1 00:00:03,720 --> 00:00:06,720 Speaker 1: From The Australian. Here's what's on the front. I'm Christian Amiot. 2 00:00:06,960 --> 00:00:13,360 Speaker 1: It's Wednesday, August six, twenty five. Jim Chalmers will shift 3 00:00:13,400 --> 00:00:16,959 Speaker 1: the focus of his upcoming Productivity roundtable from tax reform 4 00:00:17,000 --> 00:00:21,000 Speaker 1: and government spending to slashing red tape. The Treasurers met 5 00:00:21,000 --> 00:00:23,759 Speaker 1: with dozens of chief executives and industry leaders in the 6 00:00:23,840 --> 00:00:26,119 Speaker 1: run up to the August summit, where he hopes to 7 00:00:26,160 --> 00:00:35,800 Speaker 1: boost productivity and speed up housing approvals. There was never 8 00:00:35,960 --> 00:00:39,280 Speaker 1: any doubt about it. Japan was always going to win 9 00:00:39,360 --> 00:00:44,040 Speaker 1: a major contract to build warships for the Australian Defense Force. Today, 10 00:00:44,159 --> 00:00:48,000 Speaker 1: Defense correspondent Ben Packham unpacks the ten billion dollar deal 11 00:00:48,159 --> 00:00:51,280 Speaker 1: set to shape the next generation of the ADF. 12 00:00:53,760 --> 00:00:54,200 Speaker 2: Sold. 13 00:00:56,360 --> 00:00:59,080 Speaker 1: A multi billion dollar auction has been held for the 14 00:00:59,120 --> 00:01:03,520 Speaker 1: future of Australia's warship fleet and the winner is Japan. 15 00:01:03,960 --> 00:01:06,319 Speaker 2: Woll Japan has won a fierce battle to build a 16 00:01:06,360 --> 00:01:09,559 Speaker 2: new fleet of Australian warships, winning a ten billion dollar 17 00:01:09,600 --> 00:01:11,520 Speaker 2: contract with the Albanesi. 18 00:01:11,040 --> 00:01:15,280 Speaker 1: Government Mitsubishi heavy Industries through the Kitchen Sink at an 19 00:01:15,280 --> 00:01:18,920 Speaker 1: Australian Defense Force bid to beat German shipbuilder This and 20 00:01:19,000 --> 00:01:23,800 Speaker 1: Krupp Marine systems. The Australians Foreign Affairs and Defense correspondent 21 00:01:23,880 --> 00:01:27,960 Speaker 1: Ben Packham broke the story, Ben, what do we know 22 00:01:28,000 --> 00:01:30,520 Speaker 1: about how that bidding process played out? 23 00:01:30,560 --> 00:01:32,759 Speaker 3: The Germans were outclassed. 24 00:01:32,959 --> 00:01:37,039 Speaker 2: Their ship was outclassed, and as Richard Miles and Pat 25 00:01:37,120 --> 00:01:42,520 Speaker 2: Conry have said, the Japanese ship, the mcgami, was far 26 00:01:42,600 --> 00:01:45,119 Speaker 2: and away the best ship out of. 27 00:01:45,000 --> 00:01:47,200 Speaker 3: The two options in that sense. 28 00:01:47,760 --> 00:01:51,400 Speaker 2: Well, no doubt the German company TKMS put in as 29 00:01:51,440 --> 00:01:54,280 Speaker 2: strong a bid as it could. It's Miko, a two 30 00:01:54,320 --> 00:01:59,120 Speaker 2: hundred vessel, was simply not as good as the mcgami. 31 00:02:01,080 --> 00:02:03,559 Speaker 1: So what is so good about this ship? 32 00:02:04,560 --> 00:02:04,920 Speaker 3: Now? 33 00:02:05,040 --> 00:02:09,520 Speaker 2: The Japanese ship has more vertical launch missile cells, It 34 00:02:09,560 --> 00:02:13,400 Speaker 2: has a stealthy design which the German ship doesn't. It 35 00:02:13,560 --> 00:02:17,080 Speaker 2: has a smaller crew of ninety compared to one hundred 36 00:02:17,080 --> 00:02:20,720 Speaker 2: and twenty for the German ship. Now that's really important 37 00:02:21,120 --> 00:02:24,160 Speaker 2: for the Australian Navy, which like the rest of the 38 00:02:24,200 --> 00:02:27,800 Speaker 2: Defense force, is struggling with a workforce crisis. It also 39 00:02:27,919 --> 00:02:31,560 Speaker 2: lowers their sort of lifetime costs of crewing that ship. 40 00:02:31,840 --> 00:02:34,840 Speaker 3: The Japanese ship also has a claimed. 