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PODCAST: Developing the roadmap for defence industry’s growth, Dr Sheridan Kearnan, Department of Defence

PODCAST: Developing the roadmap for defence industry’s growth, Dr Sheridan Kearnan, Department of Defence

The recently-released Defence Industrial Capability Plan has outlined the government’s vision to build a robust, resilient and internationally-competitive defence industry that meets defence capability requirements.

The recently-released Defence Industrial Capability Plan has outlined the government’s vision to build a robust, resilient and internationally-competitive defence industry that meets defence capability requirements.

In this episode of the Defence Connect Podcast, host Phil Tarrant discusses the plan with Dr Sheridan Kearnan, first assistant secretary for defence industry policy with the Department of Defence, whose team has been a key driver in creating the capability plan.

Ms Kearnan gives insight into the origin of the plan, how it will set the course for defence industry growth, key priorities and how innovation will be central to capability enhancements. She also reveals the process for determining and finalising the sovereign industrial capability priorities that are critical to defence and must be developed and supported by Australia’s defence industry.

Enjoy the podcast,

The Defence Connect team.


Listen to previous episodes of the Defence Connect podcast:

Episode 447: PODCAST: Becoming the world’s most cyber-secure nation, with Cyber Security Minister Clare O’Neil
Episode 446: PODCAST: Local infrastructure – key to delivering Defence capabilities, with Cr Peter Hudson
Episode 445: PODCAST: A growing chorus calls for a national security strategy, with ANU’s Professor John Blaxland
Episode 444: PODCAST: Doing the rounds – the week that was in Defence and defence industry
Episode 443: PODCAST: Unpacking the history of Australia’s defence policy and posture, with Michael Pezzullo
Episode 442: PODCAST: Moving beyond the End of History
Episode 441: SPOTLIGHT: Unlocking Defence performance through infrastructure design, with HDR’s Tim Napper
Episode 440: PODCAST: US Space Force engages with Australian SMEs at AusSpace24
Episode 439: PODCAST: Australia’s growing need for a national security strategy, with Andrew Wallace MP
Episode 438: PODCAST: Delivering Black Hawk in record time and setting the record straight on Army’s Aviation evolution

Announcer: Welcome to the Defence Connect Podcast with your host, Phil Tarrant.

Phil Tarrant: G’day everyone, thanks for joining us today. We're running just off the back of Anzac Day, so the day after recording on a Thursday, which is the Thursday after the Monday of this week where a significant document was launched into defence industry. The Defence Industrial Capability Plan was launched, launched by Defence Industry Minister, Christopher Pyne down in Canberra. The plan's heralded as a long-term vision and road map for Australian defence industry. I'm reading here off a story that we wrote about this on Monday on defenceconnect.com.au and this was Minister Pyne speaking at the Australian Strategic Policy Institute, ASPI.

He said the plan, it sort of argues for a stronger, more resilient and internationally competitive defence industry, obviously something which is going to be really attractive for Australian defence businesses, in particularly SMEs. He said, "The plan addresses Australian defence, and defence industry of our sovereignty and outlines the initial sovereign industrial capability priorities." These are the things that we've been waiting for and understanding for quite some time. He said, “Importantly, the plan makes clear that to be considered an Australian defence industry, having an ABN and a shopfront is no longer enough. We want to see Australian leadership, an Australian board, and an Australian workforce evaluating right here at home.”

I do agree with Minister Pyne's comments. To help me today understand a little bit more about the Defence Industrial Capability Plan, and also, explore these new sovereign industrial capability priorities, I have Sheridan Kearnan in the studio. She's the First Assistant Secretary Defence Industry Policy at Department of Defence. I had to take a breath in between your title there, Sheridan, but thank you. Thanks for joining us on the show so quickly after the launch of the plan.

Sheridan Kearnan: Thank you. It's great to be here. Looking forward to the discussion.

Phil Tarrant: So I imagine you were, I didn't go down, but you were at the ASPI announcement when the plan was rolled out. What was the mood of the room there?

Sheridan Kearnan: There was a lot of interest and expectation because we have been waiting to launch this plan for some time and we have been flagging that it was coming. The room was packed out and people standing around the sides, so that shows the level of interest. The minister provided a great speech, which I'd recommend everyone go and look at if you haven't seen it yet and a lot of questions in the margins on the outside of the speech as well.

