Australia’s defence sector hit by workforce crisis

Australia’s $43bn defence sector is facing a workforce crisis that threatens AUKUS plans, with half of the industry struggling to attract staff and a third fearing they could collapse.

A survey has found 49 per cent of Australian defence companies found it ‘difficult’ or ‘extremely difficult’ to find and hold on to skilled workers.

Australia’s $43bn defence sector is facing a workforce and confidence crisis that threatens the nation’s AUKUS plans, with half of the industry struggling to attract and retain staff and a third fearing they could go to the wall.

The finding, in a poll of 801 defence companies by industry publication Defence Connect, comes amid fury inside the sector over the federal government’s failure to make key capability decisions following last year’s Defence Strategic Review.

The survey found 49 per cent of Australian defence companies found it “difficult” or “extremely difficult” to find and hold on to skilled workers, while 33 per cent had little or no confidence their current contracts would continue in 2024.

The predominantly engineering, manufacturing, administrative and IT firms were also pessimistic on the commitment of foreign prime contractors to share the benefits of hundreds of billions of dollars worth of promised defence contracts.

Just 36 per cent were satisfied with the big contractors’ transparency when working with their Australian counterparts, while only 27 per cent believed the foreign “primes” were prepared to share vital intellectual property.

Virginia-class attack submarine USS Montana conducts initial sea trials in the Atlantic Ocean. Picture: US Navy

The results come as the industry awaits details of Defence’s new investment program, the results of the government’s surface fleet review, and its promised defence industry development strategy.

Australian Industry and Defence Network CEO Brent Clark said the entire defence sector was in a holding pattern.

“Companies can’t make any decisions, and Defence can’t do any work, until that’s done,” he said of the raft of unfinished reviews.

“Meanwhile, Australia’s defence industry is getting smashed. Even the big foreign-owned primes are getting smashed.

“A lot of them are getting forced into making decisions about whether they continue to do work in Australia or whether they do it back home, because there appears to be no requirement from this government for that work to be done onshore.”

Mr Clark said the inertia caused by government indecision was compounded by crippling skills shortages.

“Graduates will go where the money’s good, when the work is interesting and where there’s a long-term future,” he said.

“At the moment, people look at the defence industry and say, ‘Well, it’s very uncertain, we’re not seeing any contracts, why don’t I just go to BHP Billiton’?”

The survey’s workforce results mirror Defence’s own recruiting and retention challenge in an economy with historically low unemployment. Shortages of uniformed personnel have forced the navy to take an Anzac frigate out of the water indefinitely and consider putting a further two on blocks, while the service is also facing a dearth of marine and electrical engineers, and combat system operators.

Workers stand by a Collins-class submarine at Adelaide’s Osborne shipyard. Picture: NCA NewsWire / Morgan Sette

The US Studies Centre has warned Australia is unprepared to meet AUKUS’s biggest challenge – developing the skilled workforce that will be needed to build and operate a fleet of nuclear-powered submarines.

Prime Minister Anthony Albanese told The Australian this month he would play an active role in fast-tracking new defence capabilities, declaring: “You can’t defend Australia with a press release, you need ­assets.” Treasurer Jim Chalmers has identified Defence as a budget “priority”.

But the industry is bracing for funding cuts, after the government warned last April it would reprioritise $7.8bn in defence funding over the next four years.

Strategic Analysis Australia research director Marcus Hellyer said the defence budget was already “broken”, and more pain was on the way.

He pointed to the rapid expansion of the Australian Submarine Agency, which already had 688 people and was forecast to increase to 922 next financial year.

“The huge opportunity cost of nuclear submarines is already biting,” he said. “That’s like 700 people sucked out of a relatively small organisation already.

“And these are the people who are just running the program.

“It doesn’t include any operators; it doesn’t include anybody in the industry.”