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Joint Standing Committee on Foreign Affairs, Defence and Trade
Defence industry exports
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Joint Standing Committee on Foreign Affairs, Defence and Trade
CHAIR (Senator Fawcett)
Feeney, David, MP
Gambaro, Teresa, MP
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Content WindowJoint Standing Committee on Foreign Affairs, Defence and Trade - 09/10/2014 - Defence industry exports
ROOS, Professor Goran, Private capacity
Committee met at 16 :15 .
CHAIR ( Senator Fawcett ): I declare open this first public hearing for the inquiry into government support for Australian defence industry exports, being conducted by the Defence Subcommittee of the parliament's Joint Standing Committee on Foreign Affairs, Defence and Trade. This afternoon, the subcommittee will hear from Professor Goran Roos, ASC Pty Ltd and the Defence Teaming Centre. On behalf of the committee, I wish to thank ASC, who are not here. I thank them in their absence for accommodating the subcommittee here. Professor Roos, I welcome you to today's hearing. Thank you for your submission and participating today.
Before inviting you to make an opening statement, I wish to inform you that in giving evidence to the subcommittee you are protected by parliamentary privilege. All witnesses are advised of the obligation not to give false or misleading evidence. To do so may be regarded as a contempt of the parliament. These are public proceedings and although the subcommittee will consider a request to have evidence heard in camera, if you object to answering a question you should state the grounds for that objection and the subcommittee will consider the matter. I now invite you make an opening statement before we proceed to questions.
Prof. Roos : Thank you for allowing me this opportunity to be here. I will make a very brief opening statement. The key issue is to say that the global defence market is very large. It is dominated by the US, who in 2013 imported about US$26 billion worth of defence equipment. Being able to be part of that market is a great opportunity for any company. In so doing, it will require a number of issues to be met.
The first one is that normally defence equipment is, on the whole, system oriented, so you have to be part of a global supply chain. That requires skill and also the assistance for getting to be part of that. The final point is that it is almost impossible to sell into a defence market unless you have your home forces as a customer, because that raises a set of issues. That means that in most countries who are succeeding in assisting their industry to have a profitable defence export business they ensure that those companies are successful in supplying to their own forces. I will stop there and be open for questions, which I think is more important than me making any further statement.
CHAIR: Could I start off with your contention in your submission that global supply chains are important. You make a link—and it is the first time I have seen the link—that the concept of offsets or local industry content is actually an important enabler to getting domestic companies into the global supply chain. Could you talk a little further about that?
Prof. Roos : Yes. When you are requiring, in formal or informal ways, external suppliers who are going to sell to your own forces to generate a local presence in this country, they will do so by finding local suppliers and their own supply chain here. That follows naturally from that requirement. That means that those local suppliers, if they are not completely up to speed on all requirements, will become so by the mere fact that they will have the parts or the relevant tests and requirements.
Once they are required to do those and become a supplier to that player in Australia, that opens the way to other markets through the prime of that system as well as directly because they now have the capability and the associated links to make that leap. Hence, there is a natural link between the requirements of somebody working with your local industry, the increase of the capability in that industry and the opening up of that industry for opportunities that they otherwise would not have both through capability and through linkages.
CHAIR: You make a comment in your submission that almost all providers of military equipment are prepared, and I think you basically indicate that they expect it, to be given local content requirements; but if they are not asked, they will not give.
Prof. Roos : Correct.
CHAIR: Could you just tell us on what basis do you make those comments?
Prof. Roos : I think I refer to that in the submission. I have had the opportunity to go and visit the potential bidders for the LAND 400 system. They are located in Finland, Germany, Canada, France and Italy. As a team, we went to all of them. I went to all of them except one. The normal situation that you will get, and the team concurs with that, is that you come to a meeting to talk over this project. On the other side, you have people who include the vice president of offsets or the vice president of the local content. Normally the question you get raised is along the following line: 'We've been trying to understand your requirements, specifically in terms of local content offsets. Could you clarify them for us?' At which point we say, 'There will be none.' In which case, they will say, 'Fine, then I no longer need to be in this room.' They will leave and we are off to other discussions. That is the first issue. Obviously, they have an issue.
Then you look at what has happened. All of these players who have exported have previously established activities locally, since it is required in many other places. Hence, they have a set-up structure for dealing with this. They are absolutely clear on how to do it, they have the processes, they have the structures and they have the ability to do so, because that is the normal requirement. We are the exception to what is the normal requirement, as seen also by the behaviour of all of these companies in those conversations.
