The Joint Standing Committee on Foreign Affairs, Defence and Trade tabled its report, Principles and Practice — 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 official response to the report in September, agreeing or “agreeing in principle” 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.
‘Fundamental input to capability’
The primary recommendation was that the “Department of Defence incorporate into policy, doctrine, procurement instructions and all associated training the addition of defence industry as the ninth fundamental input to capability”.
The term “fundamental input to capability” (FIC) refers to the elements of ADF support that are deemed to be essential to its functioning — personnel, organisation, collective training, major systems, supplies, facilities and training areas, support, command and management.
By the time the report was tabled, this position had already been endorsed 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’s response to the report said: “As 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.”
The inquiry also recommended that “in areas where an aspect of industry is identified as a fundamental input to capability”, long-term partnerships with industry should “be the default approach to driving innovation, productivity and value for money rather than a primary focus on open competition”.
The government responded that it is committed to “forming a new partnership” with industry, as outlined in its Defence White Paper and the Defence Industry Policy Statement (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 “cornerstone of the government’s strategy for resetting the Defence-industry partnership”.
The centre, which opened in Adelaide in December, will cost $230 million over the next decade. The DIPS also announced government funding of $730 million for research into “next generation technologies” and $630 million for a new “Defence Innovation Hub”.
CDIC’s mission is to “work with industry and Defence to build a world class, globally competitive Australian industry as a fundamental input to defence capability”. Its functions include providing advice, funding business development initiatives and “connecting business, academia and research organisations with innovative ideas to Defence”.
The Inquiry recommended that Defence “increase the level of support to defence exports where such exports will help sustain or develop a fundamental input to capability”. The government responded that CDIC will “provide coordinating efforts in relation to export opportunities with AusTrade and the Department of Foreign Affairs and Trade, as well as the states and territories”.
CDIC’s website says it will provide “new advisory services to guide and mentor Australian industry to improve competitiveness and capitalise on export potential”. Team Defence Australia and the Global Supply Chain program are now part of CDIC, to be integrated “into a larger suite of initiatives designed to increase the number of Australian businesses exporting and integrating into global supply chains”.
Conduit for influence
CDIC is led by an advisory board comprised of arms company chiefs and representatives from Defence “to drive the strategic partnership”. The board’s co-chairs are Paul Johnson, former CEO of Lockheed Martin Australia, and Kim Gillis, head of the government’s 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 Australian Defence Magazine, 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. “All the major industry CEOs have my phone number”, 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’s 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 admitted in 2015 that “risks of unethical behaviour” remain because "[t]here is simply so much movement between people who work in Defence and who work in the defence industry”.
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 created controversy 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 “appropriate Australian Defence Force personnel” should “assist at trade shows or exhibitions, alongside defence industry participants, to inform and advise foreign customers of the Australian Defence Force’s experience using the displayed products”.
The government’s response said “the role of AMSO within the framework of the CDIC will be considered as the Centre matures”. The government said it had reintroduced briefings on the arms industry for defence attaches and the Department of Defence would “make 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”.
Political support for arms sales
The Inquiry recommended that “relevant government ministers” should “fulfil a prominent advocacy role on behalf of the Australian defence industry”.
Since July, arms companies have had a new, high-level supporter in Minister for Defence Industry Christopher Pyne.
Pyne wants Australia to “become a world player” in arms exports. In October, he visited Washington to “spruik our defence industry” and made a speech to the National Defense Industrial Association in which he said the government wants to “use the heft of [Australia’s] defence spend to develop our export capabilities”. 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 announced that Australia had been chosen to provide “maintenance, repair, overhaul and upgrade for the componentry of the Joint Strike Fighter in the Asia Pacific Region”, which Pyne says will bring $80–100 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 serious technical problems.
Pyne sees the election of Donald Trump as an opportunity for the Australian arms industry. In an op-ed for the Daily Telegraph Pyne welcomed Trump’s plans to increase US military spending by half a trillion US dollars over the next 10 years. Arms company stocks surged following Trump’s victory, with Forbes reporting that “happy days are here again” for the industry.
While a majority of Australians were alarmed by Trump’s victory, Pyne wrote that “the massive expansion in defence spending should come as very welcome news for the Australian economy”, as it gives Australian arms companies “the opportunity to tap into that market as an exporter to our biggest ally”.
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 said: “Australian taxpayer funds are used to promote the interests of Australia’s arms industry, including local subsidiaries of multinational arms manufacturers.”
Since the policy of promoting exports “encourages arms proliferation and undermines global peace and security efforts,” MAPW said, “the “role of the Defence Department in stimulating these exports surely creates an irreconcilable conflict of interest with its primary charter of protecting Australia’s security.”
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’s support for the arms trade. The first and second parts can be read here and here.]
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