Australia needs to revisit its defence industrial base strategy. The country’s military industry should be reshaped to offer serious value to the United States and in doing so improve Australia’s own self-reliance.
It now offers little or no value to the US. Indeed, Australian capacity apparently does not factor into Pentagon projections or assessments of Indo-Pacific war-fighting readiness.
The government attempted to restart the defence industrial base in 2024, but the strategy it issued then had and has a foundational problem. Called the Defence Industrial Development Strategy, it sets up and views Defence as the industry’s prime or only customer.
But a sustainable Defence industry needs the international market. It cannot be devoted to the Australian Defence Force alone. The strategy therefore dilutes the value of the industry to national security.
Moreover, it fails to prioritise surge capacity or the ability to shift up to it in wartime.
The 2024 National Defence Strategy has a single, unifying idea: it orientates the ADF towards becoming ‘an integrated and focused force’. But the industry strategy, on the other hand, outlines no fewer than seven priorities. It’s unfocused.
The defence strategy speaks of ‘impactful projection’ and multi-domain integration to counter risks with no warning time. The industry strategy, meanwhile, is set up in domain silos (such as sea and air), and it seems to prioritise sustainment activities over integration.
The government also appears to view ‘sovereignty’ as a helpful word to scatter about discussions of the defence industry. Is it? Self-reliance is the Australian Defence Force’s ability to operate with some degree of independence to safeguard vital interests but typically within alliances. A sovereign capability, on the other hand, can be employed unilaterally where and when the government chooses.
True sovereign capability is rare for most powers. Canberra has little control over design, production, sustainment and, in some cases, deployment of military systems. We saw that when Australia wanted to send Abrams tanks to Ukraine: it needed US permission to make the gift.
Australia has some self-reliance in defence terms, but it falls well short of sovereign capability.
Another reason for needing a stronger defence industry is to use it to deepen US buy-in of the alliance – that is, to offer the US more. This is the pathway to garnering at least some degree of leverage.
In February, the assistant secretary of the US Army for acquisition, logistics and technology, Brent Ingraham, told Congress that the central threat to US military readiness stemmed from the industrial base. He attributed this to its ‘bureaucratic’ inefficiencies, workforce challenges, aged infrastructure and ‘fluctuating’ workload. Whatever the reasons for the US industry’s problems, Australia should be able to step up and help with military production.
Component manufacturing is an obvious way for Australia to develop serious self-reliance and help the US. As wars rage in Ukraine and Iran, consuming US munitions, Australia’s Guided Weapons and Explosive Ordnance (GWEO) industrial program has an opportune market.
Our progress has not been ideal. The 2020 Defence Strategic Update outlined the need for investment in guided weapon manufacturing capabilities. Canberra established the GWEO Group in Defence in 2021, but despite hefty funding, three years later we had not manufacturing but just a framework of a plan.
As the US seeks to rebuild missile stocks, Australian industry should be positioned to take orders for solid rocket motors or various other components as subcontractors to US prime contractors such as Raytheon and Lockheed Martin.
Australia can indeed integrate itself into the US supply chain, and in doing so increase the scale and production pace of its own defence industrial base. This is quite the opposite of devoting a small industry to serve a single, domestic prime customer. It’s time to overhaul the strategy.