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Speeches

South Australia- The Defence State Dinner Speech ( Land Forces 2014)

Sunday, 21 September 2014

South Australia is serious about Defence. It’s a critical sector for our State, creating long-term employment, attracting significant investment and driving innovation. It forms the foundation of our advanced manufacturing future, and is increasingly important with the loss of the State’s automotive sector.

South Australia’s defence sector employs around 27,000 people directly and indirectly, which contributes around $2 billion to the state’s economy each year. Our industry consistently attracts around one quarter of Defence’s in-country spend on platform acquisition and sustainment. This is an outstanding achievement in anyone’s language.

Clearly defence is a high growth and highly productive area of our economy, but this is not an industry without challenges. One of the state’s flagship defence projects, the $8 billion Air Warfare Destroyer project has received its fair share of attention lately, facing budget and schedule pressures.

I am confident the South Australian defence industry has the capacity to work with the measures announced in the Winter White Review, to ensure this project is delivered as effectively and efficiently as possible.

South Australia has a significant interest in the successful delivery of AWDs to the Australian Navy. We are the second largest investor in this program, which is highlighted by our highly capable Techport Australia facility at Osborne. The State remains firm in its partnership with the Commonwealth and the AWD Alliance and stands ready to support any efforts to ensure the program succeeds.

In addition, many companies, particularly Small to Medium Enterprises are hurting as a result of drastically reduced Defence spending over recent years, as a result of Australia’s strategic and fiscal environment.

These immediate savings measures, coupled with Defence’s traditional stop-start work programming, have been incredibly challenging for industry which is seeking to maintain and build on its capabilities and capacities in preparation for upcoming major projects, like the future frigates and future submarines.

In collaboration with other states, South Australia remains highly active in advocating for improved Defence programming to provide workflow continuity. South Australia believes defence investments should be focused on creating jobs in Australia rather than overseas through military off the shelf purchases. For every dollar spent on the purchase or build of this equipment, two dollars is spent on maintenance and through-life-support. There are better economies of scale in the long run if the equipment is built here and maintained by companies and workers who understand how it was constructed.

And despite consistent innuendo being circulated through the media, we expect major work on our submarines and frigates to be focused on South Australia. Let me be very clear, Defence capability decisions are rightly a matter for the Commonwealth – South Australia is agnostic on which submarine design is ultimately selected. The State is committed to supporting the Commonwealth and industry develop and deliver the project successfully, irrespective of the design option selected.

It is important though that a transparent and competitive acquisition process be carried out, to enable the Commonwealth to make fully informed decisions, on a whole of life cycle basis – while also allowing due consideration to achieving a premium result for Australian industry involvement.
This is true of all major defence procurement decisions, including Land 400.

South Australia is the logical strategic and commercial location for Land 400, particularly when you add our strong Australian Defence Force presence and existing infrastructure into the mix.

This includes our Techport Australia facility, which is the nation’s pre-eminent naval shipbuilding and repair precinct. The South Australian Government has invested more than $300 million into the development of Techport Australia. This includes a $255 million Common User Facility, which is the centrepiece of the State’s commitments to the AWD project including a wharf, runway, dry berth, transfer system and the largest ship lift in the southern hemisphere.

There is an expansive, fully integrated industrial Supplier Precinct. This is complimented by a Commercial Precinct housing the Maritime Skills Centre, delivering the trade and technical skills required for the AWD project. And finally an AWD Systems Centre, which is the national project headquarters for the $8 billion AWD project, and Raytheon Australia’s South Australian headquarters.

Techport Australia brings together a critical mass of high-end naval and defence expertise, with approximately 3000 workers employed across the precinct. The world-class infrastructure and critical mass of warship design, systems integration and construction skills provide the perfect foundation for a long-term sustainable maritime sector.

There is significant investment on the horizon with the Commonwealth set to expend around half a billion dollars in upgrading the Woomera Test Range, Cultana and RAAF Base Edinburgh to accommodate increased Defence activity.

RAAF Base Edinburgh is home to twelve percent of Australia’s Air Force personnel including Australia’s maritime patrol capability. Our new P-8 aircraft and Triton UAVs will also be based at Edinburgh. The largest site for the Defence Science and Technology Organisation is located adjacent to the base, with some 1300 scientists, engineers and support staff.

