Defence shake-up

Reports of a major Defence shake-up continued to persist this week. Reports in major newspapers pointed to a shake-up of the bureaucracy including cutting up to 25 star ranked positions and 40 public service executive posts. Reports suggested the Global Weapons Explosive Enterprise Group could be rolled in to a new armaments directorate along with the Capability and Sustainment Group and Naval Shipbuilding and Sustainment Group. A shake-up of the Australian Submarine Agency is also on the cards as a result of the review by former defence secretary Dennis Richardson. AIDN reported last week that a 10 per cent cut to maintenance and sustainment had already been imposed to find sorely needed funds to support Defence. The defence shake-up comes with little progress in the debate over the adequacy of defence spending. US Defense Secretary Pete Hegseth has appealed to Australia to lift its defence spending to 3.5 per cent of GDP or around an extra $40 billion a year. But the Prime Minister Anthony Albanese has so far resisted the overtures from Australia’s senior alliance partner even though many US allies including 31 North Atlantic Treaty Organisation countries have agreed to do more of the heavy lifting as has the UK. Mr Albanese jets off for a six-day visit to China focussed on trade and investment having still not held a meeting with US President Donald Trump in the latter’s first eight months in office. Fears are also held for the US AUKUS review (which according to the latest reports is a bit more substantial than 30 days) to see if its most vulnerable tenet survives. The US has pledged to sell Australia three to five Virginia class submarines from 2032, though shipbuilding constraints may see this falter despite Australia promising to invest $US3 billion.

US Tariff impact to worsen

Australia will soon be subject to a 50 per cent US tariff on copper as well as 50 per cent on aluminium and steel. This is in addition to the 10 per cent general tariff on all imports in to the US as the Trump trade war escalates. The latest copper tariff blow was announced by the US President Donald Trump on July 9 and is likely to operate from July 31/August 1. Australia while not a major direct exporter of copper to the US, is a supplier to China and could suffer a detrimental upstream impact. The move will also impact on exporters who use copper in their products. President Trump has also flagged a 200 per cent tariff on pharmaceuticals which is a major Australian export to the US. Though he says he will provide manufacturers with sufficient time to move production to the US before implementing this measure. Australia imported about 2 per cent or $800 million a year in steel and aluminium to the US, prior to the first round of tariffs. AIDN has called for the US and Australian governments to mitigate the negative impact of tariffs and not allow them to disrupt essential defence trade. Deputy Prime Minister and Defence Minister Richard Marles has said the Albanese government continues to lobby Washington over Defence tariffs.

Defence Industry input to Economic Reform Roundtable

Defence Industry Minister Pat Conroy will convene a meeting of defence industry leaders on August 11 to pull together ideas to put to the Treasurer Jim Chalmers’ Economic Reform Roundtable. Minister Conroy revealed the Defence Industry consultation plan in a speech to the Hunter Net F-35 in Australia 10-year anniversary luncheon in Newcastle on Wednesday. AIDN CEO Mike Johnson is one of those invited to provide input on behalf of the vital Defence SME sector. The Minister indicated many Defence firms could identify examples where the defence dollar was not being used efficiently. The Minister said he believed the Treasurer’s productivity agenda could play an important role for defence industry. Minister Conroy said he would be asking industry leaders for ideas to take to Dr Chalmers on how to make Defence a better customer and improve productivity. In a speech at the National Press Club, Dr Chalmers said all ideas were welcome at the August 19-21 Economic Reform Roundtable. He said there were some parameters in that ideas had to be budget neutral or positive and had to be practical and capable of implementation. Plenty of proposals are expected to be put including around tax reform, workforce and skills initiatives, the adoption of new technologies, research and development, and growth and productivity. The period for public submissions opened on June 27.

DroneShield lands Five Eyes deal

Defence technology company DroneShield has announced an $11.7 million research and development contract with a Five Eyes Department of Defence customer. The follow-on two-year contract involves a customer from the Five Eyes defence and intelligence alliance between the United States of America, Canada, the United Kingdom, Australia, and New Zealand. The contract is the fourth research and development award with the same Department of Defence customer and follows successful completion of the earlier $9.9 million contract announced on 4 July 2023. DroneShield has previously received three research and development contracts, including two follow-on contracts from this DOD customer in November 2020, June 2021 and June 2023, totalling approximately $14.4 million. DroneShield chief executive officer Oleg Vornik suggested multiple follow-on contracts were the ultimate customer measure of DroneShield performance.

Diggers ongoing support for Ukraine

Australia’s support for the multi-national mission to train Ukrainian military personnel continues to evolve, three years after Russia’s 2022 invasion escalated a conflict that began in 2014. Head of Australian Defence in London, Air Commodore Matthew Harper, said Australia’s support of the operation was “steadfast.” “Our objectives are twofold – to support Ukraine to resolve the conflict on its terms, and to impose costs on Russia for its aggression,” Air Commodore Harper said. On June 26, 2022, the United Kingdom launched what would evolve into a multi-national operation to train Ukrainian personnel – Operation Interflex – with an initial target to train 10,000 troops. It has now trained more than 56,000 personnel, with 13 countries involved. To date, Australian Army personnel have trained more than 2900 members of the Ukrainian Armed Forces, under Operation Kudu. Soldiers are trained in urban and trench warfare, weapons handling, battlefield first aid, field craft, patrol tactics and the Law of Armed Conflict. The training has expanded to include a junior leader training program for section commanders, platoon commanders and company sergeants.