Noting report
19 October 2023
I rise to take note of the Foreign Affairs, Defence and Trade Legislation Committee’s interim report on the performance of the Department of Defence in supporting the capability and capacity of Australia’s defence industry, and I thank Senator Urquhart for moving that the Senate take note of the report.
I called for this inquiry because recent events, such as COVID-19—the pandemic that caused devastation not just here but also around the world—and Russia’s unjust and illegal invasion of Ukraine, have exposed the vulnerability and the volatility of poorly secured global supply chains. It is essential that Australia critically assesses the resilience of our supply chains and considers how to strengthen areas of sovereign capability that are essential to our national security.
The prospect of a major power competition in the Indo-Pacific has the potential to threaten Australia’s interests and increase the risk of conflict. When undertaking capability acquisition we can no longer take for granted the peace and prosperity in our region that was underpinned by the leadership of the United States. Developing our understanding of how much the Australian Defence Force can fulfil its needs and support our allies through domestic industry is essential if we are going to make smart choices about defence policy and adequately fulfil our role in the Indo-Pacific.
From the inquiry, it is apparent that the existing capabilities of Australia’s defence industry are poorly leveraged and there are opportunities to enhance the national security contribution of these capabilities. A consistent theme from submissions to date to the inquiry is that sovereign industrial capability priorities are significantly flawed. The abundance of priorities listed leaves our defence industry without direction. When everything is a priority, nothing is a priority. Consolidating and narrowing our sovereign industrial capability priorities would provide industry with the clarity and confidence that it needs to invest in research and development, innovation and commercialisation.
Developing and maintaining a skilled defence industry workforce capable of achieving Australia’s sovereign capability ambitions is essential. The interim report notes the committee’s view that we should examine the idea of creating a dedicated plan to develop Australia’s defence and adjacent industry workforce capacity. It was great to see Minister O’Connor earlier this week announce the new National Skills Agreement, which identifies developing skills for our national security as a top priority.
A comprehensive national strategy on sovereign capability requires a robust assessment of Australia’s supply chain strengths and vulnerabilities and needs to identify what Australia can design, build and sustain locally and what can be sourced from our international partners. It is important to note that strengthening our sovereign capability does not require abandoning foreign military sales, as this would not be desirable. Sovereign capability is not just about developing our own domestic industry, though this is, of course, important. It is also about strengthening our relationships with trusted allies and partners to boost the capabilities available to Australia through resilient supply chains.
Something identified consistently across many submissions was the number of barriers and challenges faced by Australia’s defence industry when it engages with the Department of Defence’s procurement processes. Defence-adjacent industries—including private technology, manufacturing and universities—are also not adequately brought into the defence procurement process. Throughout the inquiry we heard that Australian industries were eager to participate in the supply chain, but because of the lack of clarity and guidance they have been unable to make investments in the areas that are most essential. What is clear is that Defence has work to do to improve its communication and collaboration with industry. As the committee continues to work, it is important that it focuses on which priority areas of sovereign capability Australia should maintain and develop, as well as identifying how we can alleviate deficiencies in our current defence procurement processes. I thank committee colleagues for the work to date on this inquiry. There are still many months to go to hear from individuals and organisations who have made a written submission. I look forward to further engagement and contributions to the inquiry through the upcoming public hearings.
