Posted by Defence Teaming Centre on
A report released by the Australian Strategic Policy Institute (ASPI) on 30 May 2023 has revealed that the 2023/24 Budget provides $1.5B less to the Defence sector over the next three years than last year’s budget.
While the government has been saying they are willing to take the risks and make the investments required to build Australia’s Defence sovereign capability, the only increase in Defence spending over the next three years is $4B to compensate for the increased cost of imported military equipment, caused by the fall of the Australian dollar.
Tim Dore, Acting CEO at the Defence Teaming Centre, said the Federal Government and the Department of Defence have not learned any lessons from recent history.
“Successive governments have not delivered on the industrial policy implemented to realise a sovereign industrial capability,” Mr Dore said.
“Now, because of the urgency, our government depends on Foreign Military Sales (FMS). While this does provide opportunities for industry through sustainment, the decision to ‘buy off the shelf’ as they say, means the Australian industry has lost the opportunity once again to become a leading advanced Defence manufacturer.
“This not only stifles Australia’s defence industry but also the broader Australian economy. The flow-on effect is job losses in manufacturing, infrastructure and financial services, all essential sectors supporting Defence and Australia’s defence manufacturers.
“Defence industry is one step closer to entering the ‘valley of death’.”
On May 4 2023 the Defense Security Cooperation Agency approved a possible FMS of the Surveillance Towed Array Sensor System Expeditionary (SURTASS-E) mission systems for Vessels of Opportunity (VOO), estimated to be costing Australian Tax Payers US$207M.
The Federal Government authorised the Department of Defence to purchase the capability from the US, despite the technology already being produced in Australia. The foreign acquisition is due to the accelerated timeline outlined in the Defence Strategic Review (DSR), released in May 2023.
The infantry fighting vehicles (IFVs) required as part of the Land 400 Phase 3 project could also be purchased overseas after the DSR revealed that the number of vehicles required had been slashed for the second time. Defence was originally looking to acquire 450 IFVs but dropped this down to 300 in mid-2022. The DSR then recommended this number drop again to 129, a move industry is speculating is to assist government in covering the cost of the AUKUS Program, which is estimated to cost upward of $368B, far exceeding the forecast expenditure of the cancelled Attack-class build.
“Governments decision to continue purchasing equipment overseas is putting Australia’s sovereign capability at risk,” Mr Dore said. “Election promises to support Australian industry are not being implemented.
“The lack of commitment and follow-through results in a lack of trust by industry and is prompting some businesses to exit the Defence sector.
“I have been approached by several our members advising that they are exiting the sector as it is becoming economically unsustainable for them, particularly the SMEs, to continue operating.
“These decisions the government is making are further proof to these companies that they have made the right choice.
“Companies choosing to remain in the Defence sector are hopeful that the release of the reviews promised in the DSR, particularly the first National Defence Strategy, which is due by Q2 in 2024, will cement the projects that will be made available to them over the coming decades.
“The only reason many of these companies are persevering during this treacherous time is because they have invested heavily into the sector and want some return on their investment. Many of these companies already work in different sectors, including mining and agriculture and have the flexibility to wait it out. While the smaller companies don’t have the capacity in their workforce or in their budget to hope government fulfils its promise.”