CHAIR: Do you have any evidence that shows, where a country has required local-industry content, the success rate of their local supply chain getting engaged with the global supply chain? Does one naturally follow the other or does it still require a large amount of other activity and government support?
Prof. Roos : It does not naturally follow because obviously there are many dimensions to this, such as the willingness of the local company's management and the number and type of other activities. But you tend to see that there is an extension of their activities. If you look for example at countries like South Africa—who procured a number of weapons systems from countries like Germany, Sweden and Finland; there are different domains to what they did—it is very clear that in those there was a requirement for offset. A number of local suppliers were set up. Some of those were acquired by some of these bigger suppliers and hence got an automatic issue. Others have been used as sub-suppliers in exports that these other system integrators have done to other places.
If you look at countries like Brazil—and we can argue whether in the short term it is economically preferable to be as tough as Brazil—it is clear that Brazil has been very successful in building up domestic industries. The most famous one is probably Embraer, which is now a civilian producer of aircraft that we fly in occasionally when we fly in Australia. That capability was solely built up on trade deals that required offsets and technology transfer. They are presently in the process of transferring capability on nuclear submarines, because of their cooperation with France on that area. They are negotiating further capabilities in aerospace as a consequence of the potential deal they have with Saab on the Gripen fighter deal.
You can go through, country by country, and find that if you have a clear policy in this area, then you can achieve it. That said, there is a cost premium related to this, because obviously it will be more costly to do something locally. The more you are forced to do locally, the higher the cost premium. Then you look at your ability to get payback on that over what period of time. The shorter your time period and the tougher your requirements to the level of almost being unreasonable, the more difficult it will be to get this return.
But on the whole, if you are going to look at moving something where you have an existing plant and it is a scale based production—in other words you buy something that already exists, kind of off-the-shelf, then your local cost premium normally would hover in the range of 20 per cent, give or take. It is not much more than that. If you then are able to secure, as part of the agreement, that the local suppliers will be participants in further activities internationally outside the suppliers' home country then you will be able to get that money back reasonably quickly. There are some studies around that.
CHAIR: Could you to provide the implications of those studies to the secretariat?
Prof. Roos : Yes, absolutely. I am happy to do that.
Mr FEENEY: I will be brief. In some ways, the question has been asked. The Royal United Services Institute did a study in the United Kingdom a couple of years ago which ultimately concluded that for every procurement pound they spent in the United Kingdom about 36 pence were returned to the exchequer. I have never seen a comparable study done in the Australian context. I have certainly never seen a comparable study done specifically with regard to submarines. I have listened with great interest as you have offered certain analysis around this. What can you tell us about how robust those models are?
Plainly, in the public policy debate that is underway in Australia at the moment, one of the key questions is price. While we have had various figures promulgated about what a Japanese submarine might cost and certain inflammatory and invented numbers about what an Australian submarine might cost, ultimately when it gets into the detail, if we are going to build, develop and then sustain the submarine in Australia, there needs to be a very hard-headed and clear-eyed sense of the cost to the taxpayer and the opportunity cost of doing anything else. It seems to me that the numbers are very woolly in that space. The only study I have been able to find, and this may entirely reflect on my own miserable research skills, is that RUSI study in the United Kingdom. What can you tell us about how we can rely on these numbers?
Prof. Roos : Thank you for the question. Let me first say that the problem with this study is not so much a methodological one. It is around what it is that you study. There is a big difference between studying the impact of procuring something which is an absolute off-the-shelf product, one for which there are no modifications and multiple suppliers, versus studying something like a submarine where there is no off-the-shelf solution. There is a whole range of different issues. It is very clear that if you look at an environment where you are procuring an off-the-shelf item with multiple suppliers and if you look at a normal tendering process that extracts the cheapest provider, which normally would be from a low-cost country—if it is not a sophisticated system, where you can add some smarts to that domestically—that will generate substantial savings in the cash outlays on that scenario. I come back to the cost to the economy in a second.
For submarines, I refer to the Kokoda study, which is the only really reliable one that looked at real numbers in this area. It did have some issues about underestimating some and overestimating some, But it did generate—and I have verified all those numbers on that one—that the cost per tonne for a submarine of this modern nature is not actually dependent on where it is produced. It sits at around about $400,000 per tonne, plus or minus 16 per cent, no matter where it is being produced. That is because you have only four potential players and they are all high-cost countries and the components that would be variable in levels are really not there in this scenario. Whereas if you buy an armoured vehicle that is produced in Thailand versus one produced in Germany, you would have an off-the-shelf solution with a large variation in cost. So the first issue has to do with what it is you are looking at. The second issue has to do with how you measure these things. Then you come into methodological issues around how you look at it economically.
