TRANSCRIPT OF INTERVIEW WITH MIhCKIE DE STOOP, ABC RADIO
NEWCASTLE 15 AUGUST 1989
E OE PROOF ONLY
DE STOOP: Prime Minister, thanks for your time. I don't
think you need to be told that you have some very unhappy
and very disappointed people, a city of disappointment today
up here. What have you got to say to them?
PM: I've simply got this to say. I believe that the people
of Newcastle would be entitled to be crooked on me if they
believed that I had made the wrong decision. It would've,
unfortunately because I would've liked to have seen it gone
to Newcastle, but undoubtedly it would've been the wrong
decision. Let me make it clear that I've got a very soft
spot for the Newcastle area and that's known. I was very
much involved when we came to office in getting a steel plan
off the ground because Newcastle and Wollongong looked like
being wiped off the face of the map. We weren't going to
let that happen. I've got a very, very, as I say, soft spot
for that. I've also got overall a soft spot for Australia
and I'm not going to make decisions on the basis of what
might be politically suitable. The facts are these. we
made it clear from day one that the decisions would be made
at all points on the basis of price and industry
participation. The processes were totally independent and
were rigourous. The two competing tenders were considered
by committees of the Defence Department and beyond the
Defence Department. There were two basic committees. You
had the Defence Sources Definition Committee which had the
heads of the Defence arms plus the head of the Defence
Department as well as other relevant departments and New
Zealand. There were some 15 people on that committee. As
well as that you had the Chief of Naval Staff Advisory
Committee with some six people on that. In other words over
people putting their recommendations up to the Defence
Force Development Committee of five. So in total you had
the best part of 30 people. And what you must understand is
that there was a unanimous recommendation from the best part
of 30 people involved, unanimous that the best decision for
Australia was the AMECON tender. Now why was that? It was
for a basically very simple reason. Both the ships being
tendered, that is the M type by the Newcastle-Sydney
consortium, the AWS group, and the Meko one being tendered
for by AMECON, were both ships that to the Navy were
acceptable. It is the case that just marginally in respect
of the Meko type destroyer they said there was a marginal
preference on that. But there were considerable preferences
for the Meko design in terms of the areas of management,
financial considerations and financial arrangements,
logistic support and the industry package. The financial
difference was a difference of $ 350 million. That is ten
per cent of the value of the contract.
DE STOOP: OK, well let's take a look at that figure if we
could Mr Hawke. $ 350 million certainly on the surface
sounds like a lot of money but 15 years down the track
really is a drop in the bucket isn't it? If you think of
the unemployment that is going to have to be paid out now to
the people who are not going to get work up here
PM: But you talk about the people who are not going to get
work. The fact is that Newcastle is going to have $ 700
million invested, there's a minimum of $ 700 million to be
invested in Newcastle with 1200 jobs to be created there.
The way you're talking about it Mickie is as though you have
in fact had jobs taken away from you. This is one of the
biggest contracts that will have ever come into Newcastle.
$ 700 million worth of investment and 1200 jobs at least. If
in fact New Zealand doesn't come into the process the
proportion of work that will be going to Newcastle and NSW
will be greater than Victoria.
DE STOOP: We've been told that the percentage that's coming
to Newcastle Mr Hawke is only 15% of the total 40% coming to
NSW. Under the scheme of things if AWS had won the contract
it would've meant many more jobs for many more people.
PM: It is the case if AWS had got it there would've been
more work in Newcastle. But for you to say that $ 350
million is a drop in the bucket is with respect a nonsense.
It's a nonsense that was recognised let me emphasise this
to you and to all your listeners it is a nonsense which
was recognised in my Cabinet room by Premier Greiner and the
representatives of Newcastle. I specifically put to Premier
Greiner when he was here, when he was saying he wanted it to
go to NSW and Newcastle, I said well Nick, what sort of
price differential would you think it would be appropriate
sort of to discount for? How mdch over would you say I
could allow it to go to Newcastle? If it was how many per
cent more expensive should I let it go there? His figure
was what two percent. In other words there was a two per
cent differential that on non-economic grounds it would be
appropriate to go to Newcastle. Greiner said that in front
of everyone in that room and all the representatives from
there, from NSW and from Newcastle, accepted that we had to
make the economically correct decision. For Premier Greiner
to be getting up last night and today and talking about this
as an irresponsible decision just brands him as a hypocrit
and as a man whose word can't be taken. What's the use of
negotiating and discussing with Premier Greiner if I had him
in the Cabinet room here, put it on the table and say
alright Nick, what sort of differential, how much? He said
well, two per cent. And in fact it's ten per cent. And yet
he's saying I should've given it up there. I just ask you
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to remember in respect of Greiner's position in this that
when I had to make a decision about the third runway at
Kingsford Smith or going out to Badgery's Creek, who was it
that hammered me and properly hammered me? He said you
musn't make a political decision on this. He said it might
be politically suitable for you not to build a third runway
because it might lose you some seats around the Kingsford
Smith airport but he said that's the decision you've got to
make. You've got to make it on economic grounds. But when
it comes to this he's got a different story. He says you've
got to make a political decision and not an economic one.
