AICC Business Lunch Sydney

Australia-Israel Chamber of Commerce Business Lunch
19 November 2018

Thank you very much Christopher it’s a great pleasure to be here at Gilbert and Tobin thanks very much for hosting us, I should also acknowledge Michelle Blum who heads the AICC here in NSW as the chief executive officer. To my former parliamentary colleague Michael Photios, it wouldn’t be a function in Sydney without Michael Photios being present [inaudible]. And to my future parliamentary colleague Dave Sharma who I look forward to joining me in Canberra as the member for Wentworth in the not too distant future.

I should also recognise Jillian Segal Who I’ve known for a long time as the chairwoman of the AICC in NSW and she always seems to be following me around in my roles Jillian, she came to see me many, many years ago and we had a very long chat about my parliamentary colleagues which if any of you know me well meant that it was kind of an kind of unplugged conversation about my parliamentary colleagues. But she got a lot of good information out of me, and after about an hour she told me she was on the remuneration tribunal. And I had no idea she was on the remuneration tribunal but fortunately she got really genuine information that she could use in that role and now she’s the chairwoman of IPEA, the independent parliamentary expenses authority. So it’s very important to recognise Jillian and stay on IPEA’s good side.

As many of you know, Israel is a country that I hold dear.

My most recent visit to Israel in July this year, in my previous role as Minister for Defence Industry, and that was my ninth visit to Israel.

As well as attending the inaugural Australia-Israel Defence Industry Cooperation Joint Working Group in Tel Aviv which chris alluded to, I had the pleasure of again leading the Australian delegation of the International Institute of Strategic Leadership Dialogue, which is run by my good friend Albert Dadon, who many of you will know well.

There is a great deal to be learned from Israel, in how you work, live and innovate.

In my former portfolio, I spent a lot of time advocating for Defence industry, and just as much time encouraging international defence companies to do as much of their defence manufacturing work as possible, here in Australia.

When primes partner with Australian companies and include them in their supply chains, this doesn’t just open the door to our world‑class capabilities, but also creates more opportunities and jobs for Australians.

The expansion of our Defence industry is a great national endeavour.

That’s why this Government has made a conscious decision to build a strong and sovereign defence industry. Decision that helps manage strategic risks, defend our nation and also grow our economy.

Since 2016, the Coalition Government has announced the builders for our 12 Future Submarines, 9 Hunter-class frigates, our 12 Arafura class Offshore Patrol Vessels and 21 Guardian Class Pacific Patrol Boats. That’s 54 naval vessels under our 90 billion dollar naval shipbuilding plan. Every single one of these naval vessels will be built in Australia by Australian workers, using Australian steel.

In stark contrast Labor made no decisions to build any naval vessels in Australia in their six years in office.

Whilst this Government has focused on creating jobs and opportunities for our children and the future generations to come, this serves as a reminder of the bleak future should a Shorten Government get elected.

Sovereignty in the Australian Defence context is about having the independent ability to employ Defence capability or force when and where required, to produce a desired military effect.

I often use the example of our Oberon submarines which were in service between 1969 and 2000. In the late 1970s and early 80s, our subs were maintained by our allies – the British. Alas, it was proving increasingly difficult to obtain spare parts.

At one stage Australia placed an order for spares, but due to the looming war in the Falklands in 1982, the UK weren’t able to fill this, as they understandably needed the parts themselves. Remember, spare parts for submarines back then and of course even now, are very specialised. It’s not like the spare parts for a vehicle where you can drive to any mechanic in Sydney and ask for a part to be replaced.

Whilst the UK are still very good friends, to me this serves as a reminder as to why our sovereign defence capability is so important.

Of course I acknowledge that not everything can be designed, developed or maintained in Australia – and indeed, our international partnerships are critical to realising our ambitious 200 billion dollar capability investment goals.

But if we can, we should.

As Minister for Defence Industry, a problem that I wanted to solve early on – or if I may, to fix – was how to better engage Australian companies, especially small and medium enterprises, to win military contracts or gain supply chain opportunities.

One of the early initiatives that we announced was the Centre for Defence Industry Capability. By supporting Australian businesses entering or working in the defence industry, CDIC advisers help businesses navigate the defence market, providing specialist advice on accessing global markets, and facilitating connections with other businesses and Defence.

