Australian defence industry

by Matt Keogh, Shadow Minister for Defence Industry

We are a country that punches well above our weight in so many things.

We traditionally finish in the top 5 in the Olympics, despite being so much smaller than our competition. 

We invented WiFi, the Blackbox, spray on skin and the cochlear implant. 

We are world leaders in mining and sub-sea oil and gas.

We have handled the COVID crisis better than most of the world.

In World War II we made the Boomerang fighter aircraft and just now it is Australia that is leading the world in autonomous aircraft with the Loyal Wingman.

So why is it that we so are doubtful about the potential of our defence industry and our own capability. 

We are competitive with other nations on so many things, we have the skills, resources, and the thirst for work but the simple fact is, we as a nation don’t back ourselves in our defence industry.

The Australian Defence Force is a fantastic customer of the global defence industry supply chain.

But why can’t we – Australia – be their primary supplier instead?

This is the crux of a conversation I had recently with a successful Australian defence industry business.

They’re doing well, participating on some major international defence projects, which benefit our ADF but are largely for foreign primes and forces overseas.

But they have the capacity for so much more.

In my discussions with defence industry more broadly, I’m told the same thing time, and time again – they look for export tenders and contracts overseas in order to be deemed “legit” by our own Department of Defence.

At the same time, they are fighting for those overseas contracts with one hand tied behind their back because they can’t point to contracts with our own ADF.

We need a paradigm shift.

We need our Government and Department of Defence to back our Australian defence industry businesses as a necessary and important strategic capability, right up there with our naval, land and air platforms themselves.

While this means taking on the risk that comes with fostering local companies, so we can embrace the reward, we know full well that overseas designed and built equipment presents many other risks in any event.

Ultimately, we – our Government – need to back ourselves.

Already through the COVID-19 pandemic, not only have we been well down the list when it comes to sourcing PPE and commencing our vaccine rollout, we’ve been victims of “vaccine nationalism” where countries have prioritised their own interests over their international export contracts.

Why would we expect this to be any different in a conflict situation?

The Aussie spirit of mateship is alive and well in our defence industry and beyond. When we need something to happen, we pull together and make it so.

We saw this during the response to the Bushfires of Christmas 2019 where the HMAS Canberra and Adelaide were deployed to the New South Wales South Coast, fully stocked in a matter of hours due to the fact that local companies pulled together to get sh** done.

We know we can do what’s needed when it’s required, and this is the mindset we need for all our defence industry projects.

Australian defence companies don’t want to be just building to-spec parts off a ship blueprint developed decades prior or come from overseas.

There’s no strategic or sovereign capability development in that, in fact it leads to the use of old and obsolete technology and a deskilling of our industrial base.

We should instead be commissioning Australian companies on an outcomes basis.

If we need something for our defence kit, Australian companies should have the opportunity to put forward unique solutions.

This provides the opportunity for research, development and innovation in the sector.
In order to enable this, the Commonwealth must put skin in the game.

It’s not enough to put out a tender contract and let international prime companies get away with “best endeavours” provisions, only to advise that Australian companies don’t have the capacity or capability to undertake specific work, favouring their existing, often international, supply chain.

Also read: Fiji and Australia advancing defence partnership

The Australian defence industry needs to be enabled by the Commonwealth. From the Defence Minister down there must be a new approach.

The “A” in AIC should be about home-grown and Australian owned, Australian registered businesses.

The “C” in AIC must truly be about our sovereign capability, not just content, which under the current Government’s guidelines could mean hotels, travel agents and language classes just as equally as building ships and designing new technology.

That means building and developing things here in Australia should be our priority.
If we don’t have the specific capability here, we must nurture and build that capability strategically.

We must develop and foster our current mid-tier defence industry businesses from which we can grow indigenous prime defence contractors.

There is no reason that Australia can’t be a world leader in defence manufacturing.
If undertaken effectively, home grown prime defence contractors will be enabled to take the lead on projects. No longer simply subcontracting to foreign lead contractors, rather working directly with Defence to provide new capabilities to our ADF.

Similarly, we should be using Australian shipbuilders in all future shipbuilding programs – not just providing shipbuilding labour, but also in the design, engineering, drafting and integration work.

Ultimately, this means continually investing in the development of our industry and our overall capability here at home.

This is why Labor has already committed to implementing concrete rules to maximise local content and create local jobs in Defence acquisitions.

This means negotiating appropriate, specific, enforceable and audited AIC commitments into the contractual arrangements for all major defence materiel procurements and local defence contracts. The disclosure of these commitments must be public and transparent.

It is up to the Federal Government to implement contractual requirements that compel defence primes to do the work here in Australia, and to work with local companies now and put in place the mechanism to grow our Australian defence industry from SMEs to primes. Requiring minimum levels that are only met at the end of a project with no transparency is not good enough.

Australian companies need to be factored into the defence project supply chain from the very beginning of a project and continue that through the life of the platform.

We must share the risk, put skin in the game and back ourselves in defence like we do in the Olympics.

This opinion piece was first published in The Australian Industry & Defence Network (AIDN) National Quarterly Newsletter on Wednesday 24 March 2021.

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