If you look at a study like the UK study which shows about 36 cents in the dollar equivalent, or pence in the pound in this scenario, you have to be careful because there are different returns on different parts of this process. That number primarily focussed on the production side of it—in other words, the raw material issues, the tax issues, the return on this scenario. That is the dominating component of that 36c issue. Whereas, if you include a development phase, the return on the development phase is different. There are numerous studies on the return of the development phase looking at US numbers and looking at German, UK and Swedish numbers. They vary in the return from about 2.6 up to about six or seven times the invested amount in the development phase, which of course is not the production phase. The reason for the number being so high in the development phase is that you are solving problems not previously solved and that gives you an edge as a company once you have the solution. That solution can then be spread out and implemented to drive the business thoroughly.
Mr FEENEY: Beyond the defence industry?
Prof. Roos : Absolutely. An example of that in the Collins class development would be Bisalloy, who were forced to deliver steel capability to solve the Collins problem, which they have now developed a very large international business around which is broader than the defence area. That business would not have existed unless that requirement to solve a previously unsolved problem had been put to them. But that was only put to them in the development stage. This does not occur if you have an off-the-shelf procurement. In the of-the-shelf procurement your return is solely the claw-back on tax and other types of activities. So there are studies that you have to be very careful of how you interpret them and what you are looking at in that area.
If I may for a minute return to the submarine, a submarine program theoretically would look something like this. There would be about four million man hours development phase. For that, if it is done with a partner in Australia, you would get some return but most of it would go to the partner because that is the key issue; they are the ones who are primarily solving the problem. You would get some business part of it but they would get most. Then you would have a build phase and if that is here you would get the tax claw-back in those areas. Building a submarine would go in a learning curve from about 2½ million man hours to about two million man hours over a series of four and then up and then four and then up with a jagged curve and that 2½ million man hours would make up about one-third of the cost. Two-thirds would be material, of which two-thirds would be domestic on which you have a number of claw-back issues, one-third would be specialised international material on which you would have no claw-back activities. So you would have your 36c on domestic material on the labour issue and then you have your sustainment which is man hours and labour about fifty-fifty and it goes through a different version these days.
If you make those calculations—and I have made them, which is why I wanted to take that example. I have commissioned a study on exactly those things with the extremely conservative issues. So I am not looking at type 2 multipliers or anything like that; I am looking very conservative. Depending a little on how you flick the switches over time and so on, the net cost differential between buying overseas where everything disappears versus and buying and building here but under those boundary conditions gives you a differential cost to the country varying between high 20s and mid-teens billions of dollars. So if I am conservative I would say we would be at least $15 billion better off building this submarine in Australia, given that we know it is not going to cost more in cash outlays.
Mr FEENEY: Can I ask you about the inputs you spoke to. It seems to me there are a lot of inputs that are not considered and I am wondering whether you could discuss that with me. It seems to me that, if the Australia ultimately goes to the MOT solution, there are the costs to be considered, too, and those costs go to the sunk investment in ASC and the capabilities around us, that wasted asset, the workforce and the dislocation to it, the cost to the taxpayer of retraining such a workforce and the cost to the taxpayer of paying unemployment benefits for such a workforce. How a legitimate is set to tabulate those things?
Prof. Roos : I will answer that but let me go back. One of the arguments that are frequently correctly made by neoclassical economists is that there is a crowding-out effect if you build a local program. In other words, you say the workforce could have been used for something else and that would be a better outcome—for example, put them into health care, which has a higher return. That is not valid in the discussion of the submarine because we have the automotive industry disappearing and there is a transition path for the people in the automotive industry, which is well known, into the defence industry—for example, submarines. Hence the crowding-out effect does not exist in a potential submarine project and that is very important because that makes a huge difference in the analysis.
Mr FEENEY: But would a neoclassical economist agree with you?
Prof. Roos : They would agree with that because they have already stated the number of people who will be released and they have already stated that they had will end up somewhere, they just do not know where. I am telling that some of those people could go to submarines, hence there is no crowding-out effect. So they cannot counter that argument because it is just me saying—I parted at one point where these guys would go and there is no obvious place.
The reason is that this would be a relatively high-paying job using their skills to a high extent with relatively little retraining for them; whereas, if they went to some other areas they would be lower paid and not using their skills. Hence, that would be the automatically preferred journey for some of these people, and also they are geographically within a given to domain. That is a relatively easy argument to have.