In April this year, the Australian Government launched the Defence Industrial Capability Plan – our 10 year vision for how we will build up our defence industry to support our strategic goals. It explains how our priority capability investments and ensures our spending is targeted against the current and emerging threats that challenge the Australian Defence Force.

The Plan defined our Sovereign Industrial Capability Assessment Framework, and we also announced the 10 Sovereign Industrial Capability Priorities.

The Priorities are specific capabilities that are critical to the Australian Defence Forces’ ability to deliver its core mission.

So important in fact, that Australia must be able to maintain control over the essential skills, technology, intellectual property and infrastructure to use them wherever required.

Defining specific Priorities provides guidance and certainty to defence industry partners that enables them to invest in upskilling, infrastructure and workforce capacity with confidence.

It also assists international partners – like Israel – to identify areas of shared interest where Australian industry capability is projected to grow, highlighting potential areas for collaboration and investment.

One of the ways the Australian Government is assisting industry to deliver the Priorities is through the creation of our Sovereign Industrial Capability Priority Grants.

These grants will provide up to 17 million dollars each year to assist small and medium enterprises to fund capital equipment purchases and engineering costs that will directly contribute to one of the Priorities.

This funding will ensure that Australian small and medium enterprises have the capacity and resilience they need to support Defence’s most critical capabilities.

They are in addition to a range of other funding initiatives the government has already rolled out to support Australian businesses to see their innovations developed, integrated and commercialised.

The Next Generation Technologies Fund works in tandem with our Defence Innovation Hub to provide a single innovation pipeline for capability development from research to development.

Together, these initiatives are investing over 1.3 billion dollars in Australian industry and research institutions to undertake research and transform the development of innovative ideas into advanced capability for Defence.

And it’s not just about the equipment – our people are one of our most important assets.

By the mid-2020s the outfitting workforce – which is the electricians, joiners and carpenters - will need to grow by more than 1,400 people, and structural roles - like Boilermakers - will grow by more than 1,000.

So as part of our Naval Shipbuilding Plan, I had the pleasure of opening the Naval Shipbuilding College earlier this month. The College will play an important role in ensuring that we have the right people with the right skills in place to deliver our 90 billion dollar continuous naval shipbuilding program.

The College has already launched the Workforce Register, which enables people from around Australia who are interested in shipbuilding careers to express interest and receive assistance.”

Finding people with skills in Science, Technology, Engineering and Maths will be one of our biggest challenges in being able to meet our workforce needs. To address this, a Defence Industry Skilling and STEM Strategy is being developed and will be launched this year to match the workforce and skills required to deliver our future defence capability requirements.

In delivering Australia’s ambitious 200 billion dollar defence capability development, it was at the forefront of my mind that our long-term success will require Australia’s defence industry to be globally-competitive, innovative and export-focused.

This great national enterprise won’t be sustainable if industry are only looking towards our domestic Defence and capability needs.

A robust and globally competitive defence export industry is vital to this success. It helps Australian businesses to withstand peaks and troughs in domestic demand, and fosters innovation and competitiveness. It promotes international engagement, and facilitates greater interoperability with our allies and our strategic partners.

This is an area where of course Israel excels.

As one of the world’s biggest and most innovative exporters of world-class military equipment, there is much that Australia can learn from the Israeli defence exports experience.

To that end, in January this year, the Australian Government released its first ever Defence Export Strategy. The Strategy defines a comprehensive system to support industry to build its ability to export, identify export opportunities, and achieve export success.

The Strategy aims to build a stronger, more sustainable and globally-competitive Australian defence industry that can support Australia’s defence capability requirements both now and into the future.

I have been pleased to see the success of Australian companies like Bisalloy Steels, which earlier this year signed an agreement to supply armour steel for Rafael’s fleet of Armoured Fighting Vehicles.

Australia’s Varley Group has also signed a joint venture agreement with Rafael, to manufacture the Spike LR2 anti-tank guided missile under the combat reconnaissance vehicle project.

These are great examples of Australia and Israel partnering for success.

