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Address to the JSF Advanced Technology & Innovation Conference, Melbourne.



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SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 MINISTER BILLSON’s ADDRESS TO THE JSF ADVANCED TECHNOLOGY & INNOVATION CONFERENCE Melbourne, 10 July 2007 Thank-you Air Vice-Marshal Harvey for your kind words of introduction. Today, I would like to reflect on the rather exciting opportunities presented to Australian industry and other drivers of technological innovation, by our Government’s commitment to the Joint Strike Fighter Program. A program being developed to enhance our air defence capability and to serve our national interest long into the future. The JSF Program is one that has certainly generated plenty of media analysis and like any undertaking of this scale is has its critics; but regardless, the program continues to push forward and is making good progress. Progress which secured a major vote of confidence when all nine JSF partner countries had signed up for the (PSFD) Production Sustainment and Follow-on Development phase by the end of February. It is important to re-emphasise that this aircraft was selected in the best interests of our national security; it is an aircraft being developed to provide the all round stealth capability and high performance that Australia needs. There is no doubt that we live in times of uncertainty, challenging times that are and will continue to test the broad spectrum of our capabilities. That’s why the Howard Government is committed, during this period of sustained economic prosperity, to ensure the Australian Defence Force is equipped to confront challenges in ways that best serve our nation’s interests. But of course, the people of our Defence Force can only perform at their optimum level with the equipment and technological support they require, through the critical backing, driven by the optimum performance of industry. It is vitally important that Defence, industry and research organisations all operate in sync to develop and produce the equipment and capability we need to help ensure our future security.

SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 To ensure we have the required horsepower, the Government, through its entry into projects like the JSF program, has demonstrated the preparedness to make bold decisions in a bid to ensure our capability edge. There is no question that the JSF is still a developmental program and there are some risks, but those risks are more than justified by the capability and cost benefits the JSF offers. This is a program designed to deliver us a fleet of 100 absolute elite fighters, aircraft that will help ensure our country does in fact maintain that capability edge. Australia is investing a total project cost of around $12 billion in the JSF, a commitment that offers major opportunities for local industry and research organisations. Before going further, however, I’d like to congratulate the 22 Australian companies that have already won work on the JSF Program. They have won JSF work in competition with the world’s best and have helped deliver one of the key goals of the Australian Government’s investment in the JSF Program. This work is high quality work based on new technology and manufacturing processes. This translates to quality jobs for skilled Australians and will help shape the sector for years to come. In terms of research and technology, Australia has also received in excess of $20 million in R&D funding related to the JSF. This success has been a result of our JSF Team Australia approach, all of Government and industry working together to maximise our involvement in the JSF Program. I see this teaming approach as an excellent model for future international engagement. I also pass on my appreciation to the many more Australian companies that have not yet won work on the Program, but have put in so much effort for future opportunities. The Minister for Defence and I are committed to working with Australian industry, as JSF Team Australia, to make our vision for broad Australian involvement in the JSF Program a reality. For the production phase, the JSF Industrial Participation (IP) Plans negotiated for Australian industry with Lockheed Martin and the two JSF engine manufacturers, identify production opportunities valued at more than AUD$9 billion. I stress these are ‘opportunities’ - a lot of work remains to be done to convert them into long term contracts. Government is working with Lockheed, its JSF partners and their

SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 subcontractors, to develop long-term partner relationships with Australian companies so that Australian industry has the confidence to make the necessary investments to win this work. And there will be major additional opportunities through the follow-on development and sustainment phases of the Program. Following establishment of the baseline design, it is planned that JSF will undergo technology refresh and block upgrades biannually over the life of the program. A major participation in follow-on development is one of the primary objectives of Government and industry for Australia’s ongoing commitment to the JSF Program. We are also seeking a major role for Australian industry to not only support Australia’s future JSF fleet, but to provide support as part of the regional and global JSF sustainment solution. In opening this conference I would like to cover three key areas: • firstly, the Australian Government’s recently released Defence and Industry Policy Statement, and its relevance to our participation in the JSF Program - particularly, the value of a national technology base in implementing the new initiatives; • secondly, some of the support initiatives being considered for Australian involvement in the JSF Program, including the Government’s JSF Industry Technology Facilitation Program initiative; and • thirdly, I’d then like to ask you if there is more the Government can do with industry and research organisations to achieve the desired outcomes. Turning to my first point: In March 2007 Government released its Defence and Industry Policy Statement. I was heavily involved in the broad consultation that took place to develop this Policy, working closely with Australian industry. While I don’t intend to dwell on the detailed provisions of the Policy this morning, I would like to reiterate some key points. In its broadest context, and specifically with regard to the JSF Program, the Policy aims to ensure that:

SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 • Australia has an in-country capability to support the future Australian JSF fleet, and • the viability of local industry is maintained through access to global supply chains, not just via the Australian defence budget. There are nine strategic priorities in the Policy and 22 key points to drive the Policy forward. Our planning horizon has to be long as the equipment we acquire will be critical to our country’s security for 30 years or more. This is particularly true for the new air combat capability, as Australia’s largest ever defence project and vital for our national security. The Policy seeks to drive investment in Australia, and a presence in Australia, by primes that are after big contracts from the Australian Government. With regard to leveraging Australian industry into global contracts we’re already seeing some good initial results from the Government’s early commitment to the JSF Program. But implementing the Policy will be no small job. Of specific relevance for today’s conference is that one of the nine ‘planks’ of the Policy is to ‘drive innovation in defence technology via increased pooling of the expertise and resources of Defence, industry and universities or other research organisations on joint defence R&D ventures’. The government has committed some $97 million over the next five years to supporting research and innovation. This will include approximately $50 million to extend the Capability and Technology Demonstrator program and enhance the ability to better fill gaps in the Defence Capability Plan. The Government is also committed to establish Collaborative Research Centre-like arrangements - to expand the relationship between DSTO, universities and industry - clustering research on defence priority areas. One of the requirements of the new innovation program will be specifically to have SMEs supported, and their proposals and initiatives thoroughly assessed, as a part of developing further innovation. It’s obvious that Australian industry will need a solid national R&D base to take advantage of future JSF development opportunities.

SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 Currently, the major element of this R&D base resides within research and development organisations, particularly universities. The JSF Industry Advisory Council’s engagement strategy for Australian industry has long recognised the need for DSTO, Australian R&D organisations and universities to collaborate to adequately position Australian developed technologies for future promotion into the JSF Program. Hence this conference. In focusing Australia’s R&D, the Australian JSF Industry & Technology Facilitation Program, which is still in its formative stages, has already identified some 150 proposals from Australian R&D organisations that have the potential to contribute to JSF follow-on development or improve JSF manufacturing processes. The proposals are currently being evaluated and prioritised. In this context, it is recognised that to achieve long-term national industry objectives for JSF, it may be necessary for Defence to provide some support for development of selected priority areas, for which suitable funding mechanisms are not currently available. I’d now like to turn to some of the initiatives that are being considered to support research and innovation opportunities. There are two important points to bear in mind at this stage. • First - JSF is a long term project - forty years at least. Specific opportunities in the follow-on development phase are not yet identified in Lockheed’s Industry Plan. In fact, recognising the priority to maintain air superiority of the JSF over its life of type, hypothetically, the only limitations to future development will be ingenuity and technological capability. • Second - whilst JSF is a long-term project, the baseline design is now essentially complete. Therefore, to inject Australian technology and innovation we need to be looking at future development opportunities for the leveraging of Australian technology and innovation. •

SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 Defence and industry need jointly to seize the initiative - we have the opportunity to work together now to influence development of the opportunities for the future. Very broadly, current activities that support these initiatives include: • For the JSF production phase. Many opportunities in the plans - production of JSF vertical tails for example - require significant investment in new technologies and capabilities by the companies. Government is and will continue to assist companies to develop new capabilities required to deliver the Industrial Participation Plans in the face of strong competition from other JSF partner countries. • For the JSF sustainment phase. In order to ensure Australia’s self reliance for the operation of JSF over its life of type we will need the active involvement of industry the supporting technology base to identify and develop capabilities for unique JSF sustainment requirements. One example of this is will be the measurement and maintenance of stealth materials. • For the JSF follow-on development phase - which will continue for the life of the JSF Program - Defence is working to pool the expertise and resources of DSTO, industry, universities and other research organisations on selected joint JSF R&D ventures via the newly created JSF Industry Technology Facilitation Program. Government is confident, that through the JSF Industry Technology Facilitation Program and the continuing JSF Team Australia approach - Government and industry working together - we can access new industry opportunities in follow-on development through the application of focused Australian R&D. With this objective in mind, I note that there are a number of technology workshops on the third day of the Conference and that the objective of these workshops is to make Australian industry a world leader in the respective technology. I commend this approach and the objective of having industry, universities and government funded research organisations work together to make Australia a world leader. What More Can Be Done This will require good communication between Defence and yourselves and leads me to my third point - what more can be done? The ninth and final ‘plank’ of the Defence and Industry Policy is Defence and industry working together to achieve our goal.

SPEECH The Hon. Bruce Billson, MP Minister Assisting the Minister for Defence Monday, 26 March 2007 The fact that you’re all here today and will be sitting around the table over the next few days is ample evidence of the genuine willingness to explore scope for mutually beneficial collaboration in applying advanced technologies and innovation in the JSF Program. JSF is a truly global project with industry involvement on a ‘best value’ basis - it’s a lot harder than everybody initially thought, including Lockheed and its JSF partners. While Australian industry has achieved some success to date, a lot of work is still required - from both Government and industry. Involvement in JSF is bigger than just supplying to the ADF. We need to maintain commitment to the Program and a global focus. We are still in the investment phase for Australian suppliers on JSF - and we will need to continue to invest. Major returns will only be realised over an extended period as JSF is a forty year program. Company planning and management of capacity growth is critical for longer-term participation in the JSF Program and I now welcome comments on what you think the Government can do with industry to achieve the desired outcomes. I look forward to doing all I can to contribute towards the Conference goal of “positioning Australian industry and research organisations to be major contributors to the on-going capability development of the Joint Strike Fighter through the follow-on development and technology refresh programs”. I leave it to Air Vice-Marshal Harvey’s team to work through the detail with you over the next few days and I look forward to the outcome, particularly those areas where you feel the Government could do more to assist. Media information: Cameron Hill (Mr Billson) 03 9781 2333 0408 239 521 Defence Media Liaison (Defence) 02 6265 3343 0408 498 664 For a free subscription to Defence Direct, the Minister for Defence's monthly e-newsletter, please follow this link http://www.minister.defence.gov.au/defencedirect/spt/subscribe.html