Australia — Building the skills we need for the future

The Hon. Jason Clare MP Min­is­ter for Defence Materiel
Keynote Address to the 7th Annu­al Defence Skilling Sum­mit
Stam­ford Plaza Hotel, Bris­bane
In one week it will be one year since I was appoint­ed Min­is­ter for Defence Materiel.

It’s been a busy 12 months. 

I’ve vis­it­ed 62 com­pa­nies – and more than 42 defence bases and establishments. 

We’ve rolled out a lot of new equip­ment to our troops in Afghanistan: 

• New com­bat body armour and a new com­bat uni­form;
• New Max­i­mi machine guns;
• Upgrad­ed the Bush­mas­ter vehi­cles;
• Enhanced mine and IED detec­tion equip­ment;
• The CRAM counter rock­et, artillery and mor­tar sys­tem;
• And a range of oth­er mea­sures that are part of the $1.6 bil­lion plan to improve force protection. 

We’ve made some big deci­sions on equipment. 

We have:
• Ordered an addi­tion­al 101 Bush­mas­ters and a 5th C‑17 Globe­mas­ter;
• Acquired the Largs Bay from the British Gov­ern­ment; and
• Agreed to pur­chase 24 new Romeo naval com­bat helicopters. 

In the past year Gov­ern­ment has giv­en first or sec­ond pass approval to 22 projects.  The total val­ue of these projects is more than $5 billion. 

Min­is­ter Smith and I have also announced major reforms to the acqui­si­tion, sus­tain­ment and dis­pos­al of mil­i­tary equiptment. 

This includes:

• Increas­ing the rigour of the Defence Capa­bil­i­ty Plan devel­op­ment process;
• Stronger con­testa­bil­i­ty in capa­bil­i­ty deci­sion mak­ing;
• The estab­lish­ment of an Inde­pen­dent Project Per­for­mance Office;
• An Ear­ly Warn­ing Sys­tem to iden­ti­fy prob­lems in projects before they become crit­i­cal;
• The exten­sion of Gate Reviews to all major capa­bil­i­ty projects;
• More rigour to the Projects of Con­cern process;
• The Black Report which is focused on improv­ing per­son­al and insti­tu­tion­al account­abil­i­ty in Defence; and
• The Riz­zo Report which put in place a plan to over­haul the sus­tain­ment of Navy’s sur­face fleet and the Coles Review whose task it is to do the same for our Collins Class submarines. 

I have also: 

• Expand­ed the oper­a­tion of Aus­tralian Indus­try Capa­bil­i­ty Plans to increase oppor­tu­ni­ties for Aus­tralian SMEs; 

• I have sought your ideas on how we can ensure we meet the sus­tain­ment tar­gets set in the Strate­gic Reform Pro­gram and we have start­ed to pilot the best of those ideas; and 

• We are con­duct­ing health checks on our Pri­or­i­ty Indus­try Capabilities. 

That is a lot of work. 

The next step is mak­ing sure these reforms are ful­ly and prop­er­ly implemented. 

In the next decade we will spend around $150 bil­lion on Defence equip­ment — and more than half of it here in Australia. 

It’s impor­tant we get this right. 

That’s why these reforms are so important. 

They are about mak­ing sure the peo­ple we put in harm’s way have the equip­ment they need, when they need it and that Aus­tralian tax­pay­ers get val­ue for money. 

A key part of that is mak­ing sure we have the skills we need to do the job. 

This is the next stage of our reform plan. 

SKILLS IN DEFENCE 

The skills chal­lenge starts inside Defence. 

Attract­ing and retain­ing the right peo­ple with the right skills. 

Offer­ing oppor­tu­ni­ties for pro­fes­sion­al devel­op­ment and career advancement. 

Recog­nis­ing tal­ent and reward­ing it. 

You don’t have to read far into the Riz­zo Report into the Repair and Man­age­ment of our Sup­port Ships to see the risks that emerge when Defence lacks skills and expe­ri­ence in its workforce. 

