Address to Pacific 2012

Senator Kim Carr
Minister for Manufacturing
Minister for Defence Materiel

 

1 February 2012
Sydney Convention and Exhibition Centre

Darling Harbour

 

[check against delivery]

 

It is a great pleasure to join you at Pacific 2012

I saw a reference in the press to this being my maiden performance here.

I was a little amused to see it. I’ve been to this event many times, and I know many of the companies here today.

I share with you a long-standing commitment to Australian manufacturing.

That commitment stands firm across my two portfolios – manufacturing and defence materiel.

These are not separate concerns.

And that has been the approach of this Government for a long time.

Manufacturing, to us, is not just a business or a sector of the economy.

Manufacturing is at the heart of the society we want to be.

A society that’s technologically advanced, creative and innovative.

A society that values blue-collar skills and high-wage jobs.

A society that spreads prosperity to all.

In today’s context, a society that can provide security for its people.

All these goals are one with the great project of industrial progress.

None of them can be achieved without the capabilities built in manufacturing. They serve our defence forces, just as they serve society.

So I have been involved in defence procurement for a long time.

The Government’s philosophy on procurement is simple, and it doesn’t matter if you’re speaking as the Minister for Manufacturing or the Minister for Defence Materiel.

There are always arguments about levels of local content in any major projects – resources, infrastructure or defence.

And my default position is clear. At the risk of being too direct, when it comes to buying Australia we can never get enough.

But “Buying Australian” is not on any terms or at any price.

Making sure that local firms get a fair go doesn't mean we give them free kicks to rig the game. Our emphasis is on quality. To achieve this objective we expect Australian firms to be globally competitive.

We expect them to be globally competitive suppliers.

But I reject the simplistic notion that there is an off-the-shelf answer to every problem.

And, I reject the claim that we can have a design and engineering base without local manufacturing capability.

What is more, I reject the view that off-the-shelf and value for money can be used interchangeably; or that the purchase price is the same as the whole-of-life pricing.

By their nature major acquisitions invariably involve large, long-life, technically complex systems.

These systems will require maintenance. They require adaptation to local circumstances. They require local industry. We require people who can do this work.

We need to be confident we have the strength to meet those needs – no matter how they evolve in the future.

We do recognise that there are some essential industrial capabilities that markets just can’t provide on their own.

Government has to help fill the breach.

Our 2009 Defence Industry Policy Statement allocated $446 million to help Australian defence companies be more competition-ready.

This figure doesn't include the Government's research and development support.

In the current economic circumstances, these investments are more contested but more vital than ever.

We are very mindful of the impact of the high dollar on local industry.

It is now trading some forty per cent above the post-float average; and it has been very volatile.

It has moved since May 2011 from 95 cents US dollar to $1.10.

Yet still we seek export opportunities for our Defence industries.

To achieve this our firms need to be more flexible, more innovative, more knowledge intensive.

That is they need to be globally competitive and overcome the hurdles created by our current currency valuations.

We need to work together to build and sustain capabilities across the board.

The Priority Industry Capability checks are one tool we have to monitor our progress.

I am releasing two more reviews today, covering Combat Clothing and Acoustic Systems and Technologies.

Both confirm that these capabilities are on track.

But they do not remove the need for constant improvement.

This is a fundamental responsibility of government.

We back companies who are prepared to back themselves.

We have to build the conditions so they can invest in their future.

That’s what we’ve been doing with the Defence sector for some time.

We are boosting management and planning for SMEs through the Defence Industry Innovation Centre in Enterprise Connect.

We are building the technology base through the universities and the CRCs.

We are attracting work through the links we can open with the multinational primes.

In this financial year, DMO will spend $10.2 billion. 54 per cent – or around five and a half billion – will be spent in Australia.

70 per cent of that $5.4 billion will channelled initially through eight prime subcontractors. With the exception of ASC, all are subsidiaries of major international companies.

Much of this work is then subcontracted to SMEs.

Australian SME subcontractors are a vital part of the procurement process.

Just as our athletes don't face global competition without training and support, nor should our firms.

We want these firms to grow. We want these firms to integrate more effectively into international supply chains.

They are amongst our smartest and most creative manufacturers.

They deserve our support.

Today we’re announcing a significant expansion of that work, with both Lockheed Martin and BAE signing on to the next step of their involvement in the Global Supply Chain program.

That program has already yielded more than $400 million in contracts for local industry; and that is certain to increase with these companies on board.

The lesson here is clear. Circumstances will change. Opportunities will open.

We must have the capabilities to act when they do.

SKILLS AUSTRALIA PAPER

That leads me to the first initiative I am launching in this role: the Defence Industry Workforce Discussion Paper.

All opportunities ultimately rely on Australians having the wherewithal to seize them.

This is a serious concern for the Defence sector.

On Monday, I visited the ASC (Australian Submarine Corporation) in Adelaide.

And they joked to me that if I were a qualified welder, I wouldn’t be allowed off the site. If I was prepared to read the manual, they’d train me.

The competition for blue-collar skills is that intense.

That is why the Defence Industry Workforce Strategy is so important.

This Discussion Paper maps the priority trades and professions for the defence industry, and the key avenues of skills supply. 

Skills Australia will undertake further analysis of skills gaps in preparing its final report.

I invite you all to be part of this vital work.

You will find the Discussion Paper on the Skills Australia website. Skills Australia will also be holding consultations with stakeholders across Australia in March.

We know our people are capable of great things. And we will ask nothing less of them.

Together, we can give them the opportunities they deserve to express their creativity and ingenuity.

Thank you.