As I write these words in late November, I’m not long home from the Indo Pacific Maritime Exposition in Sydney. One of the major things that struck me over the course of the three-day event was the level of frustration at the present paralysis within the Defence acquisition process.
This frustration seems to be shared by both the primes and the small to medium businesses alike, and is a sentiment backed up by ADM’s annual Top 40/Top 20 Defence Industry survey (see page 58 of this issue). This year records a 10.5 percent drop in total earnings after almost continuous growth over many years – with the exception of 2019; an increased number of defence businesses declined to participate in the survey this year; and the number of defence tenders coming through each week has effectively slowed to a trickle.
We’re of course also all awaiting the results of the independent review into Navy’s surface fleet – something that won’t be made public until at least the end of the first quarter of next year, and possibly even until after the May budget has been delivered.
It could therefore be another six months before anyone in industry has any clarity about the future of major acquisition programs such as the Hunter-class frigate and Arafura-class offshore patrol vessels. Both are major components of the Commonwealth’s much-vaunted continuous naval shipbuilding program, and both are currently the subject of endless rumours regarding their future. In the meantime, of course, small businesses in particular will continue to hurt.
With no inkling of which projects will move forward, will be re-scoped, or perhaps cancelled altogether, the defence industry supply chains are trying to survive until something – anything – happens.
Even outside the maritime sector, there is no clarity around any Defence project not specifically mentioned in the recent Defence Strategic Review (DSR). How can SMEs survive in this kind of environment? And it’s not just SMEs; the primes rely on smaller businesses for their supply chains and if some of these can’t stay in business – or even decide to leave the defence sector for greener pastures – many major programs will suffer the consequences.
And of course, after the surface fleet review, there’s the Albanese government’s aforementioned National Defence Strategy and the Defence Integrated Investment Program (IIP) to await – so, even if a project has made it through the previous reviews, there will still most likely be uncertainty. If I were a cynic, I’d say the government’s answer to a review is to commission another review.
The paralysis these reviews have fostered already is hardly the way to attract smaller, innovative companies into the defence sector.
Australia’s strategic situation hasn’t improved since the DSR was announced – or released – and, in the meantime, very little has been done to improve our ability to respond to these threats, other than the continuation of some of the projects already in the pipeline from the previous government. For example, Apache and Black Hawk helicopters, C-130J-30 airlifters and HIMARS rocket systems – but even these have limited opportunities for Australian industry participation as all are Foreign Military Sales (FMS) acquisition cases.
If our strategic circumstances are as precarious as we’re being told – and I have no reason to doubt that they are – then time is surely of the essence here and the interminable wait for these reviews is doing nothing to address the problem.
And, as we progress through 2024, the collective minds of this government – and the one in the United States – will be turning to the next election and we can perhaps expect that defence will form only a small part of the respective campaigns. Perhaps more to the point, as this issue closes for press at the end of 2023, US political analysts are giving Donald Trump a 50/50 chance of being returned to power. Then what?
This article first appeared in the December 2023/January 2024 edition of Australian Defence Magazine.