Joint Press Conference with Minister for Defence Stephen Smith, Avalon

TOPICS: Avalon International Air Show; Possible acquisition of a C-17 aircraft; China; Carbon price framework

STEPHEN SMITH: Well, thanks very much for turning up. I’m very pleased to be here at the opening of the Avalon Air Show, together with the Minister for Defence Materiel, Jason Clare, and also pleased to be joined by the Chief of Air Force, Mark Binskin.

Firstly, the Avalon Air Show is a great thing for Avalon. It’s a great thing for Geelong, a great thing for Melbourne and Victoria, but it’s also a very important thing for Australia. The Avalon Exhibition and Air Show is now very much a must-do part of the aviation, aerospace, defence and Air Force calendar. So we’re very pleased to mark the beginning of another successful Avalon week. It’s, of course, important this year because it marks also the ninetieth anniversary of the creation of the Royal Australian Air Force. And I was pleased last night to make some remarks at the Chief of Air Force Symposium.

Of course, in the course of its grand 90-year history, we’ve seen the Defence Force take part in all combat activity that Australia has been engaged in since World War II. But also, we’ve seen a sacrifice of lives. So, in the earning of that great reputation, we’ve also seen some terrible sorrow for Australian families and Australian communities.

But the Air Force has discharged the two great obligations of Australian Defence Force personnel. Firstly, combat and military obligations; and secondly, humanitarian and disaster relief. And we’ve seen that, unfortunately and regrettably, very much in the course of the first part of this year. Whether it’s been floods in Brisbane or Ipswich, whether it’s been floods in the Lockyer Valley, or whether it’s been cyclones in North Queensland, or terribly, most recently, the tragic earthquake in Christchurch, we’ve seen Air Force effectively come to the rescue with heavy airlift capability – C-130s and C-17s doing great work removing people, for example, from the Cairns hospital and private hospital, and also getting emergency search and rescue workers to Christchurch in less than 24 hours. So, great work.

As a result of the work that we’ve been doing this year, it’s caused us to also have a look at the make-up of our heavy airlift. We currently have, as you might know, 24 C-130s, both the H and J varieties, and four C-17s. I’ve announced overnight that we’ve approached the United States under the United States foreign defence sales regime to purchase a further C-17.

The C-17s, of course, are very heavy cargo lift, can fly much longer distances than the C-130s. For example, the C-17 you see behind us could effectively take half a dozen Bushmasters or a half a dozen ambulances.

So we’ve indicated to the United States, and I’ve spoken with the Deputy Under Secretary for Air Force, Heidi Grant, who’s here in Avalon, of our intention, our enthusiasm to pick up another C-17, which we think will get the calibration of our heavy airlift right.

Our current defence capability plan would see us contemplate buying two more C-130s in the middle of this decade. If we pick up the C-17 in the way in which I’ve outlined, then it’s almost certainly the case that we wouldn’t see the need for those C-130s. So I’ve made that announcement overnight.

I’d like to ask Jason to make a few remarks and then we’re happy to respond to your questions.

JASON CLARE: Thanks Stephen. It’s great to be here at the Avalon Air Show, the biggest air show in Australia, and one of the most important air shows in the world.

Over the next six days, almost 200,000 people will visit the Air Show, and there’s more than 100 aircraft on display, including the Australian Super Hornet and the American F-22 Raptor. It’s going to mean more than $120 million of investment in the local economy. So it’s great news for Avalon, great news for Geelong, great news for Melbourne and great news for Victoria.

It’s also the perfect place to announce our intention to purchase a C-17 aircraft. The C-17s are one of the great work horses of the ADF, and as the Minister has mentioned, we’ve seen them on active duty during the floods, during the recent cyclone and in Christchurch after the recent earthquake.

It was the capability of the C-17 that allowed us to evacuate the entire Cairns hospital in one night as that cyclone, Cyclone Yasi, was looming on the people of Far North Queensland.

