Hansard transcript on a Mar 10, 2021 public hearing to the STANDING COMMITTEE ON INDUSTRY, INNOVATION, SCIENCE AND RESOURCES by Southern Launch, Gilmour Space Technologies and Equatorial Launch Australia (pages 1-11).
Wednesday, 10 March 2021 House of Representatives STANDING COMMITTEE ON INDUSTRY, INNOVATION, SCIENCE AND RESOURCES
DAMP, Mr Lloyd, Chief Executive Officer, Southern Launch
GILMOUR, Mr Adam, Gilmour Space Technologies
SCHNEIDER, Mr Scott, Regulatory Lead, Southern Launch
SCOTT, Ms Carly, Chief Executive Officer, Equatorial Launch
Committee met at 09:07
ACTING CHAIR (Ms Bird): I declare open this public hearing of the House of Representatives Standing Committee on Industry, Innovation, Science and Resources for its inquiry into developing Australia's space industry... I welcome representatives of Southern Launch, Gilmour Space and Equatorial Launch to give evidence today. This hearing is a legal proceeding of the parliament. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts the parliamentary privilege. I invite each of you to make a brief opening statement. Members are always very keen to ask questions, so keep your opening statements fairly straight to the point and then we will engage in a more interactive process.
Mr Gilmour: We're based in Queensland. We have 63 employees. We've grown from three to 63 in the last five years. We are venture capital backed. We've raised $26 million so far from venture capital investors. We're developing a launch vehicle to take small satellites into space. We're well on the way in the development of that. We're completing the critical design review, which is the final design review before we start manufacturing in earnest.
Our first scheduled launch date is March next year, so we have a very critical launch ahead of us. Launch site is a big risk for us—to have a launch site we can actually launch the rocket from. We're very optimistic. The market is very buoyant at the moment, from an investor point of view. In the last three months, more than $3 billion has been raised by rocket companies around the world from investors. We're in the middle of doing our series C raise as well, and it's looking pretty good. I'm quite optimistic about the future. We want to grow jobs. Our forecast is to have at least 500 jobs in our company by 2025 and well over a thousand two or three years later.
ACTING CHAIR: Thank you, Mr Gilmour. Mr Damp?
Mr Damp: I'll give you a high-level word. As members of industry, it's very encouraging for us to be involved in this committee to carry out this inquiry into developing Australia's space industry. You've been introduced to the two other companies involved in this hearing. We three Australian launch companies are pleased to appear before the committee and demonstrate our commitment and competence in ensuring Australia is a reasonable and leading actor in the global space economy.
The global space economy is now much different than in the traditional days where space was all about government activity. As my colleague Mr Gilmour has pointed out, the modern space sector has evolved in a way today where it's led by private investment and private industry. It's creating a new market for launch services to provide these next generation technologies for Australians as well as, more broadly, the global world requirement. The market's dependence on next generation launch capability is driven by the demand for these new technologies to be safely, rapidly and reliably tested and placed in orbit. In space, these new technologies provide immense, if not immeasurable, value to everyday lives in Australia and around the world. The role of the launch industry is analogous to that of a middleman in business—that is, we launch-service suppliers make sure new technologies safely and reliably get to orbit so that customers and end users may access the benefits of these technologies. In this sense, without launch capability, there would be no GPS, no broadband internet and no effective way to monitor the environment or handle emergency situations. Launch provision is a necessary component for these services, and these new technologies, such as that being developed by Mr Gilmour and others, will provide these services with the dependence on next generation technologies.
Space technologies are also critical for national security, and a sustainable, industry-led sovereign launch capability for Australia will provide necessary support to the Australian Defence Force. In developing our sovereign capability, we harness Australian grown technologies, we create jobs and we support our service men and women on the front line.
We three wholly Australian owned companies before the committee today represent the next generation launch capability. We know Australia can be a global leader in this area. It's our shared ambition not only to ensure Australia is responsible in its launch activities but that Australia also becomes the market's first preference in getting this next generation technology into space. However, industry alone cannot bring Australia into this leading position. If the global market looks to Australia for long-term provision of next generation space services, it is vital that policy and regulation on the national level aligns with the same vision. Matters such as strategic direction, funding priorities and regulatory frameworks are the factors which can make or break Australia's opportunity.
