Australia has long been plagued by skilled labour and trade shortages, with most of the public’s attention placed firmly on the impact on residential, commercial and infrastructure construction. However, as the government’s $200 billion defence recapitalisation program gathers pace, does Australia have enough skilled labour to deliver and sustain these programs over the long term?
Robust, innovative and globally competitive industry is critical to any national security equation. Clearly identifying and supporting the strategic industries Australia needs for prolonged national security supports the development of a holistic national security strategy.
The record $200 billion investment and recapitalisation of the Australian Defence Force is serving as a major catalyst for the Australian defence industry, with the $95 billion shipbuilding plan, the $5.2 billion LAND 400 Phase 2, and $10 billion to 15 billion LAND 400 Phase 3 programs, which will see a massive upswing in Australian Industry Content and development of an advanced manufacturing workforce.
Supporting this program is the Defence Industrial Capability Plan, which identifies the government’s long-term vision to build and develop a robust, resilient and internationally competitive Australian defence industry base that is better able to help meet defence capability requirements.
The Defence Industrial Capability Plan sets out a comprehensive plan for Australia’s defence industry. The government is investing in Australia’s defence industry and ensuring that it is positioned to support delivery of the Integrated Investment Program over the next decade.
The plan acknowledges that as Australia builds its defence capability, we must also grow our defence industrial capability. By 2028, Australia will require a larger, more capable and prepared Australian defence industry that has the resident skills, expertise, technology, intellectual property and infrastructure to:
- enable the conduct of ADF operations today;
- support the acquisition, operation and sustainment of future defence capability; and
- provide the national support base for Defence to meet current needs and to surge if Australia’s strategic circumstances require it.
Further supporting the development of the nation’s advanced industrial capabilities is the Defence Export Strategy, which is designed to “achieve greater export success to build a stronger, more sustainable and more globally competitive Australian defence industry to support Australia’s Defence capability needs” by 2028, which is supported by five key objectives:
- Strengthen the partnership between the Australian government and industry to pursue defence export opportunities.
- Sustain Australia’s defence industrial capabilities across peaks and troughs in domestic demand.
- Enable greater innovation and productivity in Australia’s defence industry to deliver world-leading Defence capabilities.
- Maintain the capability edge of the Australian Defence Force and leverage Defence capability development for export opportunities.
- Grow Australia’s defence industry to become a top 10 global defence exporter.
The strategy provides $20 million in additional annual funding from 2018-19 to support Australia’s defence exports. A new Australian Defence Export Office will be created within the Department of Defence to provide a focal point for defence exports and drive implementation of the strategy.
However, despite these well-developed and articulated policy agendas, the elephant in the room is the size, capacity and ability of Australia’s skilled labour and trade-based workforce, which has long been plagued by a series of skills shortages.
This raises an important question: does Australia have the skilled labour force to adequately support the existing and immediate requirements of the ambitious defence industry plan, and can it maintain such a workforce without draining necessary skills from other areas of the national economy?
Limited supply, growing demand
As the Commonwealth government commits to record levels of both defence and infrastructure spending, combined with the residential and commercial building markets, particularly in NSW and Victoria, but with similar growth in Queensland and to a lesser extent Western Australia, the nation will no doubt face an exacerbated skilled labour shortage.
While much has been made about the potential for job losses in South Australia in particular around the projected delivery time frame of major projects like the Hunter Class and Attack Class programs and the Collins Class full-cycle docking program, other programs like the LAND 400 program and, of equal importance, the broader supply chain could face severe personnel shortages, placing a premium on skilled labour.
Responding to these challenges, it is increasingly necessary for the Commonwealth, states and territories to introduce a comprehensive suite of policies to support the development of the key skills that the Australian economy will require moving into the 21st century, with a focus on Industry 4.0, leveraging the world-leading capabilities of Australian industry.
A role for Industry 4.0
Despite Australia’s widely recognised position as providing a world-leading research and development capacity – supported by both private and public sector R&D programs driven by organisations like the CSIRO – traditional areas of high wage costs and low productivity in Australia’s manufacturing industry (exemplified in the failure of Australia’s domestic car industry and in the series of cost overruns and delivery delays on both the Collins and Hobart Class programs) have characterised Australia’s reputation as a manufacturing economy.
Enter Industry 4.0, the combination of additive manufacturing, automated manufacturing and data sharing, with a coherent National Strategic Industry development policy that can compensate for, and in some cases overcome, the traditional hindrances faced by the Australian economy, with public-private collaboration essential to ensuring the long-term sustainability and success of Australia’s defence industrial base and broader manufacturing economy.
While industry largely provides the technological expertise, government policy provides the certainty for investment – particularly when supported by elements of Australia’s innovation and science agenda, combined with grant allocation and targeted, contractual tax incentives (signed between the Commonwealth and the company as a memorandum of understanding) linked to a combination of long-term, skilled local job creation, foreign contract success, local industry content, and research and development programs, which are critical components that can be used to empower and enhance the overall competitiveness.
Establishing and implementing a cohesive, innovative and long-term vision for Australia’s sovereign industry capability can also serve as the basis for developing, and in some cases redeveloping, a robust, advanced manufacturing economy taking advantage of Australia’s unrivalled resource wealth – supporting the broader national security and interests in the Indo-Pacific.
Increasing the quantity and quality of Australia’s skilled labour market, particularly in the more traditional blue collar manufacturing area is a key component of ensuring that both the government’s Defence Industry Capability Plan and recapitalisation programs are capable of sustaining the nation’s next-generation capabilities throughout the life cycle, without sapping such skills from the broader economy.
Industry 4.0 and the advanced manufacturing revolution also serve as an integral part of the equation to solve Australia’s workforce participation and should be factored into the conversation in conjunction with enabling greater access to critical tertiary and vocational training and qualifications.