The C-17 also gives us global reach. It gives us the capacity to deploy overseas. So this is an important decision, it gives us global reach. It extends our global reach and our capability to deploy overseas, and extends our humanitarian support capability, both here in Australia and throughout the world.

STEPHEN SMITH: Thanks Jason.

QUESTION: Minister Smith, how much would this cost and when would it be available?

STEPHEN SMITH: We’ve indicated to the United States under their foreign military sales regime that we’re keen to pick it up as quickly as we can. Realistically that will be in the course of this year.

We’re effectively doing the due diligence on availability, price and the like, so I’m not proposing to be definitive about an actual cost or price. It’s on the public record that when we purchased our four current C-17s they cost us in the order of $2 billion, so you’re talking hundreds of millions of dollars. But we think it’s value for effort, value for money and it calibrates better, we think, the mix of our airlift and the capability, as Jason and I have both said, a capacity for much longer distances than the C-130s and capacity also to do large tasks very quickly, as illustrated both in Cyclone Yasi and in Christchurch recently.

QUESTION: Minister, has this decision in any way been bought forward by the lack of Navy amphibious capabilities?

STEPHEN SMITH: No, the two are unrelated. We’re very conscious of the challenges that we’ve got in our Navy amphibious lift, and we’ve had difficulties there in recent times as you would know. But there we’ve got two priorities. The first one is to make sure that the gap which has emerged is filled so we have a capability that’s appropriate in the run up to the arrival of the LHDs, Landing Helicopter Docks, which will come from Spain and be up and running by the middle of this decade, 2015-2016. I’m in conversation with my UK counterpart, Defence Secretary Liam Fox about the possibility of leasing or purchasing of A-class from the British, and also recently when I was in New Zealand had very good discussions with Wayne Mapp, the Defence Minister from New Zealand, about closer cooperation on the use in the region of their amphibious lift ship, the HMNZS Canterbury.

In addition to that we are looking at further options. All options are effectively on the table so far as amphibious lift is concerned and I hope in the near future to be in a position to make some announcements about that. But we treat the two separately. We haven’t had comparable challenges in our air capability. And we’re making the adjustment today in light of experience we’ve had in the efforts we’ve put forward this year, in the face of disasters both onshore and offshore, that picking up another C-17 is the perfect match for our airlift capability.

QUESTION: What was the thing that convinced you that it was needed?

STEPHEN SMITH: Its capacity. It has much greater capacity than the C-130s, and its capacity to go further distances. We are a leading nation in the Asia Pacific. People look to us for assistance and disaster relief, whether it’s earthquakes, whether it’s tsunamis, whatever it is in our region. So it gives us a capacity to fly longer distances with greater and larger cargos on board. So, for example, the C-17 can effectively transport an operating theatre, half a dozen ambulances, or as I said earlier five or six Bushmasters.

QUESTION: When will you replace the Caribou, Minister? When are you due to make a choice on that?

STEPHEN SMITH: Well, I never get into the detail of what we propose to do into the future with that definition. The Caribou has served us well but we need to work through our options on a replacement. So Jason may want to add, but we take these things step by step. I’ve made the point repeatedly as Minister for Defence, it’s very important that we get our acquisition and capability procurement right. So we take it step by step.

QUESTION: Do you expect the Joint Strike Fighter to be delivered on time, and are you concerned about any possible capability gap?

STEPHEN SMITH: We’re of course transitioning from the F1-11s through to the classic Hornets, the Super Hornets, and the F-35, the Joint Strike Fighter.

When Secretary Gates was in Melbourne in November/December last year for the AUSMIN talks with Secretary of State Hillary Clinton, we spoke about his Baseline Review of the Joint Strike Fighter, and that’s since become public.

There are two things which are very relevant for Australia: firstly we’ve chosen the standard, or the conventional variant. There are many of the technological challenges and difficulties with other variants, so we’re confident that in the first instance we’ve made the correct choice in terms of the variable type of the aircraft. Secondly, we in our scheduling were very conscious of the fact that this is a challenging project, and there would inevitably be some delays to scheduling, and so we’ve taken account of that.

