Keynote address – Land Forces 2016

Keynote address – Land Forces 2016 International Defence and Industry Dinner

Wednesday 7 September 2016

Good evening, ladies and gentlemen.

It is an honour to be invited here tonight to speak to you at such a significant event as the Land Forces Conference 2016.

I would firstly like to extend my thanks to the Aerospace, Maritime and Defence Foundation of Australia’s Executive Manager of Industry development, Mr Greg Ferguson, for the invitation to address you tonight.

And I would like to take the opportunity to welcome you to my hometown of Adelaide.

South Australia proudly hosts a vital range of world-class industries responsible for many of our largest and most complex defence projects, making a major contribution to our defence capacities.

Go outside and you may notice number plates that read “South Australia: the defence state”.

Defence industries have been an integral part of this state since the Second World War; a major driver of innovation, research and development and economic activity.

And that’s very much the way in which the Turnbull government views the sector – not just a fundamental contributor to our military capability and national security but a crucial element in the future of our advanced manufacturing and high-tech industries; a guarantor of national prosperity – the first time government and defence has considered Australian industry this way.

These are exciting times for Australia’s defence industry.

The future for the sector has never been brighter.

For the Australian defence industry is front and centre of this government’s vision and agenda for jobs and growth in the Australian economy.

Across the nation industry is making the transition to high-tech manufacturing; embracing the innovation that will drive our continued national prosperity.

This is where the jobs of the future will be created and with them the broader growth we need to ensure Australia maintains our position as an advanced economy among the top ranks of nations in the twenty-first century.

As Minister for Defence Industry I will do everything in my power to develop and grow the sector into one of the most important parts of our economy.

It is an exciting challenge – one I relish.

I want to ensure that when the government spends Australian taxpayers’ money it is spent on what our serving men and women need, that it provides them with the best equipment, that it does the most to serve the national defence and – wherever possible – it is invested in Australia.

The Turnbull government is beginning one of the world’s largest defence expenditure processes, a process that will have impact on national security and national prosperity for decades to come.

The long lead times of much of this process leaves us with no scope for complacency.

Time wasted at the beginning of any project is always time you have to make up at the end.

That means we must get things right from the start – hence this portfolio.

The scale of defence is now vastly bigger than anything we have seen in modern times.

The construction facility DCNS will use to build the Shortfin Barracuda submarines here in South Australia will be taller, longer and wider than the Adelaide Oval across the river.

Just what that means in terms of the steel, the concrete, the fabrication, the fit out; what it means to have a factory of that size in terms of jobs and economic activity in terms of jobs and economic activity is hugely significant.

And that is just the start, just the fundamentals, just one of a string of facilities spread across the country as part of what I want Australians to see as a great national endeavour.

We are determined to use the defence dollar to drive a high technology, advanced manufacturing future.

We are about making it real, making it happen.

The Defence Industry Policy Statement, released alongside the Defence White Paper, in February this year and the policy initiatives we are currently implementing are the driving force behind this goal.

Our strategic industry approach rests on achieving three key aims.

Firstly, we need to ensure that we maximise opportunities for Australian industry to contribute to meeting our capability needs.

Australian industries must have every opportunity to be involved in this endeavour from the government’s naval shipbuilding plans through to how our bases are maintained.

We want to use the Australian Industry Capability Program ensuring opportunities for Australian industries are maximised.

This involves much more than simply striking a dollar value for the contribution of Australian industries in major projects.

It is about using defence capability outcomes to drive real industry growth, high-tech expertise and broader capacity in Australia’s defence industrial base.

Secondly, we must approach the development of capability with a stronger strategic focus and long-term perspective.

Defence must plan for long-term industry development and skilling needs that will better equip Australian industry to support defence capability.

Finally, the relationship we have with industry must change.

We must involve industry earlier in our capacity development processes to understand just what they can contribute.

Defence, industry and state and territory governments must all work together to maximise the return on our investment and guarantee the best capability available and support for the Australian Defence Force

Only through this approach will we be able to fully realise the potential of Australian industry as a fundamental contributor to capacity.

As I have criss-crossed the country in recent weeks talking to Australian companies, industry associates and state and territory governments I have been overwhelmed by the wealth of capacity to be found in our defence industry, in companies large and small.

There are so many small-to-medium enterprises that have developed world-leading products that have not only met Australia’s defence needs but achieved success internationally.

We have incredible examples of technologies and equipment we have created and built here and which we support which are driving the defence industry dollar.

Some of these I cannot talk about.

But what I am passionate in doing is letting ordinary Australians outside the defence community understand the impact of a high quality, high-technology advanced manufacturing domestic defence industry and what that can mean for jobs.

I want them to understand the skills involved, the brainpower.

I want it to be both a source of optimism and a source of pride.

The companies I have seen over the past few weeks are critical to delivering both our defence capability and creating jobs and growth.

As defence adopts new and more complex capabilities, the demands on our industry workforce will increase.

New technologies will require new skills and rely even more on all the different capabilities that lie within Australian industry.

And wherever I have visited I have received a firm and constant message – that Australian companies are ready for the challenges and opportunities of delivering our capability plans.

