Australian Industry & Defence Network (AIDN) responds to release of Defence Strategic Review

Line of Defence Magazine - Update

F-35A Lightning II aircraft. Image: Australian Department of Defence.

In this abridged version of its 24 April media release, AIDN raises concerns over the DSR’s lack of clarity on the role of the Australian defence industry and the potential abuse of ‘speed to capability’.

AIDN’s strong membership of Australian SMEs supports any Australian Government initiative that affords the Australian Defence Industry the opportunity to secure high end work in all Defence programs. 

AIDN has supported Minister for Defence Industry Pat Conroy’s drive towards ensuring that enhanced capability for the Australian Defence Industry is the measure the Albanese Government would be seeking, rather than a simplistic measure of percentage, however the DSR does not reflect this sentiment.

In principle, as an industry that contributes $10.6 billion to the Australian economy annually, AIDN supports this initiative. A highly capable Australian Defence Industry supports the Albanese Government’s ambition of a more self-reliant and a sovereign industrial base. 

AIDN is calling for the Albanese Government and the Department of Defence (DoD) to work closely with the 61,000+ workers employed by the Australian Defence Industry to ensure that a comprehensive policy and procurement framework are put in place to achieve this intent.  

However, the DSR does not affirm this position. The references to Defence Industry appear cursory at best. Of concern is the statement that Australian industry content and domestic production should be balanced against timely capability acquisition.

The Albanese Government needs to clearly articulate what the Government believes ‘timely’ acquisition is, further to this it needs to articulate what the industrial plan for Australian Industry is to be.

AIDN can accept that the requirement for a capability may mean that Defence proceeds offshore to purchase that capability. However, there must be a plan to ensure that the ability to produce that capability locally is developed at the same time and it must be mandatory. Without the proper guidance from Government, Defence will be able to use the argument of speed to capability to avoid the use of Australian Industry.

The future of the Australian Defence Industry depends on a framework where their role in delivering capability requirements is clear, and the procurement process is efficient and accessible to local industry and importantly, SMEs.

Allowing Internationally owned large Defence contractors the ability to provide advice to Defence on ‘speed to capability’ without due regard or requirement for work to be transferred to Australian Industry, means that the these overseas companies will simply use the ‘speed to capability’ mantra to employ their existing overseas supply chain. And there will be no development, enhancement or creation of an Australian Indigenous sovereign industrial capability, a capability our national requires in order to achieve national strategic resilience. 

The recent pandemic demonstrated how vulnerable Australia is to the nuisances of overseas supply chains. Without Government clearly articulating the requirement to create an Australian supply chain then this simple will not happen and Australia will be at the behest of supply from foreign Governments, with their own needs being prioritised ahead of Australia, we will simply be in the queue to be supplied.

The creation of Australia capability allows us as a nation to be independent, sovereign and resilient. It also could and should provide a secondary manufacturing and supply capability for our strategic partners.

If Australia is to achieve a truly sovereign industrial base, then the Australian Defence Industry must be designed into every aspect of these programs.  If the intent is simply to acquire capability form foreign owned overseas industries, then our nation will have fallen short of what we need to create with our Industry.

Australian Industry is simply too important to be left to the whims of foreign owned multinational companies, AIDN would argue that now is the time for our Government to mandate requirements into all of these programs so that foreign entities understand what they must do in order to secure these opportunities.

This is not an isolated requirement, most nations have exacting requirements for the inclusion of local defence industry into their programs.