We remain confident that the Joint Strike Fighter will be delivered in accordance with our scheduled timetable, and will prove, in conjunction with the classic Hornet and the Super Hornet to be a very good fit so far as our strike and control of air capability is concerned.

QUESTION: How closely is Australia watching China‘s development of its stealth fighter?

STEPHEN SMITH: As I’ve said generally about China, China as a rising power, as a growing economy, is entitled to modernise its military Defence equipment, it’s entitled to modernise its military, but it needs to do that in a way which is transparent about its strategic intentions. And we make that point to China both publicly and privately. We remain confident that China will emerge as a responsible stakeholder, or as the Chinese themselves say, into a harmonious environment.

But this is the century of the Asia Pacific, the rise of China, the rise of India, the rise of the Asiatic economies combined, that has significant influences in our part of the world, in our region, but also internationally. And so the bilateral relationship between the great powers of the United States, China, India, will be all-important in the course of this century.

But we’re confident that these changing influences can be managed, and confident that China will emerge into a positive environment. But like every other nation, Australia believes that China should be transparent about its military modernisation and transparent about its strategic intentions.

QUESTION: Is the way it’s going about it at the moment… [indistinct]?

STEPHEN SMITH:    Well China and India are countries of a billion people, Australia is a country of 25 million people, and China and India and the United States and Japan, will remain in the top four or five economies.

Australia is a small country, in terms of population, but we remain in the top 12 countries so far as size and economy is concerned, our prosperity is concerned, and also our defence and peace-keeping is concerned. So it proceeds on a faulty premise to compare Australia‘s military acquisitions or force with China, India or the United States. But we make an appropriate contribution to our national security, through our Defence acquisitions, as a middle-sized power like Australia should.

In terms of budget and finances, the 2009 White Paper sets out our Force 2030, sets out our budget rules, and sets out our Strategic Reform Program. That is a big challenge to the Australian Defence Force and to the Australian Government, but we are on track to meet those ambitions. And I’ve made the point repeatedly, for the first time in the modern era, perhaps ever, we now have those external parameters around our Defence budget.

What we need to do is to improve the internal rigour, particularly in the acquisition and procurement area. And we’ve seen in recent times a number of difficulties and problems emerge in the Defence acquisition area, and we’ll see some lag effects.

My predecessors and Jason’s predecessors have made substantial changes in trying to manage risk in the Defence acquisition procurement area. With the first class and second class approvals and the Projects of Concern, we believe we’ve made a range of improvements to minimise the risk, but in Defence acquisitions, dealing with difficult projects, strategic intentions down the track, and use of cutting edge technology, we always have these challenges, but we need to manage risk much better.

QUESTION: Minister, are you concerned that industry will desert the Government over the carbon tax?

STEPHEN SMITH: Well, the Prime Minister and the Minister for Climate Change, Greg Combet, have been out today making remarks about that. We have put out our proposal. We’ve made it clear we want to do that in close consultation with industry and with the community.

What is very apparent to all concerned is that in the end, if we want to face up squarely to the challenges of climate change, we have to put a price on carbon, and we have to move to an emissions trading system, that’s a market solution. In my experience, at the end of the day industry always much prefers a market solution, but if we are to make progress on climate change, if we are to make progress on reducing the amount of carbon in the atmosphere, we need to put a price on carbon, we need to move to an emissions trading system, and that’s what we’re doing.

QUESTION: [Indistinct] support local industry?

STEPHEN SMITH: Look, in the end, what industry wants to do will be a matter for industry, and what the Australian community’s judgement is in the end will be a matter for the Australian community, but we believe that we have to face as a nation, squarely up to the challenges of dangerous climate change, and the only effective way of doing that is to place a price on carbon and to move to an emissions trading system and a market based approach, which in my experience, industry would much prefer, than alternative mechanisms.