You are here

Advanced Manufacturing and Defence Industries – Defence Industry

Dr Rosalie Woodruff MP

Dr Rosalie Woodruff MP  -  Thursday, 9 June 2022

Tags: State Budget

Dr WOODRUFF - Minister, how many people are employed in defence industry manufacturing, what is the contribution to GSP and how do those numbers compare to the manufacturing industry more broadly?

Ms OGILVIE - I have some information here. In relation to key statistics, I'm just going to check whether it actually has an employment statistic. I think we have the internal ones but you were asking about economy-wide - is that your question?

Dr WOODRUFF - In Tasmania, how many people are employed in defence industry manufacturing and what is the contribution of that manufacturing industry to our GSP?

Ms OGILVIE - I think Mr Bowles has that information available.

Mr BOWLES - Can I confirm you're after just defence industry, not -

Dr WOODRUFF - Defence manufacturing industries.

Mr BOWLES - Defence manufacturing. For the defence industries, employment for -

Dr WOODRUFF - Not just defence but the defence manufacturing industries.

Mr BOWLES - We commissioned SGS Economics to undertake a survey of defence industry employment because data at this level of specificity isn't available through the Australian Bureau of Statistics. The data we have is that total employees for that sector is 1374 with full time equivalents of 617. This includes all suppliers into defence. The vast majority of which are manufacturers.

Dr WOODRUFF - Just to be clear, it doesn't include defence force personnel?

Mr BOWLES - Not this figure.

Dr WOODRUFF - Minister, there are 6700 Tasmanians employed in food product manufacturing, 2100 in machinery and equipment manufacturing, 1700 in primary metal and metal product manufacturing, 1500 in wood product manufacturing, 1000 in transport equipment and 1000 in furniture manufacturing. Under the ANZSIC industry codes used by the ABS these are all the subdivisions of manufacturing. Defence manufacturing is not represented in the ANZSIC subdivisions. In fact it's so small it's not even represented in industry groups, which is a further breakdown of their subdivisions. Why then, out of all manufacturing does the defence industry get the special privilege of being part of your portfolio title?

Ms OGILVIE - Because I'm a very fortunate minister. I think the information and the details you just shared with us were ABS data on a nationwide level?

Dr WOODRUFF - No, they're Tasmania.

Ms OGILVIE - That's what I'm asking.

Dr WOODRUFF - Tasmania, yes.

Ms OGILVIE - I would like to reiterate that we have had the detail about those employed in advanced manufacturing. Advanced manufacturing in defence industries is a really important niche sector for Tasmania, being a maritime state. It's incredibly important that we build on the capacity that we have here and that we've developed over the last 200 years in our maritime and shipbuilding and defence industries. We look for those niche opportunities to connect our existing businesses and their capabilities into opportunities in defence contracting. It is a large market. The rear admiral is right across this issue and I would like to ask him to speak a little bit about -

Dr WOODRUFF - Thank you, minister, the question was to you about your ministerial portfolio. It's actually not the question about the detail of what gets done, it's about -

CHAIR - Order, Dr Woodruff. That's very disorderly. The minister has the call. She's able to seek advice if she wishes and will provide an answer to your question.

Mr OGILVIE - Thank you, yes, I would like that.

Dr WOODRUFF - her own agency title, that's interesting. Why have you added it in there?

CHAIR - Dr Woodruff, I'll remind you that you are not an appointed member.

Dr WOODRUFF - It's a political question.

Ms OGILVIE - If you could assist a little.

Mr GILMORE - Thank you minister, I'm pleased to add to what you've said. This focus on further developing the defence industry within the state was a journey that began four years ago at the national prompting from the Commonwealth Government after the 2016 defence white paper. This forecast the need and detailed the specific requirements to grow the Australian defence capability across the board, importantly under a sovereign banner so that Australia could do more for itself. It allocated $195 billion over the coming decade. We're half way through that, and that's been increased to $270 billion. With that sovereign capability requirement came the need for all states and territories to make a greater contribution to the national endeavors. I understand that in 2016-17 the then federal minister for Defence Industry came to Tasmania, and all states and territories, and urged that more would be done.

