The Joint Standing Committee on Foreign Affairs, Defence and Trade tabled its , Principles and Practice 鈥 Australian Defence Industry and Exports, in Parliament in December 2015. The report made 19 recommendations about how the Australian government should increase its support of Australian arms exports, which largely reflected the wishes of arms companies.
The federal government gave its l response to the report in September, agreeing or 鈥渁greeing in principle鈥 with all of the recommendations. In some cases, the government said that the recommendations had already been, or were in the process of being, adopted.
鈥楩undamental input to capability鈥
The primary recommendation was that the 鈥淒epartment of Defence incorporate into policy, doctrine, procurement instructions and all associated training the addition of defence industry as the ninth fundamental input to capability鈥.
The term 鈥渇undamental input to capability鈥 (FIC) refers to the elements of ADF support that are deemed to be essential to its functioning 鈥 personnel, organisation, collective training, major systems, supplies, facilities and training areas, support, command and management.
By the time the report was tabled, this position by the government and the arms industry was formally recognised as an FIC in the 2016 Defence White Paper. The government has thus endorsed the argument pushed by arms companies that the arms industry should be supported as a matter of national security.
The change will further elevate the interests of arms companies within the Department of Defence. The government鈥檚 response to the report said: 鈥淎s part of the White Paper implementation plan, Defence will progressively update all related policy to embed industry as a FIC into Defence processes and culture.鈥
The inquiry also recommended that 鈥渋n areas where an aspect of industry is identified as a fundamental input to capability鈥, long-term partnerships with industry should 鈥渂e the default approach to driving innovation, productivity and value for money rather than a primary focus on open competition鈥.
The government responded that it is committed to 鈥渇orming a new partnership鈥 with industry, as outlined in its Defence White Paper and the (DIPS), which were published in February last year.
Centre for Defence Industry Capability
The DIPS announced the establishment of the Centre for Defence Industry Capability (CDIC), which will be the 鈥渃ornerstone of the government鈥檚 strategy for resetting the Defence-industry partnership鈥.
The centre, which , will cost $230 million over the next decade. The DIPS also announced government funding of $730 million for research into 鈥渘ext generation technologies鈥 and $630 million for a new 鈥淒efence Innovation Hub鈥.
CDIC鈥檚 mission is to 鈥渨ork with industry and Defence to build a world class, globally competitive Australian industry as a fundamental input to defence capability鈥. Its functions include providing advice, funding business development initiatives and 鈥渃onnecting business, academia and research organisations with innovative ideas to Defence鈥.
The Inquiry recommended that Defence 鈥渋ncrease the level of support to defence exports where such exports will help sustain or develop a fundamental input to capability鈥. The government responded that CDIC will 鈥減rovide coordinating efforts in relation to export opportunities with AusTrade and the Department of Foreign Affairs and Trade, as well as the states and territories鈥.
CDIC鈥檚 website says it will provide 鈥渘ew advisory services to guide and mentor Australian industry to improve competitiveness and capitalise on export potential鈥. Team Defence Australia and the Global Supply Chain program are , to be integrated 鈥渋nto a larger suite of initiatives designed to increase the number of Australian businesses exporting and integrating into global supply chains鈥.
Conduit for influence
CDIC is led by an advisory board comprised of arms company chiefs and representatives from Defence 鈥渢o drive the strategic partnership鈥. The board鈥檚 co-chairs are Paul Johnson, former CEO of Lockheed Martin Australia, and Kim Gillis, head of the government鈥檚 Capability Acquisition and Sustainment Group (CASG).
Other members of the CDIC board include the CEO of Thales Australia, the CEO of CEA Technology and the Head of Industry Strategy at BAE Systems Australia.
Giving arms company chiefs key roles in government bodies like CDIC increases their access to, and therefore the potential for them to influence, senior public officials.
In an interview in , Gillis discussed the new relationship between the Department of Defence and arms companies and said that one of the key changes he has implemented is increasing industry access to CASG leadership. 鈥淎ll the major industry CEOs have my phone number鈥, Gillis said.
Arms company influence is also facilitated by the constant revolving door between the arms industry and public bodies.
When Defence employees leave to work for an arms company they take with them insider knowledge of the department鈥檚 policies, procedures and people, which can potentially be exploited by their new employer. Movement between the public sector and industry also raises the risk that public sector employees might try to curry favour with arms companies to try to secure future employment.
