TRANSCRIPT OF INTERVIEW WITH WARWICK TEECE, RADIO 2HD,
NEWCASTLE, 15 AUGUST 1989
E 0 E PROOF ONLY
TEECE: Mr Hawke, good morning.
PM: Good morning, Warwick.
TEECE: OK. The first thing as everybody has been asking me
this morning on the air, why? Why didn't we get it?
PM: The answer, unfortunately, is very simple and straight
forward. Let me preface it by saying it's done on the basis
of what was told to me as being the proper basis when I had
in the Cabinet room here in Canberra a delegation headed by
Premier Nick Greiner and with Bob Carr there and with
representatives from Newcastle. I put to them that
obviously we would have to take econonimc considerations
into account and they agreed with that. They said well
there were some other sorts of things that I shouldn't leave
out like regional considerations about Newcastle. I said
yes well I'd take that into account. I said directly to
Premier Nick Greiner well what's the sort of differential
that discount for both factors in price. In other
words, if it was 10%, more expensive to go there, what
do you think? His answer was In other words you could
go to Newcastle, you could go to Newcastle if it was 2% more
expensive. Now in fact, in fact 10%, $ 350m more for the AWS
tender. Now let me make it clear to you that this process
has been a long, thorough and objective evaluation of the
two tenders. We've had these sorts of people involved,
there's a Defence Source Definition Committee of some 15 or
more people, from Navy, the other Defence elements as well
as the civilian elements of Defence, representatives from
other relevant departments and New Zealand more than
people on that. There's some 6 people on the Chief of Naval
Staff Advisory Committee and they are making recommendations
up to the Defence Force Development Committee with 5 people
on it. In other words, about 30 people involved in the
recommendation and final selection decision.
TEECE: Alright, well
PM: Now look, I'm making the point. They were unanimous,
they were unanimous that the decision had to be for AMECON.
-2-
TEECE: Well, we political decision, it wasn't, right?
It was done on a price differential, but as Bob Carr just
said to me, and he said you could ask the Prime Minister, if
we had a look, looking at say the spread over 15 years and
what value did the Cabinet put on the benefits Through-Life
Support which was given or would be given by the Dutch Navy
towards Newcastle?
PM: But these considerations are also taken into account in
regard to both of them and this was raised in the Cabinet.
In the discussion we had the Chief of Staff and their Naval
Chief of Staff in there and in respect of this question of
Through-Life Support, no difference. In other words, on the
question of which one they went for it wasn't simply a
matter of price, although that was overwhelmingly
overwhelming. In regard to the differences between the two
ships, the AWS M Class design and the AMECON MEKO design,
the Navy said in regard to the actual ship design and
performance, a marginal preference for the AWS one, but they
said that that was more than offset by the preference they
had in the areas of management, financial arrangements,
logistic support and the industry package. All of those
outweighed that and they were all unanimous, unanimous, some
people unanimous in saying this is what the decision had
to be. Now do you really believe that I'd be entitled to
respect around Australia, including in Newcastle, if being
confronted with that position, I for political reasons
because I was frightened of a bit of backlash, no well I'll
ignore the unanimous advice of the experts, 30 of them, I'll
ignore that and go for Newcastle. I remind you it's the
same Premier Greiner who is now being so damned hypocritical
about this, who said to me when I had to make another tough
political decision about Badgery's Creek or the third runway
at Kingsford Smith, he said don't make the political
decision that you were frightened about some seats around
the airport. You've got to make the economically
responsible decision. Now he changes his tune, but he's the
same Premier Greiner who said to me in front of everyone in
the Cabinet room that a 2% differential was a maximum that
could be tolerated on economic differential grounds. It's
TEECE: I mean you're talking about recommendations of
management or whatever, we get reports about the
Victoria, we hear they've had industrial problems. We have
the combined efforts of the unions here as you know, you're
fully aware and then we, what I'm getting on the air and how
I feel is feeling that we're always second best up
here. PM: Well, it's not a right decision. If you're second
best, how do you explain that under the decision that we've
taken there's going to be $ 700m invested in Newcastle on the
project and 1,200 jobs created and that those jobs are going
to be in the area, not just of traditional steel fabrication
work, but also in engineering, electrical, electronic, pipe
work, mechanical assembly, outfitting, commissioning and
testing. That under the proposal if we get to the 12 ship
build, that under that 12 ship build, that 58 hull sections
will be assembled in Newcastle and that 5 of the 12 ships if
it's a 12 ship build will be launched at Newcastle. I mean,
once you know those facts how can you say what you do, that
Newcastle is second best?
TEECE: Well because we feel we should have won it.