This is not a unique Aus­tralian chal­lenge. I have spo­ken to my col­leagues in the US and UK – and they face sim­i­lar chal­lenges – the hol­low­ing out of skills and expe­ri­ence and the trans­fer of some of that to industry. 

One of Rizzo’s key rec­om­men­da­tions is the rebuild­ing and reor­gan­i­sa­tion of Naval Engi­neer­ing under a two star Admi­ral to give the nec­es­sary weight to this crit­i­cal function. 

Rear Admi­ral Michael Uzzell has now been appoint­ed to this task. 

As Mr Riz­zo makes very clear, this will require: 

• the devel­op­ment of a com­pre­hen­sive through life career plan for the recruit­ment, reten­tion and devel­op­ment of engi­neer­ing tal­ent; and 

• an effec­tive work­force plan­ning sys­tem to ensure staff have the skills and expe­ri­ence required for com­plex sustainment. 

In DMO a lot of good work has been done over the past sev­en years to boost com­mer­cial skills and busi­ness acu­men – and I pay trib­ute to the work over this time of Dr Stephen Gumley. 

Just one exam­ple is the Exec­u­tive Mas­ters Pro­gram devel­oped with the Queens­land Uni­ver­si­ty of Tech­nol­o­gy, in com­plex project man­age­ment and strate­gic procurement. 

Around 90 Defence and DMO staff have par­tic­i­pat­ed in the pro­gram since it was estab­lished four years ago. 

There is still more work to do though to devel­op the com­mer­cial and busi­ness skills required in DMO. 

Capa­bil­i­ty Devel­op­ment Group (CDG)

There is also more work to do in Capa­bil­i­ty Devel­op­ment Group (CDG).

When we released the Black Report into Defence Account­abil­i­ty a few weeks ago, Min­is­ter Smith and I announced three year post­ings for ADF per­son­nel work­ing on capa­bil­i­ty projects. 

The pur­pose of this is to boost the skills and cor­po­rate knowl­edge – and increase account­abil­i­ty and respon­si­bil­i­ty for projects. 

SKILLS IN INDUSTRY 

There is also more to do in industry. 

As you know, there are a lot of Gov­ern­ment pro­grams that help to build and main­tain the skills of the Aus­tralian Defence industry. 

Many of them are very effective. 

The best exam­ple is the Skilling Australia’s Defence Indus­try (SADI) program. 

SADI

I only hear good things about SADI. 

Six years ago it sup­port­ed eight companies. 

It has grown expo­nen­tial­ly since then. 

Last week I announced that 109 com­pa­nies will be fund­ed through almost $14 mil­lion in train­ing sup­port pro­vid­ed by SADI this finan­cial year. 

In the next 10 years it will invest $138 mil­lion in boost­ing skills in the Defence industry. 

The sort of peo­ple it’s help­ing are peo­ple like Byron Wal­pole, who I met at Austal in Perth last week. 

The SADI fund­ing helped him com­plete train­ing in 3D software. 

It’s also helped his com­pa­ny bid for, and win, projects here in Aus­tralia and in the US. 

This year Byron won the AIDN Young Achiev­er of the Year Award. 

SADI fund­ing I announced last week means he will do more train­ing, this time in con­fig­u­ra­tion management. 

SADI is a great pro­gram – but there is always room for improvement. 

That’s why I have writ­ten to each of the com­pa­nies receiv­ing SADI grants this year — to get ideas from them about how we can make it even more effective. 

A num­ber of com­pa­nies have already pro­vid­ed me with their ideas. 

Lat­er this year we will hold a series of round­ta­bles across Aus­tralia to give as many com­pa­nies as pos­si­ble the chance to have their say – so that the advice that comes to me reflects your ideas and experiences. 

Defence Indus­try Inno­va­tion Centres 

The Defence Indus­try Inno­va­tion Centre’s are also help­ing to build indus­try skills and productivity. 

