Lack of Australian industry involvement in defence contracting criticised

The Australian Industry & Defence Network (AIDN), has chastised the implementation of the Australian Industry Capability (AIC) Program, for not including Australian manufacturers. With announcements of subcontracts from defence prime contracts going to overseas manufacturers, Lester Sutton, national board chair of AIDN, said that the federal government needed to review the AIC program.

“The current AIC policy framework, established by the Government through the Department of Defence, is well intentioned and has been warmly received by Australian industry. However, the AIC Program as implemented is not facilitating development of sovereign industry capability or business opportunities for the local Australian defence supply chain to the extent envisioned,” said Sutton.

With almost $200 billion of investment outlined as a result of the 2016 Defence White Paper, the potential involvement of local industry was in danger of being minimised, said Sutton.

“Australian industry, particularly small and medium business, is now at risk of losing out on sovereign industry capability, billions of dollars of work, and thousands of local jobs.”

In a statement from AIDN, the network outlined a number of changes that could be made. These included: the creation of an assurance regime to track the delivery of local content in purchase orders, greater enforcement of AIC commitments with penalties for non-compliance, incentives for overseas companies to work with existing Australian businesses, rather than setting up Australian subsidiaries, and Australian industry being immediately involved in the early stages of the Future Submarine and Future Frigate programs.

“Australian industry is not after a hand out, but it wants the opportunity to compete on a level playing field, for the first-of-class of Australian military platforms, otherwise there is a high likelihood Australian industry will be excluded for the life of the platforms – and sovereign industry capability will not be achieved,” said Sutton.

With future programs still at the early stages, Sutton noted that now is the right time to ensure that local businesses have the greatest possible involvement.

“AIDN members are grateful for the significant reform achieved in defence industry policy by the government over the last five years and fully support the drive to generate more local capability and corresponding jobs through the transfer of overseas technology. But we need to ensure the intent and extent of these good policy settings, particularly around AIC, are actually achieved.”