41 00:02:34,520 --> 00:02:38,280 Speaker 2: Operational life of forty years compared to thirty years for 42 00:02:38,360 --> 00:02:43,200 Speaker 2: the German vessel. So look, the MGAMI really did win 43 00:02:43,280 --> 00:02:48,040 Speaker 2: hands down on the actual ship. There was other aspects 44 00:02:48,080 --> 00:02:52,040 Speaker 2: to the bid, including its industrial plan, how it intends 45 00:02:52,120 --> 00:02:57,440 Speaker 2: to transfer production to Australia, and even though the Japanese 46 00:02:57,560 --> 00:03:01,040 Speaker 2: vessel is a larger vessel and on paper should be 47 00:03:01,080 --> 00:03:05,800 Speaker 2: more costly, the government said that ultimately they were on 48 00:03:06,080 --> 00:03:09,800 Speaker 2: par and over the life cycle because of that smaller 49 00:03:09,840 --> 00:03:12,919 Speaker 2: crew and the longer life span of the Japanese ship, 50 00:03:13,240 --> 00:03:15,320 Speaker 2: the MCGAMI was actually the cheaper option. 51 00:03:16,560 --> 00:03:19,960 Speaker 1: It's the cheaper option now, but what about in future. 52 00:03:21,000 --> 00:03:23,600 Speaker 2: The ten billion dollar figure that we've been given that 53 00:03:23,760 --> 00:03:30,920 Speaker 2: is only for the first three vessels and the redevelopment 54 00:03:30,960 --> 00:03:33,520 Speaker 2: of the Henderson shipyards to get them ready to switch 55 00:03:33,560 --> 00:03:37,600 Speaker 2: production to WA. So that's just ships one to three, 56 00:03:37,840 --> 00:03:42,240 Speaker 2: plus some infrastructure and so forth. So really we're probably 57 00:03:42,280 --> 00:03:47,560 Speaker 2: looking at at least three times that for the full eleven. 58 00:03:47,840 --> 00:03:50,120 Speaker 2: They do get cheaper as you go along, but also 59 00:03:50,480 --> 00:03:52,680 Speaker 2: the ones that we produce in Western Australia are going 60 00:03:52,720 --> 00:03:56,000 Speaker 2: to be more expensive, at least initially to build than 61 00:03:56,040 --> 00:03:59,120 Speaker 2: the ones that are built in Japan, but it's not 62 00:03:59,200 --> 00:04:01,280 Speaker 2: clear exactly how much they will cost each. 63 00:04:04,160 --> 00:04:08,080 Speaker 1: Mitsubishi Heavy Industries will build eleven upgraded MGAMI frigates over 64 00:04:08,120 --> 00:04:11,320 Speaker 1: the next decade or so. The first three will be 65 00:04:11,320 --> 00:04:14,160 Speaker 1: built in Japan, with the remainder to be built at 66 00:04:14,200 --> 00:04:19,599 Speaker 1: Western Australia's Henderson Shipbuilding Precinct by ostel Ben You wrote 67 00:04:19,600 --> 00:04:22,320 Speaker 1: for The Australian that this is the most consequential defense 68 00:04:22,360 --> 00:04:25,919 Speaker 1: procurement decision since Labour won the twenty twenty two election. 69 00:04:26,400 --> 00:04:30,760 Speaker 2: Why is that this is really the first defense program 70 00:04:30,839 --> 00:04:34,400 Speaker 2: that labor fully owns. It has also inherited a couple 71 00:04:34,400 --> 00:04:39,320 Speaker 2: of botched naval programs from the former government, in particular 72 00:04:39,480 --> 00:04:44,600 Speaker 2: the Hunter class frigate program, which has suffered just some 73 00:04:44,839 --> 00:04:47,880 Speaker 2: terrible cost blowouts and schedule blowouts. 