Australia must strike a better balance between independent control over its defence-industrial supply chains and staying open to global innovation, particularly in dual-use technologies. As strategic competition intensifies, rigid restrictions can stifle the very innovation needed to maintain a competitive edge. Instead, Australia should combine adaptive procurement, trusted supplier frameworks and coordinated allied investment to secure critical capabilities while remaining agile, interoperable and open.

The 2023 Defence Strategic Review underscored that it was ‘no longer feasible’ for Australia to maintain a regional technological edge. Global adversaries are racing to integrate commercial innovation—particularly in AI, robotics, quantum computing and space technology—into military capabilities. In this environment, speed, not just independent capability, becomes strategic. Yet current procurement practices and risk postures often default to caution. Supply chain security measures intended to protect sovereign interests can end up slowing acquisition, raising costs or denying access to crucial technologies entirely.

Australia is not alone in navigating this tension. The United States and Britain have faced trade-offs between access and control. In 2017, the US Army abruptly banned China-made DJI drones after cybersecurity concerns were raised, despite their widespread use and affordability. Australia followed. Similarly, Australia’s 2018 exclusion of Huawei from 5G infrastructure was echoed by decisions in the US and Britain that prioritised national security over cost or capability.

These examples demonstrate the high stakes of procurement decisions involving dual-use commercial technologies. While exclusion can protect against espionage or coercion, it can also delay or block critical innovation, particularly when commercial technologies outperform or outpace traditional defence systems. The challenge is to identify and manage risk, not eliminate it by cutting off entire supply streams.

To reconcile this dilemma, Australia should adopt more flexible, adaptive procurement mechanisms. These must account for the reality that not all technologies, or their suppliers, pose equal risk. The key is distinguishing between clear threats and manageable vulnerabilities, and tailoring security measures accordingly.

One approach would be to establish joint innovation acquisition teams across AUKUS partners. These multinational teams could collaboratively triage submissions from dual-use tech firms, align requirements across jurisdictions, and rapidly approve proposals for shared capability development. This would streamline procurement for such technologies as autonomous systems or secure AI applications with capabilities that are strategically urgent but often produced by non-traditional suppliers.

In parallel, Australia and its allies should invest in trusted capital mechanisms. A multinational venture fund, modelled on NATO’s Innovation Fund, could attract investment into dual-use startups while screening out adversarial capital. This would not only increase the pace of innovation but help scale critical technologies without exposing supply chains to coercive control. Domestically, Australia’s Defence Industry Security Program (DISP) could be expanded and tiered to fast-track suppliers that meet vetted security standards, improving speed without compromising oversight.

Export controls also need modernisation. While the trilateral license-free regime between the US, Britain and Australia under AUKUS is a step forward, lingering bureaucratic hurdles still slow collaboration on dual-use technologies. Streamlining export classifications and approval pathways for pre-cleared partners would enable more seamless innovation sharing, particularly in areas including semiconductors, secure communications and AI tooling.

Programs such as Australia’s Advanced Strategic Capabilities Accelerator and the US Defense Innovation Unit already support this type of engagement. Greater interoperability between these programs—including shared lessons on fast contracting, talent models and startup outreach—could help Australia build a more dynamic defence innovation ecosystem.

Finally, Australia must continue targeted investment in domestic industrial capacity, particularly for foundational technologies where resilience is non-negotiable. For example, local semiconductor fabrication, AI safety testbeds and secure systems integration hubs would reduce dependency on unstable supply chains and give Canberra more options in a crisis.

This approach does not mean closing off from the global tech economy. Instead, it calls for a layered strategy that combines domestic investment, allied cooperation and flexible risk management. Australia should identify critical areas—such as chip manufacturing, space-based infrastructure and quantum tech—where it must have domestic control. For other technologies, it can rely on trusted partnerships and commercial supply lines, backed by strong vetting and shared standards.

Practical steps to operationalise this approach include:

—Collaborative acquisition cells to harmonise allied procurement requirements;

—Trusted innovation funds to finance secure, dual-use technologies;

—Tiered supplier security vetting, with expanded DISP screening for international partners and small- to medium-sized enterprises; and

—Focused domestic investment in key enabler technologies such as semiconductors, robotics and resilient satellite communications.

By embracing this model, Australia can avoid the false binary between independent capability and innovation. In an era defined by fast-moving threats and rapid technological convergence, the strategic edge will belong to nations that can secure their interests without isolating themselves from the global tech ecosystem.

This approach ensures that Australia remains secure and connected, and able to develop, deploy and scale the technologies that will define modern defence.