Hunter Defence

Defence Strategic Review (DSR) summary from Tim Owen

Defence Strategic Review (DSR) summary

  • The long awaited DSR was released on April 24, 2023. The review by His Excellency, the Hon Stephen Smith, and Air Chief Marshal Sir Angus Houston AK AFC (Ret’d) is a set of recommendations that have been passed to the Prime Minister, the Minister for Defence (Deputy Prime Minister), the Minister for Defence Industry, and the Secretary of Defence.
  • The governmental response has essentially been to agree in a number of capability areas with the report or ‘agree in principle’ in other areas of capability – which leaves some manoeuvring room for the Government for future capability decisions.
  • The next major step forward is the Government’s acceptance of the DSR’s recommendation for an inaugural National Defence Strategy (NDS) to be released in 2024, which will be updated twice-yearly.
  • Below is a broad summary of the 110-page document into what programs are likely to be accelerated or new ones generated with some specific programs being either delayed or are dropped all together, including the effects on industry nationally and internationally.

Context:

  • The review has found that due to the significant changes in Australia’s strategic circumstances, the Government agrees with the Review’s finding that the ADF as currently constituted and equipped is not fully fit for purpose.
  • The current defence doctrine is largely out of date and has positioned the Australian Defence Force (ADF) for a defensive position which is now obsolete.
  • Defence policy has largely been dictated by the Defence of Australia; doctrine which hasn’t been changed in the last five decades. It is out of date due to new competition in the Indo-Pacific region and the accelerating technological trends that are now ubiquitous for the
    military (read: space and cyber domains).
  • This all leads to change in major platforms (Land, Air, Sea, Cyber and Space) as budgets are reprioritised.
  • The 110-page unclassified review spans posture, acquisition, supply chain resilience, energy security as well as international cooperation.
  • It is expected to shape Australia’s defence policy and national security posture for decades to come.

Summary:

  • Due to the above, significant announcements have been made to modernise force posture (disposition, strength and condition of
    readiness) to the military including but not limited to the following:
    • Nuclear Submarines,
    • Guided Weapons Explosive Ordinance (GWEO) / Long Range Strike Capability,
    • Bolstering the Australia’s northern land and sea borders,
    • Provide easier procurement of new technologies into service (Pillar 2 of AUKUS),
    • Further hiring & retention of defence personnel, and
    • Improvement to Indo-Pacific relations.
  • The Hunter Defence Chair expects that each of the ADF Service Chiefs and Vice Chief of the Defence Force will deliberate over the findingsrecommendations over the next few weeks, post budget.
  • Expect Chief of Army to announce first force changes due to Army having the largest force posture amendment. Expect the Airforce and
    Navy Service Chiefs to follow days after.
  • The Budget on May 9 will give guidance to where dollars are to be spent.

Major announcements:

  • Minister Marles announced the government will be immediately focusing on the following six priorities:
    • Investing in conventionally armed, nuclear-powered submarines through the AUKUS partnership; (as previously mentioned prior to DSR).
    • Developing the ADF’s ability to precisely strike targets at longer range and manufacture munitions in Australia (in line with Guided Weapons Explosive Ordinance announcements made prior, and sovereign manufacturing to be set as a priority).
    • Improving the ADF’s ability to operate from Australia’s northern bases.
    • Lifting Australian capacity to rapidly translate disruptive new technologies into ADF capability, in close partnership with Australian industry.
    • Investing in the growth and retention of a highly skilled Defence workforce.
    • Deepening our diplomatic and defence partnerships with key partners in the Indo-Pacific.

Key takeaways:

  • Navy to be increased in size and capability:
    • Will likely acquire Tier 2 (Corvettes, small warships) surface capability,
    • Acquire nuclear submarine capability as fast as possible, and
    • Navy Review to outline new capability acquisition in Q3 2023
  • Army to be optimised for a littoral manoeuvre force:
    • The Infantry Fighting Vehicles (IFV) procurement reduced from 450 to 129,
    • A second tranche of Huntsman SPGs Howitzers have been cancelled,
    • There is to be rapid acceleration and expansion of the medium and heavy landing craft programs,
    • HIMARS procurement to be accelerated, and
    • Land based maritime strike (likely: bushmaster with missiles) should be expanded and accelerated.
  • Airforce to perform all aspects of air warfare:
    • An upgrade all F-35s to block 4 (electronic warfare variant),
    • Integration of Joint Strike Missiles (JSM) and Long-Range Anti-Ship Missiles (LRASM) to F35 and F-18s,
    • Further collaboration with the US on the MQ-28 Ghost Batprogram,
    • Clear guidance that the B-21 raider program is not to be acquired,
    • Space Command will be moved to Joint Capability Group meaning it will no longer be just an Air Force initiative – we will have to see in time what that will mean for funding flows, and
    • Further acceleration of the GWEOE for both medium and long-range systems.

What’s to come:

  • National Defence Strategy – 2024,
  • A Surface Fleet Review – Q3 2023, and
  • The funding and newly established Advanced Strategic Capabilities Accelerator (ASCA) will start by 1 July this year with 18 months to
    develop, test, and refine the operating model. Hypersonics, directed energy, trusted autonomy, quantum technology, information warfare, and long-range fires have all been listed as priorities for the ASCA program.

What this means from a capital and investment perspective:

  • Investment opportunities will be wide especially for companies
    working within the following:
    • Management and Sustainment, and
    • AUKUS Pillar 2 Technology Procurement in (with Australian Industry examples) will be a keen focus for Government and
      defence spending such as the following:
      • Undersea capabilities
      • Quantum technologies
      • Artificial intelligence and autonomy
      • Advanced Cyber
      • Hypersonic and counter-hypersonic capabilities
      • Electronic Warfare
      • Information sharing, exploitation and collation

Considerations and thoughts:

  • The new National Defence Strategy, which is scheduled for 2024, will include a ‘comprehensive plan’ into Defence policy, planning,
    capabilities, and resourcing as well as reprioritisation of defence spending.
  • No dollar figures as yet allocated attached to the above – Federal Budget will be the initial window on May 9 – though Navy allocations
    are expected to be somewhat delayed until an independent analysis of its surface combatant fleet is completed nearer the end of this year before changes are identified.
  • Post a number of discussions and meetings in May 2023, which Hunter defence is involved in at a national level and once the DSR has
    been fully absorbed and funding options outlined, we should be able to provide a much more detailed overview of the way forward for
    regional industry opportunities.

See the full Defence Strategic Review.

dsr marles
Deputy Prime Minister of Australia and Minister for Defence, Richard Marles at the Defence Connect DSR Summit at the Four Seasons Hotel in Sydney earlier today with former Minister for Defence, Christopher Pyne.
dsr conroy
Pat Conroy, Minister for Defence Industry, also at the Defence Connect DSR Summit with host, Christopher Pyne.

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