74 00:04:48,240 --> 00:04:50,120 Speaker 3: The cost of those ships. 75 00:04:50,120 --> 00:04:53,880 Speaker 2: Is running at something like nine billion dollars per hull 76 00:04:54,360 --> 00:04:56,760 Speaker 2: and we will not see the first one of those 77 00:04:57,160 --> 00:05:01,000 Speaker 2: in service until twenty thirty four. Now that's largely the 78 00:05:01,040 --> 00:05:04,320 Speaker 2: result of changes being made to the design they wanted 79 00:05:04,480 --> 00:05:07,160 Speaker 2: to change for Australian requirements. Now, whenever you do that, 80 00:05:07,520 --> 00:05:11,400 Speaker 2: it just causes problems. And the government in this case 81 00:05:11,520 --> 00:05:15,880 Speaker 2: was very clear it wanted a ship that was in 82 00:05:15,960 --> 00:05:20,359 Speaker 2: service and that was not going to be modified in 83 00:05:20,480 --> 00:05:21,040 Speaker 2: any way. 84 00:05:21,600 --> 00:05:24,560 Speaker 3: The government and Defense are very confident. 85 00:05:24,160 --> 00:05:27,839 Speaker 2: That this will be a pretty smooth build, in particular 86 00:05:28,160 --> 00:05:31,520 Speaker 2: with the first three ships that are going to be 87 00:05:31,600 --> 00:05:35,120 Speaker 2: built in Japan. When production shifts to Australia, that's going 88 00:05:35,200 --> 00:05:38,159 Speaker 2: to be the real challenge. Japan is a very efficient 89 00:05:38,640 --> 00:05:44,640 Speaker 2: shipbuilding nation, but Japan has not actually built ships off 90 00:05:44,720 --> 00:05:50,559 Speaker 2: shore before, and it's never dealt with the Australian supply chain, 91 00:05:50,800 --> 00:05:56,239 Speaker 2: Australian workforce capacity constraints, or the Australian Department of Defense, 92 00:05:56,440 --> 00:06:03,040 Speaker 2: which can be very meddlesome and impose requirements that can 93 00:06:03,160 --> 00:06:06,520 Speaker 2: slow things down. Now, I suspect that Defense will get 94 00:06:06,520 --> 00:06:08,719 Speaker 2: out of the way. You know, they're under orders to 95 00:06:08,880 --> 00:06:11,440 Speaker 2: just let the company do its thing. 96 00:06:12,240 --> 00:06:13,520 Speaker 3: Let's hope that's what happens. 97 00:06:15,320 --> 00:06:18,839 Speaker 1: The Albanesi government has given Mitsubishi Heavy Industries a deadline 98 00:06:18,880 --> 00:06:22,080 Speaker 1: of twenty twenty nine to deliver the first vessel under 99 00:06:22,080 --> 00:06:26,680 Speaker 1: the new agreement. Ben You and I spoke back in 100 00:06:26,720 --> 00:06:29,839 Speaker 1: twenty twenty three when the landmark Defense Strategic Review was 101 00:06:29,880 --> 00:06:33,480 Speaker 1: released by the Albanesi government. I recall you said at 102 00:06:33,520 --> 00:06:36,560 Speaker 1: that time that the overarching message to the ADF when 103 00:06:36,600 --> 00:06:40,000 Speaker 1: it came to defense procurement was to stop letting the 104 00:06:40,000 --> 00:06:42,640 Speaker 1: good be the enemy of the perfect. That they were 105 00:06:42,680 --> 00:06:46,040 Speaker 1: spending so long fitting new technologies that they were out 106 00:06:46,040 --> 00:06:48,440 Speaker 1: of date by the time they finally arrived in the field. 107 00:06:49,200 --> 00:06:53,120 Speaker 1: This new deal seems fast by comparison. Is this a 108 00:06:53,160 --> 00:06:55,480 Speaker 1: sign that Defense Force is turning things around? 