know is that improvements that will come from the adoption of the Rizzo recommendations will see greater personal and institutional accountability and when we add to those with the Rufus Black review which, as I’ve indicated, we’re proposing to release in the near future, that will, in our view, see over a period of time substantially improved performance from Defence because it will instil greater personal and institutional accountability.

And accountability is one of the significant weaknesses that we find in the system at the moment.

REPORTER: Are you at a point yet where you can say [indistinct].

STEPHEN SMITH: I made it clear publicly and privately that I was disappointed with the advice that I received but the strength of this report, as I said in my opening remarks, is that whilst it does paint a sorry picture of the past it provides us with a very good vehicle for reform and the future and I have absolute confidence in Mr Rizzo to implement the recommendations and to oversee the implementations of the recommendations of this report. I’ve absolute confidence in the new Chief of Navy and I’ve absolute confidence in the acting CEO of the Defence Materiel Organisation to diligently implement the recommendations of this report and to minimise the risks that are always there so far as putting any ship to sea is concerned.

And reports are implemented to ensure that we continue to make improvements in this area and already we’re seeing early signs that those projects, those acquisition and capability projects which are subject to the [indistinct] initiatives from Minister Clare and I, and you’ll see more in the very near future.

REPORTER: What about the 40 million?


REPORTER: [Indistinct]

STEPHEN SMITH: Well, as Mr Rizzo makes clear in his report, there needs to be a substantial commitment on the part of Defence, on the part of the Defence Materiel Organisation and on the part of Navy and on the part of the Government of the day to commit the resources to [indistinct].

DMO have already responded with additional – over 20 officers in the relevant part of their organisation but further resources will need to flow and that’s one of the reasons why both the maintenance section of Defence Materiel Organisation and Navy itself was effectively – was effectively sidelined from the recent shared services changes that I announced in the context of the Budget.

Sorry, you had a question here?

REPORTER: What about the Watercraft project, some $40 million spent on that?

STEPHEN SMITH: Minister Clare and I cancelled that project some time ago and I made my views known about the fact that $40 million worth of taxpayers’ money was wasted on a project which was never going to – to meet the requirements originally envisaged of it.

REPORTER: [Indistinct]

STEPHEN SMITH: Absolutely. We are going through one of those periods where a national Government is seeking to implement reform which is important in our long term national interest and we know from the implementation of past economic reforms that often that leads to short term difficulty.

We are embarking here upon substantial economic and environmental reform. There is too much carbon in our economy, too much carbon in our atmosphere and we need to take the strong steps that the Prime Minister has taken to reduce that amount of carbon and just as with any other substantial reform you will see short term difficulties but in the end the test will be, in the third or fourth quarter of 2013, over two years away, when the Government will – will face a poll. And I don’t want to use the cliché but that’s the only one you need to worry about.

In the meantime, I think the Prime Minister is very strongly advocating, and in a very determined way advocating the need for substantial economic and environmental reform.

REPORTER: [Indistinct]

STEPHEN SMITH: Well, absolutely. This is not the first occasion where a substantial economic reform has had to have the long hard haul of a long conversation with the Australian community applied to it.

The same was true of the floating of the dollar. The same was true of – of tariff reductions. There are long term benefits to come to our own economy, long term benefits to come from our nation and that requires a long term argument about the policy merits and a long term conversation with the Australian people. In the end, the only judgment of the Australian people that will be relevant will be the judgment that it makes at the next election in the third or fourth quarter of 2013.

REPORTER: Have you had any conversations with any Labor MP about the next option for a Labor leader?

STEPHEN SMITH: Well, the next option for Labor leader is Prime Minister Gillard being returned as Prime Minister at the next election. That’s the next option and the only option.

Okay. Everyone happy? Good, thank you, thanks.