Defense Export Support Scheme
The Turnbull government has recently announced a new $3.8 billion loan scheme to offer financial support for Australian companies involved in exporting defence/military equipment to overseas markets, particularly focusing on those that have been denied funding from private financiers
In the broader defence area, the recent departure of defence expenditure from the historical level of 2% of GDP means that spending can now be varied year-to-year, signaling a shift of priority from economic inputs to strategic outcomes
These strategic outcomes include promoting regional stability and a rules-based international order at a time when violent conflict causes “80% of humanitarian needs […] straining international responses”. Encouraging defence exporters to expand to international markets may undermine these strategic outcomes.
In financial year 2015-16, Australia’s defence exports industry was worth $4.2 billion. EFIC, the government body that provides finance to exporters has a history of helping defence exporters secure funding. Shipbuilding company Austal has received $1.234 billion for export contracts since 1994.
The new loan scheme is designed to finance defence export contracts deemed too large for EFIC’s commercial account. If the potential contract is deemed to align with the government’s national interest, the agency will be allowed to access the $3.8 billion to fund the export
What should the government’s role
be in assisting defence manufacturers
to export to foreign markets?
Australian Government, ‘Foreign Policy White Paper 2017’, a) pg. 53, b) pg. 1-27
The Guardian, ‘Australian government underwriting arms exports is 'baffling', expert says
The Australian, ‘Coalition’s $3.8n bid to drive defence exports'
Department of Defence, ‘Export Control Policy'
Australian Customs Service & Department of Defence, ‘Export controls for defence and strategic goods
Department of Defence, ‘Defence Export Strategy’ p.61
The Lowy Institute, ‘Defence export strategy revives old ethical dilemmas'
Australian Policy Handbook, Althaus, C, Bridgman, P & Davis, G, Allen & Unwin, Sydney, pp.56
Brisbane Times, ‘Obscure agency handed $3.b boost to fund Australian arms exports'