Suggestions that economic gains from Australian defence projects are overstated (Little bang for bucks in arms build-up – AFR 21 August) must be addressed, as they are misleading and once again pour cold water on the opportunity available to the nation.
One of the projects that has been questioned is the Hunter Class Frigate Program, which will deliver nine of the world’s most advanced anti-submarine warfare frigates to the Royal Australian Navy. This program is by far the largest surface ship project in Australia’s defence history, and one whose scale alone will ensure that the national gains will be transformational.
A BIS Oxford Economics report revealed at its peak in 2028, the Hunter program will contribute more than 6,300 jobs and around $1 billion in Gross Domestic Product to the national economy. And, over its 30-year life, the program is estimated to contribute a total of $17 billion to national GDP. In fact it is estimated that for every $1 we spend on the program, the Australian economy will be boosted by $2.30, while for every 10 direct jobs the program creates, 27 will be created across the Australian supply chain.
These are big numbers, however the contribution to our nation’s economy goes beyond scale. The program will also hugely benefit, and grow, Australia’s defence supply chain, growing existing companies and creating new companies delivering technologies that we are yet to imagine. Nearly 900 Australian businesses have already pre-qualified to supply to this national endeavour, and this number just continues to grow as we educate and inform companies across the country - positioning for Australian defence exports at a platform or capability level.
During the prototyping phase of the Hunter program alone – which commences at the end of 2020 – Australian businesses can bid for an estimated $20 million in contracts. Each contract win encourages new technologies and innovation and supports supply chain growth.
Crucial to the economy is the global nature of the Global Combat Ship endeavour that Australia is now a part of. The Hunter frigate is an evolution of BAE System’s Type 26 Global Combat Ship, which the company is currently building in Glasgow for the UK Royal Navy. And now Canada, too, is building the frigates. Three countries building ships with the same basic design means opportunities for companies to export into each program, and this is already happening. This economic benefit has to be considered too.
But ultimately Hunter is more than building frigates. It’s also about the creation of a world-leading Australian sovereign naval shipbuilding industry. An industry that will require the development of skills, knowledge and engineering capability, all housed within the most modern, most advanced, digital shipyard the world has ever seen.
The value of assessing the economic impact of an individual defence program should not be underestimated. Australian taxpayers deserve this transparency. However, the real value of Australia’s defence spend goes beyond the program itself. In the case of shipbuilding, the vision of ASC Shipbuilding, BAE Systems Australia’s shipbuilding business, and the company I work for, is an Australia where future warships are designed and built right here, in Australia. This therefore limits our need to buy offshore in the future.
This will provide the most up to date capability to the Australian Defence Force for generations and create a technologically advanced industry that our economy needs and deserves.