In terms of the Army, the 16th Air Land Regiment of the 6th Brigade has been based at Woodside for many years. And now major elements of the 1st Brigade, including the 7th Battalion Royal Australian Regiment are also based in South Australia.

To ensure the smooth relocation of personnel to Adelaide, the State offered a support package of more than half a million dollars. Coordinated by Defence SA, the 7RAR State Support Package included dedicated resources across health, education, transport services and employment agencies to ensure the needs of relocating families were well catered for and to ensure the smooth transition of partners and children into these related systems.

In addition the State Government, in conjunction with the Cities of Salisbury and Playford, committed $20 million towards building road and rail works to improve connectivity and ease pressure on the existing transport network. These works were completed in mid-2012 to support increased Defence activity within the Edinburgh Defence Precinct.

In January, we also saw the raising of a squadron of the new Armoured Cavalry Regiment in Horseshoe Barracks at the base as part of Plan Beersheba. That Regiment of course will be a major user of the proposed Land 400 vehicles.

Another of South Australia’s key precincts is the Cultana Training Area in the State’s north. This has been expanded five-fold and is now arguably Australia’s best all-weather training area for manoeuvre of armoured vehicles. The State Government has strongly supported the Cultana expansion process since it was announced in 2005.

The State has granted Defence a Miscellaneous Lease for Defence Purposes over the Cultana Expansion Area, expanding this training precinct from 50,000 to 209,000 hectares. Defence is expected to spend up to $50 million to develop the expanded training area and has undertaken to use local businesses wherever possible for construction activities, upgrading of essential infrastructure and services ongoing maintenance, environmental management and provision of supplies.

The much-anticipated expansion will increase troop numbers in the State and boost the Defence sector’s contribution to the economy. The Cultana Training Area currently contributes around $1 million each year to the local economy.

In the Far North, the Woomera Prohibited Area is a globally unique 124,000 square kilometre defence testing range. It represents over 12 per cent of the State, supports approximately 250 jobs and contributes almost $18 million each year to the local economy.

In July this year the passage of the Defence Legislation Amendment Woomera Prohibited Area Bill was confirmed. This helped create a new coexistence regime for the testing site, providing a greater certainty of access and use for all users. Ensuring a better balance between national security and economic interests in the area.

While Defence will remain the primary user of the area for testing and evaluation, the new legislation sets out access rights for non-Defence users, a permit scheme, compensation and enforcement provisions and an appeals process. It also preserves the right of existing users (particularly aboriginal groups and pastoralists) to continue to operate under their current access arrangements. This is a win-win for the important principles of multiple land use and coexistence between the vital industry sectors of resources and defence, which will drive economic growth and prosperity in the next decades.

Which brings me to Land 400, which is one of the largest active Armoured Fighting Vehicle programs in the world. In importance it is Army’s equivalent to Air Force’s Joint Strike Fighters and Navy’s future submarines. It will deliver a core capability for Army – and as an ex SAS officer I know firsthand the importance of arming our soldiers with the best equipment to ensure they can do their job and remain safe.

The project offers the chance to build a long term, sustainable Australian industrial capability which is able to provide the Army with ongoing support. I recently met a number of the international defence primes likely to bid for Land 400. They all expressed to me a strong willingness to undertake more work in Australia, than might normally be sought through the request for proposal process. They also indicated that this can be achieved cost-effectively.

That is why it is absolutely critical that the right parameters are determined at First Pass. The decisions made now will effectively determine whether Land 400 will be delivered offshore, or vehicles are assembled and sustained in Australia. South Australia continues to advocate for an Australian built whole-of-program and whole-of-life approach, which will ultimately drive the best-value outcome for Land 400.

We are seeking a staged acquisition process, which would include the separate contracting for sustainment. We want to encourage overseas bidders to consider Australia build options. South Australia believes First Pass is an opportunity to set a mandate that bidders must submit a Manufactured and Supported in Australia option, in addition to a best value option. Secondly for the winning bidder to sign a long term performance based Through-Life-Support contract.

And finally to seek offers that meet both vehicle capability requirements at the same time, including Combat Reconnaissance and Infantry Fighting vehicles. These rules of engagement will drive partnerships between overseas bidders and local industry. It will create sustainable in-country capability, with benefits for Army as well as more broadly throughout the economy.

