Address to the Illawarra Shoalhaven Defence Industry development conference

I wish to acknowledge the traditional owners of Dharawal Country and pay my respects to Elders past and present.

As the Minister for Defence Industry, I also pay my respects to Aboriginal and Torres Strait Islander men and women who have served our nation in the past and continue to do so today.

Thank you Anna for that introduction, and for the hard work you do on behalf of the people of Shellharbour in the New South Wales Parliament.

I also acknowledge my Federal Colleagues:

The Honourable Stephen Jones MP, Assistant Treasurer and Minister for Financial Services and Member for Whitlam;

Ms Alison Byrnes MP, Member for Cunningham;

Ms Fiona Phillips MP, Member for Gilmore,

Representatives of Wollongong and Shellharbour City Councils;

Members of Defence Industry;

Ladies and Gentlemen:

INTRODUCTION

It’s terrific to be here in Shellharbour with the Airshow underway, and I know the ADF’s fantastic military aviators are looking forward to showcasing their skills in the skies above the region over the course of the event. 

I’d like to thank Adam Zarth, Executive Director of Business Illawarra for the invitation to address you today.

The Business Illawarra team are great champions of local defence businesses, and I thank them for their commitment and their support for the future of the industry in the region.

Defence contributes $1.4 billion dollars to this region and supports more than 2000 jobs, with many more workers in the industries that support and serve the Australian Defence Force (ADF).

HMAS Albatross in Nowra is the home of naval aviation and host to specialised maintenance services that keep our aircraft fit to fly.

The University of Wollongong is the nucleus of a vibrant network of defence innovation that stretches across the region.

And the region’s mighty industrial heritage has been harnessed to provide the specialised armoured steel that protects our soldiers in the field…

with steel plate from Bisalloy currently undergoing qualification for use in the hull of Australia’s SSN-AUKUS conventionally-armed, nuclear powered submarines.

It’s work that the whole region can be proud of.

And it’s the kind of work we need to think about in terms of Australia’s industrial base and our national security.

STRATEGIC CONTEXT

The Defence Strategic Review (DSR) highlighted the challenging strategic environment Australia faces.

We see rapid military modernisation – and military build up – across our Indo-Pacific region and the loss of the traditional 10-year warning time that Australia’s Defence planning has counted on for decades.

In this more fragile world, Australia needs to think carefully about the kind of sovereign defence industrial base we need, to equip and sustain the ADF we require, to provide the deterrence our strategic circumstances demand.

The industrial base we need won’t just happen because we want it to - or even because we need it to.

To make it happen, Government needs to be much clearer about our priorities, Defence needs to be a better customer and the partnership between Defence and industry needs to be closer than ever before.   

DEFENCE INDUSTRY DEVELOPMENT STRATEGY

The Government’s Defence Industry Development Strategy represents a fundamental change from the defence industry policies of the past.

It’s a focused approach to sustain the defence industry we have and grow the industrial base we need, much faster than we have before.

FASTER, SIMPLIFIED DEFENCE PROCUREMENT

This is a Strategy to overhaul Defence procurement with a focus on simplification and speed.

We won’t compromise on governance, but we are going to reduce the time it takes to receive project and contract approvals to deliver capability at speed.

Defence will adopt a more tailored approach to procurement based on the urgency and risk profile of the project.

I’ve heard loud and clear the feedback from industry that we need to improve Defence’s application of the Australian Standard for Defence Contracting framework – known as ASDEFCON.

Defence will undertake progressive reforms to the ASDEFCON suite to make it easier, faster and more cost effective for industry to work with Defence.

And we will establish more strategic partnerships with industry, including to combine related acquisition and sustainment activities where it makes sense so that we can offer more certainty and create economies of scale.

Australia has some fantastic small enterprises in defence industry.

They are smart and agile, and their innovative approach to problem-solving is recognised throughout the world.

