The Minister for Defence, the Honourable Brendan Nelson, will release the Government's draft defence industry policy for public comment in December.

The release of the draft policy follows a comprehensive period of consultation with key stakeholders by a Review Team established by the Minister for Defence when he announced the review in May 2006.

The Review Team, comprised of the Defence Materiel Organisation’s (DMO) Head of Industry Division, Mr Kerry Clarke; CRA International Vice President and Asia Pacific Regional Head, Mr Henry Ergas; ASPI Program Director Budget and Management, Dr Mark Thomson; and the previous Managing Director of ADI, Mr Lucio Di Bartolomeo has specialist experience in the defence, policy, economic and industry arenas.

One element of the review was an examination of changes to the Australian Defence Force’s (ADF) strategic environment since the release of the Government’s 1998 Defence Industry Strategic Policy Statement. Changes identified included the increase in operational tempo; the growth in Defence Capability Plan funding; the release of new Commonwealth Procurement Guidelines in January 2005; and the changing structure of the Australian defence industry base.

In addition the Review Team led by The Minister Assisting the Minister for Defence, the Honourable Bruce Billson has had extensive consultation with defence industry; senior policy executives in Prime Minister and Cabinet; the Department of Defence; Treasury; Finance; and the Department of Industry, Tourism and Resources.

This broad consultation was conducted to ensure the policy produced will be relevant and achievable. A series of roundtable discussions were hosted by Minister Billson in all capital cities as well as several regional locations; including Townsville and Newcastle and personal interviews were held with the heads of the government departments.

Those not involved in the roundtables were still able to comment, with all interested stakeholders invited to provide written submissions to the Review Team. This ensured that views were received from a broad cross-section of industry. Over sixty written submissions were provided to the Review Team by the close of the consultation process on 30 September.

While the draft policy statement will contain more specific details when released by the Minister, it is understood that the document will recognise the success of key elements of the existing policy base established by the 1998 Defence Industry Strategic Policy Statement.

The new policy will focus around 7 key ideas and objectives:

• There is a clear relationship between certain ongoing industrial capabilities and the ability for the Government to access them to effect a specific military advantage. The Government’s objective is to identify and sustain priority Australian industry capabilities;
• Value for money must be secured to ensure every dollar of tax-payers money allocated to Defence must generate the maximum possible military capability;
• A defence-industrial base in Australia is a military capability and strategic advantage in its own right, with clear benefits for capacity and redundancy. Therefore, Australian industry participation in Defence projects must be promoted;
• Industrial capacity is directly related to a deep, diversified and efficient supply chain. A small and medium enterprise industrial base must therefore be sustained;
• The Australian economy is currently experiencing the longest period of sustained economic growth ever. The demand for skilled labour is extremely high and a shortage of such people represents a risk to our industry capability. A trained and skilled workforce must be ensured;
• Substantial benefit accrues to our industrial capability if secondary markets are found for Australian defence-industry goods and services. The export of Australian defence products and services overseas should be facilitated; and
• To succeed in a military conflict, the ADF must incorporate the very latest technology in military applications. Governments, research organizations, defence-industries and the commercial sector all develop high-end technology in today’s global economy. A technology edge must be delivered to the ADF.

Stakeholders will have until early 2007 to comment on the draft defence industry policy statement before it is considered by Government in the first quarter of 2007.