Report urges Australia to elevate defence industry to national capability

The Independence-class littoral combat ship USS Canberra, designed and built by the US arm of the Australia-owned company Austal, enters Sydney Harbour prior to her commissioning on 22 July 2023. Image credit:

In a joint effort, Ai Group and the Strategic and Defence Studies Centre (SDSC) at the Australian National University have unveiled a comprehensive report addressing the strategic role of Australia’s defence industry within the context of the National Defence strategy.

The report advocates for a paradigm shift in recognising the local defence industry as a national capability in its own right, emphasising that it is not merely a capability input, Ai Group said in a news release.

Highlighting the significance of a sovereign but globally linked defence industry, the report underscores its distinct asset in an era marked by an escalating risk of major conflicts.

Ai Group Chief Executive Innes Willox emphasised the report’s focus on identifying priority defence industry capabilities and fostering collaboration between the government and businesses to achieve those objectives.

“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,” Willox stressed.

Professor Stephan Frühling from the Strategic and Defence Studies Centre highlighted the lessons learned from the conflict in Ukraine, pointing out the need for a defence industrial base capable of surging and adapting during times of conflict.

“Other countries have built and manage their defence industrial bases as national assets for threatening times, and so can and should Australia,” the professor noted.

The report draws insights from five peer countries – Canada, France, Israel, Sweden, and the United Kingdom – and provides five key recommendations for the future of defence industry policy in Australia.

In charting the course for the future of Australia’s defence industry policy, the report puts forth five key recommendations.

Firstly, it advocates recognising the Australian defence industry as a distinct capability rather than a mere input.

Secondly, it suggests integrating and managing the defence industry as an integral part of Australia’s broader national industry structure and policy.

The third recommendation underscores the strategic prioritisation of defence industries and the provision of support to attain scalability and surge capabilities.

The fourth recommendation emphasises the government’s utilisation of the full spectrum of policy tools at its disposal to shape outcomes within the defence industry.

Lastly, the report recommends the establishment of a Defense Industry Capability Manager. This manager would be tasked with defining the necessary capability and capacity that the government must cultivate to assist the industry in meeting the level of preparedness determined by the Government.

The full report, titled “Defence Industry in National Defence: Rethinking the future of Australian defence industry policy,” is available for reference.