London, June 21, 2012 – During
the review period, the defense expenditure of Australia exhibited a CAGR of
-1.42% to reach an estimated US$28.5 billion in 2012, and is expected to grow at
a CAGR of 5.13% over the forecast period to reach US$38.8 billion by 2017.The
government is expected to make cumulative capital acquisitions of US$40.2
billion during the forecast period, 35% of which will be procured from domestic
firms, in order to support government plans to increase the independence of its
defense industry. The acquisitions are expected to focus on the improvement of
capabilities of the Australian Air Force and Australian Navy (reference see
graph below
The Australian DMO has taken criticism for the project delays and cost
overruns associated with its domestic defense procurements, several of which
have cost double the original estimations. Currently, the Australian defense
industry is facing cost overruns and delays in its project to acquire 100 F-35
joint strike fighters. As a result, similar opportunities may be offered to
foreign firms, rather than domestic firms, during the forecast period.
The Australian Industry Capability (AIC) program supports the domestic
defense industry by encouraging foreign OEMs to grant domestic access to the
global supply chain in exchange for market entry. Global supply chain deeds can
be entered into voluntarily or as part of a procurement contract, and insist
that the foreign OEM procures its equipment or components from a domestic
company. While global supply chain deeds offer substantial export opportunities
to domestic firms, they can pose major concerns for foreign OEMs, as Australian
defense products are often expensive due to high labor costs and expensive
logistics related to the country’s geographical location.
The Australian Government’s November 2009 Cyber Security Strategy professed
the fact that Australian Government computer networks are increasingly under
threat from malicious cyber-attacks. Recently the Government has initiated the
Internet Gateway Reduction Program, which aims to reduce the number of internet
gateways to the minimum for improved operational efficiency, reliability and
security. The domestic Australian cyber security industry is entering into
partnerships with the US cyber security participants in order to gain technical
and strategic insights into the domain.
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