Sunday, September 28, 2008

White Paper - the industry policy challenge

With public submissions to Australia's new Defence White Paper due to close on 1 October, I couldn't resist making one myself. There's a copy on my Rumour Control web site, if you're interested - www.rumourcontrol.com.au - click on 'Hot Topics'

My submission makes what to me is a fairly obvious point: a technology-dependent defence force requires a technology-savvy defence industry to support it. But if the Australian Department of Defence doesn't help create a more supportive environment for local manufacturers it risks losing the non-manufacturing skills base required to sustain the Australian Defence Force (ADF).

The Mortimer Review -
http://www.defence.gov.au/publications/mortimerReview.pdf
recommends that the ADF make more use of Military Of The Shelf (MOTS) equipment. The reasons for this are understandable and well argued. But I would argue also that if the Defence Materiel Organisation (DMO) plans to spend $100 billion over the next decade on buying and sustaining equipment for the ADF, then as much of that money as possible should be spent in Australia.

This isn't to say we should try to make all of our own equipment, or that the Australian taxpayer should pay a premium to create and prop up low-value jobs in an uncompetitive defence industry: that way lies madness. But Australia can do more to help its defence manufacturing companies, especially its SMEs, win positions on merit in the global supply chains of the companies which supply the ADF. Defence and the DMO have recognised this and the Team Australia initiative has been fairly successful in programs such as the Joint Strike Fighter.

This is an implicit acknowledgement that the global defence market is not a level laying field: in fact it is deeply distorted and heavily manipulated and governments have an important role to play in ensuring that their defence companies enjoy a fair go. But first they need to acknowledge their self-interest in doing so, and then frame a policy that supports it.

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