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The Department of Defence has lost the trust of the defence industry and is no longer considered a “customer of choice”, according to recent comments by defence experts from the Australian Strategic Policy Institute.
The comments were made by ASPI national security programs director Dr John Coyne and ASPI national security program deputy director Raelene Lockhorst during a recent joint standing committee on foreign affairs, defence and trade held on 25 November this year.
Much of the conversation was centred around defensive infrastructure in the Northern Territory and Queensland.
“Defence needs to provide greater clarity to industry so it can future plan,” Coyne said.
The fundamental reason why Crowley, a US company, was able to build fuel storage in Darwin is because a multi-decade agreement had been struck between it and the US Department of Defence to allow that investment.
“So we need to look at that, how to increase our commercial acumen, how to engage with our small and medium enterprises and at the centre of that is clarity.
“I think, chair, that Australia’s small and medium enterprises have been hit pretty hard and sometimes even the (loss) figures of thousands or tens of thousands isn’t quite true.
“Some of the tenders that were called off leading into the development of the Defence Strategic Review then the National Defence Strategy, some businesses lost millions of dollars through bids and bid teams and all the preparation.
“Quite often I hear that its ‘money lost by the company but not lost by government’, but the fact of the matter is government will eventually pay for that down the track or shareholders will pay for that down the track or future customers will pay for that down the track.
“The reality is that starting a tender process, then yanking it has real impacts on our economy, real impacts on businesses. Now when it comes to small and medium enterprises, that impact is even more significant.
“Quite often I speak to Defence officials and they’ll say, ‘Defence is a customer of choice’. I would put it to you that for many Australian SMEs, the Department of Defence is no longer a customer of choice. I think it’s lost.”
Lockhorst, also speaking at the meeting, said transparency from the Department of Defence is failing year after year.
“The transparency is becoming less and less every year. It’s very hard to interpret the annual reports and to reconcile them against the Defence budgets,” she said.
“There are no clear KPIs to measure against. It might say ‘Defence is 80 percent on track’, but there’s nothing underneath that.
“We need stronger signalling and longer signalling. The next three to four years in the IIP isn’t enough particularly for the smaller companies. They need to know what is the next 10 years and we need to be developing programs of work and small tenders all the time.
“Defence is no longer the customer of choice because they’re not giving five–ten years of work or pipeline. So a company’s not willing to invest in the workforce and particularly in remote locations they’re relying on fly-in fly-out workers which ultimately increases the cost of the project delivery. It’s not investing in regional Australia in capability and long-term commitment there.”
Coyne also addressed the recent speculation about the percentage of gross domestic product (GDP) that Australia should be spending on Defence, which has previously been indicated to be 3–5 per cent GDP spend in line with other countries.
“I think it’s a wrong question to sit there and put it in an absolute sense that if we get to 3 per cent (of GDP) point something or we get to 3 per cent of GDP, we’ll be ready and we’ll be okay,” he said.
“I don’t think that is the right way. What we want to be able to do is have a meaningful deterrent capability and we have to in doing so make very difficult choices about what capabilities we do and don’t take on.
“What we can say though is that we do need which we have a shortfall, which is a meaningful way to deter enemies and potential adversaries in our approaches.
“You can have the best missiles in the world, but when you fire them all and you can’t manufacture anymore or you can’t do maintenance on them or you don’t have the data to be able to target. It’s that systems of systems thinking around defence that becomes important, not single capabilities.
“(Instead we should be advocating spending to) defend our country and build that national resilience that maintains our sovereignty.”
