We want to build nuclear submarines, but what about everything else we have to build?
The AUKUS pact paves the way for Australia to acquire nuclear technology for a fleet of submarines. It is a clear signal of Australia’s changing approach to the region; however, underneath the grand strategic questions there are some practicalities that will need to be addressed. For example, will this decision cause a delay that leads to a new ‘valley of death’ for submarine building and expertise in Australia?
But as is often the case in discussions of workforce, this question is too small and parochial. The task of generating and sustaining a shipbuilding industry in Australia is not a challenge for the Navy or Defence or Industry, it is one part of a national challenge where a skilled workforce is an increasingly rare resource.
The immediate impact on the shipbuilding industry is uncertainty for firms and several thousand employees.
While the benefits and opportunities this program will bring for the workforce may be apparent to policymakers, people’s day-to-day needs are a little more pressing. The government has indicated the Australia Submarine Corporation (ASC) has been tasked with managing and implementing a new sovereign shipbuilding talent pool. ASC will seek to re-deploy the existing shipbuilding workforce throughout current and new shipbuilding programs.
In the transition, the workforce must be productively engaged. This may include rolling into other programs of work; however, the opportunities may be limited. There is also an implicit assumption of interchangeable skills and expertise. They could also be moved into ‘training’, both in Australia and overseas. Finding ways to prevent skills atrophy while also preventing leakage to other industries will be no easy task.
Regardless of the approach, retaining the workforce will be a challenge when there is considerable uncertainty about the program and the national and international demand for skills is high and growing.
With an intense focus on submarines, it is easy to forget that Australia is investing significantly in other naval shipbuilding programs. Overall, Australia is doubling the naval ship tonnage on water over next decade. This means a lot more platforms but also an increase in crew and workforce maintenance requirements. There is a long tail of thorny workforce challenges for Defence, Navy, and Industry that pre-date the decision to acquire nuclear powered submarines.
However, nuclear power adds an additional degree of difficulty in a country that has very limited nuclear expertise and no established pipeline for developing that expertise at scale. Australia has a strong record of nuclear research, but there is a specialist body on knowledge that comes with operating and maintaining a nuclear reactor in a submarine. There are clear skills gap that have been acknowledged by Australia’s small community nuclear professionals.
Australia’s economy is increasingly digital driving up demand for information and communications technology (ICT) and cyber skills but also creating additional demand across the economy for STEM skills. Digital activity contributes about $426 billion to the Australian economy and about 1 in 6 jobs are digitally geared. Defence is also increasingly a digital enterprise. Defence is reaping many of the benefits of new technology but is also inheriting the accompanying risks.
A nuclear-powered submarine is more than steel and a reactor. It is a sophisticated combat, intelligence, and communications system operating in one the most dangerous environments on the planet. The need for security cleared ICT, cyber security, satellite communications and space professionals will increase both through the build and in operation. Today, these are skills that are in short supply across the labour market and in demand across the economy.
The shortages in the STEM workforce are well known but increasing digital activity across the economy (and an upsurge in digital activity during the pandemic) is amplifying this challenge. This is a challenge that requires more application and greater imagination.
It is worth noting that Australia’s AUKUS partners have also identified substantial national shortfalls in STEM workers and have significant naval shipbuilding programs of their own. Australia will be trying to generate and retain a skilled STEM workforce in a globally competitive labour market. When international borders open the demand for the Australian workforce overseas will be strong and continue to grow which may lead to more of our STEM graduates leaving Australia.
There is considerable competition for skilled workers across the Australian economy. For example, planned infrastructure spending across the states is significant. In Victoria three infrastructure projects could create up to 35,000 jobs and many more across the economy. Similarly, in New South Wales, infrastructure pipeline spending is forecast to be about $108 billion over four years to support sustainable economic and population growth. Every Australian state has significant planned infrastructure spending.
In South Australia, where competition for the skilled submarine workforce will be sharpest, Defence industry contributes 4.5% to State’s Gross State Product, with a workforce of about 11,000 (1.5% of total state workforce). By 2030, shipbuilding was expected to grow that workforce by creating 4,000 direct defence jobs and thousands more in adjacent and supporting industries. However, South Australia also has an ambitious forward infrastructure plan. The state’s construction industry is about 67,000 jobs (8.36% of total workforce). South Australia is also focused on accelerating business expansion and job creation across nine industries over the next decade.
The competition for skilled workers within States and industries and across the economy is growing, and demand is rapidly exceeding supply.
Border closures due to the pandemic have significantly impacted on all Australian industries from agriculture to banking and finance. The shortfall in jobs across the economy could be about 400,000 workers out to 2024.
This opens the prospect of greater internal mobility in Australia’s traditionally geographically stable workforce. For the submarine workforce, the temptation to move from an uncertain industry to one with greater certainty may be strong.
The pandemic has also seen the rise of hybrid workplaces and changing expectations of work. This is still playing out through, but workplaces and employee expectations have changed. These expectations have manifested in the global phenomenon of the ‘great resignation’. More and more employees are leaving the workforce or switching jobs driven by the reprioritisation for work and life and dissatisfaction with employers. Australia’s Defence and industry workforce is older. If the pandemic results older workers leaving the labour force at a higher rate the gap in skill, expertise, and experience will be difficult to close. This will be a significant problem for Defence and shipbuilding.
The workforce is a key national resource. Unlike other national resources, the workforce has many intangibles such as skills, knowledge, experience, and aptitudes. This bundle of intangibles takes a considerable amount of time and effort to rework to meet new demands. An axiom of human capital is that it takes time, effort, and endurance to reshape the workforce. The 2020 Defence Strategic Update makes it clear that Australia’s strategic assumption that is had time to prepare to meet a threat is no longer valid.
Presenting the submarine or shipbuilding workforce in isolation of national workforce supply and demand pressures is unhelpful. Assuming it is a problem that Defence can solve alone is unrealistic. It is a mindset that underestimates the challenges facing Defence and industry and leads to a limited solution set.
The task of generating and sustaining a shipbuilding industry and delivering a submarine program in Australia is not a challenge for the Defence alone. It is one part of a national challenge that is central to Australia’s future prosperity and security.
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