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With the public version release of the Albanese Government’s much anticipated National Defence Strategic Review in April 2023 (referred to as the ‘Review’ herein), Australians were finally shown the early sketch-out of some connector-lines of logic between the previously drip-fed dots of information and media speculation about our region’s security plans and Defence spending.
In recent years, what has played out on our domestic news feeds in front of a backdrop of recent developing world events has been the Australian Government’s reactions to them in terms of rhetoric. We have seen reshuffling of diplomatic and strategic alliances, sometimes almost unwholesomely undiplomatic, such as in the case of the scrapped French submarine deal in September 2021 where international leaders’ emotion-driven responses were played out in the cold hard light of day (and on live-feed media). But mostly, we’ve seen adjustments, readjustments, and further tweaks still of Defence spend forecasts with little explanation.
The information has been scant because of the nature of the details and their impact on our diplomatic relationships.
Escalating tensions in Australia’s diplomatic relationships with its large northerly neighbour, its place in, and security of, the Indo-Pacific and examples of fast-developing conflict such as that of Russia’s military aggression towards Ukraine (perhaps geographically less relevant, but diplomatically telling in Australia’s support of the latter), has left the leaders of our country scrambling in the realisation that prior reviews and white papers of the Australian Defence Force’s (ADF) in the last 7-10 years have lost significant application and currency and that we are indeed behind.
In such a climate that we live in, further fuelled by a heightened pace of technological advances and modernisation of military and combat, leaves our Government contemplating an increasingly widening canyon between current Defence capability, preparedness and structure and that required in the new strategic environment.
Hence, the need for the fast-tracking of this Review. 
And the connector-lines of logic have been coming out quick and fast of late!
Just prior, the March 2023 surprise announcement of Australia’s commitment to purchase nuclear-powered submarines via the 2021 announced AUKUS alliance between Australia, the United Kingdom and the United States of America, was more ammunition for the press. The bombshell was not in terms of the strategic approach and parties involved, but the dollar investment to be made.
Estimates in 2016 warned us of a $50 billion spend for a new submarine fleet. That increased to a top of $171 billion in estimates as recent as 2021. And now? Now we are talking up to $368 billion! It’s like an auctioneer on red cordial is throwing these numbers out there!
But, as usual, comparability is in the context – and this time, the detail was there. The AUKUS deal dollar number is a 30-year spend estimate, a timespan unlike any other in government funding terms.
Furthermore, it is far more comprehensive an estimate than previous ones. As well as purchasing up to five US Virginia-class submarines and designing and building eight new AUKUS-class submarines, the current estimate also includes upgrading naval infrastructure, submarine production line development, workforce education and training and sustainment.
The latter elements, beyond the initial pure capability acquisition item, are where the connector-lines of logic to the ‘outside world’ (read local business community) really begin with this latest deal. The Defence business supply-chain will be relied on and challenged to step-up. The Review says as much and in no uncertain terms.
Whilst the full February 2023 internal release of the Review contains far more detail than the sanitised April 2023 version for our civilian eyes, including items too sensitive and classified for public release, it is also true that, at best, government advisory reviews such as this mainly serve as broad guidance and strategy steering functions anyway.
But the vitality of action in the Review is clear. What are the most common words and phrases in the report? Well, to name just a few:
- Enhanced lethality
- Acceleration and expansion of capabilities
- Accelerated preparedness
- Rapid evolving force and strategy
- Rapid translation of technology
- Immediate action
- Abandon pursuit of perfection and focus on timely and relevant capability
- Innovative and bold approach
- Lifting capability
- Optimised operation
- Whole-of-nation effort
- Back to fundamentals
- New Approach
- New markets and major changes …
There is certainly a strong flavour of calling Australia to action, and now!
Who will act? There is no doubt that private enterprise, in conjunction with government, will play a major part in figuring out and executing the practicalities, and driving, of the strategy in the five domains of defence, maritime, land, air, space and cyber.
Even the publicly released Review is clear in its specific areas of focus for improvement of security and economic enhancement. Investment in research and development, manufacturing and supply chains, recruitment and training for jobs in Defence and related industries and increasing output of domestically produced renewable energy, improving domestic fuel reserves and establishing a maritime strategic fleet.
Key actions likely to impact positively on local business supply chains and employment markets include the Review’s recommendations of:
- Infrastructure development to improve the ADF’s ability to operate from Australia’s northern bases;
- Investing in the growth and retention of a highly skilled Defence workforce; and
- Partnering with Australian industry in developing new disruptive technologies.
In Western Australia, the Review strongly recommends the upgrade of HMAS Stirling in Rockingham to support the higher frequency of submarine visits. Up the road in Henderson, the report also strongly recommends the development of the long-anticipated dry-dock at its world-class Australian Marine Complex (AMC) for construction and sustainment of naval vessels. It also recommends the remedying of the workforce, layout, development, and stakeholder relationships in Henderson in relation to the AMC facility.
Billions upon billions of dollars will be needed for these recommendations in WA alone.
In terms of maritime capability development, the east of Australia has also not missed out. For example, workforce and infrastructure development is encouraged for the Osborne shipyard in South Australia and development of an east-coast nuclear-powered submarine facility is also suggested.
But what of direct business funding? Probably not coincidental to the Review’s timing, also in April 2023, the WA State Government announced a $2.5 million program to incentivise the development and delivery of training courses to assist in upskilling workers for the Defence-relevant industry. 
This and the other Australian States’ and Territories’ existing and future Defence industry incentivising initiatives, on top of several existing and future Federal
Government grants and programs relevant to the Defence sector, will help increase the size and capabilities of the local Defence supply chain.
We all know that doing business with government departments, or government contractors, can be a lengthier process and a market harder to infiltrate than in a purely private commercial environment. This is due to government process and protocol, security, equality in consideration and assessment and other factors that naturally take time.
Defence is no exception, and indeed has a reputation for having higher barriers to entry than most. Rightly so, given the potential dire consequences of inadequate process and security.
Defence in Australia has some great government conduit organisations to help business work with the ADF such as the Office of Defence Industry Support (ODIS). But obviously, for the barriers to be lowered further to achieve this ramp-up of industry interaction, more help is needed.
The Review supports the Australian Government’s commitment to establish a link between Defence and innovative Australian companies, other than the Prime Contractors, through the establishment of the Advanced Strategic Capabilities Accelerator (ASCA) government-industry conduit to help accelerate technology development.
In terms of the Defence strategy on an ongoing basis, the Government has committed to an inaugural National Defence Strategy in 2024 with biennial updates. Whilst the devil will be in the detail of the ongoing strategy, the intent to streamline and make capability building and acquisition smoother, more efficient and better has been set by the recent Review.
The proof will, of course, be in the pudding if the Australian Government and the ADF can deliver what they clearly want.
And if it does, is your business Defence ready and ready to respond to the call for action? RSM has a Defence specialising team who can help.
FOR MORE INFORMATION
Our team, consisting of, Tom Huberli, Simon Harcombe, Jeff Xie and Johan van den Berg is your holistic service financial /advisory team for Defence.
