What exactly do industry groups do on a day to day basis to get the bigger picture across? ADM Editor Katherine Ziesing spoke to Defence Teaming Centre CEO Chris Burns to find out what makes the DTC tick and how the new government will affect Defence industry amongst other things.
ADM: What makes the Defence Teaming Centre different to other industry bodies such as the Australian Industry Defence Network (AIDN) or Ai Group? Burns: We have a very strong team of nine very capable people and that gives us a significant capability, it sets us apart from other organisations. Having that capability allows us to support our members and the industry through the provision of services like: market intelligence, opportunity identification, business to business matching, networking, advocacy, workforce enhancement, leadership training and enterprise improvement.
We’ve got a very strong membership base that is very, very collegiate, and we have a strong supporter in the South Australian government. We actually deliver projects for the state government, which enables them to achieve the state’s strategic objectives and they compensate us for that. Having said all that, we are the South Australian branch of AIDN
ADM: What impact, if any, are you envisaging as a result of the Federal election – i.e. lobbying a coalition federal government for Defence work in a Labor-run state? Burns: In terms of a Labor run state, we are very strongly supported from a bipartisan perspective in South Australia so politics don’t really come into play for us. Our challenge is that for the last four to five years, Defence has had nearly $25 billion ripped out of the its budget and whilst that has had a significant economic impact on the national Defence industry, it’s also caused a loss of confidence in the industry.
But with the new government all indications are good. They’ve said that they’re going to try and get Defence back up to two per cent of GDP and that’s very positive. And whilst they are clearly going to be well disciplined and very deliberate in developing the next White Paper and Defence Capability Plan (DCP), it will be a real challenge for industry if they take the full 18 months that they’ve said they will take to develop and release those documents.
ADM: What would you like to see come out the next round of major government documents such as the White Paper, updated DCP and industry policy statement? Burns: First of all we want to see the White Paper and DCP as soon as possible. Time is really catching up with us at the moment and we need a cogent and reliable DCP that is fully funded in order for industry to rebuild that confidence, move forward and get on with delivering capability to Defence.
The sooner that happens the better and I can talk about our shipbuilding issue at the moment. There are shipbuilding yards in other states that are looking at laying off their entire workforce and in time that can happen to South Australia too. Indeed, even in South Australia some of the workforce has already been laid off. Time is truly against us. So it’s a matter of getting a White Paper and the DCP out as soon as possible.
In terms of an industry policy statement, it’s always perplexed me why we have to have a separate Defence industry policy statement. The last one came out in 2010 and it wasn’t a great document. Defence industry shouldn’t be seen as separate from Defence. Defence industry is about delivering the ADF the capability it requires.
You need Defence industry as a fundamental input to capability. But if you want to state a policy about Defence industry, it should be in the White Paper - that’s your policy statement. Why does industry need a separate policy statement?
ADM: What do you see as the major reasons behind South Australia’s primacy as the Defence state? Burns: I think the state recognised the importance of Defence and Defence industry to the state and has made some significant investments to not only the physical infrastructure but also the intellectual infrastructure of the state, to set it up as a Defence state.
It didn’t happen by accident. And it did take a significant investment of resources and that’s now being effective. We have 25 per cent of Defence’s indigenous spend in the state and 30 per cent of the national Defence industry workforce. So it’s the result of a very conscious and deliberate plan investing in the physical and intellectual infrastructure such that we do have the capability, and it’s not bad for a state that only has eight per cent of the nation’s population.
ADM: On a day-to-day basis, what does that relationship look like between yourselves and the State Government? Burns: Here in South Australia, we’re the only state that has Defence and Defence industry objectives in the same strategic vein as any other important economic fundamental.
We’re the only state that has a Minister and a Shadow Minister for Defence Industries. We’re the only state that has a government agency focused on Defence like Defence SA. We’re the only state that has a Defence industry body like ours. Within that construct it’s very easy to work with the state government because we all have a common purpose about making sure we have the most capable and competitive Defence industry.
And by virtue of that close relationship we clearly delineate whose responsibilities. So, it’s for the state government to attract Defence and Defence industry along with Defence work to the state and once they get to the state, that’s when we as the DTC step up and help the industry to be more successful.
ADM: How important is continued Federal assistance to South Australia’s car industry for potential South Australian work on Land 400? Burns: It’s critical. The automotive industry in South Australia is the foundation of our advanced manufacturing capability. If we lose that industry it’ll be very difficult for the small and medium enterprises that support the automotive and Defence industries to maintain the workflow and skills base. Land 400 is a great opportunity for the industry in South Australia, but it will rely on a national manufacturing capability; it can’t be done by one state. And the nation’s automotive industry is critical for the success of Land 400.
I truly believe that people shouldn’t get upset about how much our government’s subsidies the automotive industry. When you compare how much subsidy is going to the automotive industries in other countries, we’re extremely modest.
