Defence Industry Development Strategy

Defence plans to invest $270 billion dollars in new, advanced capabilities over the next decade, including around $3 billion dollars directly on defence innovation. These major investments provide a unique opportunity to develop sovereign industrial capability, a more advanced manufacturing sector, and secure, decent, long-term jobs for Australians.

Effort needs to be focused on delivering and maintaining the equipment our forces need, and supporting our defence personnel, in an increasingly challenging international environment. The best way to do this, while ensuring Australia receives the greatest jobs and investment benefits, is to make sure these investments grow and strengthen our local defence industry capability.

Yet the Government has failed to leverage the Defence acquisitions spend for the development of jobs. It has made a series of confusing commitments on local content. It is not serious about developing Australia industry capability and it lacks an effective plan for doing so.

This is best evidenced by the Attack Class submarine project. First, Tony Abbott wanted to buy them ‘off the shelf’ from Japan. Then his Defence Minister, David Johnston, told Australian shipbuilding workers they couldn’t be trusted to build a canoe. Christopher Pyne promised the submarines would be built in Australia, with 90 percent of the work done locally. Then he revised that, saying 60 percent of the build would be local. The government initially signed the Strategic Partnering Agreement with no Australian content requirements. Linda Reynolds re-negotiated for 60 percent. Then she told us that this will be 60 percent of the contract value, not the build, enabling things like hotel accommodation and French lessons to be included.

Finally, the government cancelled the project altogether, setting back years of effort by Australian firms to prepare for participation in this project. Instead, it has announced the intention to acquire nuclear-propelled submarines and promised to build them in Adelaide with little further reliable detail. Australian firms have been left in the dark.

Australian companies have proven that they can deliver world class products and services, and over 30,000 Australians are employed in the defence sector. But we can and we must do much more.

Labor will implement a new strategy delivering concrete rules and plans to maximise local content, leveraging the defence capability investment pipeline to develop sovereign industrial and research capabilities, and build-up the skills and expertise of the Australian workforce.

We will negotiate appropriate, specific, enforceable and audited Australian Industry Content (AIC) commitments into the contractual arrangements for all major defence materiel procurements and local defence contracts. We will also ensure transparent public disclosure of AIC commitments.

Labor will ensure that AIC commitments are regularly reviewed by a body independent of procurement decisions, and that appropriate contract measures are built in from the get-go to enable auditing through the supply chain and to deal with breaches of these commitments. This is in stark contrast to the approach of the Morrison Government, which has relied on self-reporting and is now focussed on a retrospective review process that is too little and too late.

The main beneficiaries of the measure will be Australian defence industry companies who are directly contracted to do the work. However, Labor will also ensure other Australian firms benefit, whether they support defence contractors or adapt defence sector knowledge and innovations for broader civilian application.