The Tasmanian Government, as I understand at the time, developed a strategy to meet that challenge, to grow our sector, to increase the number of people employed and the overall contribution we've made. We refined that strategy in 2018. Since then we've been making a much greater contribution -

CHAIR - Time for this answer has expired. Mr Wood, you have the call.

Dr WOODRUFF - Minister, how much of the budget for this portfolio is directed to defence industries manufacturing and how much is directed to food industries manufacturing support?

Ms OGILVIE - I am not sure if I have that level of detail. Secretary, I'm wondering if you have that information or it might be something that we have to obtain.

Mr EVENS - In terms of our Advanced Manufacturing and Defence Industries budget, we don't break it down by sectors. Having said that, we do have an allocation to support the Defence Industry Strategy. Mr Bowles has the details of the funds allocated to support that strategy more broadly within Advanced Manufacturing and Defence Industries.

Mr BOWLES - For 2022-23, the budget allocation for the Defence Industry Strategy is $1.2 million out of a total budget for the Advanced Manufacturing and Defence Industries portfolio of $8.9 million.

Dr WOODRUFF - Minister, do we have an advanced food product industry strategy?

Ms OGILVIE - I don't think we have a strategy but we have a capability. Mr Bowles, I don't think we have a specific strategy, do we?

Mr BOWLES - The Advanced Manufacturing Action Plan and all the programs that we run through the advanced manufacturing program are available for all subsectors within advanced manufacturing. That includes machinery component manufacturers, food supply and beverage manufacturing. We've been working increasingly with, for example, the growing distilling industry and other technology manufacturing sectors as well. Across the advanced manufacturing program we don't specify subsectors. All of the program's businesses compete on their own merits.

Dr WOODRUFF - Thank you. So we've got $1.2 million out of $8.9 million directed towards the Defence Industry Strategy and the advanced manufacturing defence industries employ 10 times fewer people than the food product manufacturing industries and far fewer, probably a couple of per cent relative to all the other advanced manufacturing industries and yet it has an extremely disproportionate emphasis from the department. I don't understand where the advantage for Tasmanians is coming from. We certainly need to have food security and we need to be able to have our own on-island capacity for lots of things. Arguably defence advanced manufacturing is a small component but it's very large in what your Government is giving.

Ms OGILVIE - There is an amazing opportunity for growth in this area. We know, for example, that the Australian Government is investing more than $270 billion over the next 10 years in new defence technology and equipment. This is a massive opportunity for our small state, particularly as a maritime state, where our advanced manufacturing, in particular, revolves around a lot of ship building and with that capacity that we have we're able to delve into and win contracts. It's really important, I think, for balance in Tasmania that we not only have those beautiful areas you've spoken about, food manufacturing and all the other industries that we have, but we also have some high end engineering and some high end technology capability. We know that the Australian Maritime College and the University of Tasmania is focused on this. We're really proud of that capacity, so to be able to use that in a commercial sense is really important.

Tasmanian companies now have an opportunity to sell their unique products and services not just in the maritime sector but in the land, space, air and ICT sectors in a way that we haven't had before and that cuts across every level of the state. I would like to ask the rear admiral to speak a little about the growth opportunity and what we've been able to achieve.

Mr GILMORE - I guess value for money is the part that I can talk about. You highlighted the amount that is spent or invested by the department. In the last 12 months we've managed to achieve almost $75 million in new contracts. That involves four companies that have adapted what they do already very well in the commercial space into the defence industry space. That's created 30 jobs in the past 12 months and there have been a number of really significant opportunities generated and I firmly believe in the next year we'll continue what has been an exponential increase in the return of the investment that's been made in this particular area. What it's done in every case is take what this state already does often incredibly uniquely and always very well and adapted that into the defence and, more broadly, the security environment for our country. That would be my add to that, that it's the return on investment.

Dr WOODRUFF - Minister, over the 2018 19 financial year, Australia issued 45 weapons export permits to the United Arab Emirates. 23 to Saudi Arabia, 14 to Sri Lanka and four to the Democratic Republic of Congo. Militaries and militias in all those countries are being consistently accused of human rights violations, including war crimes and crimes against humanity.

