Defence and Industry Conference 2017 Gala Dinner Keynote
Well thank you very much for the opportunity to talk to the Defence and Industry Gala dinner tonight. The reason for my lateness is a very old fashioned Canberra one. You have too many roundabouts and circles and the com car driver took the wrong turn and had to go back over the bridge to Parliament House and come back again, which happens a lot to people, especially from interstate.
It’s wonderful to be here as the Defence Industry Minister. The first one in Australia’s history in a government that has committed $200 billion to building up our military capability over the next ten years. You must all feel that you are part of a renaissance of defence industry in this country. And for probably – for some of you – decades, for others of you, years, may have sometimes wondered why you are putting your own investments, your lifeblood, your enthusiasm, your blood, sweat and tears as we used to say, into an industry which sometimes you might have felt underappreciated by the powers that be, by governments, even by the Department of Defence. I think that’s unlikely, but now defence industry is in the dress circle of the Government’s policy.
Our first priority of course is capability, and our second priority is building our defence industry capability in order to support that capability. Government now sees having a sovereign defence industry capability in this country as one of the highest priorities of the Government. There are lots of good reasons for that, good reasons from a strategic point of view, good reasons from a jobs, investment, growth, economic point of view.
We do live in a country that is in a region with half a dozen of the world’s nuclear powers, half a dozen of the world’s largest standing armies. And we’re expected as a wealthy country, as a country with a long military history, a very proud military history, one that’s been involved basically in every major world conflagration for over 100 years, we’re expected to pull our weight.
I’m absolutely delighted that we will hit 2 per cent of our GDP in spending on defence by 2020 – two years ahead of schedule, and in fact we will exceed that. After years of defence being an area where governments felt they could make cuts, defence is now an area where we want to leverage that huge heft of defence spending into an exciting, growing investment climate in manufacturing, in advanced manufacturing, in high value jobs, high tech jobs.
But we’re going about it methodically and seriously. So we’ve got the foundations right. The Defence White Paper, the Integrated Investment Plan, the Defence Industry Policy Statement, most recently the Naval Shipbuilding Plan. We’ve put in place the foundation so that you, in defence and defence industry, can read with some confidence that the Government has a serious and stable plan for defence and defence industry for the next 20 years. So you can make the investment decisions that need to be made about research and development, or about infrastructure and equipment, knowing that the Government’s commitment is there over the long haul into the future.
And we’re also putting in place the structures not just to say that we want defence industry to build its capability but we’re actually going to help defence industry to do so. So we put in place the Next Generation Technologies Fund, money to make sure that we have a large spend on research, small on development. We followed up with a Defence Innovation Hub and the Centre for Defence Industry Capability which is smaller on research and bigger on development – a total of $1.6 billion.
And the Department of Defence is getting out there and having the industry working days where we’re trying to identify the businesses who are highly capable and able to support our defence and defence industry vision and those businesses that are on the cusp of being able to do so that we can then help move them to a position where they can genuinely say that they can supply and support defence and defence industry.
Because we see defence industry as part of our national security. I’ve been the Minister now for 11 months and I hope that you’ve seen our rhetoric has remained consistent. There hasn’t been a moment where we’ve flagged in talking about defence industry being part of our defence story, our national security.
And of course this plays through many different aspects of defence. So we are getting our there and promoting Australian industry in terms of exports. Because we see that for those peaks and troughs, when there are troughs in terms of defence spending, we want your books to have export contracts that see you through those times when defence isn’t spending on your particular area.
So we will have an export - defence export strategy released in the third quarter of this year but we’re not waiting for the strategy. We’ve been getting on with the job ever since I was appointed last July. I’ve been travelling around the world as many of you know, promoting products in every country that I’ve been visiting. Every major capital that I’ve been visiting, talking to my counterparts about how defence is a two-way street. Sure overseas countries want to sell us their excellent equipment and platforms and I’ve said to them you’ve got great platforms and great equipment and we do too, and we expect you to play your part in supporting our industry equally. So that cultural cringe which I’ve heard about in the last eleven months, where we’ve sometimes felt that our own equipment and platforms haven’t been good enough, that has been banished from the Government’s thinking. It’s been banished from the Department of Defence’s thinking, and we are now all promoting Australian industry overseas.
