How much does an SME need to know about Defence policy and the strategic environment?

But times have changed and it is easy to pinpoint the moments that are resulting in a transformation of the Australian defence industry. Let’s work through what has been happening in the defence industry space in the last few years. Since 2016, some major defence policies have been released that have changed the landscape for the Australian defence industry, and in particular for Australian SMEs and micro SMEs.

In the last three years we have seen the release of the Defence White Paper (2016), the Defence Industry Policy Statement (2017), the Defence Export Policy (2018) and the Defence Industrial Capability Plan (2018). Each of these policies are significant in their own right, but together these policies have created a framework that is guiding the decisions, acquisitions and sustainment of our Australian defence forces.

As a defence SME, you would be well within your rights to disregard government policy and in fact each of these major policy pieces could really just be a whole lot of words with little substance and zero impact on what happens in your business on a daily basis. It is true that not everything contained within these policies will impact an SME, but there is enough content around meaningful Australian industry involvement in the future development of our defence forces to take a serious interest.   

The specifics of each policy doesn’t really need focus, but the big picture is that together they set out an agenda to encourage a transformation in the defence and industry relationship, from a traditional situation to one that is based on collaboration to achieve mutually beneficial outcomes. That is the involvement of SMEs at the outset of the procurement process in order to strategically plan and develop Australia’s defence industrial base. 

Another concept that is woven through the policies is the idea of building capability within Australian industry to the point at which the value proposition becomes “Australian defence SMEs competitively winning contracts that meet the ADFs capability needs”. The important word here is competitive. Businesses, while afforded a significant collaboration role in the procurement journey and significant support to develop capabilities, will still need to demonstrate their ability to remain competitive. 

For me, the biggest and most discernible change for defence industry, and one that appears to have been a good decision by the current government, was the appointment of our nation’s first Defence Industry Minister. Previously we have had ministers responsible for defence procurement, but never before a Defence Industry Minister on equal footing with the Defence Minister and able to significantly influence polices for the benefit of Australian industry. 

I understand that every government must hang their hat on something, a significant policy, a game changer if you will. But the beauty of the current government’s approach is that they haven’t just introduced one policy and hoped for the best. They are establishing a comprehensive range of policies and strategies over a period of years, each one building on the last to achieve a solid foundation. Respectable strategic decisions for the future of our defence forces and at the same time providing businesses with a level of confidence to enable investment in future capabilities – it is fast becoming an environment in which SMEs can not only stay in business, but can thrive and grow. From personal experience, it has been a long time since SMEs in the manufacturing sector can say that they are looking forward to a bright and prosperous future.

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In the more recent weeks, we have also seen the appointment of the first Australian Defence Export Advocate. Another step towards supporting our defence industry SMEs to grow their businesses and spread their influence on a global stage. What a great idea, a national policy framework that encourages and supports businesses to develop an international presence in order to continue to sustain and grow their Australian operations. To what extent that support exists we are yet to find out, but the signs are positive for Australian businesses wanting to spread their wings. 

Times are definitely changing for the level of involvement and integration of SMEs into the Australian defence capability, acquisition and sustainment space. So, how much do SMEs need to know about Defence policy and the strategic environment? While it is not imperative that SMEs subject themselves to endless hours of policy reading, it is clearly an opportunity for directors, owners, CEOs and managers to take a greater interest in the strategic framework and align their business’s future strategies with those supported and endorsed by the Australian government. And the best part of this whole journey is that the policies aren’t just rhetoric, the government has put their money where their mouth is and is providing a range of financial and non-financial mechanisms to support SMEs journey into the defence industry.

www.business.gov.au/cdic.