Defence industry capability – creating a new boom in Australia

| September 22, 2016

At the recent GAP Summit the Honourable Christopher Pyne MP spoke about his new role as Minister for Defence Industry and how it is impacted by the innovation agenda.

I would like to acknowledge of course the Prime Minister of Australia Malcolm Turnbull and Lucy Turnbull, my parliamentary colleague Anthony Roberts, my ministerial colleague and my former colleague, Philip Ruddock, and I think Arthur Sinodinos is also here. Yes, welcome to you, Arthur; obviously the Cabinet Secretary. To Brian Schmidt, I think our only Nobel Prize winner in the room at the moment. Not one of the ones that we count for South Australia. Out of the 15 Nobel Prize winners that Australia has produced, five of them are actually from South Australia. I’d rather be responsible for Nobel Prize winners than coffee houses, but I notice that that has become the vignette of the evening, and of course Adelaide is actually the acknowledged capital of coffee in Australia. Anyone who’s been to Adelaide knows that. We created Cibo, we created Rio Coffee, and I have to say Sydney coffee is not nearly as good as Melbourne or Adelaide. It’s just a fact of life.

So thank you very much for having me here tonight to talk a little bit about defence industry and Defence. I know that you’ve had – I’m the fourth speaker, there’s been quite a lot of speakers so I will not speak for too long, but it is a very important part of the Government’s agenda, and it’s worth knowing a little bit about it, because it’s going to be a huge part of not just the next three years of the Turnbull Government but the next few decades in Australia and its development, and particularly of course in innovation, because the future for Defence and defence industry here in this country is massively increasing; our ability, our capability in technology, in innovation and in delivering on the platforms here in this country.

So in February the Government launched the Defence White Paper, the Integrated Investment Program and the Defence Industry Policy Statement, all very ambitious documents. The central ingredient is increasing our defence capability, not just defence industry but defence capability over the next ten years or so by investing $195 billion in that capability. This is a massive task, and for most Australians it’s almost impossible to get their mind around the scale of that task. And most countries around the world are looking at Australia and thinking that would be ambitious in our own country, and it will be very interesting to see if Australia is able to do the many faceted parts of the Defence White Paper, the Integrated Investment Program, the Defence Industry Policy Statement.

Just to put it in perspective, we’re going to build 54 vessels over the next several decades. Twelve offshore patrol vessels, nine Future Frigates, 21 Pacific Patrol Vessels, 12 submarines. The submarine program alone is $50 billion. The Future Frigates is $35 billion. The total altogether is about $90 billion. So beyond that $90 billion, we’re also upgrading all the bases in Australia, all the ranges, investing enormously in cyber security, which is a big part of the future in terms of warfare and ensuring that we avoid warfare by having important capabilities in cyber security.

We’re increasing the ADF, the Australian Defence Force to the largest level of members since 1993, to about 63,000. So this is a big task, and it’s very important to get it right, and I believe that we can get it right. We also have to implement the Centre for Defence Industry Capability, which will be in Adelaide, and that will be responsible for the Defence Innovation Hub. The Defence Innovation Hub’s job is to take new technologies and good ideas from the beginning stages through production through to services being delivered, products being delivered. The Next Generation Technologies Fund will be run by the DSTG, the Defence Science and Technology Group so that they can find out what their own technologies are that have the capacity for commercialisation, but also what else is out there in the market, fund those, support those to the Defence Innovation Hub stage and then the Centre for Defence Industry Capability is to get them out into the marketplace, into creating jobs, growth, exports for Australia.

We have some fantastic success stories in technology, in innovation, in defence industries, but we have not been great exporters of those amazing things that we’ve been able to produce. We’ve been very reticent about exporting, and we’ve had something of a cultural cringe about Australia’s capability versus the United States or versus the European Union. We’ve often taken their off-the-shelf products rather than develop our own, but one of the purposes of having this enormous investment is to build our defence capability and our defence industry capability into a sovereign capability, because there are serious pressures in our region and around the world. Very obviously, there are pressures in our region. Not just the South China Sea, but the relationships between some of the major nations of the region in which we find ourselves situated, and we have to play our part as a good partner, as a good ally, in being able to assist – as we’ve always been able to in the past in operations. As we are doing right now in Iraq and Afghanistan and elsewhere, in the Middle East. Our partners and our allies, like the United States for example, need to know that Australia can make a significant contribution, far beyond what you’d expect because of our size being 24 million people, and we have been able to do that, but the countries in our region are investing a great deal more in their defence capability than they were, and we need to not only keep up, we need to get in front, to ensure that we are a good partner and a good ally.