In responding to the committee's questions today, the three of us before you seek to demonstrate the reality of Australia's opportunity in space and how this opportunity will be achieved with safe and reliable launch activity and to outline the challenges we face in becoming a globally preferred launch service provider, all of which are barriers that government can alleviate from industry, which will literally then allow Australia to be a global leader in the launch services market. With secure sovereign space launch capability, Australia not only benefits from the applications of the new space technologies but also benefits directly from the launch industry itself, which brings jobs, tourism and investment into Australia's economy. Thank you.
ACTING CHAIR: Thank you, Mr Damp. Mr Schneider, do you want to make some opening comments?
Mr Schneider: No, thank, you; I've nothing to add.
ACTING CHAIR: Thank you for being available to answer questions. Ms Scott, do you want to make some opening comments?
Ms Scott: Equatorial Launch Australia is developing a commercial spaceport at about 12 degrees, which is really significant because one of the huge advantages that Australia has, in the growing global space market, is its geography. We have a contract to deliver NASA rocket-launchers from our site next year. This is a world first that demonstrates exactly what we're putting forward, that this industry and the opportunities are a reality now and will have a significant impact, positively, post-COVID on the national economy and national security. We're able to do that by unlocking some of these barriers and talking to the inquiry now about how we can do that to bring this reality forward for a safer, more reliable and more effective space economy. Thank you.
ACTING CHAIR: Excellent. Thank you, Ms Scott.
Ms SWANSON: Thank you, one and all, for being here with us this morning and virtually as well. In terms of Australia being a competitive participant in launching various pieces of equipment into orbit, I'm interested to hear about, firstly, what you think. You've said this morning that the regulatory framework is an issue. Are there any other impediments that you foresee into the future? I'll keep that question succinct, at this point. Can we talk about the impediments, and then I've got something to follow on from that.
Mr Gilmour: In our submission we talked about a number of things that we thought were impediments. We've got a list here but I'll go through a couple.
Ms SWANSON: Sure. It's just good to get it on the Hansard. That's the reason for the question.
Mr Gilmour: There's a concept called a 'suitably qualified expert' that's in the legislation. That's a person who has technical expertise to evaluate the flight safety risk of a launch. In the regulations, in Australia, that has to be an independent expert, that's probably going to be another company, that will do this on a commercial basis. One of the issues with that is there are not many of these companies that are suitably qualified.
The second thing is that when we look into the other countries that launch rockets, this activity is done internally by either the space agency or the civil aviation authority. I don't want to just talk about problems; I want to talk about solutions. I don't think it's that hard to say to the space agency, 'You should have a mandate before a certain time in the near future where you will conduct this activity, internally, in the space agency,' and then not have to have this suitably qualified expert involved in the process.
Ms SWANSON: That was the next phase of my question, what the impediments are and what you perceive the solutions to be. You've answered that in one instance.
Mr Damp: If I can add another impediment, the other one is cost recovery. Currently, the Australian Space Agency has indicated that it could charge up to $189,000 per launch permit application. New Zealand charges a flat rate of $60 and America charges zero dollars. The Northern Territory government has, in its submission collated 11 countries, I believe, that do not charge a fee, or if they do, it's somewhat minor, like NZ$60. This is a very large impediment to Australia being competitive on a global scale, especially when the modern launch vehicles are far smaller, far less complex and far cheaper to operate. So a potential cost recovery could be an insignificant amount of the overall launch vehicle cost.
ACTING CHAIR: Mr Schneider, is there anything you would like to add?
Mr Schneider: Not outside of the regulatory framework, beside what Mr Damp has already mentioned, but a solution to both of these issues that I've proposed—good old Hansard has that. The federal government, when it was devising these regulations, revisiting them from the old framework, did extensive consultations with industry both in the act itself and the delegated legislations. Both of these matters, which Adam and Lloyd mentioned, were raised by many members of the industry in the consultations and submissions that they made. A lot of the proposals are already there—they're already written—and the Commonwealth has them on hand. It's a matter of just going through them and processing them. That's a solution to some of the challenges that we've already mentioned, and more that we'll hopefully explain in the next half an hour.