In the past two years 600 busi­ness reviews have been con­duct­ed for Aus­tralian based SMEs – help­ing them to devel­op plans to improve their man­age­ment and productivity. 

Because skills are usu­al­ly a key part of what these plans iden­ti­fy – the pro­gram also funds train­ing. Last year alone – more than $700,000 in train­ing grants were pro­vid­ed under the program. 

Glob­al Sup­ply Chain 

The Glob­al Sup­ply Chain pro­gram is not specif­i­cal­ly about skills – but this is one of its benefits. 

For exam­ple, Boe­ing has pro­vid­ed tita­ni­um and alu­mini­um high speed machin­ing train­ing for 10 Aus­tralian SMEs through this pro­gram and Raytheon has run sys­tems engi­neer­ing training. 

SME’s have sent key staff to cours­es in qual­i­ty mea­sure­ment, dimen­sion­ing and tol­er­ance; pro­pos­al writ­ing; LEAN process­es; and project management. 

The advan­tage of this kind of train­ing is that it helps SME’s win more work in the glob­al sup­ply chains of the prime contractors. 

Pri­or­i­ty Indus­try Capa­bil­i­ties (PICs)

There are no more impor­tant skills than those con­tained with­in our Pri­or­i­ty Indus­try Capa­bil­i­ties (PICs).

They are the must haves – the things we can’t do without. 

We have iden­ti­fied what they are, but as I said ear­li­er this year they need to be more than just a list of capabilities. 

That’s why in Feb­ru­ary at the ADM Con­fer­ence I announced that DMO would con­duct health checks on each of the PICs. 

Today I have released the first two of these com­plet­ed health checks: 

• Infantry Weapons; and
• Ship Dry Dock­ing and Com­mon User Facilities. 

The results of both are positive. 

1. Infantry Weapons 

The detailed analy­sis demon­strates that the infantry weapons PIC is healthy. 

It finds:

• Base-lev­el sup­port can be under­tak­en by a num­ber of com­pa­nies, all of whom have sig­nif­i­cant rel­e­vant tech­ni­cal capa­bil­i­ty; and
• The fac­to­ry rebuild capa­bil­i­ty — although con­fined to a sin­gle sup­pli­er — is deliv­er­ing val­ue for mon­ey to Defence. 

This is because of: 

• The rel­a­tive­ly steady nature of domes­tic weapons train­ing;
• The ADF’s abil­i­ty to stock­pile ful­ly func­tion­ing weapons and parts; and
• The prob­a­bil­i­ty that the tem­po of Australia’s mil­i­tary oper­a­tions will con­tin­ue in the short to medi­um term. 

The health check con­cludes that no new forms of inter­ven­tion are con­sid­ered nec­es­sary to main­tain the Infantry Weapons PIC at this time. 

Defence will, how­ev­er, con­tin­ue pro­vide ongo­ing advice to gov­ern­ment on: 

• The cost to Defence for fac­to­ry rebuild activ­i­ties;
• The sup­ply of crit­i­cal skills with­in the Aus­tralian infantry weapons indus­try and, where nec­es­sary, tar­get­ing rel­e­vant indus­try skill sets through SADI; and
• The poten­tial impor­tance of projects LAND 159 and LAND 125 Phase 3C to sat­is­fy indus­try plan­ning and invest­ment activities. 

2. Ship Dry Dock­ing and Com­mon User Facilities 

The health check into ship dry dock­ing and com­mon user facil­i­ties has also found that this indus­try capa­bil­i­ty is healthy. 

It found:

• That Cap­tain Cook Grav­ing Dock at Gar­den Island in Syd­ney cur­rent­ly has spare capac­i­ty — and can be expect­ed to con­tin­ue to meet the needs of the Roy­al Aus­tralian Navy fleet, even with the planned changes to the fleet com­po­si­tion out­lined in the White Paper; and
• That over­all, Aus­tralia has enough suit­able docks to meet naval needs. 

