Defence Industry in National Defence Rethinking the future of Australian defence industry policy

Stephan Fruehling, Kate Louis, Jeffrey Wilson, Graeme Dunk

    Research output: Book/ReportCommissioned report


    As our geostrategic environment deteriorates, the Australian Government has adopted the concept of National Defence – the defence against potential threats arising from major power competition – as a new approach to defence planning and strategy. While many reforms will be required to implement the National Defence concept, building Australia’s defence industry capability is one of the most important. The Defence Strategic Review has argued for the need to build enhanced sovereign defence capabilities in key areas. However, the current paradigm of defence industry policy was established in a very different context to that of today. Risks of major power conflict were low, policy assumed a 10-year warning time, and industry capability was viewed largely in terms of supporting individual ADF programs. This report examines the role of defence industry in the context of Australia’s National Defence strategy. It argues that a change is required to recognise defence industry not as an input to capability but as national capability in its own right. The possession of a sovereign but internationally linked defence industry is itself an asset during a period where the risk of major conflict is rising. To inform the national debate in Australia, this report examines defence industry policy in five countries: Sweden, France, the UK, Israel and Canada. These case studies offer pertinent lessons for how defence industry policy can be implemented in different strategic contexts. The report identifies several factors that shape effective policy: fostering defence-civilian industry embeddedness; utilising a broad range of industry policy tools; ensuring formal and informal coordination between government and business; balancing competition and strategic relationships; and leveraging international markets for scale. The report then connects these lessons to Australia, considering how our defence industry policy could be reformed to deliver on the needs of a National Defence Strategy. It offers five recommendations for the future of defence industry policy in Australia.
    Original languageEnglish
    Commissioning bodyAustralian Industry Group and Strategic and Defence Studies Centre, Australian National University
    Number of pages53
    Publication statusPublished - 2023

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