Defence: where innovation and industry meet

Ai Group Defence Council Executive Director, John O’Callaghan, is more positive about the health of defence industry than he has been in many years.

A major focus for the defence sector in the past six months or so has centred around the Defence Industry Policy Statement or DIPS.

From a defence industry perspective, two of the important policy announcements in the DIPS are:

Centre for Defence Industry Capability

Prime Minister Turnbull announced earlier this month that the Centre will be located in Adelaide, but will have a national role. It will be funded to the tune of $230 million over the next decade from funding recommitted from other industry facilitation programs.

According to the Minister for Defence, the CDIC will become the cornerstone of the Government’s efforts to reset the relationship between Defence and defence industry. The Government will appoint a joint Industry-Defence Board to oversee the work of the CDIC.

The challenge for industry is to make sure that the work of the CDIC proves effective in continuing to improve the health of defence industry in Australia: creating jobs, upskilling the workforce, investing in innovation, collaborating, harnessing advanced technology, seeking opportunities for technology transfer from defence to civilian application and, of course, boosting export activity.

Once established, the Centre will provide strategic leadership for the defence industry sector while helping to further build the capability and capacity of Australian industry to support the Australian Defence Force.

Importantly, a focus of the Centre will be in assisting SMEs to link with prime and sub-prime defence contractors both here and off-shore.

Defence Innovation Hub

The Hub will be established in the second half of this year and will be funded to the tune of $640 million over the next decade.

It will be established as a virtual organisation with responsibility for managing a portfolio of Defence innovation investments that will range from small ‘concept’ exploration projects through to large scale prototypes.

The Hub will have a strong presence across the nation, working closely with industry, academic and research institutions. Among its responsibilities will be building collaborative programs, clearly articulating capability needs, requesting proposals from industry and academia and championing innovation across Defence.

Digger Works, a Defence Materiels Technology Centre program to improve protection for Australian Defence Force personnel in war situations, such as the Middle East, embodies the practical application of how the new Centre and Hub should operate.

Defence Materiels Technology Centre

A real gold nugget of Australian Defence capability in this nation is the Defence Materiels Technology Centre. Its work saves the lives of Australian Defence Force personnel on deployment in very dangerous locations.

Digger Works is a prime example of the critical role played by the DMTC in partnership with the Australian Army, Defence Science & Technology Group, CASG, CDG, defence industry and research partners.

Digger Works embodies all of the tenets espoused by Prime Minister Turnbull: innovation, agility, collaboration and partnership. Speedier decision making within Defence is one of its hallmarks.  Smart buyers in Defence should, in my view, seek to emulate the decision-making benefits of such a model.

I’ve long believed that the Digger Works model has a place in other domains, including aerospace and maritime. The challenge for all of us is to identify these opportunities.

Of course, the DMTC is involved in much more. Its fostering of so many outstanding young PhD candidates is one of its strengths. Developing the young for future capability solutions makes considerable sense. It is this cadre of young experts who will be among the leaders in Defence and related agencies in the coming years. I’m pleased that ongoing funding of the DMTC is now assured.

More broadly speaking, I’ve noticed a sea change in the disposition and confidence of many in defence industry in recent months.

The lower Australian dollar gave a lift to confidence. Ring-fencing of Defence in the past two federal budgets, unlike other portfolios, was another fillip, along with commitment to increased Defence funding to 2% of GDP by 2020-2021.

The Government’s commitment to a continuous Australian naval shipbuilding program is probably the most substantial capability decision in the past 30 years. It’s added markedly to industry confidence. It offers long-term certainty and security to thousands of workers and hundreds of companies.

Despite what you might think, there is a much better degree of political bipartisanship now than for many years when it comes to Defence capability acquisition, especially in the naval and armoured capability domains. Perhaps this is because of the very serious terrorist and other threats encountered around the world over more than the past decade. Consequently, Australians are more attuned to the need for the Government to assure their security.

I’m more positive about the health of defence industry, including the future of the DMTC, than I’ve been in many years.

Are you a defence industry player? Please share your perspective on these policy initiatives below.

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John O'Callaghan
'Johnno' is Director – Defence and Government Relations at Ai Group, and Executive Director to the Ai Group Defence Council – the principle employer organisation representing the interests of Australia’s defence industry. Its membership comprises Australia’s leading defence industry firms.
John O'Callaghan

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