If you then look to the cost to the taxpayer of not building it here, which is an opportunity cost argument, you have to be very careful because you end up in some areas risking the sunk cost argument. Just because we have invested does not mean we should invest. Everything has to be looked at in its own right. So the stranded asset argument may be quite difficult to win through. I would say I prefer to reject that one as such. What is more important in this domain is that, if we decide not to do it here, we are incurring a future opportunity cost by not having capabilities to further utilise and maintain an asset which we have just invested in. That has an opportunity cost, which is not included in the discussion, but it is substantial. For example, there is no such thing as Mots, but if we say that we end up in the classical military off-the-shelf problems. It is worth pointing out that buying off-the-shelf actually means buying off somebody else's shelf and that generates four problems.
The first problem is that you come back some time later and say, 'I would like this pump please.' They say, 'We produced that seven years ago but we don't any longer and the company has gone bankrupt, sorry.' In other words, you have no control of a guaranteed supply of key components. We have already run into problems of that nature with some of the surface vessel. The second issue is that they say, 'Yes, we have one of those things. Unfortunately we have a lot of them about our own forces have priority, so get in line. We can't give it to you now. We'll give it to you when we have time.' Unfortunately, that time may be too late for us and we have also run into those types of problems historically— Black Hawke in Iraq and so on.
Mr FEENEY: And with the Oberon during the Falklands War.
Prof. Roos : Absolutely the same issue. So that is a problem. The third problem is, 'Yes we have all the things we want but unfortunately we don't like the way you use our equipment so we ain't going to sell it to you'—that was the Mirage in Vietnam. We do not have the control, the sovereign capability of how we deploy the assets which are ours in this area. There is a fourth issue which comes up around this domain. It is a bit of an esoteric issue but it has a similar nature. With this military off-the-shelf scenario people frequently forget that there is a cost involved in the opportunity cost around these different types—
Mr FEENEY: You have not mentioned the possibility—and perhaps it is invalid—of a monopoly supplier price gouging to us.
Prof. Roos : The monopoly supplier price gouging is a contractual issue and a capability issue. If you treat your contractual environment—again, let us differentiate. You have a military off-the-shelf so you can send a tender out for toilet paper, in which case you do not have that problem. When you do not have that, you have a different contractual environment. What you would do, in my opinion, in the submarine scenario, a contested project definition program, is say to them, for the four we are talking about—Japan, German, Sweden and France—'Here is $10 million each and here is the list of the problems we want you to solve.' It is not a specification of the job; it is just a listing of the problems. You would say, 'These are the operational problems. These are the problems we are looking at. We want you to go away and come back to us saying how you intend to solve those problems. How are you going to deal with a guaranteed transfer of the IEP utilisation and issues like build in Australia? How you are going to guarantee our sovereign capability around these types of issues, and what is this going to cost us in this scenario?'
Now you can compare apples and apples. At the moment, we are comparing apples and pears because we do not know what we are looking at. Once we have compared apples and apples we are able to pick the one we want to work on based on what our priorities are, whether it is stealth or whether it is something else in this area. We now know what it is possible to do. So we will now put together our specification based on what we have learned. In that, we will have a long-term requirement. And part of that requirement is to bring us to the level where we no longer have a dependency on that supplier. Hence, the price gouging is limited through the contractual structure they put in, which is normally an incentive based structure rather than one where you try to eliminate risk, because you can never eliminate risk; you just have to price the risk appropriately.
Ms GAMBARO: Thank you, Professor. You have gone through all the opportunity costs of not building in Australia, including some of the issues with buying off the shelf. I am going to ask you a different sort of question. What are the opportunity costs if it is built in Australia and it goes pear shaped? Can you go through that scenario? Then I want to ask you a question about Norway. You used that as an example. Why are they are doing so well? The same impediments to Norway and the US are the 25 or so domestic restrictions, including the Berry amendment that the Americans legislated in 2007, with that local off-the-shelf type of product. So, how are they doing so well?
Prof. Roos : Can we split it into two?
Ms GAMBARO: Yes, split it into two. The chair is very patient with me. Fire away.
Prof. Roos : Whatever project you enter into, there is a risk issue. But you can contain the risk to its different phases. The first risk is that you design something that does not work. That is actually what happened to Spain. They designed something and they made a comma error and ended up with a submarine that was 70 tonnes heavier than it should be, so it was extremely good at submerging but it was not so good at coming up again. That is a design risk. That design risk is catered for in the responsibility that you contract your design partner for, and is verified through the sea trials that you run at the end of the first class. You can contain that risk. That means that you are contracting them on an outcome, not on how they achieve the outcome. Hence you have transferred that risk to the other party. So that is almost a foreign risk, if I can put it that way.