Phil Tarrant: Who was mainly in the room? Was there a lot of brass in there or was it mainly defence industry?

Sheridan Kearnan: We had the Vice Chief of Defence Force and our Associate Secretary and the Secretary of Defence, who'd only just returned from the United States where he had been looking at ship building issues. Yeah, so we had a mix, a lot of defence industry and there was media there as well.

Phil Tarrant: I think you've just arrived back from Washington, on the G'Day USA trip recently?

Sheridan Kearnan: I did.

Phil Tarrant: How did you find that?

Sheridan Kearnan: That was great. For me, I'm fairly new in the position, so it was a concentration of quite a few activities in the U.S. leg of the trip and then I went around to Malaysia as well for a team Defence Australia activity. So G'Day USA was really good to go to. I got to sit on a panel with some of my counterparts from the U.S. system there, including the Pentagon to talk through sort of opportunities that we have with the United States to try and broaden our cooperation between our industrial bases.

Phil Tarrant: That's great. You just hit me up with a really nice segway to a preamble of what we're going to talk about in today's podcast, and obviously the Defence Industrial Capability Plan is key to drill down into this sovereign industrial capabilities but you previously spent some time in Washington so you're familiar with the city.

Sheridan Kearnan: Yes.

Phil Tarrant: Before you joined in your new role as First Assistant Secretary of Defence Industry Policy. How did you end up doing what you're doing today? What's the backstory?

Sheridan Kearnan: So I've had about 20 years in the Department now. I'm not sure where the time goes but when you're having fun, you stick around. I've spent a lot of time working in core policy areas in the department, mainly international policy and strategic policy. In that time, I've had some great opportunities, including working in Washington for three years, where I was Minister Chancellor of Defence Policy. My main focus was spending a lot of time engaging with the Office of the U.S. Secretary of Defence office and I've also have had extensive experience working on Asia issues as well as our operational areas in the Middle East.

I have spent all of that time in policy. I kind of describe it that I've spent most of my career looking out of the country and it's always good to continue to broaden, and so I was asked to take up the job of First Assistant Secretary Defence Industry Policy. I describe it as now I spend a lot of time looking into the country. I'm on a great learning curve and I'm really enjoying it.

Phil Tarrant: I imagine that external perspective will complement your remit now, and a big part of it is Australia's Export Strategy and I know that the Defence Industrial Capability Plan is all about also gearing up Australia to be great exporters. I know that's something that's very important also to Minister Pyne. For our listeners that aren't really familiar with what sort of falls under your umbrella of what you are responsible for, can you give us a quick 101 brief on what's your portfolio and your major activities?

Sheridan Kearnan: I have a number of areas that fall within my remit. There is the Core Defence Industry Policy area. That's the area that has been the masterminds behind the Defence Industrial Capability Plan, and we produce quite a lot of the broad framework that sits over how defence engages with industry. In that area we have a number of other key responsibilities. We've just established the Export Office, so Monday was a big day for us. The Export Office was opened as well, and that will be very much focused on trying to diversify our defence exports overseas, and there's an area also that looks at skilling and STEM for defence industry, which includes the school Pathways program, and then I have the Innovation Hub, which is trying to do some collaborative innovative development that will support ADF capabilities, and the other area that I have is export controls, so that's the area that looks at the items that may be exported from the country and making sure that it meets our international obligations.

Phil Tarrant: When you initially looked at this job as a potential next role for you and now you're four months in, which is still relatively new, is it what you thought it would be? Is it different, same?

Sheridan Kearnan: There's a lot of domestic engagement, so we're talking to a lot of businesses and industry, and that goes right from the big primes down to the small medium enterprises. You get to poke around in a lot of interesting jobs that people are doing, and it's quite fascinating to find right down to the Mom and Pop's Garage activities, or new areas that are trying to break into the industry, so there's a lot of really interesting things that keep me entertained. I describe it as, my job could be never-ending if I didn't put some sort of limits on it.