ACTING CHAIR: Ms Scott, is there anything you would like to add?
Ms Scott: I have two points, if I may, on the regulatory front. The multination agreements that we're either signed to or not currently signed to can make a significant impact to market opportunities for Australia. One of those is the TSA, or Technology Safeguards Agreement, which would allow Australia to interact with the US market in a significant manner—we're currently excluded from that in many regards.
I'd also like to mention that there are some other funding considerations that Australia has available to it already, where we would be able to better recognise, preference and identify local launch opportunities within Defence procurement processes—that means the manufacture of vehicles and launching locally. We're talking about 70 per cent of direct spend from Defence on launch, which is a significant figure that's going to go offshore. It may be absorbed nationally to start to grow significantly capability and market in the local space.
We're also seeing that there are sovereign funds and established funding priorities that are able to have a shift in mandate to acknowledge the significant critical assets that are being established in Australia, to support those and support the launch industry and space industry more broadly. So on the regulatory front there are specific agreements internationally that can be entered into and existing funding programs that can be adjusted to see launch and space thrive.
ACTING CHAIR: Thank you.
Dr ALLEN: Just to summarise what I've read and what I've heard this morning in relation to the safety regulation and cost-recovery aspect: what you're saying is that at the moment the safety aspect is being outsourced to independent consultants, and you're suggesting to bring it into the ASA. Sometimes when you read this as a non-space person, you might think you're trying to cut corners as a for-profit company. But you're not asking for that, you're asking for it to be brought in-house and for some of the order of it to be changed so that the regulation is smoothed out. But you also want to build capability within the ASA to provide that oversight and that partnership with the commercial companies. With the cost-recovery aspect of it, do we know where that costrecovery aspect is going? Is it going to general coffers or is it going to grow the ASA and therefore its own capabilities? Or is it cross-subsidising academic space initiatives to therefore balance out a market which has a commercial arm but also an academic aspect and a public arm as well?
Mr Gilmour: I'll confirm that, indeed, we are trying to just get the capability to do the qualification of the risk into the agency, and we embrace the actual process—it's just where it's done and the cost of getting that done. I don't have an answer for the second question. I'm not sure where the money is going—the $190,000—if it's going back to the federal government or if it's staying with the Space Agency.
Dr ALLEN: Just to clarify, I read somewhere that the cost recovery scheme actually hasn't started.
Mr Gilmour: It hasn't.
Dr ALLEN: So we don't know where it would go. The cost recovery is for the future, presumably to build the space capability in Australia. Is that correct?
Mr Damp: The cost recovery is a Department of Finance mandated question, and it's something that the Australian Space Agency has now deferred twice from starting. It is ticketed to begin on 1 July 2021, and the Australian space launch industry has no clear guidance yet on what spectrum of costs could be associated with any launch, as such.
Dr ALLEN: So the question is that it could get deferred again and it could be deferred indefinitely, but, for business certainty, for commercial operations, you'd like to have some certainty around what that cost may or may not be. And you'd like to have it proportionate to the activities that a competitive commercial sector that's trying to grow quickly would have. So it's probably not no cost, but just a cost that's proportionate and market competitive. Is that correct?
Mr Gilmour: Yes.
Mr Damp: Yes.
Mr Schneider: I have a response. I'm not sure if it's to the first or the second component of the question, but the purpose of cost recovery has not been made clear. It's to enhance the capabilities of the agency. It's to recover costs that are used in the assessment of the application, which could be staffing hours but also could be outsourcing those assessments to third parties—to contractors. That's the purpose of cost recovery under the current framework.
Ms Scott: I reiterate the importance of being competitive internationally. I think the rest has been covered well.
Dr ALLEN: I have a question about a technology safeguards agreement. To explain to a non-space-sector person listening to this, presumably such an agreement is to protect the IP of countries wanting agreements with Australia. If a country wants to invest in capabilities that are onshore in Australia, they want to know that Australia's not going to steal its IP and become a competitive market. That's my reading of what a TSA might be. Is that correct?
