Australian + New Zealand Defence Directory 20/21

AUSTRALIAN + NEW ZEALAND DEFENCE DIRECTORY 2020/21 THE NATION BUILD www. d e f e n c e . d i r e c t o r y 16 AUSTRALIAN DEFENCE INDUSTRY – MOVING FORWARD T he Federal Government is undertaking the largest expenditure on the Australian Defence Force since the second world war. The Government should be congratulated on this undertaking, of course this reflects the complexity of the geopolitical situation that Australia finds itself. Given the recent events of the COVID-19 pandemic and the shock to both the Government and the nation of how much of our industry is dependant upon foreign entities it is important to ensure that this massive expenditure of Australian tax payers money is undertaken here in Australia, our Govern- ment needs to stimulate the Australian economy and not the economies of foreign governments. It is going to take many years for our economy to recover, we are seeing levels of unemployment that we have not experienced for decades, one area that seems to be operating in almost a business as usual mode is defence, and as such it should now be considered to be a genuine economic stimulus for Australia. The Department of Defence needs to fundamentally understand that it has an obligation to spend the funds provided to it to ensure that the economic impacts to the Australian economy are fully consid- ered, in other words it needs to follow the Governments own policy. If work can be done in Australia it must be done in Australia, if this requires greater direction or inter- vention from the Ministers or even the Prime Minister to ensure that Defence complies then sobeit. The Department cannot operate in isolation of the reality of what has happened to the Australian economy because of COVID, the fiscal reality is that Australia’s GDP will decrease around 10%, it may degrade further, simply based on the current forecast of a 10% reduction this represents 5 years of Defence expenditure, based on the Governments stated intention of achieving a 2% spend on Defence. This expenditure needs to contribute to and to ensure that our recovery as a nation is the highest priority. Defence has a difficult role to perform; it has to ensure that it delivers the capability to achieve the stated intention of the Australian government, whilst managing the complexity of large programs, to an agreed schedule and cost whilst demonstrating value for money, in an economic environment that the Australian tax payer will demand achieves a return for them. This complexity is understood however it is the environment that Defence has to oper- ate, Defence is not an island unaffected by these issues. The reality of the Australian Defence Industrial landscape is that a limited number of large foreign owned Prime Contractors are contracted to undertake the defence programs, it is through these prime Contractors that Australian companies will provide their services. Therefore Defence and the Prime Contractors need to be bound by the Governments policy to ensure that Australian companies are given every opportunity to secure appropriate workshare. If the Australian taxpayer, or perhaps the Australian voting public, decides that this expenditure does not directly solve their issues, then any Govern- ment would be forced to review this expenditure, or risk not being the Government. One area that can assist both Government and defence in managing the public’s expectations is to ensure that as much of their money is spent in the Australian economy as possible. Australian companies not being part of these programs can only lead to discontent and this generates negative commentary, essentially the loss of what should be a good news narrative, placing greater pressure on these programs. Industry has an expectation that it will be able to compete for work in these programs in a fair and equitable way, it is not asking to simply be handed these contracts, industry understands the need to be competitive and to represent value for money, and Australian industry has demonstrated time and time again that it does represent value for money, that it does provide innovated solutions and that it does achieve international benchmarks for efficiency and productivity, in other words there is no factual basis for foreign owned companies to exclude Australian companies being part of their global supply chains. What industry does not and will not accept is for them to be excluded from this work and for this work to be handed to foreign owned com- panies or having foreign owned subsidiaries being established in Australia to create the illusion of Australian content. Industry will take Government on face value and accept that Australian Industry is vitally important to Government and industry will absolutely work with Government and Defence to achieve the best possible outcomes for Australia and the Australian public. Brent Clark CEO AIDN