Industry forced to wait for strategy in another Defence delay

The Albanese government has revealed yet another delay to its Defence agenda, announcing a new strategy to revitalise the nation’s defence industry won’t be released until next year.

Defence Industry Minister Pat Conroy and Air Vice-Marshall Gerry van Leeuwen at Garden Island Fleet Base East in Sydney. Picture: NCA Newswire/ Gaye Gerard

The Albanese government has revealed yet another delay to its Defence agenda, announcing a new strategy to revitalise the nation’s defence industry won’t be released until next year.

The strategy, which will include a plan to address the industry’s workforce challenges and expand defence exports, was due to be released this year.

But Defence Industry Minister Pat Conroy told a defence industry conference on Monday that the strategy would now be made public “early next year”, prompting opposition accusations of another broken promise.

“Will we ever see a defence industry development strategy?” Opposition defence spokesman Andrew Hastie said.

“The government’s crippling indecision is slowly wiping out our sovereign manufacturing capability as we see Aussie capital, intellectual property and businesses head overseas for work in allied markets.”

The delay follows the government’s move to put off urgent decisions on the future of the navy’s surface fleet until the first quarter of next year.

Mr Conroy told the Australian Industry & Defence Network symposium that the government needed to speed up defence procurement, embrace more risk, and ensure Defence worked better with small and medium enterprises.

“The full articulation of how we’ll do that will be through the defence industry development strategy that will be released early next year,” he said.

“So many industry policy statements are great on paper, but the proof will be on intervening to actually support Australian industry.”

Mr Conroy said defence industry SMEs were critical to delivering infrastructure upgrades and “building strong and resilient supply chains that keep the ADF kit in good working order”.

The delay comes amid concerns in the sector over new export control legislation to bring Australian firms under the US defence industry umbrella as part of the AUKUS submarine and technology pact.

The Australian Industry Group said the change was essential to unlocking the benefits of AUKUS, but could “significantly impact” the defence industry through increased compliance costs.

“We believe that additional support for SMEs will be needed, including guidance, resources, and potentially streamlined processes, recognising their particular challenges and capacities,” Ai Group Innes Willox said.

Strategic Analysis Australia research director Marcus Hellyer said the change would bring Australia into the US’s International Traffic in Arms Regulations system, making it easier for Australian defence companies to do business with the US and UK.

But he said there could also be significant costs for defence industry firms wanting to export to other countries, due to the regulatory burden imposed by the ITAR system.

“The benefits seem to be reasonably clear in terms of lowering trade control overheads with the US, but the cost could be very severe,” Dr Hellyer said.

“The one thing that pretty much everybody agrees on is that the US ITAR system is kind of broken; it’s clunky and it’s slow.

“One of the competitive advantages Australian companies have at the moment is that they’re not part of the ITAR system.”