109 00:06:55,960 --> 00:06:58,520 Speaker 2: Well, it's a sign that the Albanesi government doesn't want 110 00:06:58,560 --> 00:07:02,040 Speaker 2: to repeat of what's happened four. I think probably Defense 111 00:07:02,080 --> 00:07:04,919 Speaker 2: has got the message here, and because we're getting it 112 00:07:04,920 --> 00:07:07,599 Speaker 2: off that Japanese production line, we're going to be getting 113 00:07:07,640 --> 00:07:10,880 Speaker 2: the first one quite quickly and certainly by Australian standards. 114 00:07:11,200 --> 00:07:13,000 Speaker 3: Now, to sweeten the deal. 115 00:07:13,000 --> 00:07:17,760 Speaker 2: Japan offered Australia a ship that was already in its 116 00:07:17,880 --> 00:07:23,400 Speaker 2: production schedule. The Misubishi Heavy industries have famously never missed 117 00:07:23,400 --> 00:07:27,200 Speaker 2: a deadline, certainly not in their current operation, but they 118 00:07:27,200 --> 00:07:30,280 Speaker 2: haven't delivered a ship built in Australia yet, so that 119 00:07:30,360 --> 00:07:34,000 Speaker 2: will be a challenge. It should also be noted that 120 00:07:34,280 --> 00:07:38,080 Speaker 2: even though the government wants ships four to eleven to 121 00:07:38,160 --> 00:07:43,400 Speaker 2: be built in Australia, Pat Conroy, the Defense Industry Ministers, 122 00:07:43,440 --> 00:07:46,520 Speaker 2: said today that Australian industry really needs to prove that 123 00:07:46,600 --> 00:07:48,920 Speaker 2: it's up to this and get into a position where 124 00:07:48,960 --> 00:07:52,520 Speaker 2: it can do that. Now that's a message to Ostel, 125 00:07:52,760 --> 00:07:56,320 Speaker 2: which has been named the government sovereign shipbuilder. They're located 126 00:07:56,360 --> 00:07:59,400 Speaker 2: over in wa They've got a lot on their plate. 127 00:07:59,560 --> 00:08:03,920 Speaker 2: And the other issue with getting things going over there 128 00:08:04,040 --> 00:08:08,240 Speaker 2: is there hasn't been a lot of redevelopment yet or 129 00:08:08,800 --> 00:08:12,680 Speaker 2: works going on at Henderson, and there's going to have 130 00:08:12,720 --> 00:08:17,120 Speaker 2: to be a lot happen there to get that precinc 131 00:08:17,240 --> 00:08:19,160 Speaker 2: really up to speed. 132 00:08:20,400 --> 00:08:21,560 Speaker 3: Well, to build a whole. 133 00:08:21,440 --> 00:08:27,360 Speaker 2: Range of things, including to sustain nuclear submarines for the 134 00:08:27,480 --> 00:08:30,280 Speaker 2: US and the UK that are going to be rotating 135 00:08:30,320 --> 00:08:32,880 Speaker 2: through there. And there's a whole lot of sort of 136 00:08:32,960 --> 00:08:36,120 Speaker 2: regulatory stuff that needs to happen over there, and you've 137 00:08:36,160 --> 00:08:40,320 Speaker 2: got multiple levels of government that have to agree to everything, 138 00:08:40,480 --> 00:08:43,520 Speaker 2: so that's going to be a huge task. So you know, 139 00:08:43,720 --> 00:08:46,080 Speaker 2: none of this is guaranteed, and if I was a 140 00:08:46,080 --> 00:08:48,760 Speaker 2: betting man, I'd be saying the precinct there is not 141 00:08:48,800 --> 00:08:51,520 Speaker 2: going to be ready for the fourth ship and that 142 00:08:51,600 --> 00:08:55,240 Speaker 2: they might have to build another three in Japan, which personally, 143 00:08:55,400 --> 00:08:58,599 Speaker 2: I don't think would be such a bad outcome, especially 144 00:08:58,679 --> 00:09:02,280 Speaker 2: for the Navy because it'll get six ships in quick 145 00:09:02,400 --> 00:09:05,480 Speaker 2: time that it would otherwise not get as quickly. 