Australia is interested in continuing to learn from Israel’s experience of bringing innovation through into defence capability and areas where Israel has experienced particular successes or challenges.

The signing of the defence industry cooperation memorandum, that I initiated, in October 2017 signaled a strengthening of ties between Australia and Israeli, especially in the area of defence industry and innovation cooperation.

Initiatives like the Australia-Israel Defence Industry Cooperation Joint Working Group also provide an excellent opportunity to share lessons in how to enhance defence capability through developing our respective defence industry and innovation sectors.

I am pleased to report that since that first meeting, there have already been tangible outcomes.

At the first Joint Working Group, the Australian Department of Defence and the Israeli Ministry of Defense identified ‘Network Centric Soldier’ as a mutual capability challenge.

Soldiers carry a number of discrete sensors – such as laser range finders, rifle optics, cameras, and thermal imagers. Through the Network Centric Soldier challenge, Defence is seeking a new solution to network these systems, collate and analyse the data they collect, and display key information on a single device.

A Soldier Personal Area Network will provide our troops with better personal protection and to improve the integration of their equipment – something that could protect and save precious lives.

Defence is currently assessing industry proposals for solutions to a Soldier Personal Area Network. Shortlisted companies had the opportunity to pitch their innovative solutions to senior members of Army at the Army Innovation Day in October 2018.

This was a great opportunity for defence companies to meet with representatives from the Army and explain their innovations, and it provided a face-to-face networking opportunity that otherwise wouldn’t have occurred.

It’s through this type of practical cooperation that we can work together with Israel to enhance Defence capability and grow the capacity of our industry and innovation sectors.

So I welcome opportunities for Israel and Australia’s defence industries to strengthen their engagement, particularly at the industry‑to‑industry level.

Deeper engagement between our defence industries will strengthen our broader bilateral relationship, and create opportunities for collaboration and defence exports.

Both Australia and Israel have sophisticated defence industrial bases, and there is significant potential for mutual capability outcomes to result from enhanced industry collaboration.

Australia and Australian companies are committed to continuing to collaborate with Israel to enhance our respective defence capabilities and sovereign industrial bases.

Joint projects, sub-contracting to Israeli primes, and incorporating Australian businesses – especially small and medium enterprises – into Israel’s supply chains, provide opportunities for both countries to take advantage of the significant investment that the Australian Government will be making over the next decade.

Israel is recognised as world-leading exporter of Defence technologies and Australia shares an important relationship with Israel, particularly in the field of materiel cooperation and commercial acquisition.

In these areas, Israel continues to make significant contributions to Australian Defence capability, across all domains.

For example, Elbit Systems of Israel is one of the major companies contracted to deliver the Battlefield Mission System software for Australia’s LAND 200 project.

Israel’s support for the Battle Management System, is worth over $400 million, is improving joint and allied interoperability.

This system will enable commanders to make smarter, faster and safer decisions by transforming land command and control from a paper-based system to a modern digital system.

Elbit has also entered into contract to supply and maintain 4,700 thermal imaging devices for Australia’s Enhanced F88 assault rifle which is made by Thales.

Further, Elbit Systems is providing sustainment support for the data recorder fitted to our F/A-18 Classic Hornet aircraft, which provides important training, analysis, evaluation and diagnostics for the Royal Australian Air Force.

Elta Systems, which is different to Elbit, is a subsidiary of Israel Aerospace Industries, is also contributing to Australian Defence capability.

This is being done through the provision of deep-level maintenance and technical services of Jammer pods for our Hornets, and through the upgrade of Electronic Support Measures equipment for our Orion aircraft.

Of course, Rafael is also accredited for the design of the Typhoon Mk 25 weapons system in service currently on the Armidale Class Patrol Boats.

And, Israeli company Plasan Sasa is supporting Australia via subcontract with Thales Australia, to provide the hull design and protection package for the Hawkei protected vehicles.

There will be further defence industry collaboration between our two nations and I look forward to Israel’s continued contribution to Australian Defence capability development.

It’s important that we continue to strengthen the Australia-Israel relationship, most importantly through our people-to-people connections.

As we continue to build practical cooperation through our strong partnership, we address the challenges that our two countries share, now and into the future.

Thank you very much.