2018 Defence and Strategic Studies Course

Speech to the 2018 Defence and Strategic Studies Course

** CHECK AGAINST DELIVERY **

Canberra, ACT

Good morning ladies and gentlemen, and thank you for that introduction.

It is a pleasure to be addressing the Defence and Strategic Studies Course this morning.

It is my first opportunity to come here to Weston Creek, a home of so much significant professional development for Defence.

Some of you have travelled from overseas to be here, others have travelled just 10 minutes down the road. All of you are future leaders of the defence forces across our region, who acutely understand the importance of our national defence capability.

I particularly wanted to speak to you today to give you a feel for my priorities as Minister for Defence, to give you a chance to ask questions of me, and particularly to point out the importance of the cultural change I started as Minister for Defence Industry.

As future senior leaders in Defence it is important to me that you ‘get’ Defence Industry, and you understand why it is so important to me and to this and future Governments.

A focus on delivery of defence capability

Australia and our friends and allies share an aspiration to protect our sovereignty and maintain the stability of the global rules-based order.

Protecting that aspiration means helping recover from natural disasters, countering terrorism, gathering intelligence and ultimately being ready and able to fight and win in modern conflict scenarios.

Ensuring that we can deliver that capability where and when it is needed, that it is well-matched to emerging threats, and able to leverage new technologies are vital tasks.

This is dependent on the capability of our people, and the effectiveness of their equipment and technology.

The role of Minister for Defence Industry gave me a good understanding of Defence’s capabilities, particularly into the future, and of our industrial base.

Since being appointed Minister for Defence, I’ve outlined four main priorities.

I want to use these priorities to guide my actions and efforts in this role.

These are:

Managing great power competition in the Indo-Pacific.

Pursuing enhanced military-to-military relations with Japan, Indonesia, India and the South ­Pacific.

Enhancing Australia’s military capability and maintaining our defence technology edge in the ­region; and

Managing the return of terrorist foreign fighters to Southeast Asia.

Now as you all know our region plays host to the defining great power competition of our generation.

China’s GDP is growing rapidly, forecast to be almost twice the size of the United States by 2030.

The United States remains, and will continue to remain, our closest ally.

The Australian Government is firmly committed to maintaining a constructive, positive relationship with China founded on our broad mutual interests, and on mutual respect, for our mutual benefit.

We are in a unique position to help manage the vital relationship between China and the United States, as a long friend of both, with close economic and people to people links.

We will continue to play a vital role in the region, building and deepening linkages.

Just this week I’m hosting the Vietnamese Defence Minister, I visited Indonesia and Singapore not long ago, as well as hosting the 2 plus 2 Ministers meetings with Japan in Sydney.

These engagements are vital.

In particular, I want to bring us closer to India.

I’ve travelled there both in this portfolio and in my previous role of Education, and I will look to travel there again soon.

We’ve got a lot in common with the world’s largest democracy, and there is a lot more we can do to bring our two nations more closely together.

In the South Pacific, too, we’ve got an important role to play.

We need to be the partner of choice for our friends and allies, working with them to help where we can to develop their capabilities, and learning from them at the same time.

On capability I will continue what I started in Defence Industry: delivering the platforms needed to take our defence force to the next level.

We are the twelfth largest economy in the world, and we are the twelfth largest defence spender in the world.

Delivering the equipment our troops need into the future is crucial.

We will soon be one of the most advanced defence forces of any size in the world: and bringing those new capabilities on board, and making sure they integrate properly, is no easy task.

And finally we can’t underestimate the risks posed by returning foreign fighters in Southeast Asia.

We can play an important role here, not only in the intelligence and security space but also in training our allies.

So under those four priorities, I want to talk a little more about the work ongoing in Defence Industry.

I know you are all familiar with this Government’s 2016 Defence White Paper. This key document makes clear the importance we place on building a capable, agile, well-trained and resourced Australian Defence Force that is well prepared for the more complex and high-tech conflicts that the future may bring.

