Defence export plan is going to be a hard sell at home and abroad
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Defence export plan is going to be a hard sell at home and abroad

The Turnbull Government's ambitious plan to make Australia one of the world's top 10 defence exporters is almost certainly going to be a hard sell both at home and abroad.

Given the combined value of sales by the top 100 arms producing companies came to almost $US400 billion in 2012, the $3.8 billion in financial assistance flagged by the Prime Minister on Monday is a drop in the ocean.

Australia's current arms exports, estimated at about $2 billion a year, would be lucky to get us into the top 20 countries, let alone the top 10.

Only three Australian companies made the list of the world's top 100 arms manufacturers in 2010.

They were all subsidiaries of international corporations based out of America and Europe and are the most likely beneficiaries of the largesse that is about to be placed on the table.

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None made the top 50.

While the government's decision to extend its jobs and growth mantra to the weapons sector makes some sense given the recent death of a locally based car industry, it does appear to be setting its sights unrealistically high.

Australia's ability to become a major player in an export market dominated by America, Russia, China, France, Germany, the UK, Spain, Italy, the Ukraine and Israel is questionable.

Yes, it may be possible to persuade foreign companies to increase their investments in their Australian operations by offering short term financial incentives. But, and this is literally the billion dollar question, will those operations be maintained at their new tempo once the incentives are scaled back?

Many of Australia's defence manufacturers are already struggling to be internationally competitive with local tax payers already paying well over the odds for warships and the like.

If, for example, it costs significantly more to build the new submarines in South Australia than it would to have bought an equivalent vessel from overseas it is highly unlikely foreign navies are going to be beating a path to our door.

That said, the premium is justified in that it develops and retains skills and technologies and will generate hundreds of jobs over many years.

Importantly, many Australians will be deeply uncomfortable with the concept of Australia attempting to become a larger player in the industry of war, and the ethical dilemmas such sales inevitably lead to.

One top 10 list we did make, which highlights the challenge we face in turning around our balance of trade in the weapons sector, is the top 10 list of arms importers.

Where Australia can, and is, playing a role is in the "work smarter" space occupied by companies such as Fyshwick success story, CEA Technologies.

Founded in 1983, CEA made headlines when it developed a revolutionary radar technology that is now being integrated into the AEGIS weapons systems used by friendly navies around the world.

If the Government's investment is channelled towards similar such projects and initiatives there is a high chance it will return a significant dividend in areas as diverse as education, innovation and employment.

If, on the other hand, it is just a subsidy to encourage local subsidiaries of foreign-owned multinationals to relocate additional manufacturing capability to Australia for as long as it lasts then long term benefits seem unlikely.

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