CEO Babcock International Group, Australia & New Zealand
The views reflected in this article are the views of the author and do not necessarily reflect the views of Babcock International Group or those affiliated with it.
Press coverage of Defence estimates hearings, and the more recent announcement regarding the SEA5000 programme, has generated a fair bit of commentary on the Defence sector; notably around the programme risks associated with the 2016 Defence White Paper, ensuring value for money from its considerable investment in the sector and better strategies to achieve the best outcomes, for the nation.
As a relative newcomer to Australia, and having worked in several other defence economies – including previously running Babcock’s UK defence business – I’d like to offer a few thoughts on defence investment.
Putting your money where your mouth is
I arrived in Australia midway through 2016, about four months after the White Paper was published. At that time, the defence community was clearly excited by the $195 billion investment in the sector, planned out in a clear and articulate way, programme by programme. There was also a fair degree of debate about percentages of Australian content (a theoretical minefield in its own right!), some well-intentioned exchanges about ‘value for money’ and a chattering of disruptive soundbites from populist elements.
None of this surprised me. When a government makes such a massive commitment of its taxpayers’ dollars, it is only natural (and democratic) that those taxpayers should express their opinion.
What did surprise me is how quickly we moved from this broad, freehand debate to a coherent construct of policies and plans; all underpinned by the rapid establishment of key enablers, such as the Defence Innovation Hub, the Next Generation Technologies Fund and the Centre for Defence Industrial Capability – each of which is already making specific contributions to the establishment of a sustainable Australian defence industrial base.
In a remarkably short time frame, Australia has gone from the grand designs of a White Paper to establishing the critical framework that will both upgrade its national defence capabilities and deliver an economic dividend; this latter creating jobs, enhancing industries and expanding supply chains, across the nation.
To put it bluntly, I can’t think of another nation in peacetime that has travelled this far, so quickly. Typically, Defence White Papers are defunded, or at least defanged, relatively soon after they are published; often for political reasons, and often completely unrelated to “Defence” itself.
In my view, the genuine commitment of nearly $200 billion to defence and national security is the sign of a stable, prosperous and confident nation who’s Administration has the foresight, insight and political courage to demand a sustainable, macro-economic return from the very considerable investment of its taxpayers’ dollars. I call that transformational, a firm foundation of the ongoing modernisation and diversification of the Australian economy.
Regenerating State economies
As the milestone programmes are now being rolled out, we are also seeing how the ‘defence dividend’ can develop State economies. Take the Naval Shipbuilding Plan as an example. This is not only the means of giving the Royal Australian Navy the capabilities it needs to deal with future threat scenarios, it is also a direct investment in the future of South Australia. Shipbuilding will give that State the potential to retrain, redeploy and massively grow its existing industrial skills base, to become an advanced manufacturing powerhouse with global reach. The Land 400 programme presents a similar opportunity for Queensland.
And these capabilities and industries are not just being built with taxpayer’s money. The political commitment behind the White Paper gives international companies like Babcock the confidence to invest in their existing Australian businesses, with a view to becoming part of developing the nation’s defence industrial base.
For example, since the Defence White Paper, Babcock has made the Adelaide CBD our regional Asia Pacific home: head office to our defence, emergency services, oil & gas and asset management businesses, across Australia, New Zealand and South East Asia. In less than a year, we have doubled our floor space in Adelaide, and we have significantly grown our headcount, nationwide.
And we are not stopping there. As part of our contribution to Australia’s current and future submarine capability, we plan to invest in a new, purpose-built facility in Osborne. This will ensure not only that we continue to support ASC in maintaining the Collins Class submarines very high operational availability – for as long as it takes – but also that the sovereign elements of the Future Submarine will be grounded and cemented (literally!) here in Australia.
And it’s not just Babcock; BAE Systems’ announcements following its selection as Preferred Bidder for the SEA5000 programme illustrate both the enormous potential for its expanded Australian supply chain, and the investment that the company will make in South Australia.
Supporting SMEs & Skills
As SEA5000 demonstrates, the burgeoning defence industry offers new opportunities for Australian SMEs to diversify into this growth market. The aforementioned key enablers – such as the Centre for Defence Industry Capability – are already connecting businesses with Defence majors, as well as acting as conduits for advice, funding and innovation.
However, those interested need to understand the demands of defence procurement; including the stipulations of ASDEFCON tendering & contracting, the need for balance sheet resilience and the importance of workforce diversity. This won’t be a free, or even an easy, ride. Prime contractors like Babcock and BAES have a responsibility to help the SMEs who make up our local supply chains to make the transition into the exacting world of defence contracting. And we can do the same with the education sector, making sure that all participants have access to people with the necessary skills, qualifications and experience.
If industry links hands, and Australia can avoid the mistakes of other jurisdictions, then the Government’s ambitions will be realised and the nation will benefit from a long-term, sustainable and exportable defence industry.