Ms Scott: I'm happy for Mr Schneider to add to the commentary. You're correct in talking to the fact that it provides some guidelines and boundaries in regard to the exchange of information that is sensitive, and not just on the commercial side. We're talking about highly capable equipment that is able to fly to space. So you're really looking at managing the flow of information and technologies in a controlled manner, and providing some guidelines around doing that. Allied nations, largely, have signed into a TSA. Australia is an outlier in not being signed to a technology safeguards agreement. Mr Schneider, I pass to you for any further commentary that enlightens the group on that.
Mr Schneider: I don't have a great deal more. Yes, it is more about the security and the control of where the information is going, for the governments of each nation—but particularly in terms of the US TSA, where the US government knows where the technology and information is going. But, as Ms Scott pointed out, other allied nations do have them, including the UK and New Zealand. The New Zealand TSA with the United States does facilitate conducting space launch activities.
Mr Damp: The other key reason to get a TSA in place is it allows Australian launch companies to partake in the US's satellite manufacturing capability. Research funded by the federal government in 2019 indicated that should Australia have a TSA place it would then be able to engage a full market potential under a gross value-add of up to $2 billion in direct and induced value due to this TSA. So it's quite imperative that we as Australians capitalise on this launch opportunity before us and engage with the US in developing this TSA.
Dr ALLEN: As a representative of the taxpayer, obviously when you are trying to get capability onshore, there needs to be the balance. Of course, we want countries that are way ahead of us and have invested literally billions of dollars in being able to profit and protect their IP. The flip side of it is how does that feed on to growing our own domestic market and provide a competitive environment for Australian companies that may not just want to feed off the IP but grow their own IP and be competitive against those offshore companies coming onshore?
Mr Gilmour: Launch technology is not just available in the United States; it's available in all the companies that have launched. So the reality of the American ITAR system is that we buy products from other nations— Europe, Japan, et cetera. But having said that, the biggest space market in the world is the United States. So a TSA would enable us to trade more actively with American counterparts who actually do want to supply us products but are prohibited from doing so right now because of ITAR, which is what a TSA overcomes. In terms of development, it's an enabler for us in the short term but, in the long term, we are going to develop the technology ourselves.
Dr ALLEN: The TSA doesn't prevent that development?
Mr Gilmour: No.
Ms SWANSON: It might just be worthwhile, gentlemen, explaining what the ITAR system is very briefly so that members of the committee know what that means.
Mr Gilmour: We have a similar system in Australia called the Defence export controls. It's a list of munitions and weapons technology that the Americans are nervous about sharing with other countries. So things at the very top of that list are nuclear weapons and not far down the list are rockets and missiles. They restrict the transfer of this information outside of the United States in terms of not just companies but citizens. So if you're an Australian citizen in America, you still can't get access to the information. It's really to safeguard what they consider to be dangerous technology or dual-use technology.
Mr PERRETT: I just wanted to get a rundown. We had evidence earlier that there's about $270 billion annually of launch business. I just want to get an understanding of where that occurs in terms of who our competitors are right now. I'm sorry to go back to basics but, in terms of our competitiveness, we've had suggestions of the Northern Territory being 12 degrees from the equator. Woomera seems to be viable at 30 degrees south equator. Others have suggested the Aleutian Islands at 52 degrees north of the equator. So could we just get a bit of an understanding of who our competitors are and what we bring to the table in terms of government investing money in competitors.
ACTING CHAIR: Just to clarify, you're talking national players rather than businesses?
Mr PERRETT: I'm assuming that you can mention the companies, but if it be a US company that's launching out of Mongolia, so be it.
Mr Gilmour: In terms of actual launch vehicles, the market that we're looking at initially is to take small satellites up into low earth orbit. There are probably about eight competitors around the world that have either launched or will launch into space in the next two or three years. The majority of them are in the United States. There are probably two in Europe
Mr PERRETT: Are there eight US companies launching from the US?
Mr Gilmour: There are eight in total around the world. I'm not talking about China. China is a bit of a restricted market. Not many people want to use China to launch into space. So outside of China—
Mr PERRETT: Does China commercially launch?
Mr Gilmour: Yes, it does.
Mr PERRETT: To nations outside of it?