And so I found out that I was actually responsible for the Defence attaches, which I’d assumed were in Foreign Affairs. But when I discovered they were actually my responsibility, I wrote to them all in January, all around the world, and said to them one of your KPIs is how many contracts you settle in your particular cities all around the world. And they have been responding, because for those of you who have been around Canberra for a long time – and I’m sure it’s many of you because the Government is your biggest client; you might be here from the Department of Defence – you know that Defence attaches or anybody in the area, if they get given an instruction and they’re part of a national vision, a national project, it’s invigorating, it’s innovating, and it makes you want to get out there and be part of that story.
So the horror stories we’ve heard over the years about Defence not supporting Australian industry, I know that there’ll still be examples every now and then where you feel that way, but I hope you’re feeling a different change in attitude in the Department of Defence and in defence in general, which wants to hear about what you can do, what your capabilities are. And can I also congratulate the various bidders for some of our big projects, because they too are having these industry working days. Whether it’s Rheinmetall, or BAE for the combat reconnaissance vehicles, whether it’s DCNS for the submarine build, and Damen and Lurssen and Fassmer for the offshore patrol vessels, Fincantieri and Navantia and BAE again for the Future Frigates, they’re getting out there and finding out what the capabilities of your industry, your defence industry are, and trying to build them into their bids as part of their Australian industry content.
So it is a really exciting time to be in defence industry and it’s critical that we keep the momentum going. So as your Minister for Defence Industry, I have been trying to make decisions and keep the process on schedule, and I have to report to you tonight that we are on schedule. Things like the requests for tender for the offshore patrol vessels occurred on time, the same for the Future Frigates. The decisions about upgrading bases all around Australia are happening when they need to happen. Decisions around things like surface-to-air missile defence systems, or cyber security, or electronic warfare, or taking advantage of the Joint Strike Fighter opportunities that exist; we’re making those decisions and we’re keeping the momentum going, and we have to keep doing that.
On the Joint Strike Fighter program, of course, we’ve won the lion’s share of all the decisions that have been made so far by the Joint Project Office in Washington about who will be the Asia-Pacific hub for the sustainment and maintenance of the Joint Strike Fighter. Whether it’s the engines, or the frames, or most recently they just made decisions on 64 component parts of the Joint Strike Fighter and who would be the Asia-Pacific hub, and we won 63 of them. I’m still trying to find the one that we didn’t actually win – and that was only 8 per cent of the componentry parts of the Joint Strike Fighter that they’ve decided so far. So there’ll be hundreds more to be decided over the months and years ahead, and we are beating South Korea and Japan in that endeavour.
So give yourselves a pat on the back, be happy to be here, because you’re part of a really exciting national endeavour, making defence industry one of the most significant parts of our economy, helping to replace the mining industry, which of course has now moved from the construction into the extraction phase and won’t have as big an impact on our economy as it’s had in the past, although it will still obviously be a very significant part of our economy.
But you in defence industry are the future in many respects of manufacturing. You invest in research, you invest in development; it’s high technology, the jobs in it are high value-added jobs, and we can compete with anyone in the world in Australia in defence industry jobs. We can’t make certain widgets as cheaply as they can make them in Asia or Africa or South America, but we certainly can make frigates and submarines and offshore patrol vessels and combat reconnaissance vehicles, and all the component parts of some of the very big projects that we are deciding right now. So thank you very much for allowing me into your industry and giving me the chance to promote the jobs, the growth, the investment, and most importantly the capability that will be the defence industry of the future here in Australia.
A couple of years ago I was in Israel and I caught up with their Prime Minister there, Bibi Netanyahu, and I asked him who the most significant figure was in Israeli economic history, and he said Charles de Gaulle. Charles de Gaulle because in the late-1960s the French, under Charles de Gaulle, decided not to sell arms or equipment or platforms to Israel anymore, and Israel had to make a decision, and they made the decision that they wanted their own capability and they wanted their own industry. And 50 years later, 50 years plus, defence industry – all the runoff programs that occur, all the products and services that are created out of defence industry – is probably the most significant part of the Israeli economy. They didn’t sacrifice capability and they built their own industry, and that’s the vision that this Government has as part of this renaissance in your industry.
So thank you very much for having me and I look forward to catching up with some of you over dinner.