But a hard-headed look at what we need to be resilient and increase our self-reliance rapidly reaches the conclusion that we need more Australian businesses operating at the Tier 2 level.

So Defence will use initiatives such as the Global Supply Chain Program, the Advanced Strategic Capabilities Accelerator (ASCA), procurement reform and strategic partnerships to achieve these aims.

We’ve done this for many years for the sustainment of advanced platforms.

Now we are going to roll out this approach to establish continuous naval shipbuilding and evolve it for large programs such as Integrated Air and Missile Development.

ONE STREAMLINED DEFENCE INDUSTRY DEVELOPMENT GRANT

Ever since I started as Minister for Defence Industry, business has complained to me about the confusing defence grant arrangements.

Businesses that had a lot to offer Defence got discouraged and had their time wasted. 

So we’ve streamlined the grants into a single $183M Defence Industry Development Grant with four streams which we’ll tailor to build Australian industrial capability in the Sovereign Defence Industrial Priorities. 

As part of this Strategy, Defence will work across Government with initiatives like the National Reconstruction Fund and with the defence industry programs of the state and territory governments, so we have a whole-of-government and whole-of-nation approach to the priorities we need to achieve. I also want Defence to work more with important organisations including the industry capability networks.

BUILDING AUSTRALIAN INDUSTRY CAPABILITY

The Australian Industry Capability (AIC) Program will continue, and Defence contracts will continue to require AIC plans because that’s essential to growing our sovereign defence industrial base.

It will also support the Albanese Government’s broad-based Buy Australian Plan.

You can expect the Government to be proactive in promoting the integration of our sovereign defence industrial base into global supply chains because that’s what our strategic needs demand.

That’s the only way we will achieve AUKUS – which is essential for our national security – but it also applies to the integration of our guided weapons and explosive ordnance enterprise with the US to make both of us more secure.

I know that workforce is a huge challenge for the industry, as it is for the ADF.

So the Strategy includes measures to grow and train the defence industrial workforce in partnership with all levels of government, industry and unions.

GETTING THE PRIORITIES RIGHT

Prioritisation is central to the Defence Industry Development Strategy.

We’ve had Sovereign Industrial Capability Priorities for years, but they’ve been vague to the point of irrelevance.

There was no accountability for failing to deliver.

Prioritisation is at the heart of the new Strategy and that means focused Sovereign Defence Industrial Priorities that include identified Capability Managers and Delivery Managers.

Sovereign Defence Industrial Priorities will be considered from the beginning of the capability process from acquisition to delivery to maintenance and sustainment.

And most importantly, the Strategy will drive Defence to engage directly with industry right from the beginning, so that we understand what the sovereign defence industrial base can deliver and where we need to support it.

I want to make it clear that the Defence Industry Development Strategy is not a hands-off, set and forget, strategy.

I’m establishing a tripartite defence industry council that I’ll chair so I can hear directly from industry and unions as we roll out this whole of nation approach to developing the industrial base.

THE DEFENCE INDUSTRY DEVELOPMENT STRATEGY AND THE ILLAWARRA SHOALHAVEN REGION

One of the seven Strategic Development Priorities in the Strategy is the maintenance, repair, overhaul and upgrade of ADF aircraft.

That is hugely significant for the Illawarra Shoalhaven region.

Great work is done on the industrial estate around HMAS Albatross to keep our vital naval aviation assets ready to serve Defence.

Highly-skilled workers keep the MH-60R Seahawk Romeo helicopter fleet in the sky with a world-class maintenance, support and logistics capability employing more than 200 people.

And demand for their skills will grow as the Government expands the fleet from the current 23 to 36 aircraft.

Just last year, Sikorsky Australia in Nowra completed the first-ever deep-level maintenance of a United States Navy MH-60R Seahawk Romeo helicopter.

It was a huge milestone, demonstrating the level of trust and confidence of the United States Navy in our sovereign defence industrial base, and in the skills and competence of those who work there.