Our subsidies to the automotive industry are quite miniscule compared to other countries. And you can’t discuss subsidising the automotive industry in isolation of the fact that that industry returns a lot more benefit back to the economy, not only in dollars but also in jobs. ADM: Do you think that that subsidy program will continue given what’s happened in Victoria? Burns: I hope it does. It’s potentially a house of cards. If we lose the manufacturing capability in the automotive industry, the toolmakers and smaller companies that support GMH Holden in Adelaide, won’t get enough work from the other industry sectors and that will just make it more and more difficult for them to survive.
ADM: South Australia has been very active on shaping the debate when it comes to the future of the national shipbuilding industry. How successful would you say that campaign has been? Burns: I think it’s been very successful. As an island nation, to have a naval shipbuilding industry is critical to the nation’s future security and the prosperity of the nation. Whilst we as a state might have been successful, we realise that a naval shipbuilding industry can’t live in one state.
It’s a national capability and we’re in an ideal position to deliver that capability, but we need to all work together and need to understand that that capability is under serious threat at the moment because once the Air Warfare Destroyer program ends we’ve got nothing to sustain that industry beyond the Air Warfare Destroyer until we want to build the future submarines.
We’re really got to have reexamine naval shipbuilding. Firstly I think we should get out of the habit of talking about building 12 submarines for $39 billion. We need to get in the habit of talking about a continuous plan to build a submarine every two years and we’ll also build a warship every two years for example.
ADM: Do you see those two elements working together - the Defence capability required by the ADF and the needs of Defence industry? Burns: Yes, I do. The industry is about delivering capability to the Defence force first and foremost; it’s not about making jobs, it’s not about keeping industry alive. If there isn’t a need for the industry then you shouldn’t just sustain it. But what there’s got to be is the confidence and the consistency of demand to make sure that we maintain a skills base so that we can not only build the capability but we can also maintain it through its life.
If you look at the end of the Anzac frigate program, the build program alone was $5.6 billion but it returned $7.5 billion to the economy. We’ve got to recognise what the value of it is to the total economy, by having a reliable shipbuilding community here in Australia.
ADM: What do you see are the differences between ‘made in South Australia’ and ‘assembled in South Australia’ in terms of the Future Submarine program? Burns: Well that goes to the last question that no one state can be the naval shipbuilding state. Naval shipbuilding is a national capability. We could never build a future submarine all in South Australia, nor will we build warships all in South Australia. “Made in South Australia” can’t happen. What it’s got to be is assembly in South Australia. The infrastructure exists both physically and intellectually to be assembling all the future submarines in South Australia, but the work will have to be spread throughout the country because that’s where the capability exists; across the nation.
We won’t label it made in South Australia but we’ll definitely assemble and consolidate in South Australia.
ADM: What other manufacturing programs are on the horizon for South Australia, beyond shipbuilding and Land 400? Burns: The other big thing we’re doing in South Australia is airborne maritime surveillance and at Edinburgh we have got P-3 Orions but we also have Cobham Aviation who operate the border protection aircraft. Maintaining that capability is hugely important for the nation and given that the P-3 Orions in the future will be replaced by the P-8 Poseidon and uninhabited aerial vehicles that will be based in South Australia.
It’s not just about building and maintaining a plane or platform. That’s important but its the systems that go on board them are what matches our industry capability. We’ve got a tremendous capability for systems engineering, systems integration and maintaining sensor systems and that’s where the opportunities lie for South Australian Defence industry in terms of the airborne maritime surveillance.
There’s lots of opportunity in terms of communications and C4I with companies like Codan who are producing highly advanced innovative systems, integrated C2 systems like those produced by SAAB, electronic warfare, and even cyber security in the future are all going to be hugely important to us.
We also have the DSTO, or half of Australia’s Defence research and development out at Edinburgh. That research and development, the experimentation, the modelling, simulation, and the training environment; they’re the areas I see us going in the future.
ADM: What do you think are the best and worst case scenarios for Defence industry over the next 3-5 years? Burns: Best case? In terms of shipbuilding, we recognise the implications of the value of the capability and the government makes the decision to develop a continuous flow of ship and submarine building based on what I said before – a ship every two years, a submarine every two years for example. For South Australia that’s absolutely critical but it’s also critical for the nation.
The worst case is if the economic rationalists in Canberra prevail and continue to fail to recognise the value to the nation of having a Defence industry and continue to fail to recognise that the bulk of the effort is in throughlife support.
If we lose our shipbuilding capability here in the country and the economic rationalists prevail and we just go offshore and buy everything from a Defence perspective, and that will dumb down our nation completely. The next generations of engineers don’t want to be taking black boxes out and sending them back to America and then putting another black box in.
