Firms call for Australian defence industrial base

A group of Australian defence and space companies have published a new report urging the Australian Government to ensure the AUKUS treaty does not leave local companies in the cold while developing Australia’s defence industrial base.

The report was jointly developed by NIOA Group, Gilmour Space Technologies, Austal, Macquarie Technology Group and the Australian Industry & Defence Network.

It argues that with Australia’s defence policy increasingly shaped by AUKUS and similar treaties and partnerships, global defence giants such as Lockheed Martin, BAE Systems and Thales Group will only further extend their dominance in capturing Australia’s military spend.

But this risks excluding local innovators or relegating them to a passenger role, the report argues.

“Australia is intended to be a technology and capability contributor to AUKUS, not simply a price and technology taker,” the report states. “There is some world-leading technology resident in Australian medium and small companies that should be brought into the AUKUS conversation.”

The report argues that the term SME is a misnomer — in this case as it gives rise to a “misperception that Australian defence industry is comprised primarily of many small companies”, which “underestimates the size, scale, and capability of our industry base”. It suggests that the correct term should instead be medium and small enterprises.

It recommends that the Australian Defence Force fund a radical lift in investment involving pumping at least $1 billion annually into local innovators to encourage the development of sovereign defence manufacturing capabilities.

The report also argues that over-reliance on overseas providers threatens to compromise the security of Australia’s defence sector, with Australia risking becoming collateral damage to attacks on the platforms by rival nation states. The reliance on overseas primes risks embedding intrinsic cybersecurity risks into code Australia cannot see or control, the report suggests.

“Too much defence industry policy has been made in Australia for defence industry and not with defence industry,” the report states. “That must change.”

The report gives eight recommendations for helping to develop Australia’s defence industrial base and shore up defences against attacks on platforms provided by big foreign primes.

These include the government declaring an intent to establish Australian defence industry primes, establishing a dedicated Government Defence Industry Steering Council and revising federal procurement rules to recognise economic security and industrial sovereignty as being value for money.

Other recommendations include changing Defence’s core processes and structures to enable and grow direct partnerships with Australian companies, and creating a new $1 billion budget line item to fund sovereign capability pathways from Australian companies for defence purposes.

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