Concerns about the strength of Australia’s defence industrial base were central to the industry policy panel at ASPI’s 2025 Defence Conference. The defence industrial base—a network of domestic and foreign industries, companies, research institutions and suppliers—supports the development, production and sustainment of Australian military capabilities and capacities essential to achieving Australia’s national defence objectives.
Panellists emphasised the importance of stronger civil-military and public-private integration, urging a shift toward viewing national resilience as a whole-of-nation effort. Glenn Keys, founder and executive chairman of Aspen Medical, cautioned against separating defence security from economic security, noting ‘our national resilience doesn’t stand as a separate topic’. He argued that defence and economic security are fundamentally intertwined, and both are essential to building a resilient Australian industrial base.
Drawing on Aspen Medical’s 20 years of experience delivering healthcare in crisis zones and defence operations across 21 countries, Keys outlined three essential ingredients for resilient public-private partnerships in crisis conditions: early planning, integrated exercises and trust-based decision-making. The first, he argued, is about getting in early: establishing contracts, systems and cooperative methodologies before a crisis hits, rather than scrambling the day after. The second involves testing those arrangements through joint, integrated exercises, where real friction points emerge. He highlighted the importance of seeking real lessons through tested coordination. The third ingredient is the ability to make collaborative decisions, enabled by the trust, frameworks and working relationships built through prior planning and practice.
Keys also warned against forgetting the hard lessons of the Covid-19 pandemic, particularly how export bans on personal protective gear (PPE) by partner countries exposed the fragility of global supply chains. ‘So the challenge, I think, is that we have to work out how do we get Commonwealth investment in capability that’s Australian-only controlled, so that in the times of global crisis … we can self-sustain our responses.’ For figures including Keys, ownership is central to sovereignty. If a defence contractor is majority foreign-owned, his concern is that strategic decisions could be influenced by external interests—just as Australia experienced with PPE shortages during the pandemic.
This challenge cuts to a deeper policy debate: how Australia defines sovereignty and national resilience in practice, not just in rhetoric. Sovereignty is one of the most frequently invoked yet least consistently defined terms in Australia’s strategic discourse. For some, it justifies a protectionist approach to national capability. For others, it means retaining the ability to act independently, even while working with partners. This lack of shared meaning continues to complicate defence and industry policy.
This is where definitions matter. What constitutes an ‘Australian business’ or a ‘sovereign industrial base’ has tangible implications for procurement and capability. Recent updates by the Department of Finance on the definition of an Australian business for federal procurement purposes are a step forward, and will soon be reflected in revised Commonwealth Procurement Rules. In a landscape with limited exemptions from Australia’s trade obligations, clear definitions are essential to determining when to prioritise domestic capabilities without undermining international trade agreements or bilateral partnerships.
A 2023 parliamentary inquiry into Defence’s support to the capability and capacity of Australia’s defence industry resulted in an interim report recommending further examination of how sovereign capability should be defined and which areas should be prioritised within the defence industrial base. In 2024, Labor senators decided to close the report without any hearings or feedback from industry, arguing the Defence Industry Development Strategy (DIDS) would address the issues and that it was too early to assess its impact.
The DIDS asserts that ‘only in limited circumstances is Australian ownership critical to sovereignty’. Despite simultaneously endorsing a national ambition for greater self-reliance, parliamentary oversight has been limited. This tension remains unresolved. The 2026 revision of the DIDS will need to reconcile this tension and more clearly articulate what a sovereign industrial base should look like.
Another common theme from the panel was the belief that the federal government can do more to bridge the gap between national economic ambitions and the sustainability of defence and civilian industries. ‘We have a defence exports office,’ noted Glenn Keys, ‘and yet we don’t have a policy that drives buying from Australia. How can we expect foreign countries to buy Australian if Australia doesn’t buy Australian? That’s a really, really challenging sell when you’re sitting in the room.’ Aligning procurement policy with industrial strategy, he argued, would not only strengthen military capability but also tighten the integration of civil and military efforts. The Buy Australian Plan is a step in this direction, but how it will interact with Defence policy and the new definition of ‘Australian business’ remains to be clarified.
Kate Louis, head of defence and national security at the Australian Industry Group challenged conference attendees to view industry ‘not just a bolt-on,’ arguing that ‘it’s an enabler of national security’ and a strategic capability in its own right. She called for a clearer industrial policy purpose—one that links strategic and economic goals to a broader vision of the kind of industrial nation Australia aims to be. Workforce shortages, procurement slowdowns and inflation, she warned, are compounding existing risks.
Oleg Vornik, chief executive of DroneShield, positively observed: ‘We’re seeing top talent return to defence tech …. As strategic threats mount from Russia, China and others, there’s a renewed sense of mission—and that’s bringing agility and innovation back into the sector.’ While positive, this trend is driven by the security environment, not the government’s nurturing of industry.
At the same time, Australia’s global defence industry integration is also expanding. In June 2025, Australia entered into partnership agreement with the NATO Support and Procurement Organisation (NSPO), enabling closer cooperation with NATO partners on capability acquisition, system support and logistics. Deputy Prime Minister and Defence Minister Richard Marles hailed the agreement as a key step in modernising Australia’s defence partnerships, saying: ‘Signing the NSPO Agreement opens the door to new partnerships for us to deliver capability and operational responsiveness for the Australian Defence Force.’ This agreement not only gives the ADF access to NATO procurement programs, it offers Australian industry new entry points into NATO-managed supply chains, contributing to collective capability development. Australia has also opened negotiations toward a Structured Dialogue on Security and Defence with the European Union. Together, these initiatives point to a more integrated transatlantic-industrial ecosystem—linking Australia more closely with European, Canadian and US defence partners.
Japan offers a valuable example. At the conference, Osamu Nishiwaki, deputy commissioner of Japan’s Acquisition, Technology and Logistics Agency, highlighted Tokyo’s efforts to address similar labour and supply chain challenges through its Three Principles on the Transfer of Defense Equipment and Technology law. ‘Without a strong defence industry, [deterrence] has no serious meaning,’ he warned. Policy, he argued, shapes industrial behaviour ‘more than we think’.
In an era of intensifying strategic competition, transforming government-industry partnership is not optional; it’s essential to delivering on Australia’s national defence objectives. The upcoming Defence + Industry Conference 2025, themed ‘Resilience and Growth Through Partnership’, offers government leaders an opportunity to demonstrate how policy and strategy is driving civil-military integration, strengthening supply chain resilience and shaping the next phase of national capability and industrial ambition.