The Australian Bureau of Statistics’ 2023–24 Defence Industry Account has made clear that the Department of Defence is not just a strategic actor; it’s an economic institution with national and regional influence. But the data reveals an uncomfortable truth: Defence is absorbing economic capacity in northern Australia at scale but doing too little to replenish or expand it. If it’s serious about long-term readiness and regional stability, that must change.
At first glance, the figures are impressive. The Australian defence industry contributed $11.9 billion in gross value added to the economy in 2023–24, a 12.3 percent increase on the previous year. Defence-related employment surged by 9.1 percent, nearly four times the national average. In the Northern Territory alone, 451 businesses were engaged in Defence-related construction, reflecting the region’s central role in infrastructure-led defence investment.
This growth reinforces what Territorians have known for years: Defence is a pillar of the regional economy. However, the new data also exposes a strategic contradiction. Defence plays a defining role in shaping the economic architecture of the north but continues to deny or downplay its role as a long-term economic actor.
Defence is right to focus on readiness and capability in a contested Indo-Pacific, but readiness isn’t just about runways and munitions. It’s also about ensuring the regions where our forces are based are sustainable, resilient and focused on the future. That means investing not only in what Defence consumes—fuel, construction and maintenance—but also in what it can help produce: industry, skills and supply chain resilience. Right now, Defence is acting almost entirely as a demand-side actor. That’s not enough.
The current demand-side focus creates bottlenecks. Defence consumes large portions of the NT’s skilled trades, project management capacity, and logistics bandwidth. In doing so, it limits the availability of these resources to other sectors, such as construction, tourism and even civil infrastructure. In some cases, hotel developments, airport upgrades and regional business growth have been paused or reshaped to accommodate Defence timelines. This is not inherently bad but becomes a problem without reciprocal economic contribution.
In short, Defence’s footprint is crowding out alternative growth, not through malice, but through inertia. This presents a strategic vulnerability. As the region gears up for greater geopolitical competition, it cannot rely solely on one pillar to sustain its economic health.
So what should be done?
Defence must acknowledge its economic role, not as a passive by-product of capability delivery, but as a deliberate lever of national power. This requires a shift in mindset at all levels of Defence leadership. Economic stewardship in the north must be as valued as strategic basing or infrastructure delivery.
It must also become a supply-side actor. This could take many forms. One promising avenue is targeted capital investment in northern industries that can meet Defence needs through short, secure and sovereign supply chains. That might mean investing in niche manufacturing, specialised maintenance, or supply hubs that support distributed operations. The goal should be to enable the north to support Defence and supply it reliably and at scale.
Defence must do more to anchor long-term workforce capacity. Veteran retention in the north is low, but it doesn’t have to be. With the right support from NT and local governments, Defence could help develop policies that encourage veterans and their families to stay, transforming them from operational assets into community anchors. Similarly, Defence education and training programs could be more deliberately tied into regional vocational training and university pipelines, supporting local skills development in engineering, logistics, and information and communication technology.
A recent audit by the National Audit Office found that Defence is failing to enforce its own policies around local industry participation. Considering this, Defence must improve its Australian Industry Capability program. In regions such as the NT, where Defence is one of the only long-term economic constants, local industry engagement isn’t just a good policy but a strategic necessity.
We also need to start thinking about Defence’s role in building industrial resilience and innovation capacity in northern Australia. A new wave of industrialisation, or Industry 4.0, in northern Australia isn’t a pipe dream; it’s a missed opportunity. Northern firms are close to Defence’s end users, which gives them a competitive advantage in designing, testing and iterating capability solutions. But this will require policy changes, enabling Defence units to work more flexibly with local industry and fast-tracking innovation adoption at the tactical edge.
None of this is simple. It will require coordination across Defence, state and territory governments, and the private sector. However, the alternative is stagnation, a defence presence that consumes but doesn’t create, and a region that supports the nation’s security without fully sharing its economic dividend.