Sovereign defence industry – a deterrent effect. Part 2: The comparison

In Part 2 of our series, we begin to address the comparison between Defences’ current methodology and industrial manufacturing capacity to that of our regional competitors.

The ability to develop and deliver hard power capabilities, timely and on budget, acts inherently as a deterrent in times of heightened regional tension, reducing the need to rattle sabres and exchange rhetoric. The latent deterrent power of the industrial base is only in effect if industry is engaged by a defence force that acquires and develops technology efficiently and cost-effectively.

Defence’s current methodology of initiating projects to introduce new capability is siloed, and results in a ‘stop-start’ project management approach that offers little to no continuity across capability production and delivery lines. Last year’s announcement by Deputy Prime Minister Richard Marles, that Defence is cumulatively 97 years behind schedule and $6.5 billion over budget is a stark reminder that what we are doing is not working.

Former Army Major General Mick Ryan has drawn the parallel between Australia’s current strategic outlook to the one it faced in 1942 as the Imperial Japanese Army advanced through Southeast Asia and the South Pacific. Drawing upon the lessons from the past, Ryan articulates the concern that “Australia, having divested itself from large parts of its manufacturing capacity and not having invested in innovative thinking about future military and defence strategies and operations for many years, needs to reinvigorate its thinking and action rapidly”. (Ryan, 2022)

Whilst Australia’s major capability acquisition pursuits range from several years to several decades (and with little indication of sovereign industry featuring as a DSR priority), China’s People’s Liberation Army – Navy (PLAN) commissioned 28 warships between 2021 – 2022. Having already surpassed the size of the U.S. Naval fleet, China could have 440 combat-ready ships in the water by 2030 if it maintains a similar rate of production. Within the context of these contrasting rates of manufacturing effort, Defence’s Capability Lifecycle process acts as a constraint, rather than an effective driver of Australia’s industrial capacity, which ultimately poses little to no deterrent effect that can be relied upon to support Australia’s strategic objectives in the region.