We have been deliberate in the White Paper to match strategy with capability, and capability with appropriate resources.

The Government has committed to increasing the Defence budget to two per cent of Australia’s Gross Domestic Product by 2020–21.

This is an unprecedented investment in defence capability of 200 billion dollars over ten years.

This is an ambitious, comprehensive plan to regenerate Defence capability, the largest we’ve seen since the Second World War.

Our great national endeavour

Through the Defence and Strategic Studies Course, you’ve looked at the reform process under the First Principles Review – a ‘once in a generation’ transformation of Defence.

The challenges recognised institutionally and culturally are not dissimilar to those faced by our international partners, including the need to demonstrate value for money, address rapidly-emerging technologies, and search for more efficient and effective ways of doing business.

You will have seen that cultural change is hard.

It takes time, it takes commitment and it takes buy-in from everyone in the organisation.

It’s not just a case of issuing the documents and letting people get on with it – and that’s partly why I am here speaking to you today, and why I’m maintaining a strong interest in Defence industry despite my new role.

Australia is currently undertaking a great national enterprise – our biggest build-up of military capability in our modern peace-time history.

Our Defence industry is a vital part of that enterprise.

Defence industry is the key to fostering the development of the best capability to ensure our soldiers can fight, win and survive in battle against our enemy.

I put it this way:

The ADF needs a strong defence industry: to build the equipment in needs, to update it and upgrade it, to provide for some level of self-sufficiency, and to ensure we have access to the best and latest technology.

We can’t just treat defence industry as a vendor – getting them to respond to a tender and that’s it.

Before I took on the Industry role, the default was to buy from the US, or elsewhere overseas.

One of the most important things I’ve done is to make sure we are always asking: can this be done here in Australia?

Now the equipment and the capability has to be the best available, and the price does have to be reasonable, but if we can do it here, we should be.

And if we can’t do it here, my next question is this: how do we make sure that when this capability comes up for renewal ten years from now, whoever is in my shoes has a real Australian option to choose from?

How do we build that industry?

To support industry in understanding the requirements of the ADF, the Government released a Defence Industry Policy Statement.

The Statement establishes the framework for effective engagement between Defence and industry.

The Statement sought a new approach for how Defence does business, by formally recognising industry as a Fundamental Input to Defence Capability.

Enhancing this collaboration and ‘partnership’ will allow us to harness leading-edge innovation and technological expertise that will continue to provide unique capability advantages for the Australian Defence Force.

As many of you will know, we also released the Naval Shipbuilding Plan, which outlines our 90 billion dollar investment to develop a sovereign shipbuilding industry, through the construction of ships, submarines, surface combatants and minor naval vessels.

Opportunities for defence industry through our naval shipbuilding enterprise have been increased since the Government has made the decisions needed to build 54 naval vessels on Australian soil, by Australians, using Australian steel.

Defence Industrial Capability Plan

To support Australian defence industry to take on defence work, including through the Naval Shipbuilding Plan, the Government released the Defence Industrial Capability Plan in April this year.

The Plan provides our vision for how Defence will partner to build a more robust industry over the next decade, to better support companies to deliver more of Australia’s defence needs.

Through the Defence Industrial Capability Plan, Australia is seeking to practically reposition industry and to deliver our vision to develop a broader and deeper defence industrial base over the next decade.

It recognises that we need industry and innovation initiatives to work as a ‘system’ because as we grow our defence capability, we need to grow our industrial capability to keep up.

Defence ‘sovereignty’ is a large focus of the Plan – that is, ensuring we maintain the sovereign industry capabilities required to support our mission.

Australia needs the ability to independently deploy defence capability when and where Government decides.

So we need to understand what industry capabilities are required to be based in Australia for our defence force to remain effective.

Through a comprehensive process of stakeholder consultation, including with industry and the Australian states and territories, we have identified a series of ‘Sovereign Industrial Capability Priorities.’