Then you have a risk relating to local production. In other words, the people out here for some reason build a submarine that leaks or whatever it is. They get it wrong. They turn out to be not very competent in how they do things. The way you normally get around that is by having a contractual structure where you include the competence partner in your process.
May I point out that that is one of the things that was not done around the AWD. That means that when you come into unforeseen problems, if you have your partner in the contract with the same incentive system, they have an incentive to use their maximum knowledge to solve this problem before it actually arrives; whereas in a situation where they are not in the contract it is not their problem. For example, in the AWD we bought something from Spain that works very well in Spain. It uses a different combat system than ours. When it came down here we decided we wanted an American combat system. It so happens that the American combat system uses more energy to run than the Spanish one. That means that you need thicker cables to transfer that energy, the electricity, into the combat system. A thicker cable does not bend as easily as a thin cable. That meant that the Spanish design to take the energy through the ship could not be used. That means we had to redo something here. But then you could not get design certification for it until you went to the design partners. So you had to ship this over to Spain and sit and twiddle your thumbs until they decided to say, 'Yes, we think that will work.' Those types of issues occurred because the consortia here, the partners who owned the know-how and certification rights of that vessel design, were not part of the issue. So you had guaranteed to incur a risk rather than structure yourself not to incur it. So, again, you are back to the contractual structures to do these scenarios.
Then, in sustainment, you normally do not have the risks relating to the builder. Instead, you have the original Collins risk where there was an original set-up around what was required for a parent navy. A parent navy is the one who owns that one class, and Australia is the only one who will have Collins, so they have the parent navy responsibility. At that point, the Royal Australian Navy had never been a parent navy for anything. They were used to the UK being the parent navy, so they did not know what it entailed to be a parent navy. So they looked at the set-up structure proposed and said, 'That's too expensive; we don't want that.' As a consequence of rejecting it on an up-front cost issue, they of course incurred substantially larger costs, not to mention an availability issue throughout the Collins. That was based on, at the point of departure, an ignorance issue of the difference between being a parent navy and not being a parent navy.
By the way, that is the same issue that occasionally comes back around the statement that Warren King made that we do not need to do this because we can maintain our aeroplanes without doing this. The issue is that the aeroplanes have a parent air force, and that is the US. They also have multiple users who all put pressure on the parent air force and the supplier to solve upcoming problems. Then we are told what to do to solve them; we do not have the problem. In the submarine scenario, we are the parent navy. There is nobody else to tell us these things. So we need to build the capability. This is why there is a fundamental difference between a reasonably standard product and one that is not. That was the first question that you asked.
Ms GAMBARO: Then the Norwegians—
Prof. Roos : What do they do?
Ms GAMBARO: What do they do, apart from having people on the ground? There has to be something more to it than that.
Prof. Roos : It starts with people on the ground. As I pointed out in my submission, it is worth pointing out that in support of defence sales the Norwegian government has about 15 to 20 'diplomatic' staff in place in North America. I do not know how many we have. What they do is that they run a number of activities. I think I outlined some of them here. For example, they ensure that there are continuous lobbying activities in the US towards the congress and the Senate around this area. They have a joint Norwegian-US defence interest committee. They ensure that the security system allows them to be part of it. They lobby to clearly ensure that they have the right to sell through their subsidiaries in the US and be counted as a US firm. So they have a whole complete set of activities that they do, which I have outlined in my submission. That has opened the doors for them in a way that you cannot expect an individual firm to do. It is impossible for an individual firm who is an SME or a mid-sized company to have the capability to (a) know what to do and (b) have the access that you have on a government-to-government level in this scenario. The reason I raised Norway is that they have many similarities. They have a similar economic structure and raw material base. They are also a customer to the JSF. But how they have built around that and developed an incredibly large defence sale, which is substantially larger compared to Australia's, has, in my opinion, some learning for us in that area.
Ms GAMBARO: Thank you, Professor.
CHAIR: Following on from your answer, particularly about the congressional armed services committee and the different way they operate, could you outline, so we have it on the record, the importance of the congress and those armed services committees in their whole defence budget and procurement cycle, as it would apply to us trying to export into them.