But when I hammered him in the Cabinet room his word in
front of everyone was it would be irresponsible if you made
a decision where the differential was more than two per
cent. Well it's more than two per cent. It's ten per cent.
That $ 350 million is ten per cent of the total value of the
contract.
DE STOOP: We've spoken this morning with the Lord Mayor of
Newcastle, John McNaughton, and he is still hoping that
there will be a percentage of the 25% that's for the
rest of NSW which includes very high tech industry that we
have, in fact we're all set up and ready to go for here.
Now I'm just wondering if there is any chance that we will
get more than that 15% at this stage.
PM: Let me say that I think John McNaughton has been very
responsible about this and he was part of that delegation
that I've just talked about. I've invited John to come down
here later this week and I've done that on the basis that
I've given him, and I give through your station to the
people of Newcastle, a guarantee that I will ensure that
every possible piece of work that can go to Newcastle
consistent with meeting the cross criteria, every piece of
work that can go to Newcastle will go there. Let me remind
you of this. The project is going to bring to Newcastle a
full range of ship building skills. It's not only the
traditional steel fabrication work but it'll also be
engineering, electrical, electronic, pipe work, mechanical
assembly, outfitting, commissioning and testing. Under the
decision that we've taken, if we have the maximum build of
12 ships, which is what it will be if New Zealand comes in
with four of them, I remind you that 58 hull sections will
be assembled in Newcastle and five of the 12 ships will be
launched from Newcastle under that maximum 12 ship build.
Now those things are going to be done and what I have
decided, I've already made the decision yesterday, that I'll
set up a Cabinet sub committee with Peter Morris on it, and
he's got the interests of Newcastle at heart. I'll have
Morris and Beazley and Button. What I'm going to be
suggesting, I've already suggested it to Morris and I'll be
suggesting it to John McNaughton, that you set up a panel of
people, relevant people from Newcastle so that we can
monitor this process and see that we can extract for
Newcastle the maximum amount of work that can be done. But
I would be entitled to have my bum booted from here to
Timbuktu and back if because I would see it as perhaps
politically more advantageous to give it to Newcastle I cost
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this country the best part of half a billion dollars. Now,
I'm not going to do that. I wasn't prepared to do it in
regard to Kingsford Smith. I was told I would lose seats
around the Kingsford Smith airport, that I should take the
politically soft decision. Greiner said don't you do that
and I didn't. Not just because of Greiner but because I'm
always going to take the decision which is the economically
responsible one. But Greiner is a double standard Premier,
preaches economic responsibility in regard to Kingsford
Smith but economic irresponsibility in regard to the
frigates.
DE STOOP: He almost should be smiling because there is
going to be, there's no doubt about it Mr Hawke and you're
aware of it, there's going to be a huge political backlash
here. we're already getting a response from listeners now.
The main thing they're saying is what in the hell does
Newcastle have to do to win a contract through the Federal
Government and
PM: What it has to do is have a consortium
DE STOOP: ( inaudible)
PM: it has to have a consortium who puts up a competitive
tender. The people of Newcastle ought to be saying to the
AWS tenders " how is it AWS, how is it that your tender was
$ 350 million more, $ 350 million more than the other one?"
DE STOOP: They'd argue that it was the better vessel. But
I tell you one question that
PM: They would, but the Navy doesn't. The Navy says that
taking everything into account and let me remind you that
including if the price had been the same the Chief of the
Naval Staff said the Navy's choice was for Meko.
DE STOOP: If the price had been exactly the same?
PM: Yes, that question was put yesterday. Because,' as I
said, there are other considerations than just the actual
ship design and performance, which was marginal. There was
only a marginal difference there. But they've got to take
into account a whole lot of other considerations, like the
question of management of the project, who can they have the
most confidence in in terms of the management of the
project? They went for the one that we chose.
DE STOOP: So the Navy didn't have as much confidence in AWS
as it did in AMECON?
PM: That's obviously what's involved. Yes. They're saying
that. That's not knocking AWS. It's simply saying that
when you have two propositions before you they've got to
make assessments as to which is the better of the two. On
that score they came down in favour of AMECON. And in terms
of financial arrangements, not just the price but in
financial arrangements, in terms of logistic support and in
terms of the industry package, on all of these things which
are of vital importance to the Navy, their preference was
for the AMECON bid. Now are you saying to me I just don't
take this view that the people of Newcastle when they come
to consider this are going to say that Bob Hawke should've
said well there's about 30 people from the Navy, the Defence
Forces, all the relevant people having to make a decision in
the best interests of Australia, that they're going to say
Bob Hawke should've said to these about 30 people who were
unanimous in their view, ' Bob, you should've said just to
look after Newcastle you'll knock over the unanimous
recommendation of some 30 people'. I don't think in the end
the people of Newcastle are going to say that.
