A new Defence Industry Minister and new opportunities for the Defence industry

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

KPMG recently hosted Australia’s first Defence Industry Minister Christopher Pyne MP. Across the two events over 200 Defence Industry business representatives had the opportunity to hear Minister Pyne speak about his agenda for the defence sector, and to discuss one-on-one issues that matter to business. For those unable to attend, there were some powerful messages.

Minister Pyne was quick to explain he is in fact Australia’s first Defence Industry Minister, a title not previously assigned to a Cabinet Minister.  So, what will be his agenda in this new role?

Having attended both the events I would offer four insights.

  1. This Minister is committed to investing the $195 billion described in the Integrated Investment Program.
  2. His is a national agenda, not just South Australia.
  3. With two Ministers in Cabinet, he firmly believes that Defence is uniquely represented and able to progress the political decision that underpin Defence Agency program delivery.
  4. And lastly, Minister Pyne was broadly of the view that Defence projects that could be delivered in Australia, should be delivered in Australia.

It’s this last insight that is perhaps the real point of difference between this Minister and those that preceded him in the recent past from both parties. This statement represents a departure – of a scale yet to be quantified – from Defence’s offset-agnostic policy suite.  Where in the past Defence contracts could be described as encouraging local investment and spending by prime contractors (Primes) and their sponsoring System Program Offices, this new language suggests Australian Industry Content policy will grow teeth.  Industry is now watching to assess how sharp they will become.

Minister Pyne’s style and approach are also a departure from what’s become the norm for Defence Industry.  Based only on this initial engagement, those that interact with the new Minister for Defence Industry were impressed by his determination to keep his office door open, to be action orientated, and decisive when confronted with industry experience at odds with his agenda. The Defence portfolio prefers careful, often slow, decision making, but if Minister Pyne is to make a measurable difference in this government’s 3-year term he will need to push harder than his predecessors.

So, what should Australian Defence business do now? For Primes, your stakeholder map now has more political elements to it than in the past.  Investing time and resources into shaping stakeholders across the lake is now more important. For Small to Medium sized Business the appetite to hear your innovative ideas is real – they need to make investment sense – and be aligned to the various objectives of the Defence Centre for Industry Capability (CDIC), Defence Innovation Hub and the Next-Generation Technology Fund (NGTF), but you have a Minister who wants to spend, so give him options. For the information technology and infrastructure enablers you will be under pressure to deliver, and to do so in the more convoluted program environment of the Integrated Investment Plan. Both will be seen as ‘early investment areas’ for the larger naval programs in particular – get ready.

On balance, I’m positive about the prospects for Australian defence industry as they relate to this new Minister. It’s no easy task, and undoubtedly there will be set-backs, but my sense is Minister Pyne will accelerate defence spending and shape investment towards innovative industry in a meaningful and measurable way during this term of government.

20160811raaf8485160_0138-t57ac208a-m800-x2571f046Feature Image: Christopher Pyne MP, Minister for Defence Industry sits in the cockpit of an F/A-18F Super Hornet during his visit to RAAF Base Amberley. © Commonwealth of Australia, Department of Defence

Add Comment