NIOA’s CEO for Australia and New Zealand, Ben James, has called on Defence to rally behind industry in the wake of revelations that thousands of contractors face the axe.

James’s plea was triggered by a recent media report which revealed that Defence is planning to purge contractors in a raft of budgetary measures.

The boss of the biggest Australian-owned supplier of munitions to the ADF last night (Eds: Thursday, July 27) told Queensland’s premier defence gathering in Brisbane that Defence’s cost crackdown risked undermining industry engagement and confidence amid a regional environment which he described as “an increasingly rough neighbourhood”.

“Properly harnessed; motivated and engaged industry partners bring market expertise, private capital and investment and superior agility to capability delivery that is beyond the capacity of government agencies acting in isolation,” James told AIDN Queensland gala dinner guests.

“In that sense, there will need to be a degree of calibration and nuance in what the AFR described last month as Defence’s ‘War on Contractors’.

“A vibrant, viable and functional defence industry base is a critical pillar in achieving the strategic depth we seek in an increasingly rough neighbourhood.

“Conversely, a weak, short-sighted and bureaucracy-bound industry base could represent a harbinger for a catastrophic failure of credibility in deterrence.”

With Australian defence and foreign ministers and their American counterparts in Brisbane this week for the annual AUSMIN talks, James seized upon the timing to emphasise the critical role of allied sovereign capability.

Regional defence and security will be high on the agenda when Defence Minister Richard Marles and Foreign Minister Penny Wong meet with US Secretary of State Antony Blinken and Secretary of Defence Lloyd Austin.

“One of the stated aims of this week’s AUSMIN dialogue is to establish a combined logistics, sustainment, and maintenance enterprise to support high‑end warfighting and combined military operations in the region,” James said.

“The US is currently pursuing changes to Title 3 of the Defense Production Act which would allow Australian based production and manufacturing to be listed as a US domestic source.

“The Defence Strategic Review itself calls out the need to manufacture munitions in Australia.

“If all of these initiatives are important and central to Australia’s defence posture, I would contend Defence needs to go to war in partnership with industry, rather than slashing sovereign industry contributions in the wake of Major Service Provider misconduct and an urgent need for budget savings.”

James’s address resonated with more than 345 stakeholders, including industry leaders and SMEs from throughout Queensland, many of whom were at the same event last year when he warned Australia “is well off the pace” in building a reliable defence industrial base.

The former Brigadier said the defence industry was navigating through challenging times, and the importance of collaboration between government and industry was greater than ever.

“From a Defence industry perspective, the DSR was scathing of CASG, finding ‘the current approach to capability acquisition as unsuitable in our strategic circumstances’,” he said.

“Similarly, the review found that the Guided Weapons and Explosive Ordnance (GWEO) enterprise, established after the Strategic Update in 2020 to ‘support missile and guided weapons manufacturing for use across the Australian Defence Force’, lacks required workforce and is yet to produce a strategy.

“Now, the DSR informs us, the GWEO Enterprise has until quarter two 2024 to determine options for the increase in guided weapons and EO stocks, including the rapid establishment of domestic manufacturing.

“So, four years after the Strategic Update identified the ‘military modernisation faster than we had expected’ in our region, the ‘deployment of new weapons by our adversaries that challenge Australia’s military capability edge’ and ‘greater intensity in major power competition’, we will have options presented to Government to increase EO stocks an rapidly establish domestic manufacturing… without a penny of new money to achieve as much.

“The misalignment between how we see and describe our region and the pace at which we are implementing necessary changes to industry settings are a case of ‘talking the talk’; but not ‘walking the walk’. Our audio is not matching our video – we’re not being fair dinkum.”

NIOA Australia and New Zealand CEO Ben James, at last night’s AIDN Queensland dinner, has called on Defence to back local industry in challenging times.