Our industry has also made it clear that they want to contribute to a truly collaborative national approach towards delivering our continuous shipbuilding program and meeting our broader defence needs.

The Integrated Investment Program that accompanies the White paper brings together for the first time all capability-related investments over the next 10 years.

This will provide industry with unparalleled levels of clarity and certainty needed to plan for the future and maximise opportunity.

At the same time the government is restoring confidence in long-term defence funding, investing approximately $195 billion in defence capability through the Integrated Investment Program across the decade to 2025-26.

Again, this is something I want ordinary Australians to understand.

There is more than enough in our defence investment plans for the entire nation to benefit.

They rank among the biggest defence industry proposals in the world right now.

Not only will they enable us to say we pull our weight in the region, in the Indian Ocean, in the Pacific, but they will enable us to build a domestic defence industry with quality capacity that is also up there with the best in the world.

We are not just talking about a domestic defence industry.

We are making it happen.

This unprecedented investment in defence capability will be backed up by an increase in the size of the ADF.

Our permanent forces will increase to around 62,400 over that decade to 2025-26, returning them to their largest size since 1993.

This will involve more personnel not just in air, land and sea combat roles but intelligence, cyber operations and enabling capabilities.

This future force will be underpinned by advanced manufacturing and system integration and components provided by Australian industry.

We will also be upgrading defence bases and facilities across many parts of regional Australia to support these new and enhanced capabilities.

Australian industry already plays a fundamental role in supporting our defence force, particularly in regional Australia where many of our bases are located.

The government’s commitments will create local jobs and opportunities across Australia.

And this, of course, doesn’t just mean direct jobs within defence industries themselves but the flow on benefits to the local economy; from housing, construction and other services down to the local newsagents and family owned restaurant.

The national approach the Turnbull government is taking to deliver the continuous naval shipbuilding program and in other defence investment will realise these significant flow-on benefits for industry across Australia with job creation along the length of the supply chain.

This is why I call it a national endeavour.

Australian industry from across the country will be involved, drawing at all stages on the imagination and capacity of the many small and medium enterprises who want to get ahead – the engine room of innovation in this nation.

The opportunities that will come from this approach will be long-term and provide Australian industry with the certainty that will create jobs and growth over the next 30 years.

I want to stress the role the Defence Industry Policy Statement plays in all of this.

For the first time we are not just committed to maximising the delivery of defence capability through a more focused, coordinated and transparent effort between defence and industry.

We are setting out to transform defence’s approach to innovation and create a seamless bond between capability needs and innovation in Australian industry.

We are capturing the potential of our nation’s smart ideas by streamlining engagement not just with industry but academic and research organisations by establishing a clear path to commercialisation.

This involves maximising opportunity for competitive Australian businesses to succeed by building export potential, skills and diversification in the defence industry – backed up by a government investment of around $1.6 billion over the decade to 2025-26.

The statement is a clear reflection of the government’s determination to build a closer, more strategic relationship with industry to deliver better capability outcomes for defence.

It was developed in consultation with industry, acknowledging its critical contribution to our capability edge.

It is a key part of our economic agenda, central to our plan to steer the nation from the post-mining boom environment into a new future as an innovation economy.

A key initiative of the defence Industry Policy Statement will be the Centre for Defence Industry Capability, due to open here in Adelaide at the end of this year.

The Centre will be one of the foundations of our new strategy.

We have allocated the Centre $230 million across the decade to provide business skills, innovation advice and export programs to develop prosperous Australian businesses that can support the ADF.

For, while the Centre might be headquartered here in South Australia, it will have a national approach.

It will be a key communications bridge between defence, industry, state and territory governments and the research community.

It will act as the focal point for a whole range of business development, skilling and global supply chain services for small and medium businesses.

It will, we hope, allow new ideas to grow into tangible new capabilities – backed by an advisory board comprised of private sector and defence representatives, leveraging the expertise and services of AusIndustry.

This military innovation will spur greater and broader economic activity, bringing benefits to local businesses and communities across the nation.

A key support of this will be the new Defence Innovation Hub, also set to open in the last quarter of this year.

This will see $640 million invested across the next 10 years to bring together defence, industry, academia and research organisations to collaborate on innovative technologies that can deliver better defence outcomes.

We are also providing $730 million over the decade through the Next Generation Technologies Fund that will better position defence to respond to strategic challenges and develop the next generation, game-changing capabilities for the future.

All these initiatives not only demonstrate a clear commitment to draw on the skills and expertise and smart ideas we know lie in our small to medium enterprises to develop a world-class Australian defence industry across the country.

Important to our investment in innovation is how that funding will be allocated and prioritised.

There’s an old axiom that to prioritise everything is to prioritise nothing, and so tonight I would like to announce the three innovation priorities for the Innovation Hub.

As you would know the Integrated Investment Program identified six capability streams.

Of these, the top three priorities for financial year 2016-17 are as follows.

In the Intelligence, Surveillance, Reconnaissance, Electronic Warfare, Space and Cyber capability stream we will focus on improving intelligence collection, analysis and dissemination.

This will also include biometric data, as well as cyber innovation to support intelligence capability development.