I mean
PM: Why do you feel you should have won it if in fact the
Government is told unanimously by some 30 experts that the
interests of Australia demand that the AMECON bid be I
mean, how do you run a country? On that basis then, I
should have, in regard to the decision in Sydney on the
Kingsford Smith, I should have shied away from the third
runway there because it was the politically tough thing to
do. I should have said no, there's three or four seats at
risk here, but I'll run this country on the basis of not
taking any political risks. Now
TEECE: Why we ask the question is whether that $ 350m over
years really is going to be, you know, will that happen?
Will there be a saving, that's the question?
PM: Well, what you're saying is that you know better, you
know better, than all the experts. You're saying that the
Chief of the Naval Staff, that Admiral Hudson and all the
people under him are a bunch of crooks. They're either
crooks or incompetents and that you know better.
TEECE: Well what we're really saying is that, you know, we
feel that behind this whole area that the $ 350m over the
years, it's a question which was asked by several people on
the line and I've got to ask the question of you for them
too, is that is this going to really happen? Will there be
a saving of $ 350m and if there wasn't would
PM: Of course there will be. I mean the question is a
foolish question unless, unless you are saying that Admiral
Hudson, all the people in our Defence Forces concerned with
this, are a bunch of incompetents or crooks. I mean what
you're saying really is that we shouldn't have had the
evaluation process with all these experts on it. We
shouldn't have had it, we just simply said well, obviously
going to be better to have it at Newcastle, it'll be
politically more convenient, we won't have an evaluation
program, we won't have a costing, we won't do any of those
things. We'll just work out where it's politically more
convenient. Now you can't run a Government like that.
You've got to have the evaluation program and when they come
up with their detailed figuring, and it's not their
figuring, let me say, I mean the actual the figures that
were put up, the costs, are the figure that was tendered by
-4-
AWS and the figure that was tendered by AMiECON. I mean,
Admiral Hudson and his people didn't create the figures.
This is the tender price. They tendered $ 350m more. Now do
they mean their figure or don't they?
TEECE: Right, now look on this 40% that comes to New South
Wales, how much of that comes to Newcastle
PM: Well, what we can say, what we know definitely as a
minimum at this stage is $ 700m of investment and 1,200 jobs.
But what I have done is to say now I, because I do have a
feeling for that region, I mean, when we came to office I
was faced with a situation where Newcastle and Wollongong, I
might say, were going to be wiped out because, under the
Conservatives, they allowed the steel industry to run down.
Now you know we brought in the steel industry plan to save
Newcastle and Wollongong. I've proved my bona fides in
regard to the region. Now, in the same sense, I said
yesterday, well now look I want to ensure that now having
made this decision we're going to, consistent with the
contracts, we're going to get every possible piece of work
that we can for Newcastle because I want that to be done.
Now just having said that I've set up a Cabinet Sub
Committee which will have Peter Morris from the Newcastle
area, Peter Morris, Kim Beazley and John Button. I want the
Newcastle people to set up a panel up there of industry and
unions and so on so that we can just monitor this and see
that we can get as much of the work as possible up there
consistent with the decision that's been taken.
TEECE: Do the Germans use the MEKO frigate in their own
Navy? PM: No, I was asked that earlier, there seems to be some
uncertainty. They are not using it at this stage, I'm told.
But, you know, so what? I mean, you know, what is the point
of that? Here is a vessel which has been analysed and
tested by the experts, it's in fact used by four NATO
nations. It's used by four NATO nations. I don't know
whether I'm allowed to use the opposition but Mickie de
Stoop asked me this just a while ago up there and at that
stage I didn't have that information definitely. I thought
is was either used or going to be used. The fact is it's
being used by four NATO nations. Now, the Navy, our naval
experts here, in making the judgement, were able therefore
to take into account that this was an operational vessel, as
was the other one. I mean, the thing is that they're both
good vessels, but when you're making a decision about
vessels you've got to take account, not merely the vessel
itself but, as I say, of the considerations of how is the
project going to be managed, what are the financial
arrangements about it, the question of logistic support and
the total industry package. The fact is that while the
difference is $ 350m it is a minimum of $ 350m difference
because if the options on sensors and logistic support are
taken up in the contract, the difference will be even more
than $ 350m.
TEECE: The thing that's coming through all the time, and I
feel it because I'm right here in the Hunter Valley is the
feeling that there's going to be a backlash. Bob Carr said
to me this morning, he thinks there will be.
PM: Well, thank you Bob Carr. Thank you very much Bob
Carr. Bob Carr was here in the Cabinet room and if Bob
Carr's going to say that let's have it right on the table.