Phil Tarrant: So, sort of drilling down into defence SME land, and that's a big part of developing our sovereign industrial capabilities; we have some great depth of talent across our estimates to equip across these areas, which we'll get through in a moment, but was there any sort of preconceived ideas you had about defence industry seeing that you've always been looking outwards, now looking inwards, preconceived ideas about defence industry that has completely been challenged and turned on it's head where you went, "Wow, didn't really understand that we had that"?

Sheridan Kearnan: I think that the thing that has really struck me is the amount that ... like, the vast proportion of the Australian defence industry is actually in the small and medium enterprises. That provides an interesting challenge for us, particularly in terms of the export options that we're trying to pursue. It's easy to get big defence exports if you're just exporting major platforms. For us a lot of it will be trying to help support these small industries to get into the global supply chains and those sort of things. I'm working closely with primes and that sort of space, and to try and get them to diversify as much as possible.

Ideally you don't want an industry that is just dependent on Defence for work. It should be much more diversified than that, which will increase its resilience, and noting that I come from the Department of Defence. The whole focus is in support of ADF capabilities, so what we want is strong defence industry that will be there when we need it, which is what a lot of the sovereign industrial capabilities is about.

Phil Tarrant: One of the sort of main strengths of the plan is, I guess the entire definition of what Australian Defence Industry is. How do you see you guys sort of communicating, collaborating with the industry to make sure that everyone understands or is on the same page about what defence industry's all about?

Sheridan Kearnan: We do a huge amount of outreach, so there's a number of different ways that we ensure that the message is getting out there that ranges from the Minister of Defence Industry, Minister Pyne, doing speeches and doing a lot of outreach himself. He engages quite extensively with our defence industry partners. We have quite a few websites that are accessible to get more information, on Monday we launched the website for the Defence Industrial Capability Plan which can be accessed, and that has ways to contact into the department, so if anyone has any questions it's easy enough to reach out to us and there's a team of people there ready to respond.

We do a huge amount of engagement directly with industry that ranges from people just coming and talking to me down to very sort of structured ways that we can reach out. We do a lot through AIG, Australia Industry Group, and we also have a board that supports the Centre of Defence Industry Capability, which are industry representatives, so we talk through with them as well, and then there's the State and Territory consultative forums, so every state and territory has defence advocates now, so we have a sort of structured way to sort of engage and reach throughout the country to ensure that the message is spread.

Phil Tarrant: So, let's have a drill down to unpack the Defence Industrial Capability Plan and I know a lot of our listeners are very familiar with this because there's been a lot of work being underway for quite some time to crystallise this opportunity for Australia, and to be able to present in a way which was a logical plan, plus the actual points moving forward, and before we come in here you spoke about there's still a little work to do. We have the plan now; great, but we need to implement it, and everyone has a role to play within that, but can you talk us through the genesis of the plan and why do we have this?

Sheridan Kearnan: Okay, so the plan was sort of flagged back in 2016, so 2016 was a big year for Defence. We launched the White Paper, and at the same time there was a number of supporting documents that were provided. One was the Integrated Investment Plan, but separately there was the 2016 Defence Industry Policy Statement, and in that document it flagged that there were some capabilities that are important to Australian Defence Missions that they must be developed and supported by Australian industry because overseas sources do not provide the required security or assurances we need. As such, it's critical that the industry base associated with those very specific capabilities, is maintained and supported by defence as Sovereign Industrial Capabilities.

Back in 2016 we flagged the Defence Industrial Capability Plan would be created that would identify what those specific sovereign industrial capabilities were and the way forward in that space.

Phil Tarrant: The role of industry to help conceptualise participate in putting the plan together? What role have they had so far?

Sheridan Kearnan: We have had very extensive consultation with a huge range of people. I would almost describe that the collection of these sovereign industrial capabilities is almost the brains trust of a huge range of experts across both defence as well as the industry base, so in terms of defence there was extensive consultation with capability managers, the people who want to use the capability when it's delivered, or the individuals who have to deliver that capability, so the people that are working in KESG, and also consultations with Joint Operations Command, who are the people that ultimately have to use the capabilities, whose engagement across whole government levels, particularly with Department of Industry, which is where the Centre of Defence Industry Capability sits, but they basically worked defence as well as prime minister and cabinet and elsewhere, and then as I sort of mentioned before, a lot of reach into peak bodies, so we work through Australia Industry Group to have direct conversations with industry, as well as the board members of the CDIC.

