The election of the Coalition in 2013 saw a major shake up in the way Defence was approached by government – following what the Coalition describes as six years of neglect under the tumultuous Rudd/Gillard/Rudd governments – the newly formed government sought to create an environment of stability and consistency for Defence with a number of key policy objectives.
Central to this was the commitment to return Australia's defence expenditure to 2 per cent of GDP following what both Prime Minister Scott Morrison and retiring-Defence Minister Christopher Pyne explain as a 10 per cent reduction in real terms in the last year (FY2012-13) of the previous government – resulting in Defence investment falling to its lowest levels since 1938.
The Coalition has used this relatively short election campaign to sell its credentials on defence and national security – with the FY2019-20 budget serving as the culmination for what became "business as usual" for Defence and defence industry under the Coalition – despite its own internal leadership challenges.
Funding wasn't the only major areas of focus for the Coalition since coming to office in 201. The Coalition has sought to develop and implement a range of policy papers, beginning with the foundational document – the 2016 Defence White Paper (DWP) – and its supporting Integrated Investment and Naval Shipbuilding Plans and the Defence Export Strategy to support the broader domestic and international capabilities of Australia's defence and industrial capabilities.
Setting the context - DWP and the defence industry development plans
The 2016 Defence White Paper outlines a plan for a renewed and reinvigorated period of Australian involvement in the rapidly shifting geo-political and strategic balance of power currently sweeping through the Indo-Pacific.
The 2016 DWP and the Coalition budgets since 2013 have sought to expand Australia's material capability to act as a regional security benefacto. This focus on delivering a series of major capability upgrades and modernisation programs across the Australian Defence Force includes:
- The delivery of the first unit as part of the $5.2 billion LAND 400 Phase 2 Boxer Combat Reconnaissance Vehicles;
- Industry partners presented their bids as part of the $10-15 billion LAND 400 Phase 3 Armoured Fighting Vehicle program;
- The announcement of BAE Systems Australia as the successful tender for the $35 billion SEA 5000 Hunter Class guided missile frigate program;
- Construction commencement and milestones at the $535 million SEA 5000 Shipyard facility at Osborne, South Australia;
- The arrival of Australia's first two Lockheed Martin F-35A Joint Strike Fighters; and
- The signing of the Strategic Partnership Agreement (SPA) between Naval Group and the Commonwealth and the Framework Agreement between Naval Group and ASC as part of the $$50 billion SEA 1000 Attack Class future submarine program.
Defence industry export has also been a primary focus of the coalition government, with new Defence Industry Minister Linda Reynolds recently announcing a renewed Industry Participation Plan to build on the success of the government’s Australian Industry Capability Program and Local Industry Capability Plan initiative but extends the requirement to consider opportunities for Australian industry to all Defence procurements of $4 million and above ($7.5 million for construction).
The government has confirmed over the next decade to 2028-29 the government will invest more than $200 billion in defence capabilities, including:
- The continuous naval shipbuilding program, which is investing around $90 billion to build world-class vessels, while also building a strong and viable Australian naval shipbuilding industry;
- Continuing the purchase of the fifth-generation F-35 Joint Strike Fighter and P-8A Poseidon maritime surveillance aircraft to provide Australia with regionally superior combat and maritime surveillance capabilities;
- Continuing to upgrade the EA-18G Growler electronic attack aircraft and E-7A Wedgetail battlespace management aircraft; and
- Building Australia's policy and intelligence capabilities to ensure Australia has a deeper understanding of the changing geo-political environment.
Election sweeteners and committing to industry growth as critical support
A Minister Pyne and Minister Reynolds release explained, "Labor’s failure to commission these important projects led to the workforce ‘valley of death’ and the loss of thousands of jobs in Adelaide and across the country. The Coalition has acted decisively since 2013 to increase Defence spending, build up our military capability, and create tens of thousands of jobs for Australians through our revitalised sovereign defence industry."
The Coalition has drawn on the announcements outlined in the 2016 Defence White Paper (DWP) and supporting Integrated Investment and Naval Shipbuilding Plans to set the tone for its record for managing the defence portfolio – focusing on responding to regional tensions and forging a path forward, following nearly two decades of 'valleys of death', cost and delivery overruns and shrinking defence budgets.
In addition to the existing sovereign industry capability plan, the government plans to introduce a number of industry support programs, including:
- Implementing the Defence Industry Skilling and Science, Technology, Engineering and Mathematics (STEM) Strategy, released by the government in February 2019, which outlines support to help the local defence industry to meet anticipated workforce and skills demand over the next decade;
- Establishing the Defence Global Competitiveness Grant program, an initiative of the Defence Export Strategy (launched in January 2018), investing up to $4.1 million a year to support small to medium enterprises to overcome barriers in accessing export opportunities;
- The establishment of the Sovereign Industrial Capability Grant program, a key initiative of the Defence Industrial Capability Plan (launched in November 2018), to invest up to $17 million per year in grants to build the capacity and capability of Australian small to medium-sized enterprises to deliver operationally critical capability for Defence;
- Providing advisory and facilitation services through the Centre for Defence Industry Capability for 550 small and medium enterprises, issuing over $3 million in grants and conducted stakeholder outreach events that have been delivered to more than 5,000 participants; and
- Administering the Defence Innovation Hub, which has received over 800 innovation proposals and awarded around $100 million in contracts and an additional 12 special notice contracts worth around $10 million focused on specific capability challenges.
Changing regional realities need expenditure recalculations
While the continued defence budget growth is expected to be widely welcomed by industry, the growing challenges to the Indo-Pacific region are raising questions about whether Australia's commitment to 2 per cent of GDP is suitable to support the growing role and responsibilities that Australia will be required to undertake as regional security load sharing between the US and allies becomes a reality.
Dr Malcolm Davis of the Australian Strategic Policy Institute (ASPI) reinforced this, telling Defence Connect at the Avalon Airshow in late February, "The government aspiration of spending 2 per cent of GDP on defence is simply not enough any more. We need to look at planning our force structure, our capability requirements and spending on a number of factors, including allied strengths and potential adversarial capabilities, not arbitrary figures.
"It is time for us to throw open the debate about our force structure. It is time to ask what more do we need to do and what do we need to be capable of doing."
The Coalition reinforced its reminder to Australia's defence industry, saying, "The Coalition government has spent the last six years restoring Labor’s unprecedented cuts to Defence funding and reversing their failure to commit to a single Australian-built naval vessel. We have restored confidence in our defence industry and grown our high-tech manufacturing sector ... Labor must commit to the Coalition’s defence industry policies, which are seeing Australia’s defence industry boom and thousands of new high-paying jobs being created."