Mr Gilmour: It wants to and it does in some cases.
Mr PERRETT: But not yet?
Mr Gilmour: No, it has. It has definitely launched foreign satellites into space commercially. But most of the Western world would rather launch on a on a vehicle from outside of China in the current environment. So I'm talking about outside of China. China has probably about four launch companies that are launching.
Mr PERRETT: They are closely connected to the government, one would imagine.
Mr Gilmour: Yes, they are. The launch market is not big. There are not that many competitors. I'll defer to Lloyd and Carly a bit more on the launch sites. There are probably around 12 or 15 commercial launch sites around the world. But from our perspective as a launch company with a vehicle, we very much like the locations in Australia that launch sites are getting built on. So Lloyd's site is a really good place to do sun synchronous and polar orbits. A lot of the small satellites that are going around—
Mr PERRETT: Is that Woomera?
Ms SWANSON: Could you clarify those terms?
ACTING CHAIR: Presume we're at the very entry level of space understanding, just explain.
Mr Gilmour: Lloyd's site is at Whalers Way down in South Australia.
Mr Damp: It's a 35-minute flight to our west at the tip of the Eyre Peninsula.
Mr PERRETT: So about 33 degrees?
Mr Damp: Yes, 34.9, same as Rocket Lab in New Zealand.
Dr ALLEN: Could you describe and explain what sun synchronous and polar orbits mean? And also, the other question I was going to ask is: what is specific about the Australian geography? I know you said it is because there's no flight paths and maritime; there is low-population density and less infrastructure for things to re-land; and it's close to water. But from the point of view of satellites going from our latitude, what is the advantage? Is it to do with the sun synchronous and polar orbits?
Mr Gilmour: We have a number of them. If you picture the earth, sun synchronous and polar orbits basically go over the poles or close to the poles. The reason why that's good is because they stay in that orbit as the earth spins. if you have enough of them in that orbit at any point in time over the earth, there is a satellite. If you've got 100 satellites in a polar or sun synchronous orbit then you can have global coverage. So, for example, the Iridium constellation, which is one of the first communication constellations that went up in the late nineties, they fully run on a on a polar and sun synchronous orbit so they can cover the earth. I would say at least 50 percent of the customers that we've got slated to launch into space are looking at polar and sun sync. The reason why Lloyd's site is good for that is because you're quite south. Going south from there, there's nothing until you hit Antarctica, so it's incredibly safe. Sorry to be a little bit more technical but, when you're doing a sun synchronous orbit, you're actually going counter to the rotation of the earth. The closer you are to the poles, the less rotational speed you have to counteract, so it's a lot easier to go sun sync from a south or very north latitude.
Mr PERRETT: So then it is close to the equator to go to the moon and things like that?
Mr Gilmour: It is close to the equator for equatorial type orbits. If you want to go sun sync or retrograde— opposite of the earth's spin—the further south you go or the further north—but we are south—the better.
ACTING CHAIR: Geographically, which nations meet that?
Mr Damp: I forget if it was, Mr Perrett or Mrs Swanson, who asked the question: who are Australia's competitors? Our competitors are New Zealand with Rocket Lab, who are operational. New Zealand has a TSA in place. They charge NZ $60. The UK has a brand new space agency. They have a TSA in place.
ACTING CHAIR: Mr Damp, can you just clarify for me, too, whether they've got an industry that's a manufacturing one or a launch one? I suspect they have slightly different location needs.
Mr Damp: Sure. New Zealand has Rocket Lab, amongst other manufacturing companies, as well as a launch capability. The UK has a number of launch and manufacturing companies, as well as, I believe, two or three spaceports under development.
ACTING CHAIR: In the UK? Mr Damp: Yes, including Scotland. They have a TSA in place. Japan also has manufacturing, at both the national level and the commercial level. They have a TSA in place, I believe.
Dr ALLEN: But Japan doesn't have the geographical latitude we have. Isn't it more equatorial?
ACTING CHAIR: They're manufacturing, he's saying—not launching.
Dr ALLEN: Sorry, I thought Mr Perrett's question related to our competitors geographically.
Mr PERRETT: I'm happy to hear about all of them.
