An innovation hub and next generation technologies: Defence opens the door for start-ups

Mike Kalms, KPMG Australia’s Defence Industry Lead Partner, and member of the Government’s Expert Panel
Mike Kalms, KPMG Australia’s Defence Industry Lead Partner, and member of the Government’s Expert Panel

The Federal Government’s Defence White Paper, Defence Industry Policy and Integrated Investment Program announced yesterday signals a complete redesign of the relationship between the Australian Defence Force (ADF) and industry.

The Government’s broader Innovation Agenda has significantly impacted this White Paper and companies that are innovative, collaborative and internationally focused will benefit. And it is not just a document for big international corporations. This White Paper establishes investment funds and support mechanisms for smaller, innovative service and technology start-ups. This could be the most exciting aspect of the entire White Paper.

Previous Defence White Papers and Industry Policies have tended to be more focused on international prime systems companies with large globally-integrated supply chains, but now it’s our small to medium Australian innovators that could benefit the most from this new Industry Policy. Whilst the detail is still to come, $230 million for the Centre for Defence Industry Capability (CDIC), $640 million for an Innovation Hub and a further $730 million for the Next Generation Technologies Fund represents a $1.6 billion, 10-year investment which should flow to Australian companies and entrepreneurs.

Innovation and entrepreneurship are not words typically used to describe the Australia Defence Industry Sector – but this Industry Policy may in fact be remembered for being the document that first established its foundation.

If the CDIC is well led, the Innovation Hub and Next Generation Technologies Funds are well managed and the cultural change described in the First Principles Review delivered – Australia could witness the growth of an export focused, collaboration-orientated group of national security entrepreneurs. Just as the start-up mentality begins to gain traction in the Australian economy, Defence injects hundreds of millions into accelerating those ideas into reality – to the benefit of Australia’s national interests.

In a nation where small business employs around 4.5 million people the redesign of the industry engagement programs will be very welcome. The move from some 35 disparate Defence support programs (not including tens of other Federal Government and state industry support programs), to two streamlined avenues for the defence industry to interact and collaborate with Defence is a big and welcome change. The CDIC will give a regionally accessible ‘shopfront’ for SME’s seeking to work with Defence. A case management style of support will assist business understand Defence’s technology and service requirements, seek support and/or sell innovative ideas and technologies that give the ADF an edge.

The perception of the ADF to some is one of big ships, fast planes and loud guns. But the Defence force is more than just its equipment. Managing these assets is an important component of defence capability, project management, engineering, logistics and supply chain services are also vitally important – opportunity to provide these services is growing. Australian business may not physically build the equipment but their innovative, disruptive technologies and new ways of looking at old problems could be the decisive advantage the ADF requires.

Feature Image: Prime Minister of Australia, the Hon Malcolm Turnbull, MP, speaking to Army Cadets after the Launch of the 2016 Defence White Paper at the Australian Defence Force Academy (ADFA) in Canberra. © Commonwealth of Australia, Department of Defence

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