Phil Tarrant: For our listeners who haven't yet read the document, and I'm halfway through it myself. It's a 160-some pages, I think, something like that; so it's 170 pages? It's quite a lot. It's a big one. If you want a shortcut initially and actually understand what's going on, there's some really good fact sheets around it which I’ve immersed myself in and you can get them on the defence.gov.au website. Just look for Capability Plan, but there's one around the Defence Industrial Capability Plan, a quick fact sheet, which is just really an executive summary of what this thing is all about and just gives you a bit of an insight in the role that you can play, and whether or not you're part of the story or can be part of the story and how to become a part of that story.

A couple of key points about the plan which it outlines: It says the key purpose is to build a broader and deeper defence industrial base, a strategic approach to defence industry investment, and innovative and competitive defence industry, a robust defence industry export capability and a defence industry partnership that enables Australia to reposition itself for the future, so in theory all this sounds great.

To what I said before and a lot of what needs to be done, in my initial remarks, paraphrasing in many ways Minister Pyne talking about to actually being defence industries more than just having an ABN. It's more than just potentially having a large parent that does a little bit here in Australia, so could we have a quick chat around crystallising what it means to be in defence industry and how an SME or even a large business can actually be part of this story. What do you need? What sort of capabilities and what sort of positioning do you need to have?

Sheridan Kearnan: The plan does outline a stronger definition. It does say that an ABN is not enough to be considered a defence industry, and that's a clear message from government. Companies need to possess an Australian-based industrial capability, so this is more about the bigger companies, and that could be in a number of different ways. It could be that there's a company or board presence, value-added employment opportunities for Australians, or an Australian-based work force or infrastructure.

Basically, what the government's asking for is that companies should be showing some sort of commitment to Australia and basically investing here.

Phil Tarrant: That's great, and you spent some time in Washington. I know there's a lot of SMEs out there as part of the G'Day USA defence contingent. I expect the SMEs on that particular trip out to Washington are hotly engaged defence industry businesses and I've met some of them. I know the CEOs. They're passionate individuals, and they're very hungry as well for growth. One in particular ... I did a podcast just the other day ... now set up a shop in LA as well, so they're doing some great work on tempering or heat treatment of metals; all sounds really cool. Really unique thing, so this SME ability to connect in, engage with defence industry and part of this story having the ABN is great. You need it. It's a ticket to play, but it's that firm commitment about it.

Do you feel as though the time you spent in Washington, but also the four or so months you've had in this role now that there is that inherent passion within our SMEs to be part of this story, or is it something that they're looking at it, they'll try and have a go at it, and if it doesn't work they'll go and look at other market segments? What's your view?

Sheridan Kearnan: There is actually a lot of interest and excitement about where Defence Industry is. There's obviously a huge commitment by government to deliver the best capability to defence. 200 billion is the figure, obviously, that is outlined in the White Paper and the IIP. It's interesting taking on this job, because I describe it, because I had three years in Washington, which was the time when the first principles' review was occurring, and I was actually out of the country when a lot of massive change was happening back here in Australia, in Canberra, and the way I describe is it is that I'm a bit like the grandparent coming back to the department.

For a lot of people who have been sitting in the department, there's a lot of change that's happened, but they probably don't see the change on a day-by-day basis, whereas I've come back and the department I've come back to is fundamentally different, and the relationship between defence and defence industry is quite transformed, and the way I describe it is, we're on a journey. We're trying to make it better and better, and these are all steps on that journey to try and improve the relationship between defence and defence industry.

So, the industry ... all the feedback I get as a fairly new person into this space is very positive, a lot of interest and excitement. There's a lot of opportunities that everyone can see, and that's actually both in Australia as well as in the US. You mentioned G'Day USA, but there's also a lot of discussion there about the amount of opportunities or the amount of money that's being allocated towards defence requirements, so everyone knows that there's good opportunities out there. It's positioning yourselves to be ready to take those opportunities.