As Minister for Advanced Manufacturing and Defence Industries, can you account for all Tasmanian defence industry exports? And can you claim with confidence that none of our exports, which is an export market you are actively trying to grow, will either go directly or indirectly to militaries linked with war crimes and human rights violations, or in supply chains that end up there?

Ms OGILVIE - I will ask the rear admiral to speak to this one. I will firstly state that our advanced manufacturing defence industries work is an Australian-based market, so I want to ask the rear admiral to speak more broadly about the contribution that we're making to the important defence industry of Australia and how we are managing those issues.

Mr GILMORE - There isn't a Tasmanian defence export industry. There is an Australian defence export industry. For anything defence-related to be exported, particularly if it is an armament, it must go through a very rigid process developed in accordance with Australian law, international norms and comes together within the Defence Export Office, which is part of the Department of Defence. An export licence must be awarded to that company or series of companies that seeks to export whatever it might be. It is a long and detailed process. No Tasmanian product, component or service can be provided overseas without it going through that process. Part of that is to look to see who the recipient nation is and what their legal standing is.

Dr WOODRUFF - Thank you, Rear Admiral. Despite what sounds like comforting information, it doesn't fit with the facts that I have in front of me for 2018 19, where there were 45 licences granted to the countries I listed for exports of Australian weapons. Arms trading is a serious issue and we need to do everything we can to make sure it's done to countries that are operating within human rights -

Mr GILMORE - Yes, that's an Australian Government responsibility.

Dr WOODRUFF - Correct. Can I ask through you minister to the rear admiral, you said that our exports go to an Australian based market. Just to be clear, what you mean is we produce goods that go into an Australian market and they may or may not be used by our Australian defence industries. They could also be exported under the processes that you described?

Mr GILMORE - That's correct.

Dr WOODRUFF - So, they're not all for Australian defence. They're also for money, for trade?

Mr GILMORE - Yes, like all things we trade. Correct.

Dr WOODRUFF - We don’t have any sense of whether the things we're producing are going into Australian defence or whether they're going for export overseas?

CHAIR - Dr Woodruff, the minister has explained that the export permit process for defence industries is managed at a federal level. Would the minister like to speak more broadly about Tasmanian policy?

Ms OGILVIE - I can talk more about the policy -

Dr WOODRUFF - It's about our supply chain understanding.

Ms OGILVIE - About what we do, yes. We don't work with any weapons manufacturers. That's where you were headed. That's not something that we do.

Dr WOODRUFF - Not quite, but -

Ms OGILVIE - Let's have that on the record. Our companies produce a variety of products that range from lifesaving and ship safety issues, such as thermal protection and insulation, marine escape systems, environmental monitoring and domain awareness equipment, training systems such as bridge simulators, manufacture of various support watercraft, including sea boats, landing craft and stores and support vessels. As a maritime state, that's where our expertise lies.

When I think about human rights I think of the great work that not only our defence force is doing keeping us all safe, but the work we do in peace keeping, the work we do in emergency situations, in floods, in fire, in all of those sorts of elements. As a Tasmanian, I want to know that what we are producing is keeping our people safe. It helps if you think about it in that context. We are making a contribution that will keep our people safe and provide the best equipment we can.

Dr WOODRUFF - Do you track how much of our goods end up staying in Australia -

Ms OGILVIE - It goes through that process. That's a federal Government responsibility.

Dr WOODRUFF - So, we just produce stuff and give it to some sort of -

Ms OGILVIE - There are contracts in place.

Dr WOODRUFF - Contracts that may or may not be used by the Australian Defence Force. They could also be used by defence to export.

Ms OGILVIE - It depends on the procurement process, obviously.

Mr GILMORE - We have a sense of what our Tasmanian companies provide domestically and internationally in the defence market. It is all along the lines that the minister just mentioned, equipment, products and services, education, training, simulation and those sorts of things. They're commercial contracts. None of them are state-run entities. They need to comply with the law of the land and international norms as it relates to the export or trade in defence-related equipment.

Dr WOODRUFF - Whether Tasmanians get to understand whether what we produce stays in Australia or goes overseas. It's that simple.