Industry Voice Launch, Canberra

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I would like to extend my congratulations to you and John for establishing the Industry Voice Group, it is a great pleasure to be here for your launch. I would also like to acknowledge my many Parliamentary colleagues and distinguished guests here today.

Last year, I completed my one hundred day review of the Defence Industry portfolio. As a result of that review, I identified my five priorities, including:

1. Enhance CASG performance delivery to be a ‘strong client’.
2. Expand small business access to Defence.
3. Increase the number of exporting Australian businesses.
4. Build Australia’s skilled defence industry workforce.
5. Ensuring Defence’s grants, innovation, science and technology programs are contributing to enhancing ADF capability.

To deliver on these priorities, I have directed the Secretary and CDF to implement a series of action items with the intent of backing Aussie small businesses.

Given today’s focus is on small business and AIC, I will expand on these topics as part of my first and second priorities.

Where we have come from

But first, I do not have to remind the people in this room about where we have come from. Before the Coalition came to Government in 2013, there was no plan for our defence industry. There were budget cuts to Defence and not a single Australian built ship was commissioned.

Under our Government, we have spent the last six years repairing the Defence budget, providing certainty for our defence industry and delivering more jobs and opportunities for Aussie small businesses. I intend to deliver on this commitment and go even further.

Enhance CASG performance delivery to be a ‘strong client’

I understand the focus here today is Australian Industry Capability and content and how we can further strengthen support for small business in our defence industry. To do this, we need CASG to be a strong client. We have negotiated, signed and announced the contracts to deliver our major defence capabilities in the years ahead. Now is the time to deliver.

This is the largest Defence acquisition and sustainment program any Government has ever undertaken in Australia. We therefore need to ensure CASG remains fit-for-purpose, and is a well-resourced and a well-informed client to manage and deliver the Government’s $200 billion investment in defence capability. That is why to deliver on our commitments to the taxpayer, the Australian Defence Force and defence industry, I am working to ensure CASG strengthens its professional skills base and increase skilled staff with commercial expertise to better enable them to manage our Defence programs.

I am pleased to announce the appointment of Martin Halloran as the new Head of AIC – a new position within CASG – and Francesca Rush as the new Assistant Secretary General Commercial Counsel. The private sector experience Martin and Francesca will bring will complement the skills already in the Department of Defence. We are on the right path to make CASG an even stronger client through these new appointments that will provide greater attention and consideration for AIC moving forward. 

Expand small business access to Defence

One of the conclusions I drew after one hundred days in this portfolio was the need to go even further in our support for small business.

We need to enhance our AIC contractual framework and hold each and every major Defence contractor to account on their obligations. That is why I have directed the Secretary and CDF to establish an independent AIC audit program. This program will be independently administered, and be required to investigate and report on whether major contractors are meeting their AIC contractual obligations.

Additionally, this independent process will report on both industry and Defence’s progress on the implementation of our Sovereign Industrial Capability Priorities. The delivery of our capability priorities are fundamental to creating a sovereign defence industry. It is a responsibility of Defence to identify sovereign priorities in each of its major programs and industry’s responsibility to deliver the priorities as set out in their AIC plans.

Defence and industry must partner together to ensure we are meeting our goals of establishing a sovereign defence industry. This independent audit program will hold our major contractors to account and Defence’s ability to deliver each of our Sovereign Industrial Capability Priorities. We are in the first stages of developing this program and therefore possible outcomes from such an audit are still to be determined.

As I have said since day one, small business is my focus and I will hold our major contractors to account. This independent AIC audit program is one big step in that direction.

To go even further, I will also be establishing a consistent AIC contractual framework to be applied within CASG. This is the next step in providing greater certainty for Aussie small businesses in our defence industry. For CASG to be a stronger client and for small business to have greater access to Defence, a consistent set of AIC contractual terms must be applied to all capability and sustainment contracts.

Upon completing my one hundred day review, I identified we can further build on the success of our Government’s policies for defence industry. It is the Morrison Government that is delivering 57 new naval vessels, 12 submarines, 9 frigates, 12 offshore patrol vessels, 21 patrol boats, 2 mine hunter support vessels and 1 hydrographic vessel. Our plan is creating 15,000 Aussie jobs right across Australia and opening thousands of opportunities for small business.

It was only last week that I joined Luerssen Australia in recognising the participation of Australian small and medium businesses that are contributing to the build of this program. So far more than 300 Australian small and medium businesses are benefiting from this program, with Luerssen exceeding their AIC contractual obligations, currently achieving 62.7 percent. And I have no doubt, Luerssen will continue to exceed these expectations.

We are establishing partnerships with major contractors from our flagship programs and I will ensure they continue to deliver the know-how and know-why skills required to build a true sovereign capability. My team and I are regularly engaging with Naval Group, BAE, Luerssen Australia, Rheinmetall, among other large Defence contractors to ensure they continue to deliver their end of the bargain.

But for future contracts, I want to go even further, seeking more ways Aussie small businesses can benefit from large Defence contracts. That is why across the board, the new AIC contractual framework I am establishing will lead to a mandated set of contractual terms that are consistently applied to all CASG contracts requiring an AIC plan. This new framework builds on our existing policies and will encompass greater accountability, enforcement and stronger contractual terms to ensure Australian small businesses continue to be the backbone of this industry.

Centre for Defence Industry Capability

As some of you may know, I have commissioned a review into the Centre for Defence Industry Capability. While it is a great initiative and plays a vital role, I want it to grow stronger and better service defence industry. This is to be led by the two co-chairs of the CDIC Advisory Board, Kate Carnell, the Small Business and Family Enterprise Ombudsman and Tony Fraser, Deputy Secretary for CASG.

We are also now finalising the Terms of Reference. There will be significant industry consultation with industry groups, such as Industry Voice and small and medium businesses right around Australia.

The CDIC must be strengthened and be more effective in meeting the needs of small business in our defence industry. CASG has an important role to play in assisting the CDIC become a more effective group to identify upcoming opportunities for small business to compete for Defence contracts. And to identify opportunities to get involved in the supply chains of our major contractors. I expect that once this review is completed, we will deliver a stronger CDIC, one that will effectively meet the needs of small business in our defence industry.

Conclusion

Our Government has spent the last six years reversing Labor’s neglect of the Australian defence industry. We are commissioning Australian built ships, with Australian steel.

We are delivering thousands of jobs right across Australia, opening new opportunities in the defence industry and building new skills and capability to deliver a sovereign defence industry. As the Prime Minister has said, it is a Coalition Government that is on the side of Australian workers and small business.

Our policies are backing small business to help us deliver $200 billion worth of defence capabilities. Small and medium businesses are the backbone of this industry. We need you to succeed. Your success, is our success, and this cannot be done without you.

As Minister for Defence Industry, it is my job to build on our existing policies and we are on the right path to achieving even greater success. I am taking AIC seriously, and I hope some of the major actions I have explained here today highlight to you our Government’s commitment to small business.

ENDS