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South Australia springing back to life on back of defence

Jul 23, 2019 – 11.00pm

Construction of the future submarine project will be based in South Australia. supplied

As South Australia's Holden production line assembled its final locally made car in October, the state was already on a trajectory to revitalise its industrial base with advanced manufacturing generally, and defence industry in particular.

As the commonwealth commits to a doubling of its defence budget in the next decade, along with sovereign defence capability and continuous domestic naval shipbuilding, the state is now looking confident.

"We're the Singapore of Australia," says SA defence minister Martin Hamilton-Smith. "We don't have coal like Queensland or New South Wales, and we don't have the iron ore of Western Australia. But we're not letting any opportunities in defence or space pass us by."

Construction of the future submarine project will be based in South Australia. supplied

He says South Australia has made defence industry a core of its economic planning, not the least because the state had skills and advanced manufacturing suppliers for the car industry, and from shipbuilding at Osborne.

He says the state has its own organisation – Defence SA, headed by Sir Angus Houston – which was started a decade ago as a way of plotting and planning a post-car economy. He says the employment results have exceeded the targets as the commonwealth turns to sovereign capability in its defence acquisitions.

The SA government has invested heavily in becoming a hub for Australian defence industry and as a result has developed several distinct hubs, says Hamilton-Smith. One is the defence industry hub around RAAF Base Edinburgh, where ISR assets such as the P-3 Orions, P-8 Poseidons, the JORN over-the-horizon radar and the soon-to-be-ordered Triton surveillance unmanned aircraft are operated from.

"Edinburgh is a great illustration of where defence is heading and the technology you need to support it," says Hamilton-Smith. "It's about data-to-decision – all the data from the surveillance systems comes back to this super-base, and then you need smart systems to do something with it."

He says the second major defence industry hub is the Osborne shipbuilding area, home to the Techport naval yards which the SA government built before on-selling to the commonwealth so it could build future frigates, future submarines and offshore patrol vessels in the precinct, as well as sustain Collins submarines.

"The employment boost from continuous shipbuilding is fairly obvious," says Hamilton-Smith, "but it's also the technology transfer, the presence of the naval prime contractors and all the SMEs that come into those supply chains. The benefit of big defence contracts is that it's never about one thing, it's an ecosystem of research, manufacture, engineering, testing, government, military and sustainment.

"Three or four years ago we were faced with accepting that Australia was a farm, a mine and a destination for tourists. We disagreed, and we fought very hard to turn around that thinking and invest in a sovereign naval shipbuilding industry."

He says Mawson Lakes is another defence industry hub in the Adelaide area, as the industrial park becomes a home to Lockheed Martin Australia, BAE Systems Australia, SAAB Defence, Raytheon and major university research projects.

In the CBD of Adelaide, Hamilton-Smith says the three major universities – South Australia, Flinders and Adelaide – are "defence hubs in their own rights" and feed into the defence industry sovereign capability.

"The university sector needs to have 5 per cent of the $90 billion being spent over the life of the navy programs. They can contribute to sovereign capability, especially in the high-end problem solving."

He says the old Royal Adelaide Hospital is a potential hub for AI, machine learning and data-to-decision platforms. "Australian university research teams can add value in finding the needles in haystacks of data. You don't have to build the whole ship – Australian research and development can compete in the high-value work."

He says the Tonsley Innovation District is also being built as a defence hub on the old Mitsubishi site in advanced sciences and defence sciences. It has attracted university and TAFE groups.

South Australia was looking at "unemployment of up to 10 per cent a few years ago, but in the recent figures, we're down to trend of 5.6 per cent for October after 5.8 for September. We have a non-accelerating inflation rate of unemployment [NAIRU] of 5 per cent, which is at the top of the pack."

He says the South Australian defence industry focus has been an admission that the economy has moved on from traditional assumptions.

"If we keep building an economy around cost factors or volume, we will founder," says Hamilton-Smith. "The economies that will thrive in the coming decades will be low-volume, high-margin and tech-heavy. Government investment is the key, which is why the government has invested so much at Osborne and Tonsley."

Hamilton-Smith says the opportunity for SA defence industry in space initiatives is also "enormous" given the commitment of the 2016 Defence White Paper to space as a defence capability, and the fact that South Australia already boasts space infrastructure, rocket-testing ranges and hubs of defence industry and academic research.

"The space opportunity isn't complicated," says Hamilton-Smith. "We need to launch our own satellites to meet with some of the broader defence goals in the years to come. Having our satellites and satellite industry isn't just good for defence, but it's what you need to run ATM networks and phones."

The economic roadmap, South Australia's Defence Strategy 2025, plans to create 37,000 jobs and an annual economic contribution of $2.5 billion by 2020.

It proposes to cement South Australia's status as a national centre of complex warship and submarine build and sustainment; to establish South Australia as a centre of expertise for electronic and information systems; to position South Australia as a national hub for airborne maritime surveillance and weapons system test and evaluation; to build South Australia as a centre for military vehicles and integration of combat systems; and to advance South Australia as a centre of expertise for defence science and technology.