The step change from Intelligence, Surveillance and Reconnaissance to Targeting, as well as the advancement of hypersonic technology as an opportunity for Defence’s space capabilities also warrant attention in this stream.

In the Key Enablers stream, one which I am glad is now seeing the attention it deserves, we will focus on the need to update command and control systems across all domains spanning the strategic to tactical levels.

Innovation opportunities were also recognised in the Force Structure Review in strategic and satellite communication, simulation and further research into energy resilience.

And finally in the Land Combat and Amphibious Warfare stream we will focus on remotely operated platforms, the Armed Reconnaissance Program, nanotechnology and, in support of close quarters combat, the Special Forces and Soldier Systems programs.

Of course, the beauty of innovation is that we do not yet know what great ideas or fields will yield us the most success, and so we will keep a handy reserve to proposals that do not neatly fit into the priorities but nonetheless offer us an opportunity to explore unexpected or unforeseen technologies or ideas.

These three priorities present a wealth of opportunities for industry to work with defence and state and territory governments to grow our technological edge.

The acquisition of the 1100 Hawkei light protected vehicles and 1000 companion trailers, to take one example, will create many opportunities for our defence industry to be involved by ensuring at lead half of the cost of the vehicle’s manufacture will be spent in Australia.

With the Hawkei production taking place at the Thales factory in Bendigo we will see the benefits of this investment being shared with around 170 people employed in the region.

Another is the contracts I announced less than a fortnight ago between BAE Systems Australia, Rheinmetall and the Commonwealth for the next stage of the LAND 400 Phase 2 – the Risk Mitigation Activity – which will test the two company’s options for our next Mounted Combat Reconnaissance Capability.

This will not only see the procurement of world class vehicles that offer a quantum leap in protection for our soldiers and our militay operation capability, but a focus on increasing the opportunities for Australian industry involvement in the project.

There will also be new equipment for the individual soldier, such as the 30,000 enhanced F88 weapons systems – lighter, modular and with improved ammunition interoperability – Thales Australia will produce the rifle in Lithgow, New South Wales.

It will stretch to the parade ground and boots supplied by one of our national icons, R M Williams, first made in a shed a brisk walk from here and still proudly manufactured in Adelaide’s north.

And it will be felt in the way defence contracts a range of services essential to support our defence bases from facilities management and logistics through to catering and domestic services.

Ten comprehensive Base Services Contracts now manage all of these right across Australia – not just delivering value for money but crafted to enable small to medium enterprises to be engaged to the maximum extent possible by the lead contractor, providing an economic boost to local economies from the more than $1 billion spent and 11,000-plus direct and indirect jobs they provided.

And, of course, there is the $267 million being spent on the facilities to support the new LAND 121 vehicle fleet, which includes the G-Wagon light vehicles, the Rheinmetall MAN trucks, and the Thales Hawkei vehicle. Expenditure during the next three years will create many opportunities for local subcontractors over and above the already strong Australian industry involvement in the manufacture and delivery of the LAND 121 vehicles themselves.

All of these are great examples of how defence is already working with Australian industry.

But now I would like to look to the future with the announcement of the CDIC’s advisory board co-chairs.

The advisory board will guide and shape the Centre to be a high performing organisation with a single-minded purpose to grow Australia’s defence industry, maximising opportunities for involvement in all aspects of defence capability.

Key to that is strong leadership, from both Defence and Industry, to ensure the Centre can deliver on the key role we expect of it.

Accordingly, I would like to announce that the Government has selected Mr Paul Johnson as the industry co-chair.

Paul brings a wealth of experience in both Defence and defence industry. After 22 years in the Royal Australian Navy, Paul moved to senior defence industry roles culminating in his appointment as Managing Director and Chief Executive officer of Lockheed Martin Australia.

Paul is currently Chairman of the Rail Manufacturing Cooperative Advisory Board and a Director of the Industry Defence and Security Australia Ltd organisation and previously a board Member of Defence South Australia.

Mr Kim Gillis, Deputy Secretary Capability Acquisition and Sustainment Group, has been selected for the Defence co-chair role.

Kim has had a long and prestigious career in both Defence and Australian industry. It is precisely this extensive experience that makes Kim not only ideal for his day-to-day role, but perfectly suited to work alongside Paul.

Paul, Kim, congratulations to you both – the task ahead of you will be challenging, but ultimately it will be rewarding.

I look forward to working with you both closely over the next three years to drive transformational change for Australian industry and see many great outcomes for Defence capability.

I am an unashamed backer of Australian industry and I know our defence sector has the skills and innovation to drive our economy and the jobs and growth in high-tech manufacturing that will underpin our nation’s future prosperity over the coming decades.

Thank you for the opportunity to speak with you this evening.

I trust you all see how important this government believes Australia’s defence industry is to our economic future.

It is an honour to be Australia’s first Minister for Defence Industry.

I very much appreciate the skills you bring, your innovation, your resourcefulness and your capacity.

The government wants to capture these to drive jobs and growth and reshape our economy.

I see the potential in this room.

As I said before, I want to make it real. I want to make it happen.

I look forward to working with you all and businesses across the nation to assure Australia’s future security and prosperity.