Austal : NEW PAPER DETAILS STRATEGY FOR AUSTRALIAN SOVEREIGN DEFENCE CAPABILITY

MEDIA RELEASE

1 DECEMBER 2023

Sovereign Australian Prime Alliance (SAPA) and Australian Industry & Defence Network (AIDN) join forces to provide recommendations for Defence as Australia faces our most challenging outlook since WWII.

A new report sets a path to building genuine sovereign defence capability for Australia, recommending the Department of Defence cultivate Australian defence prime contractors and create a new $1 billion fund to acquire capabilities and services from medium and small Australian companies for defence purposes.

The report, Developing Australia's Defence Industrial Base, details eight recommendations to the Department of Defence and Australian Government to grow Australia's defence industrial base, in the interests of strengthening Australia's deterrence capabilities, improving our self-reliance, and becoming an active contributor to our AUKUS alliance.

The paper argues, achieving these objectives will de-risk the nation as we face our most challenging strategic outlook since World War II.

The eight recommendations in the report are for the Australian Government to:

• declare the intent to establish Australian defence industry primes;
• establish a Government Defence Industry Steering Council;
• produce a new definition of 'industrial sovereignty';
• revise the Commonwealth Procurement Rules to recognise economic security and industrial sovereignty as 'value for money';
• change Defence core processes and structures to enable and grow direct partnerships with Australian companies;
• create a new $1 billion budget line to fund sovereign capabilities and services from medium and small Australian companies for defence purposes;
• make AUKUS Pillar Two - Advancing the Capabilities of the U.S., UK, and Australia - deliver now, by setting industry to work; and
• replace the fruitless search for the perfect lists of 'Strategic Capabilities Priorities' and detailed industry plans with practical priorities.

The report examines Australia's strategic challenges in the context of increasingly expansionist, policies of the People's Republic of China and the growing grey-zone warfare tactics being perpetrated against Australia and our allies.

Underscoring the geo-political context is Australia's increasingly important role in the Indo-Pacific, our AUKUS partnership, and concerns expressed by the Albanese and former Morrison governments through the Defence Strategic Review and Defence Strategic Update, respectively.

It also proposes a deeper working partnership between Australian companies, government ministers and the Defence organisation, driven by the urgency of our strategic environment and focused on results that strengthen Australia's military deterrence capability and national security.

The paper asserts its recommendations will see Australia shore up its defenses by building a stronger industrial base centered on stronger manufacturing capabilities, a multi-pronged approach to reducing supply chain risk - including greater stockpiles of key resources - and building a stronger sovereign defence industry underpinned by Australian primes. The paper argues this would lower Australia's current overdependence on multinational primes which may be required to support their home nations during a major conflict, potentially at Australia's expense.

The report looks at examples of how comparable countries, with lower GDP and - in many case - smaller defence budgets, have built highly capable defence industries when faced with strategic threats and uncertainty. These include Israel, South Korea, Sweden, and Turkey, all of which have become defence export powerhouses.

"Even our most trusted security partners will be stretched in the event of a regional war. So, Australia must have more independent capacity to defend ourselves and to be a strong partner with our allies", said Rob Nioa, CEO of NIOA, a member of SAPA and one of the paper's co-sponsors.

Nioa underscored how Australian industry is ready to step up to support Defence and the Government meet the current challenge. "Give us the tools and we will finish the job. In this case the tools are the conditions that will allow strong Australian owned and run defence prime companies to emerge and thrive."

The research was commissioned by the Australian Industry Defence Network (AIDN) and the Sovereign Australian Prime Alliance (SAPA).

About Australian Industry & Defence Network.

The Australian Industry & Defence Network (AIDN) was established in 1995 to develop a national representation for small-to-medium-enterprises (SMEs) operating in the Defence sector. For more information visit www.aidn.org.au.

About SAPA

The Sovereign Australian Prime Alliance (SAPA) is an informal grouping of large Australian prime contractors to the Federal Government, comprising:

• AUSTAL, Australia's global shipbuilder,
• Gilmour Space Technologies, Australia's leading space technology company,
• Macquarie Technology Group, Australia's data centre, cloud, cyber security and telecom company; and
• NIOA, Australia's largest family-owned global munitions company.

SAPA's shared goal is to advocate for Federal Government to cultivate and support Australia's sovereign prime contractor companies in the interests of achieving a more secure, self-reliant and resilient Australia.

Media Contact

Nermin Bajric

Watterson (for SAPA)

+61430955199

nermin.bajric@watterson.com.au