This is not a pitch solely for South Australia. It is a proposal to maintain armoured fighting vehicle manufacture and sustainment capability in this country. Australians for Australian jobs.

The scale and complexity of this project demands genuine collaboration across all levels of government and industry, and across all states, to capitalise on this opportunity – in the national interest. Only this approach will allow for thorough evidence based comparative evaluation of potential premium for Australian industry involvement in Land 400, weighed against the benefits to Army and the nation. The Commonwealth can then determine the best solution. 

Regardless of the approach ultimately taken by the Commonwealth, the South Australian Government wants to create a long-term sustainable armoured fighting vehicle industry in our State.

We have established a reputation as one of Australia’s leading military vehicle manufacturing and sustainment hubs. Indeed, all Australia Armoured Fighting Vehicle manufacturing programs for the last quarter of a century have been managed from South Australia.

BAE Systems designed and upgraded the M113AS4 Armoured Personnel Carrier from Adelaide. While GDLS managed and delivered the Australian LAV program from Adelaide. Both companies were able to successfully draw upon the highly skilled resources of our local defence, automotive, systems engineering and heavy engineering companies. With this proven track record we can confidently target Land 400.

To that end, we are engaged with all potential bidders to promote the State’s credentials and explore how we can best assist them to improve their win probability. I confirm my Government’s resolute commitment to support the delivery and sustainment of their vehicle offering from South Australia. We are prepared to make significant strategic infrastructure and other investment to ensure that South Australia is home to the Land 400 project in Australia.

Central to our offering is the creation of a unique Land Combat Systems precinct, in partnership with Defence and industry. The precinct would bring together all the government and industry infrastructure needed to build, sustain, develop and upgrade the system over its life.

As many of you would well know, Land Combat System components such as artillery, helicopters, communications, armour, sensors and weapons operate on the battlefield together as one system. Historically though, they have not been supported as a single system. As the battlefield becomes increasingly complex and dynamic, and all elements are predominantly software driven, the degree of integration needed is increasingly significant.

There’s a growing need to integrate their support as a ‘system of systems’, to allow the Land Combat System to be continuously optimised to support operations and evolve as a single integrated system into the future. So, just as we developed the world-class Techport Australia precinct, to support Defence and the naval industry – we see an opportunity to invest in infrastructure to support Army and the Land Combat System.

Land 400 would form the initial core of the precinct, which would be designed with flexibility to enable growth and transformation through the life of the wider Land Combat System. It would be custom built to support a successful project delivery and ongoing integration and sustainment of the system.

The facilities would include a centrepiece LCS Reference Centre, providing a controlled environment to enable system fault rectification, testing and integration to minimise operational disruption and evolve the system over time. We will build Defence Project and Sustainment Offices, starting with Land 400. A purpose designed manufacturing facility for the Land 400 build, sustainment and upgrade, with room for storage and expansion.

We will build an additional plant to support other major Land Combat System projects, with links to an upgraded Combat Training Centre at Cultana and a national simulation network. As well as an industrial precinct for small and medium businesses who would take a leading role in supporting the Land Combat System.

One key feature will be a common-user industry proving ground, including a test track, weapons and sensor alignment facility and NATO-standard obstacles. This will be supported by a dedicated rail loading platform and nearby amphibious ship loading facility. There will also be education facilities to develop Land Combat System specific skills. By housing all expertise and vital infrastructure in one precinct, this will greatly enhance systems integration and ongoing Defence and industry collaboration.

We are engaged with the Australian Government, proposing joint investment in the development of the Land Combat Systems precinct. South Australia has two large state-owned greenfield sites, which are available for development of the precinct: Firstly the Osborne site, which is adjacent to our international port and roll-on roll-off facilities as well as Techport Australia. Secondly Edinburgh Parks, which is in close proximity to end users and the RAAF Base Edinburgh.

South Australia stands ready to partner with Defence and industry to deliver Land 400. No one does defence like South Australia – no one. It’s why we’re known as Australia’s Defence State.

If you invest in South Australia, the government will be your partner. The business community will support you. The community will embrace you. I leave you with our vision for the Land Combat System precinct in South Australia and I look forward to talking with many of you over the coming days to explore the opportunities.

*note speech subject to change in delivery*