The Sovereign Industrial Capability Priorities further identify what Australia needs from our industrial base at a ‘capability’ level, rather than a ‘company’ or technology level.

Ultimately, our aim is to strengthen Australia’s Defence Industry Capability.

We will apply this framework to every major capital equipment procurement of 20 million dollars and above, to ensure maximum industry involvement, and that we continue to build an enduring industry capability.

This will require industry tenderers to be more explicit about how they intend to maximise Australian industry involvement in a project.

When it came to the tender submissions for the Land 400 Combat Reconnaissance Vehicle, for example, the first submissions had an Australian Industry Content of around 5%

The Government applied pressure, asked the tenderers to work harder and look again, and the final winner, the Rheinmetall Boxer, will have an Australian Industry Content of over 55%.

And we’re already looking at export opportunities for the Boxer and its systems to our friends and allies.

Defence Exports

For a long time Australia has had a bit of an inferiority complex about the quality of its defence materiel.

The reality is that we make some of the best systems in the world, in demand overseas.

The CEA Phased Array Radar is accepted worldwide as perhaps the best radar there is.

The Nulka anti-missile decoy, deployed on US Navy ships, has saved the lives of American sailors overseas.

The Bushmaster and Hawkei vehicles, one with a proven history of saving Australian lives, and one just entering service as a next-generation vehicle, are in demand by a number of nations.

Australia is continuing to shift the way we think about defence industry in the context of strategic policy.

And part of that is the promotion of Defence Exports.

Exporting our Defence Materiel helps the ADF defend Australia.

Promoting and selling our platforms and equipment overseas helps boost the strength of our supply chains, strengthens Australia’s defence industry, exposes us to international competition and builds links overseas.

This helps us maintain a strong and capable defence force.

This, for me, has been one of the most interesting cultural changes.

I travel a lot, and when I arrive overseas often my first question to the Defence Attache is: “what are we trying to export here? How is that going?”

Now the first couple of times I asked that question I was met with a blank look.

For too long our Defence Attaches, and indeed the ADF and Defence, didn’t see promoting exports as an important part of their job.

That’s changing.

Now I’m met by an Attache who’s linked in to what the host nation defence force needs to buy, which Australian companies might be able to provide that, and is helping provide the introductions and smooth things over.

A strong defence industry helps defend Australia.

And exporting makes our defence industry stronger.

Underpinning this change has been our Defence Export Strategy.

This says to industry: we want to help you increase your exports, because we recognise that industry cannot sustain itself on the needs of the Australian Defence Force alone.

New markets and diversified opportunities are required to help unlock Australian industry’s full potential.

We realise that Australian defence industry is not just about the Australian Defence Force – it is diverse and has many customers, within Australia and increasingly overseas – and we encourage that.

Exports will provide our defence industry with greater certainty of future investment and support high-end manufacturing jobs for generations to come. Exports also support Defence’s future needs.

Our strategic goal over the next decade to 2028 is to achieve greater export success to build a stronger, more sustainable and more globally-competitive Australian defence industry.

We are committed to bringing together all of the levers within Defence and industry to provide end-to-end support for defence exports, from building export readiness, to identifying and realising overseas opportunities.

Conclusion

The Morrison Government’s focus remains firmly on providing the best capability to the Australian Defence Force.

I also want to leave you with a challenge – that while you play your part in continuing to build, sustain and operate a defence force that is regarded as world-class in capability, agility and potency – that you continue to ask yourselves, where are the opportunities for Australian defence industry and how can I better engage them.

They can’t be a group we keep at arms’ length, which we speak to when we have to, which we leave to make their own way in the world.

A strong defence industry helps defend Australia: and that is the main role of the ADF.

And, for our international friends, we look forward to continuing to work with you. Not only in exercises that build our shared regional military capabilities, but also by working together with our defence industry partners to ensure we’ve all got the capabilities we need going forward.

Thank you