Page 103 - Australian Defence Magazine Dec 2018 - Jan 2019

FROM THE SOURCE
CHRISTOPHER PYNE
“Our defence industry doesn’t have a green light for gouging the taxpayer; it’s because we want to build up our defence industry.”
Continued from page 106
ADM: Going back to that Australian In- dustry Capability (AIC) and industry be- ing recognised as fundamental input to capability (FIC); what are the mechanisms for making sure that AIC is followed, first of all contractually but also in the spirit of which it was envisaged?
PYNE: TheDepartmentisdoingsomework around assurance in terms of faithfully imple- menting AIC promises made in contracts, tender documents or bids for major projects. So far it’s been faithfully implemented by the primes who’ve won contracts and by those peo- ple who want to be part of the supply chains.
I get very little criticism from Australian SMEs that they’re being cut out. Every now and then there are niggles, maybe primes haven’t moved as quickly as they would have liked or they feel that they’ve been unfairly assessed against primes’ own internal de- partments or divisions, and when we hear that of course we raise it with the primes and they usually remediate the problem.
I’ve had a couple of criticisms from Aus- tralian companies that didn’t win tenders, which is a different problem. The issue related to pricing; they were tendering a much higher rate than the person who won the contract. Our defence industry doesn’t have a green light for gouging the taxpayer;
RAAF pilot, Flight Lieutenant James Champness welcomes Minister Pyne aboard the C-17A Globemaster aircraft prior to flying him to Afghanistan during his visit to the Middle East region.
it’s because we want to build up our defence industry. We’re not interested in building people’s second beach houses.
Therefore businesses that miss out on contracts, it’s not always because they were unfairly treated. I think most people have entered into this in the spirit in which it’s intended. And a lot of the primes want to expand their Australian operations and want to use companies in their global sup- ply chains with capabilities. Leidos has just joined the global supply chain program but there are some primes that are better than others and we have to keep educating those that aren’t as good as others about how we’re serious about AIC. Feedback from industry is really critically important in that.
Telling me or my office or the Depart- ment, but particularly me and my office, is a good start. We’ve tried to be pretty open with people, about examples of unfair treat- ment and we want to hear it. It doesn’t mean that everyone is necessarily got a fair case but those that have we’re happy to take it forward.
ADM: How is Aus- tralian industry and defence performing in your campaign to become a Top 10 exporter in the next decade? How is that being tracked? PYNE: Part of the Defence Export
Strategy was an announcement of a mecha- nism that would be developed in the De- partment of Defence to assess our success or otherwise in defence exports. That work is being done as we speak, implementing a review of how we measure across Australia our defence exports, because internation- ally I think the measurements are much like Swiss cheese. It’s a bit holey.
The strategy is going very well. In the Sep- tember quarter we wrote export permits for $3 billion worth of value in defence out of the Defence Export Control Office. Which is a lot more than we usually write! Ap- plications for permits in the June quarter jumped by 25 per cent on the previous year. So people are definitely coming to the party.
Anecdotally, again, Defence industry say to me that the attaches are really engaged with the defence exports side of their job in a way that they’ve never been before be- cause they never were asked to before, and that goes to that cultural change in Defence since the White Paper.
We’ve had two get-togethers with the defence attaches; one in Singapore for all attaches in the subcontinent and Asian re- gion, and one in Paris for the Middle East and Europe. I find that the defence attach- es are very engaged. I think it’s going well and in terms of real outcomes. Everything suggests it’s on track, but it’s a fragile bird, defence exports. It needs to be encouraged and nurtured because they haven’t really been encouraged and nurtured in the past and I don’t think they’re necessarily robust enough yet, but we’re getting there.
ADM: Given the changing strategic situ- ation in Asia, are you comfortable with the pace of Sea 1000? Could or should the construction drumbeat be accelerated? PYNE: The drumbeat is as fast as it can be done and it can’t be changed. We will keep the Collins in service until the new class of submarine, which the name of which will be announced by the time your magazine is available. We’ve already announced before a life of type extension for Collins Class, so that will be implemented.
The important thing to understand is that the Collins Class is a very effective submarine; we’re not concerned about our
www.australiandefence.com.au | December 2018 – January 2019 | 103