A STRONGER INDUSTRY FOR GREATER NATIONAL RESILINECE

By Brent Clark,

CEO, Australian Industry & Defence Network

As the Federal Government continues with the significant challenge of replacing, upscaling and enhancing the ADF it is important to consider that there is another element to national sovereignty - and therefore strategic resilience - that must be developed and enhanced: the Australian-owned and controlled defence industry.

Recent events in Afghanistan, the continuing COVID-19 pandemic, tensions in our region and the complexity of the world’s geo-political circumstances require a robust, independent, and highly capable domestic industry.

We as a nation continue to learn the lessons of the fragility of our supply chains across all sectors. As the pandemic continues to batter our economy, we need to accept that at some point this economy is going to have to move into a recovery phase and if we are going to maintain the standard of living, we have all come to expect then Australian industry must become a vital component of that recovery plan.

Throughout the pandemic the Australian Government has been able to keep Defence programs largely on track. This means that Defence dollars have continued to flow, and companies continue, in the most part, to be viable operating entities.

The ability for Defence to bring forward the payment of invoices allowed many companies to maintain a positive cash flow throughout the pandemic, which in turn allowed them to maintain a solid workforce. Although many were involved in achieving this, AIDN applauds the Hon Melissa Price, Minister for Defence Industry, and the Capability and Sustainment Group under the leadership of Tony Fraser, AO CSC, for pro-actively managing these outcomes. GREATER AUSTRALIAN CONTROL

Defence has a difficult role to perform; it must meet the requirements of the government of the day and to do this it requires people, equipment and services. The acquisition of equipment must be achieved to a defined cost and agreed schedule.

Given the nature of the activity and the government’s stated requirements to create a sovereign industrial base to achieve greater national resilience, Defence is therefore obligated to ensure that Australian-owned and controlled industry receives the majority of work orders and contracts. This will ensure that most of the activity is undertaken in Australia by an Australian company. At present this simply is not the case. Recent studies indicate that less than 50% of the activity is spent within Australia, with a significant percentage of that spend going to foreign-owned and controlled multinational companies.

It is acknowledged that many of these overseas owned companies do attempt to engage with Australian industry, and those efforts are to be applauded, but the simple reality is that there should never be an order placed without first determining whether the work can or could be done in Australia, how Australian companies are going to be included in the activities, and how Australian companies are going to be upskilled and enhanced to undertake the activity into the future.

Chairman of the AIDN National board, Graham Priestnall, addresses guests at the 2021 AIDN National Gala Dinner held on 3 February 2021 at Canberra’s National Convention Centre. © AIDN National.

Australia has proven industrial capabilities with companies that compete on a global stage - our mining and medical industries spring to mind. This is not the case with our defence companies who largely struggle to get a toe hold on many of these programs, watching on as the overseas supply chain of these multi-national companies are engaged ahead of them, usually behind the guise of intellectual property issues, or undue risk or non-competitiveness.

Australia lags the world in the development and protection of its defence industry and this needs to change. Change can only come through government intent and with proactive policy mandating that Defence ensures Australian-owned and controlled industry is at the forefront of every acquisition decision.

AIDN looks forward to working proactively with both sides of the political spectrum, Defence and the multi-national companies to achieve the outcome that is best for Australia.

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