The national employer association Ai Group and the Strategic and Defence Studies Centre (SDSC) at the Australian National University have today released a major report that examines the role of defence industry in the context of Australia’s National Defence strategy.

The report argues that a change is required to recognise that a locally-based defence industry is a national capability in its own right and the industry should not just be seen as a capability input. The possession of a sovereign but internationally linked defence industry is a distinct asset during a period where the risk of major conflict is rising.

Ai Group Chief Executive, Innes Willox, said: "This new research maps out a path for Australia to identify the priority defence industry capabilities we need to have locally, a method for building those capabilities to scale using the broad suite of industry policy tools and stronger government-business collaboration.

"The major question that Australia's National Defence Strategy should be considering is how to ensure we have the capability – in terms of infrastructure, skills and intellectual property – to supply critical defence goods in Australia. Both international primes and local businesses in defence and the defence supply chain are critical to achieving that ambition. We need to build joined up supply chains including both to deliver that capability more quickly and at larger scale," he said.

"A key problem this report seeks to address is a lack of coordination across many layers and dimensions of government and industry. A strong recommendation to address this shortcoming is the appointment of an Industry Capability Manager (ICM). If we need coordination, then there's got to be a defence industry Czar, and the ICM is it," Mr Willox said.

Professor Stephan Frühling, Strategic and Defence Studies Centre, said:

"The conflict in Ukraine has demonstrated once again the importance of a defence industrial base that can surge and adapt, not just to support but also to reconstitute, expand and provide new capabilities during conflict. Other countries have built and manage their defence industrial bases as national assets for threatening times, and so can and should Australia."

The Ai Group/ANU Report draws on observations from five peer countries: Canada, France, Israel, Sweden and the United Kingdom. The case studies identify how other governments think about the role of industry in defence, and how industry capabilities are built to meet government requirements.

The report offers five recommendations for the future of defence industry policy in Australia:

  1. The Australian defence industry should be considered a capability in its own right and not just an input.
  2. Defence industry should be embedded within and managed as part of Australia's broader national industry structure and policy.
  3. Defence industries should be strategically prioritised, then supported to achieve scale and surge capabilities.
  4. Government should utilise the full range of policy levers at its disposal to shape defence industry outcomes.
  5. Government should establish a Defence Industry Capability Manager to define the capability and capacity that government needs to develop to assist industry to meet the level of preparedness determined by the Government.

The full report is available here: Defence Industry in National Defence: Rethinking the future of Australian defence industry policy

This report was supported by the Department of Defence strategic policy grants program. The views expressed in the report are those of the authors and are not necessarily those of the Australian Government or the Australian Department of Defence.

Media enquiries

Tony Melville (Ai Group) – 0419 190 347

James Giggacher (ANU) – 0436 803 488