{"id":81700,"date":"2023-08-15T06:00:42","date_gmt":"2023-08-14T20:00:42","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=81700"},"modified":"2023-08-14T17:47:10","modified_gmt":"2023-08-14T07:47:10","slug":"rebooting-australias-defence-industry-policy-establishing-the-principles","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/rebooting-australias-defence-industry-policy-establishing-the-principles\/","title":{"rendered":"Rebooting Australia\u2019s defence industry policy: establishing the principles"},"content":{"rendered":"
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The technical requirements of AUKUS, and the time strictures and innovation challenges laid out in the defence strategic review, all implicitly increase the demands on Australia\u2019s defence industry. How can the government most effectively support industry in meeting those demands?<\/p>\n

In my previous article, I noted that defence industry policymaking has fallen to the Department of Defence because Australia\u2019s broader industry policy apparatus has withered over decades. Industry policy has been subsumed by Ricardian theories of comparative advantage, and technical industries have declined, outcompeted by better supported counterparts in other countries.<\/p>\n

Even limited attempts to lean on the existing policy apparatus (such as situating the Centre for Defence Industry Capability in the Department of Industry, Science and Resources) have failed. And so, in the past five years, Defence has produced policies to support the growth of defence industry. Those policies have met with mixed success.<\/p>\n

Given that limited success, the eye-popping demands on defence industry implicit in AUKUS and the review require a fundamentally new approach to industry policy. We must plan for the industry we need and design and deliver coherent strategies to stimulate its rapid and sustained growth.<\/p>\n

Defence\u2019s industry policy development capabilities are limited, which is fair enough\u2014industry policy is not its core concern. As I advocated in the first article in this series, ideally government would create a powerful industry and trade department and cultivate strong and scalable policymaking capabilities within it, with economic planning powers and resources to back it up. But, if that cannot be, Defence will again forge its own path on industry development. How can it do that?<\/p>\n

There are many ways to botch industry planning and policy. The objective may be a competitive and advanced industry, to be relied upon in the hour of need. But economic history is littered with poor outcomes and client industries and firms more expert at rent-seeking than innovating. There\u2019s a high risk of wasting time and resources. But history also points to a consistently successful pathway.<\/p>\n

Other countries, starting from a position of relative weakness, have attained greater technological advances and productivity gains than Australia through careful economic planning and well-designed and consistently delivered industry policies. South Korea is a signal example. In the 1970s, it had an economic profile akin to Guatemala\u2019s. Today Korea, in the shape of Hanwha, is leading the development of Australian capability in Land 400 Phase 3 and is rumoured<\/a> to be a potential acquirer of Austal. We should study how it got to where it is now.<\/p>\n

Countries that have successfully transformed their technical capabilities have a common policy history. They have all:<\/p>\n