We have important international and national interests to defend, to press overseas. We support an international rules-based order, which has been consistently the case since the Second World War. Australia’s been a big part of that. There are countries in the world right now who don’t want to support an international-rules based order, and by that of course I mean countries who abide by international decisions about the right of free passage, the right of navigation through the sea, which is one of the pressures that we face in our region.

So the purpose of all of this investment is not only to create jobs – which it will – and to create growth in our economy – which it will – and help in the transition from the mining boom and the construction phase of the mining boom to the new phase of the mining boom, the extraction phase, but to create a new boom in Australia, which is the defence industry boom, which enhances my ideas boom when I was responsible for National Innovation Science Agenda.

I appear to be responsible for all the new booms that happen in Australia!

It will do all of those things, but it will also do some other very important things. This investment, Malcolm’s absolutely determined that we spend as much of this investment as we can in Australia. We will not, of course, have second-rate decisions that are not good for our national interests or our defence capabilities. That will not be our intention. But we have put the effort in that we are now going to put in, to see what we can do in Australia by making those investments, because those industries will be highly innovative and very valuable. They’ll drive technology change. They’ll create the kinds of jobs that Brian Schmidt was talking about, and the ANU will turn out and other universities will turn out the kinds of people that will be working in these industries. These high technology, advanced manufacturing industries. Lots of people who’ll be working in these industries will be people with PhDs, people with mathematics majors.

So we have an enormous challenge ahead in this country, in terms of the skills base through science, technology, engineering and maths that we have not invested in because of the way we’ve allowed people to get into university. Because of the proliferation of subjects at schools. Decisions we’ve made over the last several decades – or the State and Territory Governments have also made – have meant that we haven’t got the skills base that we need to be able to do this job. So the Turnbull Government will have to invest in that as well.

So there are many moving parts to this particular challenge that the Prime Minister has given me. I’m very much looking forward to it. I hope I have the energy to be able to bring it about, and it’s a very important legacy, because it’ll last well beyond the time that I’m a minister in a Turnbull Government. For decades, these decisions will be being made and the benefits will be delivered, but how we set that up now at the beginning of the process is critically important to staying on schedule, hopefully staying within budget.

There’s a tendency, of course, with big projects, to think that you can take some time now because you can make it up later. Well, we will not be able to do that because of the ambition of the scale of what we’re doing. So thank you very much for having me.

It’s great to be back at Global Access Partners again with Catherine and Peter. I’ve spoken at the last several Summits, and I’m very pleased to be here to support it again. It does an important job, and I always look forward to getting the papers after tomorrow’s deliberations. I feel I know many of you already, looking around, and thank you for what you’re doing for Australia, and let’s hope together as a team we can do even more for our country over the years ahead. Thank you very much.



  1. Alan Stevenson

    Alan Stevenson

    September 26, 2016 at 7:03 am

    Defense Industry Capability

    We, as a nation, have the proven ability to improve, invent and sustain cutting edge technologies. However, we are not capable of building complex structures which will withstand time. I served in the Royal Australian Navy for some time and know that the ships built in South Australia were substandard. The watertight doors allowed cockroaches to migrate without effort; the welding was such that large gaps appeared in the superstructure in heavy seas, etc. The Collins Class submarines spend more time in dock than at sea. The new submarines we are buying from France are having to be retrograded from atomic power to diesel which they were not designed for (vibration, etc). As a nation we are not strong – the Indonesian navy has a greater total tonnage that ours – and yet we are spending 90 billion dollars on upgrading our capabilty. Surely this money could be better spent elsewhere while we make friends with our neighbours through diplomatic efforts. The American presidency is not looking strong for the forseeable future – a liar or an idiot! We must learn to stand on our own feet in this neighbourhood. The hand of friendship is about all we have to offer – let's do it with as much sincerity as we can muster.

    • Max Thomas

      Max Thomas

      November 23, 2016 at 5:10 am

      If words were weapons…

      An old uncle who served on the Kokoda Track used to tell us that Australia's defence consisted of a .303 rifle and a tin boat. "Gawd 'elp us if we get attacked on a weekend and someone's borrowed the tinny to go shootin'." In no-time we've gone from former Defence Minister David Johnston saying he wouldn't trust the government's own shipbuilding firm to "build a canoe" to the present Minister for Defence Industries saying: "We have some fantastic success stories in technology, in innovation, in defence industries, but we have not been great exporters of those amazing things that we've been able to produce." I'm with you Alan, we have to take a more independent stand and that must include doing a lot better at engaging in meaningful relations with our neighbours.