New figures from the Stockholm International Peace Research Institute (SIPRI), the world’s leading authority on global military spending, show that Australia has become the world’s second largest weapons importer but has dropped to 25th in the export rankings.
Australia previously ranked as the fourth-largest importer and 18th largest exporter. It now imports more military equipment than any other country bar Saudi Arabia and exports less than Belarus, the Czech Republic and Norway. The shift up in imports, however, is reportedly due to significant payments for the F-35 and for the Future Submarine programs rather than a wider general increase.
The news of the export drop comes in spite of the government’s push to make Australia one of the world’s top ten largest military exporters. The Defence Export Strategy, announced in early 2018, includes a $3.8 billion Defence Export Facility administered by Australia’s export credit agency and a $20 million per annum re-allocation of funds within Defence.
In a statement to the ABC, Minister for Defence Industry Melissa Price threw doubt on the SIPRI figures.
“The Stockholm International Peace and Research Institute system for measuring defence exports does not capture a large amount of Australian industry defence exports, particularly our niche capabilities in sustainment and upgrade services," Minister Price said.
ADM understands that former Minister for Defence Christopher Pyne also expressed doubt over how the SIPRI figures are calculated and sought to change the definition of ‘arms export’ to better reflect Australia’s industry profile.
SIPRI’s methodology documents ‘actual deliveries of major conventional weapons’ and production arrangements. It does not cover small arms and light weapons other than portable guided missiles, trucks, artillery under 100-mm calibre, ammunition, support equipment and components, repair and support services or technology transfers.
Yet SIPRI researchers have previously doubled down on their analysis and questioned whether Australia is capable of breaking into the top ten.
“To be honest, I don't see Australia becoming a major arms exporter in any near future," SIPRI senior researcher Siemon Wezeman once told Nine reporter Antony Loewenstein. "The list of exports in the last decade gives not the greatest reasons to be optimistic about exports of major weapons from Australia, the more so since the new-produced weapons listed are not very advanced and are not niche weapons. Australia has no comparative advantage and many other countries produce or can produce them cheaper."
Wezeman also said Australia "caters for its own needs, largely now [through] subsidiaries of foreign companies.”
Relatively few participants in ADM’s Top 40 2018 disclosed export figures. Three of the top five of those that did are local subsidiaries of foreign companies: Thales, BAE Systems and Lockheed Martin, who appear alongside locals EOS and Marand. EOS exports to Saudi Arabia and the UAE whilst Marand supplies vertical tails to the F-35 program. The company was sold to a private equity firm in March.
KPMG has previously noted the absence of export-capable mid-sized Australian companies, with a dozen large primes locally supplied by small businesses with $1-5 million in revenue. These small companies ‘seldom export’ and tend to do so through a prime.
The reasons given for this industry structure were a historic lack of clarity from government on the value of local content and reliance on varying international supply chains (i.e. French submarines, British frigates, German patrol vessels).