146 00:09:09,840 --> 00:09:13,640 Speaker 1: Coming up what this mega deal means for Australia's relationship 147 00:09:13,760 --> 00:09:29,520 Speaker 1: with Japan. Next week will mark the eightieth anniversary of 148 00:09:29,640 --> 00:09:33,559 Speaker 1: victory over Japan in the Pacific. August fifteen is known 149 00:09:33,600 --> 00:09:37,480 Speaker 1: as VP Day and it commemorates Japan's surrender and the 150 00:09:37,600 --> 00:09:41,120 Speaker 1: end of World War II in the region. Australia joined 151 00:09:41,120 --> 00:09:43,400 Speaker 1: her allies and an outburst of rejoicing the Lake of 152 00:09:43,440 --> 00:09:45,320 Speaker 1: witch mersites have never seen before. 153 00:09:45,880 --> 00:09:49,000 Speaker 3: The pendub emotion of six years poured out as a flood. 154 00:09:49,440 --> 00:09:50,679 Speaker 3: Freedom was really. 155 00:09:50,440 --> 00:09:55,880 Speaker 1: Their Eight decades later, it's Japan and Australia who've united 156 00:09:55,920 --> 00:09:59,040 Speaker 1: against the growing military might of China in the Pacific. 157 00:10:00,160 --> 00:10:03,000 Speaker 1: Japanese troops have this year commenced training in the top 158 00:10:03,120 --> 00:10:07,880 Speaker 1: end alongside Australians and US Marines, and Ben Packham says 159 00:10:08,040 --> 00:10:11,160 Speaker 1: the new deal to supply mcgami class frigates is another 160 00:10:11,240 --> 00:10:14,959 Speaker 1: positive step in Australia's geostrategic relationship with Japan. 161 00:10:16,040 --> 00:10:17,679 Speaker 3: Talk about a turnaround. 162 00:10:17,920 --> 00:10:22,240 Speaker 2: Historically, you know, the contest was between Germany and Japan, 163 00:10:22,840 --> 00:10:26,760 Speaker 2: our two wartime foes to build us these ships. So, 164 00:10:26,840 --> 00:10:29,880 Speaker 2: I mean, it really does show how things can change. 165 00:10:29,960 --> 00:10:33,640 Speaker 2: But Importantly, we have a special strategic partnership with Japan. 166 00:10:33,720 --> 00:10:37,000 Speaker 2: It's known as our quasi Ally, Japan is one of 167 00:10:37,000 --> 00:10:39,280 Speaker 2: the powers with the US that is really going to 168 00:10:39,280 --> 00:10:46,520 Speaker 2: be critical in deterring any conflict with China, particularly over Taiwan. 169 00:10:46,880 --> 00:10:50,720 Speaker 2: Japan has a highly capable military obviously the US does 170 00:10:50,760 --> 00:10:53,480 Speaker 2: two and the closer that we can all work together 171 00:10:54,080 --> 00:10:59,679 Speaker 2: in terms of integrating our capabilities, training together, doing exercises together, 172 00:11:00,360 --> 00:11:04,760 Speaker 2: and integrating our defense industries so that they work more seamlessly. 173 00:11:05,240 --> 00:11:08,319 Speaker 3: That is going to serve us well in that. 174 00:11:08,480 --> 00:11:15,840 Speaker 2: Longer term challenge to respond to China's massive military growth 175 00:11:16,080 --> 00:11:19,040 Speaker 2: and its desire to be the dominant power in the 176 00:11:19,080 --> 00:11:19,920 Speaker 2: Indo Pacific. 177 00:11:31,040 --> 00:11:34,400 Speaker 1: Ben Packham is the Australian's Foreign Affairs and Defense correspondent. 178 00:11:34,880 --> 00:11:37,200 Speaker 1: You can read all his reporting and analysis of the 179 00:11:37,240 --> 00:11:40,040 Speaker 1: future of the Australian Defense Force at the Australian dot 180 00:11:40,040 --> 00:11:40,920 Speaker 1: com dot au