Phil Tarrant: A lot of this is about projecting the capabilities of Australian defence industry both at home and abroad, export opportunities, and there's a goal to become a major defence exporter. At the moment we're a huge importer, but we're not a huge exporter, so there's a big opportunity there, but when you look at this opportunity in Australia right now, 200 plus billion dollars going to be spent over the next decade on defence capability enhancement and delivery. It's an attractive market for global plays and we've seen some of the large American primes in particular come out here, and they're passionate about firming their position in defence industry, and a lot of them are doing a lot to try and equip SMEs to go outwards, but they're also very smart and strategic in building local relationships, and I think Lockheed Martin in particular is being very good at this.

Do you think you'll see a lot more of these major global defence companies investing more or being attracted to Australia over the time ahead, and how do you see SMEs can really be part of that story?

Sheridan Kearnan: I do think that there will be a lot of ... I keep saying opportunity. I don't want to just keep using the same word, but I do actually think that there will be a lot of interest in big companies coming into Australia and setting themselves up here. We are a pretty stable economy, very structured. You know the environment that you're coming into to operate, but we also are geographically well positioned in terms of our market access into the Asia-Pacific region, which is one of the growing defence markets, so there has been in the last few years a lot of interest in coming in and setting up in Australia, and I think there's going to be more of that in the years to come.

Phil Tarrant: Just going back to the ABN point that Minister Pyne said and you've touched on; having an ABN is just not enough. Do you think this will organically or fluidly just police itself, that people will want to be participating in Australian defence industry and they are Australian domicile or globally domicile but have the relevant requirements to actually play in this market: Do you think eventually that the government's not going to have to police the type of businesses that they choose to do business with? Do you think it's going to be about the long-term commitment of the companies and their focus, their passion, and their energies to actually commit to Australian defence industry would just rationalise the landscape itself?

Sheridan Kearnan: I think so. The focus is on providing the best capability for the ADF, and basically the message about an ABN is not enough is not a message about that we're changing the nature of the way that we do business, but it's a conversation about what we're expecting from some of the big players as they work in our economic space. The key thing is that we'll remain a very open defence market, so it's not like there's anything that's making us more protectionist or anything like that, but it is what we're expecting, and I think it will just naturally evolve that this will be a broader collaboration between the government and defence with defence industry.

Phil Tarrant: A big part of the Defence Industrial Capability Plan was the firming, crystallising exactly what the sovereign industrial capability priorities are, and this dialogue's been happening for years and years, and it was I think established; the original sovereign capabilities back in 2009. I'm plucking that number out. It sounds like it's right, but I know these new sovereign industrial capabilities replace what was identified way back when, which is nearly a decade ago, and for all our listeners I'm not going to rattle through all of these in depth. Go and check it out. It's all easily accessible now. It's all within the plan. There's a lot of fact sheets you can get on it as well, but the reading on it is, what are the sovereign industrial capability priorities, and I'll read this out really quickly.

It says, "sovereign industrial capabilities priorities are capabilities that are critical to defence and must be developed or supported by Australian industry," so this is a collaborative approach, so it's critical for defence and industry has a role to play, and the ones that are being identified moving forward, it's Collins Class Sustain and the Continuous Shipbuilding Program, which everyone is very familiar with. Obviously, Land Combat Vehicle Technology Upgrade. You know that's well underway now with the obviously the establishment of a new Vehicle Centre of Excellence. Can't remember exactly what's it's called by Rheinmettal up in Queensland with the LAND 400 phase two vehicles. You've got enhanced active and passive phase radar, a ray/radar capability.

Combat clothing survivability is another one, then advance signal processing capability in electronic warfare, cyber and information security, surveillance and intelligence, data collection, etc. Test evaluation certification, a systems' assurance, munitions and small arms research and design development manufacture.

Obviously we have some sovereign capabilities there with Thales’ factory up in Lithgow, plus some other great manufacturing builder we have there, and then also Aerospace Platform Deep Maintenance, and obviously that's preparing us for the future, so that's a real quick summation of what the sovereign industrial capability priorities are. You could read about them. There is so much information there, and my recommendation would be as an SME as you read what the sovereign industrial capabilities priorities are, think about how it works within the context of yourself. Otherwise it might just be mind boggling, because it's quite a lot of information there, so they've been firmed. They've been established.