Bob Carr was there in the Cabinet room and did not
dissociate himself from Premier Greiner who said that the
maximum differential that you can allow in price in favour
of Newcastle was In other words, only could you go that
far of accepting a more expensiv by contract for
Newcastle. Now that's what Premier Greiner said. Bob Carr
was sitting there and did not disagree. Now it's all very
well for these politicians, after the event, to sing another
tune. It's a damn pity that they couldn't take out of the
Cabinet room the honesty and integrity which they showed
there, because they were honest there. I put the question
to them, I said look don't you accept that as Prime Minister
and as a Government I have to be economically responsible
about this? Yes, they all said it, Carr, Greiner, and all
the representatives. They all said it, yes you have to be
economically responsible. So I put the question to them.
This is not after the event, Warwick, this was beforehand.
I said to them, OK what margin do you think I should have to
favour Newcastle? How much more expensive? 2% was the
figure used by Premier Greiner and Bob Carr did not
disagree. TEECE: But do you think there will be a backlash?
PM: Well, I think there might be at this stage but, look, I
just happen to have more faith in the people of Newcastle
than some others seem to have. I don't think the people of
Newcastle are going to say, particularly when Carr and
Greiner have said what they have about the differential, I
don't think they're going to say, well Bob Hawke should have
ignored and overridden the advice of some 30 experts who
were unanimous in saying that Australia, I mean, after all
the people from Newcastle and the Hunter region are
Australians, they're not just Novacastrians and Hunter
region people, they are Australians. I don't think that in
the end they would say we want our Australian Prime Minister
to overrule and override the unanimous recommendations of
the Navy, of everyone concerned with this, some 30 people.
I don't think they'd respect me if that's what I did.
-6-
TEECE: Out of the Cabinet vote, do we know, I mean can we
know the numbers which way it went, was it unanimous?
PM: Well, we don't have votes in Cabinet. That's the way I
run it. We have the discussions and it goes on and, in the
end, there was an acceptance of the decision.
TEECE: In March this year when you were up here, we were
talking about the decision and a local independent I
remember putting a question to you, who was arguing the
decision had already been made, there'd been a sweetheart
deal and you said there'd be no way in the world. That's
coming up again
PM: Well all I can say is that if he says that, I'd like
him to say it publicly in respect of the people involved in
this because they would take him to the cleaners for
defamation. I mean, what you are simply saying is that
Admiral Hudson, the Chief of the Naval Staff, all these
senior people in our Defence forces, the men dedicated, have
given their life to the defence of this country that they
are crooks. All I can say is that that reflects upon the
people who make those accusations. This has been as clean
as a whistle. I mean the fact that there's a $ 350m
difference in the contract is proof positive of that fact.
TEECE: we've put everything into this particular
campaign PM: And you're going to get a lot out of it. I mean I pay
credit to the people of the region for the intensity of
their campaign. I mean, as a result, what are you getting?
You're arguing as though you've lost all. The fact is that
Newcastle is going to get a minimum of $ 700m new investment,
1,200 new jobs.
TEECE: What if Newcastle tender for the work
tenders are again too high? Will we get the work, because
we've obviously got to tender back again?
PM: No, but already as a result of the contracts of the
tenders that have been submitted they have been submitted on
the basis of work that's been done by the consortium in
terms of making their decisions about who's going to do the
work for them. They already know, they already know what
tender prices there would be in a broad sense to be able to
make, in broad terms, the tender price that they've offered.
On the basis of what they've already put up we know these
figures of $ 700m investment and 1,200 new jobs. Let me make
the point that if in fact New Zealand were to not go ahead,
then as a result of that the work that would have been done
in New Zealand, much more of that will go to Newcastle. You
have the situation that you would get then in New South
Wales, some 50% of the work. If it's a 12 ship launch, that
is 8 here and 4 from New Zealand, then remember that 58 hull
-7-
sections will be built and assembled, 58 hull sections will
be built in Newcastle and there'd be an assembly and launch
of 5 of the 12 ships out of Newcastle.
TEECE: The other question that's been asked of me this
morning is that the next Federal election hinges on Victoria
compared to 4 seats here.
PM: No, well look that gets down, in the end, to a
attack upon Admiral Hudson and the integrity of Defence
forces. I mean, Newcastle people are better than that. I
don't think that they really believe that Admiral Hudson and
all these dedicated people in our Defence services whose
life is committed to the defence and integrity of Australia
that they are going to be party to some sleazy political
trick, because in the end that's what it means. Remember
all these people were unanimous in their recommendation.
Now if you want to say that Admiral Hudson and these people
are a bunch of political crooks, then say it, but you know
who that reflects upon. It doesn't reflect upon Hudson and
the rest of them, it reflects upon any person who's low
enough to make that accusation.
TEECE: Mr Hawke, thank you very much.
ends
0