AIDN Quarterly Newsletter (September)

Repeated lockdowns and border closures by Australian states and territories have presented massive challenges for businesses across Australia.

We all know that defence industry relies on the movement of people across borders to ensure continuity of supplies and parts and to enable people with specialist skills to build up our Defence capabilities that are proudly ‘Made in Australia’.

Over the past 18 months, my priority has been to keep the wheels of our defence industry turning.

We have done that, and I want to congratulate and thank both industry and Defence for stepping up so well to meet this challenge.

But I know many challenges remain.

That is why when the time comes, as set out by the Doherty Institute Modelling Report, we need to re-open Australia together – not in an ad hoc manner where states do different things.

My message to defence industry is that the tide of public sentiment is turning as we approach a period where there is growing confidence of Australia being in a position to open again soon.

Amid the gloom of shutdowns, the National Plan – announced by the Prime Minister and endorsed by the National Cabinet – is a shining beacon.

It provides a path to better times for businesses and families across the nation.

The National Plan provides for an enormous confidence boost for our industry. Literally, for a positive shot in the arm.

It tells the thousands of companies – from small, advanced manufacturing factories in the suburbs of Melbourne and Sydney, to the giant naval construction operations in Perth and Adelaide – that there is a path back to something resembling normality.   

The key to the National Plan is our drive to accelerate the rollout of vaccinations right across the country.

Against the predictions of some of the doomsayers, we are seeing an astonishing increase in the rate of people getting vaccinated.

Australians clearly want to regain their freedoms and our National Plan will help to provide those freedoms.

Critically, the National Plan will help to protect and support the continued growth of our defence industry.

As the Prime Minister has said: “The commitments made in the National Plan are not just commitments made to each other. They are commitments made to our own people”.

So I urge all Australians to get vaccinated as soon as possible to protect themselves and their families, and to ensure the national economy is firing on all cylinders.

There is no question that defence industry and the small and medium Australian businesses that are its lifeblood are critical to our economic recovery from COVID-19.

There are economy-wide benefits from our Defence investments that extend beyond our own industry, supporting Australian jobs in multiple sectors.

We’re advised that spending on Defence over a 12-month period contributed more than $29 billion to the national economy across a vast array of industries, supporting more than 100,000 Australian jobs across the country.

This is an astonishing ripple effect, and the job numbers are only going to grow as we deliver $270 billion worth of Defence capability for our men and women in uniform.

To ensure we continue this trend of creating more jobs, keeping businesses open and our industry strong, reform of support to defence industry is continuing.

My determination to ensure Australian small and medium businesses can compete fairly, have guaranteed opportunities in Defence projects, and have the best industry support on offer, has never been stronger.

Despite what some have claimed, the Morrison Government has mandated the requirement for specific and measurable AIC commitments in Defence projects.

That means that if a business receives a Defence contract worth $20 million or more, a company will be contractually obliged to deliver on its AIC commitment.

This is the policy of our Government and is a non-negotiable.

Upon entering the portfolio and consulting with many in industry, it was clear that our AIC policy and delivery needed to be strengthened, and I have done exactly that.

A new contracting system for AIC has been rolled out and is being used in tenders and projects.

These changes to AIC are significant and timely, because small and medium businesses will be crucial to our success as we come back from COVID-19.

I know that many SMEs are wanting stronger commitments from the primes.

They are rightly demanding that companies deliver on their contractual commitments.  Which is why this government has started an audit program to confirm obligations on AIC are being met.

It was a key plank of the Five Pillars plan which I announced to better support Australian defence industry companies. It’s about holding prime contractors to account on their AIC commitments.

Audits are already underway and will continue as part of a rolling program to make sure large companies are meeting their obligations.

I can assure the SME community that if a prime contractor fails to meet its commitments, we may pursue contractual penalties for non-performance.

And I will absolutely ensure results are held against them for future tenders, making them less likely to win contracts.

Finally, before the end of the year, I will also launch a new organisation that replaces the Centre for Defence Industry Capability as the one-stop shop for defence industry support and guidance.

It will work with industry associations, state and territory officials, SMEs and primes to deliver the capability our ADF needs to keep Australians safe and secure.

I look forward to launching this organisation and the system that will be put in place to support each state and territory across the country.

COVID-19 continues to throw us curve balls, placing incredible pressures on businesses, both small and large.

But our National Plan is clear and gives us the hope we need.

My support for defence industry is unwavering and I am determined, more than ever, to ensure a fit-for-purpose system is in place that puts the industry on the right path to success.

At the end of the day, we do this for one reason and one reason only – to ensure the men and women of the Australian Defence Force have what they need to keep Australians safe and secure.