Australia will not be able to afford all the high-tech weaponry it needs to defend itself unless the federal government ends its fixation on building defence equipment locally, a former senior Defence official argues.
With the federal budget deep in deficit, former Department of Defence economic adviser Rob Bourke warns that a misguided focus on “sovereignty” and “nation-building” could have disastrous consequences for national security.
Construction of a fleet of frigates for the Royal Australian Navy has been plagued by cost blowouts and delays.
Pointing to delays and cost blowouts with the planned fleet of nine Navy frigates set to be manufactured in South Australia, Bourke argues the government should prioritise value for money by buying more military equipment directly from overseas.
However, this would risk a backlash from unions and limit politicians’ ability to chase votes in key electorates by promising to create well-paying local manufacturing jobs.
“Linking an updated defence capability plan to an outdated defence industry policy is, at best, a high-risk venture,” Bourke writes in a report for the Australian Strategic Policy Institute to be released on Tuesday.
“More realistically, it represents a path to disappointment on both fronts.”
Bourke says recent troubles – including ill-fated attempts to find a viable replacement for the Collins-class submarines – demonstrate how “an errant defence industry policy, based on vague notions of sovereignty, has the potential to bring defence capability planning to its knees, especially in a challenging security and fiscal environment”.
He says domestic assembly of equipment such as submarines can be extraordinarily expensive, coming at a price premium of between $500,000 and $23 million a year to create a single net job.
Buying more equipment directly from overseas “could facilitate an increase in military spending now by demonstrating to taxpayers the enduring importance placed by Defence on avoiding waste”, he argues.
The money saved could be used to buy B-21 bombers from the United States, long-range missiles and drones, as well as helping to pay for nuclear-powered submarines under the AUKUS agreement.
In an interview with The Sydney Morning Herald and The Age last week, Defence Minister Richard Marles said Australia must turn itself into a “porcupine” island fortified with enough lethal weaponry to deter an attack from a hostile rival.
In July, Marles assured Australian defence industry leaders that local manufacturers would have a key role to play in building the future submarine fleet.
Bourke says new conventionally powered submarines, warships and military vehicles are obvious examples where Defence could rely on overseas builds rather than assembling the equipment locally.
“Given the size of the projects involved, even modest percentage reductions in the price of preferring domestic over foreign supply could translate into significant dollar gains,” he writes in his report, Budgets, the Economy and the Defence Strategic Review.
“There’s little evidence to suggest that overseas builds would increase long-term sustainment costs.”
Local production should be limited to areas in which Australian industry has a demonstrable competitive advantage or is required for national security reasons, he argues.
The federal government has commissioned former Labor defence minister Stephen Smith and former Defence Force chief Sir Angus Houston to conduct a sweeping review of the Australian Defence Force that is due to report by March.
The review will examine whether planned acquisitions should be scrapped and may suggest new equipment purchases to boost the nation’s fighting capabilities.
Bourke says the review offers a perfect opportunity to shift Australia’s defence industry policy away from one designed for a benign strategic environment and favourable fiscal climate.
Rather than destroy the local defence industry, he says reprioritising defence expenditure would be a net positive for domestic jobs and economic growth.
“Australia should gain more jobs faster across a larger, more efficient, and increasingly diverse advanced manufacturing base,” Bourke writes.
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