07/13/2012 Andrew Elwell - defenceiq.com
With a growing economy (1.3% in the first quarter of 2012), a defence spend topping AUD 42 billion (£26.8 billion) over the next five years and with a similar culture to many of the traditionally big-spending defence nations in the West, should everyone be paying a little more attention to Australia?
ADS Group, the UK’s defence trade organisation, recently held a meeting at its London HQ to discuss the opportunities and advantages of investing down under. At the ‘Australian Aerospace & Defence Opportunities Briefing,’ Brinley Salzmann, ADS’s Overseas & Exports Director said that while Australia is feeling the effects of the global economic downturn, it is not as bad as in Europe and the US.
Salzmann went on to list a number of procurement programmes the Australian government has in place, including a contract for 100 Joint Strike Fighter F-35A aircraft and three Hobart class air warfare destroyers. He highlighted that AUD 24 billion (£15.8 billion) is due to be invested in the industry through fiscal year 2012/13.
While cuts to the defence budget are planned – which are in the region of AUD 5.5 billion (£3.6 billion) over the next four years – Group Captain Peter Wood of the Office of the Air Force Adviser (AFA) said that “no aerospace programmes are being cut, just delayed.”
Wood referred to the F-35A deal, saying that Australia has committed to buy 14 fighters at this point with a review of how many others are needed in the pipeline.
“My suspicion is we won’t get 100 of them (F-35A fighters) because we can’t afford it,” said Gp Capt Wood. Political wrangling over the F-35 and number crunching is a global phenomenon, it seems.
That aside, Gp Capt Wood was keen to underline the level of modernisation Australia’s armed forces are implementing at this time: “When I retire there won’t be an aircraft in the Air Force that was flying when I started.”
Of all domains, air perhaps offers the most promising opportunities for foreign investors. But it goes beyond just aerospace.
“We need to develop our professional mastery of air power and introduce aspects of space power … we need to get more involved in that,” said Gp Capt Wood.
Pick a PIC
Which other areas is the Australian government looking to invest in? In its 2009 White Paper, Defending Australia in the Asia Pacific Century, the government outlined its commitment to ensure a number of defence capabilities were always available from within its own borders. These 12 capabilities, which include electronic warfare solutions, signature management and infantry and remote weapons stations, are known as the Priority Industry Capabilities (PICs). In addition, the government has also set-up a website, the Defence + Industry ePortal, which hosts information on Australian capabilities and programmes for potential customers and investors.
According to Nick Paxman, Counsellor Defence Materiel at the Australian High Commission, there is a “two speed economy” in Australia. That is, one economy that’s fuelled by Chinese demand for Australia’s resources, which is currently booming; and another economy, including all other industries, which is not. Australia is hoping that defence can bolster its economy in the future and is laying the groundwork for its inevitable expansion. The opportunities for economic surge in the Asia Pacific region are plain to see and Australia could play a central role in that development during the 21stCentury. Making sure its defence industrial base is competitive on a global scale is vital to this objective, which is why it is beginning to assign increasing resource to it.
When President Obama and U.S. Defense Secretary Leon Panetta unveiled their new global defence strategy earlier this year, it signalled the beginning of what is likely to be a step-change in focus moving from Europe towards Asia.
The industry will need to pay a little more attention to Australia over the coming years, whether it knows it yet or not.