I imagine the government's quite happy now to have really crystallised what these priorities are, Sheridan, and how you guys going out there now communicating it rather than just putting some great documentation together around it.

Sheridan Kearnan: So, we've got a pretty extensive rolling program to reach out, so as I mentioned there's the website, which has all this documentation on there and you can just google it and it'll probably take you there. We're engaging out into key places which is including, through the State and Territory Consultative Forums, so this afternoon I'm going and talking to New South Wales Defence Industry as a separate session where I'll sit down and talk through what the plan actually involves and get some feedback, and we will be reaching out through conferences. We regularly speak at defence industry conferences and we have our normal consultative forums, which is a lot of engagement through AIG and through the CDIC.

Phil Tarrant: So, to actually realise, crystallise, and document what these new sovereign industrial capability priorities are, can you give us a bit of a inside view on the process to work what these things are? How do they come about? I imagine there's quite a lot of debate around, "This should be," and "This shouldn't be," and "This is more important than this. This gets priority over this one." How is the culture of that discovery phase and rationalisation phase? Interesting, no doubt.

Sheridan Kearnan: Intensive consultation and a lot of discussions with many people who have views and spend a lot of time thinking about these issues. Defence is a huge department, so even just the consultation that you have to do within defence can be long and complex and deep, but then you actually have to sort of go. It's almost like rings. You do consultation out into the broader government, because there's a lot of other players that have an interest in this, such as the Department of Industry, and then you have this intensive third realm, which is actually outside government, which is with defence industry, so there were many, many drafts circulated of the document and many meetings and discussions, including the States and Territories, so I consider this a coalescing of all the vast intellect of Australia that thinks about defence industry poured into this one document.

Phil Tarrant: I think it's a really game process to try and do that, seeing there is so many people with so many voices and so many different objectives. Everyone obviously has the same primary objective and that is capability enhancement, making sure our war fighters have the gear that they need to do what they need to do, but was there anyone particularly out of joint because they didn't get their sovereign capability added to it, or how did that process happen of saying, "Yes, no, no, you're not going to be representing this. Regards"?

Sheridan Kearnan: There was a lot of discussion about what was in and what was out, including going right up into the senior committee structure and defence, and debates about some things that could have been considered within it, but ultimately we had to settle on these ten, so at some point you have to almost lock and load the document and get it out there. What I would emphasise though is that this is the picture at the moment. It is a journey. We will be reviewing this down the track to see, so it could be that down the track we're incorporating other things or things might fall out. It will evolve and part of that is because also the nature of the world that we live in. Technology is changing extremely fast. It could be that in this age that we live in that it could be very soon that we consider some other area, particularly in a very technological area that we want to incorporate into the sovereign industrial capabilities.

Phil Tarrant: We touched on it really briefly, but how are going to engage SMEs with the Defence Industrial Capability Plan and the various programs that are related to it, and I guess there's two sides of that. There is the SMEs who have one of these capabilities and can contribute direct to government, then you have the other SMEs who might be doing all their work by a prime and might not have that direct relationship with government, so how will this play out?

Sheridan Kearnan: There's multiple ways SMEs can engage with the department, and it ranges from are you totally new to the space, and you're almost at that 101 stage, and for those SMEs really going to CDIC that sits within the Department of Industry to get advice is probably key. Then for other SMEs that are actually playing this space, there are a multitude of different opportunities that can be pursued. The key is that the sovereign industrial capability priorities will be incorporated into the full defence planning cycle, so this comes from forced design right through to the strategic planning capabilities that we have, and so there's multiple points that SME could engage. The Innovation Hub is one example where sovereign industrial capability priorities will obviously be a framework within any proposal is analysed.

Phil Tarrant: You know, to actually work up a document of this scale, and considering as we spoke about the amount of import and the amount of stakeholders that need to be collaborative in pulling it together, it's great that we got to this point and it's launched and it's in the market, and I think defence industry by in large in the quick conversations I've had around it is very satisfied with having this document now, but I guess now it's about the business of getting things done, which you mentioned beforehand, and it sounds like it's a living, breathing document as well, so it will evolve and change over time. How is defence or industry going to score itself against whether or not it's doing a good job against this plan? Who's keeping tab on this and deciding, "Yes, it's working out," or, "It's sort of working out. We need to change it," or, "Everything's going wrong. Let's need to completely revive it"?

