DEFENCE INDUSTRY STILL LET DOWN BY LIBERAL GOVERNMENT

By Matt Keogh MP

09 July 2020

Yesterday’s release of the 2018-19 Defence Industry and Innovation Programs Annual report highlights the Liberal Government’s failures in supporting Australian Defence Industry and building local sovereign capability.

Despite headline grabbing media releases of funding announcements and “growth” opportunities, the Morrison Government has failed to ensure high quality work for Australian defence businesses.

The razzle dazzle of the “Major Highlights” of the report paper over what those in industry know all too well - that the Morrison Government’s approach is failing local defence industry.

It is now clear that all the grants, conferences and road shows mean nothing if the Government doesn’t included enforceable mandatory Australian Industry Capability requirements into its billion dollar contracts with Primes.

There continues to be a complete absence of enforceable contractual requirements imposed on major defence suppliers to ensure they meet any sort of Australian industry content commitments, nor has there been any real by government effort to ensure such work contributes to the development of our sovereign defence industry capability.

The economic value of domestic participation in the defence industry is decreasing, despite multiple government initiatives and statistically, a greater number of contracts signed.  As reported in Australian Defence Magazine, Australian companies are winning lower value work.

Our small and medium defence businesses are being locked out of promoting capability options to Defence, in part, due to being left to the whim of foreign contractors, who engage them as subcontractors based on foreign designs and capability offerings.

There is a clear role for the federal government in boosting support to local defence industry businesses, so they are capable and ready to engage in relevant supply chains.

The key policy failure here is a lack of any clear, measurable and enforceable Australian industry content requirements, imposed on prime contractors by Defence.

“Best endeavour” undertakings in unenforceable Australian Industry Capability plans to “maximise” use of AIC are not the best choice at all.