Industry expert delivers forecast for Defence Strategic Review
February 10, 2023
Photo: Defence Connect
The Defence Strategic Review release date is fast approaching as Defence Connect sat down with XTEK Group chairman and industry insider Mark Stevens for his forecast of the Australian Defence Force and defence industry changes.
Prime Minister Anthony Albanese and Deputy Prime Minister and Minister for Defence Richard Marles announced the details of the Defence Strategic Review (DSR) in August last year.
Following a Defence Strategic Update in 2020 and Force Posture Review in 2012, the new review will assess and restructure the Australian Defence Force to meet global and regional security challenges.
What changes should the Australian defence industry be expecting from the DSR?
“I think that the Defence Strategic Review will talk about key areas of how we can do more local manufacturing. That’s inevitable, but I don’t think it will be as broad based as everyone thinks,” Mark Stevens said.
“The government has been talking about Australian Industry Capability (AIC) Program (defence opportunities for Australian companies) since they came to power but it’s not the defining characteristic that it was for the previous government.
“Where AIC might have caused a project extension or a poorer quality result it won’t be as important as it has in the past. As a manufacturer, we expect to be doing more here (in Australia) but it won’t be universal (for all companies).
“There’s a growing awareness that we cannot be doing everything (across air, land, and sea).”
Former minister for defence Professor Stephen Smith and former Chief of the Defence Force, Air Chief Marshal Sir Angus Houston, are both conducting the review and are scheduled to deliver it early this year.
What funding changes would you expect to see in the DSR for the Royal Australian Air Force, Royal Australian Navy, and Australian Army?
“I think we will see an acceleration for land forces with anything applicable for the Pacific region and we can expect these will be fast tracked. I think we will get a number of infantry fighting vehicles but they will be a reduced number,” Stevens said.
“If you look at the combined arms system that the ADF has been building towards for some years. You’ve got the attack and heavy lift helicopters, self-propelled and towed artillery, HIMARS and tanks. All the pieces are in place.
“People seem to think about zeroes and ones for each branch, who is getting funding and who is getting cut. Certainly there is a focus on other things (this time) such as missiles, unmanned projects, more ships and maybe getting another squadron of F-35s (combat aircraft) or some B-21s (strategic bomber) but in relation to the Australian Army, it’s about foundation and building capability on a fifth-generation battlefield.”
What does this year hold for the XTEK Group?
“We’re one of 18 defence companies listed on the Australian Securities Exchange. We have come out of a period of flat earnings, however, shareholders are now getting a reasonable return,” Stevens said.
“We are on the hunt for acquisitions both here in Australia and in the US to add capability. We’re interested in getting into the US Department of Defense and there is some consolidation of the market expected in Australia.”
Stevens was appointed to the XTEK board of directors in February last year. He is the founder and managing director of Arican and a 1984 graduate of the RMC Duntroon who has served for 10 years as an infantry officer. He has also been the defence lead for IBM Australia and led more than 250 deals into Defence since 1999.