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Industry News

DTC Calls For Greater Transparency Around Australian Industry Content

By September 3, 2018 No Comments

The recent media debate about transparency and defence contracts needs mature analysis from several angles, according to DTC CEO, Margot Forster.

The DTC agrees that calls for greater financial transparency is important – but these should not be blown out of proportion.

“In fact, the DTC believes more pressing need is for accountability in achieving the promised levels of Australian Industry Content,” she said.

“We are on the cusp of the greatest nation building exercise Australia has ever seen. The benefits will be enormous, if we get it right.

“There is a need in the early stages of our sovereign capability build up to set the ground rules for measurement and accountability around Australian Industry Content. This will be best achieved as part of a collaborative, continuous improvement mindset from al parties.”

Background

The Australian Strategic Policy Institute stated that “the government needs to demand Defence provide greater public transparency in its planning and reporting”. This led to a debate on financial transparency, which played out in the mainstream media, with a focus on changing financial reporting to be against original budgets, not revised budgets.

The ABC and other media also reported claims that the Future Submarine program was likely to blow out by billions of dollars. This was strongly rejected by the Defence Department.

The Real Issue

While not ignoring the need for financial transparency, the DTC believes the more immediate need is for transparency around Australian Industry Content and better policy in the areas of:

  • Contracting
  • Transparency and how this drives accountability
  • Metrics and mechanisms for enforcement.

“We would like to see a review of current Australian Industry Content (AIC) commitments across defence programs, compared to actual delivery,” said Margot.

“For this to be effective, we first need to agree on the audit mechanisms.

“Part of this would be identifying industrial and skills shortages and how these are assessed for sovereign sustainment implications and how they inform policy development. How the workforce is trained is part of the intellectual property that must be transferred to achieve sovereign capability.”

Other issues highlighted by the DTC include:

  • Creating transparency around how Primes incorporate global supply chain involvement in their Australian Industry Content planning.
  • Ensuring overseas opportunities are included as part of the calculations.
  • How AIC is impacted when commercial terms and conditions are finalised. For example, Rheinmetall has changed the number of units for delivery and the costs. What does this mean for SMEs in the AIC plan?
  • What Government will do to establish horizontal acceptance with partner nations across standards, etc.

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