Defence welcomes infrastructure deal makers amid rising tensions
The Defence Department is exploring private financing to help pay for military bases and other facilities as officials scramble to find the funds to support nuclear-powered submarines and expanding northern bases.
But Defence deputy secretary Celia Perkins, who oversees its landholdings, said there were no plans to cut back on infrastructure spending to ease pressure on inflation.
“Defence is about 4 per cent of the national infrastructure spend each year, so we’re quite a small player,” Ms Perkins told The Australian Financial Review Infrastructure Summit on Tuesday.
Celia Perkins in the deputy secretary at the Defence Department. She was pictured after The Australian Financial Review Infrastructure Summit. Michael Quelch
“We work really hard on our future pipeline with other parts of government with [Infrastructure] Minister [Catherine] King’s department, and with the states and territories. And then we’re focused really keenly on how we can achieve the work we need to do in service of those priorities.”
Ms Perkins said the government had committed $3.8 billion over the next four years on expanding Defence’s footprint in northern Australia, an area spanning far north Queensland, the Northern Territory, north of Exmouth in Western Australia and out to the Cocos and Keeling Islands.
Some of these projects include runways, fuel storage, accommodation, security and expanded training ranges.
A further $8 billion has been committed for AUKUS infrastructure, most notably upgrading HMAS Stirling in Perth to accommodate nuclear-powered submarines, including wharf expansions, training and logistics.
To help pay for this, Ms Perkins said Defence was considering expanding its use of private finance to accelerate the delivery of new infrastructure.
She said standardised, replicable infrastructure around the country lent itself to private financing, while defence operations where flexibility was required were better catered for by traditional budget funding.
She said while private financing would be of “net benefit to the federal budget”, the government would have to examine closely the rate of return private investors sought.
Nick O’Brien, Westpac’s managing director for consumer and industrials, told the Summit that banks had come around to investing in defence, within an ethical framework. “Certainly, it’s not a blank cheque, and we will evaluate each project on its merits,” he said,
“There’ll be certain areas that we would definitely not be prepared to go, and we would say anything which we would define as controversial weapons, for example … things like landmines and cluster bombs or chemical weapons.
“We would also have another lens in regard to human rights governance in these countries and the rule of law etc. It doesn’t mean it’s just things that go boom, there’s a lot of other things that are involved in this sector.”
With rising costs and labour shortages a concern running through many of the summit’s panels, Laing O’Rourke general manager for defence, Roger Noble, warned that these pressures would be particularly acute in northern Australia, and even worse in remote locations.
He said it was important to put in sufficient incentives and support, such as training, education and family support, to attract workers, as well as have a good understanding of localised supply chains.
“A clearer understanding of the work pipeline helps because that allows companies to make longer-term investments in order to be prepared and ready to execute the projects, particularly when they’re in remote or localities,” Mr Noble said.
“This is infrastructure we’ve got to get right on time because it’s intimately linked to the defence of Australia.”
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