The government faces a damaging row over defence procurement, amid claims the Defence Material Organisation is reflexively opposed to Australian defence industries.

The row centres on defence equipment manufacturer Thales Australia. Thales produces the Bushmaster armoured vehicle, one of the clear successes of the Afghanistan conflict, at its Bendigo plant, which employs over 200 people.

As the Bushmaster production contract nears an end, Thales has bid for a component of the Army’s Land 21 program to source 2300 medium and heavy trucks, just over half of which will need to be fitted with protection for operational deployment. Thales is offering a single cab variant of the Bushmaster, which was initially rejected by the DMO before the Rudd Government overhauled the contracting process on entering office. Thales’s vehicle is up against civilian vehicles from Mercedes-Benz and M.A.N, which will be fitted with armour.

Despite a troubled development phase, the Bushmaster is credited with savings dozens of Australian lives in Afghanistan — Defence sources say between 40 and 50 — as well as those of a number of Dutch soldiers, who started demanding the Bushmaster over armoured versions of civilian transports, which have proven ineffective at resisting blasts from roadside bombs compared to the Bushmaster’s v-hull. Over 100 have been sold to the UK and the Netherlands. Over 30 of the vehicles have been destroyed in Afghanistan.

The Land 121 Phase 3 decision was due by the end of the year, but was recently delayed until March. Bendigo MP Steve Gibbons has started campaigning within the government and publicly for the Bushmaster variant.

Gibbons is an assiduous local member who has turned Bendigo from a marginal seat — John Brumby lost it in 1990 — into one with a nearly 10% margin for Labor. But he was also one of the few Caucus members to openly rebel under Kevin Rudd, leading the successful fight against the removal of Parallel Import Restrictions on books.  The Australian printing company McPhersons is a major employer in the Victorian town of Maryborough, in Gibbons’s electorate.

He appears to have an even stronger hand with Thales, given the Bushmaster’s excellent record of saving lives in IED incidents and the poor record of armoured-up civilian transport equipment like the Mercedes and M.A.N competitors. “Obviously we’re a small player in international defence manufacturing and have no capability for most of the big ticket defence requirements like aircraft, missiles etc,” Gibbons told Crikey. “However, we do have significant industrial capabilities in ship building and repair, ordnance and armoured vehicles. The Bushmaster is arguably the best in the world for its combination of mobility and protection. It has saved scores of Australian lives in Afghanistan.

“Despite this, there remains a strong bias against Australian armoured vehicle manufacturers from sections of the DMO.”

The left-wing AMWU has also been lobbying for Thales within the Government.

The Phase 3 project is considered a crucial bridging project for Thales to the Land 121 Phase 4, which is a light protected vehicle to replace the ADF’s Land Rovers. Australia has already contributed funding to a much-delayed US project to develop a light vehicle to replace its Humvee fleet but has also provided prototype funding to local manufacturers, including Thales for its Hawkei light vehicle.

The AFR revealed yesterday that Defence Minister Stephen Smith had been warned by the employer heavyweight Australian Industry Group of job shedding and skill loss in the defence manufacturing sector due to delays in project approvals. Thales is one of those companies identified, as it axed 100 jobs in October.

Peter Fray

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