Department of Defence rules state that departing employees should wait 12 months before taking up employment in the arms industry. However, the Secretary of the Department of Defence, Dennis Richardson that 鈥渞isks of unethical behaviour鈥 remain because "[t]here is simply so much movement between people who work in Defence and who work in the defence industry鈥.
Gillis himself embodies the revolving door, having been the vice president and managing director of Boeing Defence Australia prior to taking on the roles at CASG and CDIC. He has also worked for the shipbuilding company Austal.
Other notable defence employees who have moved into the private sector are Raydon Gates, CEO of Lockheed Martin Australia and New Zealand who is a former admiral in the Australian Navy and defence attache to the US; Warren King, former DMO head who in October 2015 when he joined lobbying firm CMAX Advisory; and Kim Beazley, former Deputy Prime Minister and Ambassador to the United States, who now sits on the board of Lockheed Martin Australia.
Sales promotion
To help with sales promotion, the Inquiry recommended that the work of the Australian Military Sales Office (AMSO) be expanded.
It recommended that defence attaches should take a more proactive role in securing business for Australian arms companies overseas while 鈥渁ppropriate Australian Defence Force personnel鈥 should 鈥渁ssist at trade shows or exhibitions, alongside defence industry participants, to inform and advise foreign customers of the Australian Defence Force鈥檚 experience using the displayed products鈥.
The government鈥檚 response said 鈥渢he role of AMSO within the framework of the CDIC will be considered as the Centre matures鈥. The government said it had reintroduced briefings on the arms industry for defence attaches and the Department of Defence would 鈥渕ake available Defence Force personnel with experience using the displayed products to promote Australian industry where appropriate and where it provides a strategic benefit to Defence鈥.
Political support for arms sales
The Inquiry recommended that 鈥渞elevant government ministers鈥 should 鈥渇ulfil a prominent advocacy role on behalf of the Australian defence industry鈥.
Since July, arms companies have had a new, high-level supporter in Minister for Defence Industry Christopher Pyne.
Pyne wants Australia to 鈥溾 in arms exports. In October, he visited Washington to 鈥溾 and made to the National Defense Industrial Association in which he said the government wants to 鈥渦se the heft of [Australia鈥檚] defence spend to develop our export capabilities鈥. Australia could become a major exporter of warships, like Spain, Pyne said.
During the visit, Pyne met with US Secretary for Defense, Ashton Carter, as well as other senior US Defence officials and the CEO of Lockheed Martin. The US government subsequently that Australia had been chosen to provide 鈥渕aintenance, repair, overhaul and upgrade for the componentry of the Joint Strike Fighter in the Asia Pacific Region鈥, which Pyne says will bring $80鈥100 million into the Australian economy.
This amount is dwarfed by the $17 billion the Australian government has committed to the F-35 project, which is running seven years behind schedule and 50% over budget and continues to be fraught with .
Pyne sees the election of Donald Trump as an opportunity for the Australian arms industry. In Pyne welcomed Trump鈥檚 plans to increase US military spending by half a trillion US dollars over the next 10 years. Arms company stocks surged following Trump鈥檚 victory, with that 鈥渉appy days are here again鈥 for the industry.
While were alarmed by Trump鈥檚 victory, Pyne wrote that 鈥渢he massive expansion in defence spending should come as very welcome news for the Australian economy鈥, as it gives Australian arms companies 鈥渢he opportunity to tap into that market as an exporter to our biggest ally鈥.
Profits before peace
The Australian government is supposed to represent the interests of Australians, but its support of the arms trade puts profits before our security.
The Medical Association for the Prevention of War id: 鈥淎ustralian taxpayer funds are used to promote the interests of Australia鈥檚 arms industry, including local subsidiaries of multinational arms manufacturers.鈥
Since the policy of promoting exports 鈥渆ncourages arms proliferation and undermines global peace and security efforts,鈥 MAPW said, 鈥渢he 鈥渞ole of the Defence Department in stimulating these exports surely creates an irreconcilable conflict of interest with its primary charter of protecting Australia鈥檚 security.鈥
Moreover, government support for arms exports makes us complicit in the harm caused by the overseas sale of military products.
Instead of using a trade which causes untold human suffering as a basis for economic growth, our government should reject militarism and invest our taxpayer dollars in initiatives that promote human wellbeing and security, such as the development of renewable energy technologies.
[This is the third and final part of a series on the Australian government鈥檚 support for the arms trade. The first and second parts can be read here and here.]
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