This is not just important to Nowra, it’s important to the nation.

Industry here in the region is already supporting our Sovereign Defence Industrial Priorities.

That’s terrific – but it’s going to need to continue to grow and evolve.

The Strategy directs Defence to continue to use the existing industrial base and to work in partnership with industry to maintain certainty, strengthen the resilience of supply chains and reduce unnecessary overheads.

This includes leveraging existing industrial capabilities to support other Defence capabilities, providing an opportunity for businesses to scale.

We’ll work closely to maintain and further build a sustainable technical workforce with capacity to serve Australia’s needs and our industrial partners.

And you can expect us to challenge the industry to develop and deliver innovative solutions in targeted areas.

The Office of Defence Industry Support, ODIS, will continue to be the primary Defence point of contact for industry.

In fact, ODIS is going to become even more important, because it will deliver options to close capability gaps in the Sovereign Defence Industrial Priorities, and it will feed into decision-making a deeper understanding of industry capacity and capability.

It’s great to see Steph Steel, ODIS Adviser for the region, is here today and will be speaking to you later today.

Steph and the ODIS team of Advisers will continue to be defence businesses’ first port of call, and they will continue to provide practical, actionable advice to businesses on the assistance that is available. 

And because exports are vital to strengthen and scale the local industry, the Global Supply Chain Program will be expanded and the whole ecosystem of defence industry support, from ODIS to ASCA, will work together - and with industry - so that exports are considered from the beginning of the capability process to identify opportunities from the outset.

AUKUS PILLAR 1

One the biggest opportunities for the region is the one I referred to at the beginning – our acquisition of nuclear-powered, conventionally armed submarines.

It’s the newest chapter in the steelmaking history of the Illawarra Shoalhaven, for the forging of steel that is fit for the toughest assignments on the planet.

In December, the Australian Submarine Agency (ASA) entered into a contract with Bisalloy for the qualification of Australian steel for use on Australia’s SSN-AUKUS submarines.

Over 16 months, the steel will be subject to more than 4,500 tests.

Only a thin layer of steel separates the crew of a submarine from the ocean’s depths.

The pressure that steel must withstand over a life in service is extreme.

That’s why it takes so long to qualify the steel for a submarine, and why the tests are so exacting.

The qualification of the steel to both the UK and US standards will increase the resilience of the whole AUKUS trilateral supply chain.

And it’s the very first step in what will be a suite of opportunities for Australian suppliers to contribute to international supply chains and make a contribution as submarine production is sped up and expanded across the UK and US.

Australian companies will have the opportunity to undertake vendor qualification processes that will position them to work internationally as part of global nuclear-powered submarine work packages.

The price of entry into this market will be a commitment to becoming ‘AUKUS ready’; to meeting the security, international and data requirements needed to participate in the trilateral nuclear-powered submarine program and associated work packages.

ODIS and the ASA will be ready to work with Australian industry to provide advice and support so that we can ensure every opportunity for Australian business to participate in the manufacture and sustainment of Australia’s SSN AUKUS submarine.

And that is getting closer by the day.

A major milestone was achieved late last year with the passage by the United States Congress and the signing by President Biden of the 2024 National Defense Authorization Act.

The Act includes substantial enabling provisions for Australia’s AUKUS nuclear-powered submarine program.

CONCLUSION

One of the great privileges of being Minister for Defence Industry is that you get to spend time on our defence bases, and to see our soldiers, sailors and aviators making good use of the kit that is designed, made and maintained by Australian Defence industry.

And as the Minister charged with ensuring the future of our defence industrial base, it’s also a source of great reassurance when the intellectual property, the materials and the manufacturing are here in Australia as well.

Defence industry in this region has a big role to play in building Australia’s sovereign defence industrial base, and I look forward to working with you to achieve this great national challenge.

[ENDS]

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Karlis Salna (Minister Conroy’s Office): +61 435 521 326

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