Increasing investment attractiveness
The Government recognises that demand clarity alone may not be sufficient to enable industry to invest in its own uplift across all priority product categories, particularly where Australian industry faces insufficient economies of scale to deliver a commercial rate of return on investment.
For this reason, there are a range of financial support mechanisms for industry, including additional funding to the Defence Industry Development Grants Program, providing access to non-grant financing, and enabling industry to leverage innovation programs.
Defence Industry Development Grants Program
The Defence Industry Development Grants (DIDG) Program provides matched funding to support Australian businesses to invest in their own uplift in plant, skills, and security. This program seeks to assist with capability uplift and qualification costs, noting that these costs are often not recoverable given uncertainty of a purchase order. Funding is provided across 4 dedicated streams.
The Government has provided additional dedicated NPS-specific funding through the DIDG Program, to ensure support for SMEs with a demonstrated potential to manufacture priority products for NPS supply chains, such as participants in the DIVQ program.
National Reconstruction Fund
Government-funded debt and equity investments will provide additional capital for capability uplift of Australian suppliers. One existing fund accessible to Defence suppliers, including those part of the NPS supply chain, is the National Reconstruction Fund (NRF).
The NRF is a $15 billion fund established to provide loans, guarantees and equity to support projects that diversify and transform Australia’s industry and economy. Seven priority areas have been identified, including Defence capability.
Global Supply Chain Program
The Australian Government is supporting Australian supplier qualification into United Kingdom and United States submarine supply chains through the Global Supply Chain (GSC) Program. This program supports Australian suppliers to secure export opportunities within the global supply chains of major defence primes, including the United Kingdom and United States primes building and sustaining nuclear-powered submarines.
Dedicated Nuclear-Powered Submarine (NPS) funding will support primes to uplift Australian vendor capability. Primes will assist Australian suppliers to expand into international markets by identifying commercial opportunities and helping them to secure internal orders.
Export Finance Australia
Export Finance Australia (EFA) supports Australian Defence suppliers to access and secure export opportunities through tailored financial and advisory solutions. It plays a key role in addressing financing gaps where commercial options may be limited, providing loans, guarantees and bonding to support export contracts and capability uplift. EFA also works with commercial lenders and offers advisory services to help businesses structure and deliver export opportunities in global Defence supply chains.