~ Alan Dupont, published in the Australian
Despite the increasingly contentious blame game about who is responsible for the chronic failure to deliver promised defence capabilities on time and on budget, Labor and the Coalition agree that Australia needs a viable defence industry.
Yet Australian industry participation in major defence projects has declined significantly since the last of our locally built Anzac-class frigates was christened in 2008. Labor and the Coalition have talked a good game but seldom walked the walk.
We still import most of our major defence equipment. Our naval shipbuilding industry is in disarray. Australian companies are bit players in a defence industry dominated by big overseas prime contractors. And we have no defence industry strategic plan or a funding model that meets our needs and provides a pathway to greater defence self-reliance. Israel and Sweden, both smaller than us, have built world-class defence industries.
South Korea has come from nowhere to become a defence export powerhouse. Seoul’s defence exports are expected to reach $16bn this year, equivalent to one-third of our defence budget. They include $1bn worth of artillery and ammunition resupply vehicles for the Australian Army.
Industry insiders give three reasons for the failure to establish a comparable Australian defence industry. First, our political system isn’t conducive to long-term, bipartisan nation building. The country’s journey to nationhood under the protective embrace of big and powerful friends seems to have expunged strategic thinking as a national attribute.
The US regularly publishes national security strategies that set out the purpose and intent of administration policy, the latest of which came out last month. The Biden and Trump administrations both signalled their determination to reverse the precipitate decline in the US industrial base by prioritising local defence production and exports to improve the nation’s ability to defend itself and protect economic interests.
Despite escalating global tensions and the professed desire for sovereign capabilities, we haven’t produced a national security strategy since 2013. Nor have we rigorously determined which defence industrial capabilities should be sovereign – meaning built and owned by Australians.
Defence Personnel and Veterans’ Affairs Minister Matt Keogh identified a second reason in a speech he gave last year when opposition defence industry spokesman: “Time and time again,” he said, “we find defence work going overseas” or with “tender specifications all to foreign design standards and specifications” with “no willingness to work with local industry to determine the suitable locally supplied materials to enable local suppliers to participate”. There are also too many instances of Defence favouring foreign over local companies for research and development funding when the required capabilities can be built here, often more cheaply.
A third reason is the reluctance of government to work with the private sector. This is a problem for the US, too. US defence analysts Tom Mahnken and Tai Ming Cheung write that the historical partnership between the US public and private sectors that helped win World War II has eroded. In words that could easily apply to Australia, they argue the US defence acquisition system “has become increasingly rigid, isolated from much of the most innovative and commercial parts of the economy and risk averse”. We might have been able to get away with this in peacetime but in the words of Bob Dylan, “the times they are a-changin’ ”.
Our vulnerability to supply-chain disruptions and the weakness of our defence industrial base could be fatal in a time of rising conflict and heightened geopolitical risk. On the opportunity side a robust, export-generating defence industry can help provide the jobs and smart skills that Anthony Albanese says he wants.
An urgent task is to ramp up our stocks of munitions and consider co-production with allies beyond the remit of the newly established Australian Missile Corporation, which appears to have run into bureaucratic and technology transfer headwinds.
High-intensity conflict of the kind we are witnessing daily in Ukraine is essentially industrial warfare. The country, or alliance, that can deliver the biggest punch and outlast adversaries in a protracted war will be victorious.
Right now, that isn’t Australia or our principal allies. US annual production of 155mm artillery shells would last only two weeks at Ukraine rates of expenditure. In a recent simulated wargame based on Ukraine, Britain ran out of ammunition after eight days. Australian stocks are unlikely to last even that long.
Above all, we need a strategy supported by enabling legislation that puts Australia on the path to a sustainable, competitive defence industry by harnessing the expertise and financial and industrial power of the private sector.
We are already competitive in many areas of design, innovation, advanced manufacturing and R&D. Radars, military vehicles, additive manufacturing, quantum computing and small satellites are representative. But pockets of excellence and niche capabilities aren’t enough.
The answer is to scale up and join up, emulating South Korea’s approach. Seoul has “long pushed and encouraged” defence industry, says veteran Jane’s defence industry analyst Jon Grevatt. The sector is regarded as a priority for national security, military capability, the economy, job creation and skills, and attracts “whole-of-government support”.
Whole of government is the key. Growing a competitive defence industry must be a national priority. It can’t be left to Defence, which doesn’t have the know-how or authority to implement the necessary changes. Prime ministerial leadership is essential.
If the Prime Minister wants affordable defence self-reliance and for Australians to “seize and own the opportunities of the next decade”, he should start by building a world-class defence industry.