Sheridan Kearnan: My division will be the one that owns and controls the framework, so we'll be the ones that will undertake a thorough review process, which will happen ... we'll probably do a pretty quick review in about a year's time or just over a year's time to see how the system's working and embedding down. We've been preparing for the release of the plan, so we've been making sure that all the documentation, such as for the tender process for Australia industry capability plans, which is part of the process to try and make sure that there is maximum a engagement with Australia defence industry.

We're right at that very core base of changing documentation to make sure that this is all fed into it, so we'll have a pretty good basis to then sort of sit down and do a review process, which will again involve a huge amount of consultation, and continue to take feeds from multiple areas, because basically what we want to do is just, as I keep saying, it's a journey that we're on with Defence Industry, so we'll continue to evolve it, so we're basically an open door for industry to come in and talk to the department, so we're happy to engage with anyone who does want to talk to us about it, and we're always in the market for good ideas.

Phil Tarrant: That's great, and I'm happy you brought up the phrase open door, because chatting with people within defence industry, in Department of Defence and then also SMEs, the SMEs say, "Yeah, it is actually an open door." The cultural shift to how it was before to where it is today is completely different, and I work in defence industry I guess from a media perspective, but my mind boggles sometimes about all the different documentation, all the different hubs, all the different programs, plans, etc. It is quite confusing, even though I'm at it every single day.

I've got a list of a couple of things here which are all created and developed to try and support the doctrine of an open door, and obviously you have the Australian Industry Capability Program, the Centre for Defence Industry Capability, the Defence Innovation Hub, the Next Generation Technologies Hub, and Defence Export Strategy, and we'll get into that for a sec, but there's lots of outreach programs from government to defence industry, support an open door, and that you are open for ideas, because ideas equal innovation, innovation equals enhancements and benefits, and etc.

How do you keep across all these different initiatives and prioritise where to direct your attention and intervention of your department to make sure that you can keep true to this open door policy and make sure that people's involvement with that is a good outcome?

Sheridan Kearnan: It's having great teams working with me who can get a lot of the business done so I can try to stay at a more strategic level. There are multiple components of the face of defence for defence industry to engage with, and the key point in all of that is that defence is a big enterprise. It's a extremely large department trying to deliver some of the most complex things the Australian government does need to deliver. You just have to think about the ship building task that is ahead of us, and it's nation building on a very large scale, so it's not like you can just try and have one initiative to try and meet the multiple arm demands and requirements to try and make sure that we get the best output that we can for the Australian defence force in terms of capability, so there are very bespoke dimensions to this.

Some of it is fairly new space, so Centre for Defence Industry capability. It's a new entity, just been going for a bit over a year now. Sitting in the Department of Industry, it's people who know and understand defence, but they think like industry, which is critical, whereas defence is this huge enterprise where everyone in the Department of Defence things about defence capability, so it's actually almost a different kind of cultural shift, so CDIC is really key to all of this, and it's a great avenue for industry people to engage with people who think like industry, who know to navigate defence, so that's really important, and then places like the Innovation Hub and the Next Gen Tech Fund.

I've had people sometimes say, "Why isn't there just one sort of innovation space," and it's making sure that people understand that it's two areas doing two very different things. The Next Gen Tech Fund is run by Defence Science and Technology Group. It's very much, when you talk about research and development, it's the research side. It's not a pure sort of dichotomy between the two, but the scientists who are really in the very early stage, research phase, Innovation Hub is actually more about development, so it's more mature ideas. It's contracts to try and get those ideas actually into capability.

Phil Tarrant: I'm going to look over to our producer here Adam who's sort of started looking at me because I'm know I'm going too long, but I'm going to keep going because I'm interested in this. I just want to quickly touch on the Defence Export Office, so this fits under your remit, Sheridan, and this is about understanding and not policing, but giving the framework for Assurance to export abroad.