DE STOOP: I'll tell you what they are saying though.
They're saying why didn't the Government and the Navy and
the Defence Forces all get together and select a vessel and
then call for tenders? Why wasn't it done that way round?
PM: You can't do it that way.
DE STOOP: Why?
PM: Because Mickie, we don't have the capacity to say we
are naval architects, we'll design the vessel. You've got
to have a proposition saying these are your requirements,
these are your basic requirements, now you tender to us on
the basis of what you know our requirements are.
Essentially what the Dutch did was to base theirs on the M
type vessel which is in service with the Netherlands Navy
and the was essentially based on the existing German
one. Both of them, both of those ships are essentially,
both of those are essentially acceptable to the Navy. Both
are very good ships.
DE STOOP: Is the German vessel being used by the German
Navy Mr Hawke?
PM: Yes, the German, the German, the AMECON one?
DE STOOP: Is it being used by the German Navy?
PM: Yes, it's being used by the German Navy. Being used
and to be used and the Dutch one by the Netherlands Navy.
But the point I'm just coming to is this. In terms of a
decision about acquiring a ship and building a ship, it is
not simply there is a ship, that's a nice ship and that's a
relatively nice ship and looking at them. You've got to
build the damn things. So when tenders are made there are
decisions that have to be made, not only about the relative
price and here there was a ten per cent cost differential
but you also have to have decisions made about the
management capacity. who in terms of the proposals put
forward are most likely to be able to deliver efficiently
and on time? All these sorts of things, and financial
arrangements and provisions. How much do you have to pay up
front, how much later on. All those things are relevant and
in respect if all those considerations
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DE STOOP: Obviously AWS didn't do as well or didn't score
as well in those questions.
PM: You've got to ask yourself the question. Ask some
good Australian people in the Defence Forces, members of our
Defence Forces. Are the people of Newcastle going to say
that those people are crook, that they're irresponsible,
that they're going to recommend the thing that's wrong for
Australia? Are 30 people going to be wrong?
DE STOOP: The one thing that they may say is have they gone
for political expediency?
PM: Now come on. I repudiate that. That is a slur upon
the Chief of the Defence Staff, upon Admiral Hudson, it's a
upon all the senior people in the Navy. If you're
getting to the point where you are casting a slur upon the
integrity of Admiral Hudson and our senior dedicated
committed Defence Forces, then I think that's the bottom of
the barrel.
DE STOOP: Well you know Mr Hawke that there have been so
many leaks over the last two months, we've heard so many
stories up here from various people, a lot of them leaking
out of Canberra through, and I must admit, through the
press. But at one stage it seemed that the Navy, if you got
down to who was going to drive the bloody things, the Navy
was saying we want the AWS ship.
PM: The Navy have said unanimously, through the selection
processes, unanimously that they want the Meko ship. That's
what they have said.
DE STOOP: Is that taking cost?
PM: Taking into account all those factors.
SDE STOOP: given the two vessels side by side which one
would they prefer to drive away?
PM: It's hardly the point. They've got to say let's look
at all the considerations in terms of not you don't only
drive it away. It has to be delivered on time and according
to specifications and have through-life sustenance
provisions. They take all those things into account, the
whole lot. So it's no good just saying which one they drive
away. They take every consideration into account. Mickie
you can go on for 55 hours, you cannot avoid, and I think
you accept that you can't avoid the fact that the Navy and
everyone concerned in this, some 30 people, they all
unanimously, unanimously said to the Government this is the
decision you must make.
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DE STOOP: OK, well that's the thing you've got to sell to
Newcastle. I know that you've been called away at the
moment because you have another appointment. I appreciate
the time you've spent with us. Are you very concerned
just briefly that you do have a big sell job to do here in
Newcastle? PM: Yes, and I will come to Newcastle and I'll talk to
whoever wants to talk to me about it. We won't run away
from it.
DE STOOP: How many seats are threatened do you think?
PM: I don't think any because, in the end, let me say this.
I have more faith in the good sense of the Newcastle people.
I don't think the Newcastle people in the end are going to
say we think that the Chief of the Naval Staff is a crook.
We don't think that all the people in the Defence Forces are
crook. We don't think all the people in Attorney-General's,
Industry and Commerce, the New Zealanders, that all these
people, we don't think they are crook. If they all
unanimously said this was the right decision, and it's a
decision which is going to bring $ 700 million of investment
and 1200 jobs to Newcastle, I think the people of Newcastle
are going to say alright that's the right decision.
DE STOOP: You've got a lot of people walking around the
area today saying frigate, I can tell you. Thank you for
your time.
PM: Thanks Mickie.
ends