There are cur­rent­ly two ongo­ing reviews that have the poten­tial to influ­ence this PIC in the future: 

• The Force Pos­ture Review announced in June; and
• The inde­pen­dent review into future non-Defence use of Gar­den Island announced in June. 

Obvi­ous­ly, the rec­om­men­da­tions and out­comes of these reviews will be con­sid­ered in future health checks of this PIC. 

While the health check con­cludes that no new forms of inter­ven­tion are con­sid­ered nec­es­sary to main­tain this PIC at this time Defence will con­tin­ue pro­vide ongo­ing advice to Gov­ern­ment on: 

• The min­i­mum dock­ing capac­i­ty required with­in Aus­tralia to sup­port the strate­gic needs of the ADF in the longer term;
• The appro­pri­ate­ness of mov­ing naval ves­sels between ports for the con­duct of rou­tine repairs;
• The oper­a­tion of Cap­tain Cook Grav­ing Dock, includ­ing the access arrange­ments for com­pa­nies engaged in ship repair and main­te­nance fol­low­ing the expiry of the exist­ing lease in 2013; and
• The sup­ply of crit­i­cal skills with­in the Aus­tralian ship repair indus­try and, where nec­es­sary, tar­get­ing rel­e­vant indus­try skill sets through the SADI program. 

The oth­er PIC health checks are still under­way and I hope to be able to release them lat­er this year and ear­ly next year. 

Pri­or­i­ty Indus­try Capa­bil­i­ty Inno­va­tion Program 

To help ensure we build and sus­tain our pri­or­i­ty capa­bil­i­ties we have also estab­lished the $45 mil­lion Pri­or­i­ty Indus­try Capa­bil­i­ty Inno­va­tion Program. 

Today I can announce the first $9.2 mil­lion in fund­ing will open next month. 

Com­pa­nies can apply for up to $4 mil­lion in matched fund­ing for inno­v­a­tive projects that will improve or enhance a Pri­or­i­ty Indus­try Capability. 

I expect we will be able to announce the first suc­cess­ful grant recip­i­ents in the first quar­ter of next year. 

Defence Engi­neer­ing Intern­ship Program 

I can also announce today anoth­er pro­gram that will be start­ing next year – the Defence Engi­neer­ing Intern­ship Program. 

This will allow third year engi­neer­ing stu­dents to com­plete a twelve-week defence indus­try place­ment in an Aus­tralian Defence SME as part of the prac­ti­cal com­po­nent of their studies. 

The $1.4 mil­lion pro­gram will give some of our bright­est engi­neer­ing stu­dents expo­sure to oppor­tu­ni­ties in the defence indus­try – hope­ful­ly leav­ing them with a desire to come back into these com­pa­nies after graduating. 

The pro­gram will allow for the stu­dents to be paid $700 per week – an attrac­tive propo­si­tion for any stu­dent — while the SME that hosts them will receive $500 for each week they are there. 

Appli­ca­tions for the pro­gram will open in time for the start of the 2012 aca­d­e­m­ic year– and I expect that between 20 and 25 posi­tions will be made avail­able each year, for the next three years. 

ADDRESSING FUTURE SKILLS CHALLENGES 

A lot is already hap­pen­ing, but I sus­pect more is required. 

The $150 bil­lion chal­lenge ahead means that we need a fresh look at whether we have the skills to meet it. 

Over the next 15 years we will replace and upgrade 85 per cent of ADF equipment. 

The amount of work done by Aus­tralian indus­try is expect­ed to increase from $5.5 bil­lion per annum now to $7.5 bil­lion per annum — in today’s dol­lars — by the end of the decade. 

That cre­ates a chal­lenge — the chal­lenge of build­ing the skills and capa­bil­i­ty to take on, and deliv­er, the growth in work over the next decade and beyond. 

The biggest moun­tain we will have to climb is the Future Sub­ma­rine project – poten­tial­ly the biggest and most com­plex Defence project ever. 

Poten­tial­ly the biggest and most com­plex project Aus­tralia has ever embarked upon. 