Obviously one of the key goals of government is to enhance our capabilities in industry to export, and to support us in these two ... I guess diversify the revenue by identifying export marks, but also I guess just positioning Australian defence industry with our friends and colleagues in different parts of the world to equip them with some of the great stuff in innovation that we're having here, so what keeps you awake most at night when you think about the work that you need to undertake with the Defence Export Office? Is it getting more SMEs or businesses out there or understanding who we can project abroad?

Sheridan Kearnan: I think one of the real challenges is understanding other markets and finding where the opportunities are. If you just try and think about it in terms of issues of scale, understanding the Australian market is small compared to trying to navigate the world market, so that really is where the challenge is. As part of the export strategy, there's going to be quite a lot of work and effort to try and better position us so that we can support defence industry to diversify into other markets. Obviously this is all in the context of our Export Control Systems, and we'll always be a responsible exporter, but it is trying to just figure out how to do that sort of navigation, so we're developing much closer relationships with Oz Trade to help them work with defence industry.

We'll have presence in post-services where I'm doing much more intense work with defence attaches, so basically it's trying to create a framework in a concentrated area which is much more focused on delivering this as an outcome.

Phil Tarrant: Having myself immersed myself into the development of the Defence Industrial Capability Plan and sovereign capabilities, etc. My message for defence industry would be, if you don't know what's going on, there's plenty of information out there and you can get yourself up to speed pretty quickly on what this is all about and how it will relate to you and your business. That's whether you're a large player within defence industry or a smaller SME. Sheridan, what would be your message to defence industry? Now that we have this big bit of work, crystallised what the Industrial Capability Plan is, we have a true understand now of our sovereign industrial capability priorities, we're well our way. We've done a lot of the hard work, a lot of the strategy behind it now, but what's your message to defence industry?

Sheridan Kearnan: The key message I'd say is that we still have quite a lot of work to do. We have outlined what the sovereign industrial capability priorities are, but from there we need to develop industrial plans and that involves having a better understanding of the industrial base in Australia as well as implementation plans for the sovereign industrial capability priorities. This is a two-way street, so we do need a lot of input and information from defence industry, which is why we're an open door, because as much as we're trying to provide support to defence industry, we also need support back to help us help defence industry better position themselves.

Phil Tarrant: A sort of central content point for your department, the work that you're undertaking, how can defence industry connect with you guys?

Sheridan Kearnan: It's very easy. If you just go to our website, there is actually a portal there where you can email direct to us, and we will have people who are positioned and poised waiting for the conversation to sort of start that engagement. People can reach out to me. I'm always happy to have people come in and have meetings, and we'll continue to get out and about around the country to have the discussions that we need to have.

Phil Tarrant: Yeah, and I've really enjoyed today's discussion. I feel a lot more educated and well-versed around this, but it just reminded me that there is so much more information you need to know, and we'll do our best at defenceconnect.com.au  to help communicate this information, to help you better understand this information and how you can go about grabbing some of these opportunities available to us. The crystallisation of the sovereign industrial capability plans as a business in defence, you can now go out there and you can start targeting or I guess applying a filter against what you do and your capabilities as a business, and how it might fit in with these and the relevance of the stuff that you do, but Sheridan Kearnan, who is the First Assistant Secretary of Defence Industry Policy at the Department of Defence, I really enjoyed the chat. Thank you.

Sheridan Kearnan: Yeah, thank you. I've enjoyed it as well.

Phil Tarrant: If you want to connect in with Sheridan, she mentioned some of the ways to do that. If you've got any questions at all around this particular podcast or you need anymore information, I'm happy to share some of the documentation I have around. It'll give you a bit of a shortcut. You can email the team here at defenceconnect.com.au, but we're going to be doing a lot of work around this as well, running some stories and podcasts over the period ahead, so watch this space. Just visit us at defenceconnect.com.au if you're not yet subscribing to our daily morning market intelligence so you're the first to know what's happening in defence industry and defence. It's defenceconnect.com.au/subscribe. If you're a social media person, you can follow us there, like us, love us, follow us, thumbs up us. Just search defence connect and you'll track us down.

That's it for us today. That's quite a long podcast, but I think we covered a lot of ground, Sheridan, so thanks again. I really enjoyed it. We'll be back again next time. Until then, bye, bye.