Australian defence R&D 1 Ferguson Research, Development and Product Innovation in Australia’s Defence Market Dr Gregor Ferguson INTRODUCTION This paper explores one aspect of the Australian market for high-technology defence equipment: the role of government and private sector Research and Development (R&D) spending in the development of new or updated products by Australian defence companies. The topic is timely as Australia’s Liberal-National Coalition government, elected in September 2013, promised a new Defence White Paper, Defence Industry Policy Statement, Defence Capability Plan (essentially a 10-year equipment shopping list) and a new Naval Shipbuilding Plan. These were expected to be published in early 2015; they are now expected in September or October of this year and it is anticipated that they will express a new focus on relations between the Department of Defence and Australia’s defence industry, and the need for innovation to address the emergent and lingering challenges faced by the Department and the Australian Defence Force (ADF). Certainly this was the interpretation of many observers following statements by the Prime Minister, Mr Tony Abbott, and Minister for Defence Mr Kevin Andrews in August 2015. Tony Abbott announced on 4 August that the Australian government will invest some $89 billion over the next 20 years in acquiring and sustaining new submarines and surface ships for the RAN. He added that this program includes an unprecedented peace- time continuous build of surface warships, essentially creating an enduring Australian industry capability. This was a watershed moment for Australian industry when taken in conjunction with a fundamental re-organisation earlier in 2015 of defence acquisition, the appointment in 2012 of a new leader for the Defence Science and Technology Group (formerly DSTO) and Defence Minister Kevin Andrews’s speech to AMCHAM, the American Chamber of Commerce, in Canberra in late-August promising Government support in the new Defence White Paper to “promote, harness and translate innovative ideas into practical capability.” The original stimulus for the research on which this paper is based was the observation that while Australia conducts a relatively significant amount of defence R&D and is a significant purchaser of high-technology defence equipment, the Australian Defence Force (ADF) imports most of its major equipment, weapons and platforms such as ships, aircraft, submarines, main battle tanks and guided missiles. Some of this materiel, including highly