A lot of the details of this project are still to be decid­ed, but it will poten­tial­ly involve hun­dreds of com­pa­nies, thou­sands of work­ers and a lot of skills that cur­rent­ly do not exist in suf­fi­cient num­bers in Australia. 

While some of those skills are avail­able over­seas, oth­ers will have to be grown here in Australia. 

Meet­ing this chal­lenge requires us to tack­le it from two direc­tions – sup­ply and demand. 

Sup­ply side challenge 

By sup­ply I mean – what do we need to do to ensure the Defence indus­try has the skilled work­force it needs as the amount of work increas­es over the next decade and beyond – the appren­tices, the welders, the boil­er­mak­ers, the avion­ics engi­neers, the spe­cial­ist mar­itime tech­ni­cians, the soft­ware engi­neers and sys­tems inte­gra­tors etc. 

Where will the skill short­ages emerge and what do we need to do to meet them? 

With this in mind I have asked Skills Aus­tralia to work with the Defence Indus­try Skilling Task­force to map out the range and depth of the skills sets we have, the skills we will need, and how best to build them. 

It will report to the Defence Indus­try Inno­va­tion Board mid next year. 

Demand side challenge 

As I said – I think we need to look at this from two sides – sup­ply and demand. 

By demand I mean – what do we need to do to man­age the demand or pipeline of work to sus­tain­ably grow the skills we need. 

As Min­is­ter Smith has made clear: 

“We run a nation­al secu­ri­ty capa­bil­i­ty pol­i­cy, not a local indus­try pol­i­cy … It is impor­tant, very impor­tant though, that we under­stand that an impor­tant nation­al secu­ri­ty fac­tor is … local indus­tri­al capability.” 

The risk posed by skills short­ages is a real one. It can affect pro­duc­tiv­i­ty and sched­ule. It can also affect capability. 

Just like you man­age your sup­ply chain, this is a risk we need to man­age and mitigate. 

It’s a les­son learnt from the expe­ri­ence in Williamstown over the past year – where the gap of less than a decade between the last ANZAC Frigate and first AWD blocks led to a loss of skills and productivity. 

The gap between the end of the AWD pro­gram, the Future Sub­ma­rine and Future Frigates Projects have the poten­tial to be of a sim­i­lar size. 

It means we may devel­op a lot of impor­tant skills and then lose them and have to rebuild them. 

To start address­ing this I have asked Defence look at this in this year’s Annu­al Plan­ning Guidance. 

The pur­pose of this doc­u­ment is to align strate­gic guid­ance, capa­bil­i­ty deci­sions and resource plan­ning on an annu­al basis. 

One of those resources is the skills embed­ded in our defence industry. 

This report pro­vides an oppor­tu­ni­ty to look at the future Defence require­ments and the things we need to do to ensure they are suc­cess­ful­ly delivered. 

CONCLUSION

If there is one thing I hope Min­is­ter Smith and I have demon­strat­ed this year – it is that we are seri­ous about reform. 

The pur­pose is simple. 

We are respon­si­ble for a lot of tax­pay­ers’ mon­ey – and we have an oblig­a­tion to ensure it is spent well and our ADF per­son­nel get the equip­ment they need, when they need it. 

An impor­tant part of this is mak­ing sure we have the skills we need to do the job. 

Not all of the mil­i­tary equip­ment set out in the White Paper and the DCP will be made in Australia. 

But a lot of it will be. 

And most of it will be sus­tained here. 

That cre­ates a big chal­lenge for all of us – build­ing the skills we need for the future. 

How suc­cess­ful we are, will have a big impact on whether tax­pay­ers get val­ue for their mon­ey and whether our ADF per­son­nel get the equip­ment they need, when they need it. 

That’s why skills is the next step of our reform plan. 

Press release
Min­is­te­r­i­al Sup­port and Pub­lic Affairs,
Depart­ment of Defence,
Can­ber­ra, Australia 

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