Prof. Roos : Yes. As I pointed out, there are about 25 or so restrictions that affect purchases on behalf of the Department of Defense. When I say the Department of Defense, it is worth pointing out that the different branches of the forces in the US act as independent customers, so you have to deal with all of them independently; you cannot deal with them as an entity. To outline these restrictions, firstly, there are the federal acquisition regulations. There is the important Defense Federal Acquisition Regulation Supplement, DFARS as it is called. There is the Buy American Act; the Balance of Payments Program; the Berry amendment; the special matters restriction; the no-foreign-content-restriction; the security classification of programs; the requirement to prove it is on US soil; the Small Business Act; the Data Distribution Code; ITAR; and proxy border special security arrangements they can arrange. All of these you have to adhere to.
The key issue is, yes, there is a regulation up here but the project is here. But you can tweak your program somewhere or other to adhere in the way that you want. That is partly how you intervene in the system. You intervene to ensure that they say, 'Well, it is okay to buy from Norway in that scenario.' And that means that they have to do all of these things. They influence the Congressional executive and the Department of Defence policy development. They are a part of these types of areas. They ensure there is a continuous dialogue between representatives of Norwegian industry and defence and US industry and defence and the defence customers and the politicians in these areas. Lobbying is a big business in the US as we all know. They also provide educational services and support, which is of course a great indirect way of setting things to your customers in this area. To do that you need to have a critical mass because you must be able to respond to any demand within any of the US time zones at any point in time and you must have on-US-soil production capabilities because otherwise you will fall foul of a number of these types of activities. I gave the example of Kongsberg and how they did the normal duty journey. They became a sub supplier to a big American defence contractor and then established themselves locally in the US. They then got support from the Norwegian government to go through a number of clarifications of the regulations and then their sales have taken off what dramatically. They are very successful as a supplier of equipment into defence systems. I think you may be familiar with the Penguin and a few other things of military equipment which are used throughout the armed services.
This is not unique for Norway. I just picked Norway because of the relative size issue. Sweden is an even bigger exporter and Sweden has managed to get separate agreements. You may be aware that the US is not allowed to buy from countries that would not maintain the supply in times of crisis or war but there are exceptions to that. The exceptions can be made if what you have to sell is desirable enough. It is about making that case very clearly.
CHAIR: I am not sure how familiar you are with the Defence Trade Controls Act. We have had a number of comments to the Senate Standing Committees on Foreign Affairs Defence and Trade that will have a chilling effect on our local defence industry and its ability to innovate and export. Are you in a position to make any comment on that?
Prof. Roos : I would generally agree with the spirit of those comments. It is an act that if abused can basically shut down any non-US company's ability to do any type of business activities that involves any form of US technology derived or direct. So I think that as an act in its own right is an act where it its interpretation must be managed to the advantage of Australian industry. So I would have set already, from the period of this act being discussed as one of our objectives, for our diplomatic corps to make sure that the act has a number of if not amendments then interpretations that would secure a greater degree of freedom for our industries that maybe otherwise would be allowed. Given that Australia is on the top level of US allies, I think such an outcome would be quite feasible. But I am not sure whether we have taken those steps.
CHAIR: Given the Defence Export Control Office is essentially the people who administer the act, and it is act here in Australia, have you engaged much with industry around the regulations that will flow from the act?
Prof. Roos : No, I have not.
CHAIR: Have you been involved at all with any of the pilot programs?
Prof. Roos : No, I have not. I have stayed out of this area completely on purpose.
CHAIR: Thank you not only for your evidence today but also over the last several months. You have been very active in the defence space and seeking to advocate for defence industry and, more importantly, defence capability and national sovereignty at the end of that. Thank you for your contributions in those areas.
Prof. Roos : Thank you for allowing me the opportunity to appear. Let me say, I think it is of fundamental importance that we as an island nation and a country have the ability to control our own destiny. We cannot put that in other people's hands who may or may not be there when we need them. If you have been asked to provide any additional material, which I think you have, or if there is any further information you would like to provide the subcommittee, could you please forward that to the secretariat. You will be sent a copy of the transcript of your evidence and you can suggest corrections to that.
Prof. Roos : I will get back to the studies on the offset issue. That is what I understand I have been asked to provide. May I also point out to the committee that I was yesterday giving evidence in front of the shipbuilding inquiry in Newcastle because I was not able to be here next week. I have asked for that inquiry to synthesize a broader issue as a submission, so I will do so. And that will also contain issues of relevance to this inquiry, so I will make sure that a copy of that submission will be sent to this inquiry as well.
CHAIR: Thank you, much appreciated.