Mr Damp: And Japan does have a launch capability that it uses. It's more for the mid-inclination, so in between equatorial—
Mr PERRETT: Is it in Hokkaido?
Mr Gilmour: No, it's on the main island.
Mr PERRETT: Honshu?
Mr Damp: Yes. They do the best they can from where they are, but our launch sites have significantly better capabilities.
Brazil has just signed a TSA with the US. They have both domestic manufacturing and a launch capability that they are now starting to spool up. Then there are a lot of European nations—Norway, Sweden, Portugal—who are all developing both manufacturing and launch capabilities.
Mr PERRETT: Portugal?
Mr Damp: Portugal. Somalia have just recently announced that they are going to start looking at developing a launch capability. So Australia is, right now, at a fantastic point to take advantage of where we are, the companies we have and the advances that the launch sites have made in licensing our facilities. The time to act is now.
ACTING CHAIR: We've got about four minutes left. With the indulgence of my colleagues, I might just— look, there's one area of great interest to me, and I would like input from each of you. There are many reasons a government would encourage a particular industry in their nation, as opposed to leaving it to the market. One of those is jobs and employment. I'd be interested in hearing comments from each of you on how reliant you currently are on bringing talent and skills in from overseas, and where you see the opportunities in Australia for development. I'll put on the radar for you that we are particularly interested—the committee—in going beyond the traditional perspective: 'This is a boffins' industry.' When we've been going around, we're seeing a lot of technicians, a lot of people in this industry doing what we might consider the old apprenticeship-type jobs. There's going to be the broadest spectrum of work available for Australians if we can get this industry right. Mr Gilmour, I might start with you.
Mr Gilmour: As I said in my opening statement, we've got 63 employees now. On the mix of those employees, about 60 or 70 per cent are engineers. They can be mechanical, chemical, electrical or mechatronic— we get them from all different types of engineering. Then we have a sizable team of technicians. These are welders, CNC machinists and electricians. As we build more launch vehicles, the ratio will go heavily towards the technicians, and we will get those technicians from industry. They're working either on cars or in oil and gas or—
ACTING CHAIR: Do you have to value-add to their existing skills.
Mr Gilmour: Absolutely. Yes, we do. You also asked about the ratio of foreign workers to locals. We hire about 10 to 15 per cent of our staff from overseas. They're super experienced rocket engineers that then teach Australians, so we want to keep that ratio for probably at least the next five years. We're very optimistic about job growth. Space technology is inherently headcount heavy. It's people heavy. It's very hard to automate it or to get robots to do it. It's such a complicated system that we predict we're going to go through 500 people by 2025 and 1,000 people by 2027. If you look at some of our major competitors, they have thousands of people. SpaceX has 8,000 or 9,000 employees now. So it is a very, very good industry to grow jobs and diversify jobs—not just boffins but people from all over the industry. We also have people that do marketing, sales and financial control. So it's a broad spectrum.
ACTING CHAIR: That's a great overall picture. Thank you for that. Mr Damp, do you want to comment on that?
Mr Damp: Yes, thank you. I want to add some of the ancillary activities that are induced by Mr Gilmour's operations or by any launch activity and to give you an example of what occurred back in September, when Southern Launch undertook its first two launches of space-capable systems. During or prior to that launch campaign, we had 25 community members from Koonibba, a rural Aboriginal community, trained up by South Australia Police to be able to staff roadblocks. The goal was that they could be employed by us during the campaign. Lo and behold, fast-forward six months and the broader community has identified that there are now a large cohort of individuals in this Aboriginal community who can perform these other economic activities. With that, the community is now outsourcing these staff to gain additional income for the individuals. So it's not just the direct employment that our companies provide; it's the belief, the understanding, that our operations give the communities that they too can be masters of their own destiny, which I think is a real opportunity for the nation to get on board and run with.
ACTING CHAIR: It's interesting. I think we think of these sorts of longer-term employment opportunities. But, given that the operations of these sorts of businesses are often remote, you're saying that there are also opportunities for those regional and remote communities that you're in.
Mr Damp: Yes.
ACTING CHAIR: Of course, at the end of the day, that's good business practice, I would argue. But it's not required, is it?