Western Australia’s elevation of Defence West to a statutory authority is emblematic of the much larger national debate about how Australia organises power, capability and industry in an era of strategic competition.

Defence West can use its greater influence not just to promote the state’s industry but to better integrate efforts in Western Australia with national policy.

Governments across Australia increasingly recognise that defence industry policy shapes national security outcomes. Industrial capacity determines how quickly Australia can build, sustain and adapt military capability. Critical minerals, shipbuilding, energy infrastructure, advanced manufacturing and logistics are no longer adjacent to national security; they are national security. It’s why the elevation to cabinet of a minister for defence industries in 2016, alongside the minister for defence, has been maintained and only become more important. It’s also why the Western Australian government launched the 2025 Defence and Defence Industry Strategy, which is designed to complement the Commonwealth’s National Defence Strategy and Defence Industry Development Strategy.

Defence West is already focused on expanding the state’s defence industry but only as a branch of the Department of the Premier and Cabinet. A bill before the state parliament will give it the authority of an independent agency.

The discussion surrounding it raises a difficult but necessary question: what type of organisation best delivers defence industrial outcomes at speed, coordinates investment and aligns industry with national strategic priorities?

Traditional government departments provide legitimacy, oversight and integration with ministerial decision-making. They can also carry structural limitations that slow delivery. Complex approval chains, rigid staffing models and fragmented responsibilities slow decision-making at precisely the moment Australia needs speed. In part this is why the Albanese government is reforming defence procurement by establishing a new secretary-level Defence Delivery Agency.

The challenge of such reform is always in its implementation and the question of how Defence West and the Defence Delivery Agency will work together will need to be answered. Part of the solution is ensuring the traditional federal system has national support. Government business enterprises can offer a different but complementary model to the public service and private sector. They can recruit specialist expertise more easily than government, engage industry with greater commercial flexibility and maintain strategic continuity beyond electoral cycles while remaining accountable to the parliament and its processes such as Senate hearings.

Defence companies, state governments, universities, investors and federal agencies currently operate inside fragmented systems that often compete rather than align. Companies receive overlapping requests from multiple jurisdictions. Workforce shortages intensify competition between projects rather than supporting national capability outcomes. State governments pursue investment opportunities that don’t always match Defence priorities. This includes unwittingly seeking economic agreements with China that help it develop supply chain dominance, for example in solar panels and batteries. By boosting Beijing’s economic power, these agreements actually require us to spend more on security measures to protect against a rising China.

Those problems no longer represent minor inefficiencies. Strategic competition, turbocharged by China’s fusion of its civil and military sectors, has turned them into national security vulnerabilities. We should not copy China’s fusion model, but we must adapt.

Western Australia enters the debate from a position of genuine strength. The state has globally significant critical minerals reserves, advanced maritime industries, major energy infrastructure and deep operational experience delivering large-scale industrial projects in remote environments. Henderson Defence Precinct is the headquarters of shipbuilder Austal and already supports critical sustainment and shipbuilding activity. Its importance will grow as it expands to accommodate the sustainment of nuclear-powered submarines under the AUKUS arrangement, the delivery of littoral manoeuvre vessels as part of Defence’s LAND 8710 program and when building of the upgraded Mogami class frigates begins. The resources sector has developed logistics and infrastructure expertise that Defence increasingly requires.

Western Australia is already looking beyond Australia’s borders to strengthen industrial partnerships. Talks with Japan reflect the growing recognition that economic security, industrial capacity and defence capability are increasingly interconnected. Strategic partnerships with trusted allies can help unlock investment, accelerate infrastructure development and strengthen the industrial foundations that Australia’s future defence capability will depend upon.

The combination of those advantages with the major risk – Western Australia’s reliance on China for economic prosperity – create a compelling case for a more empowered Defence West capable of integrating industry, coordinating investment and aligning state capability with national priorities.

But governance reform alone won’t solve Australia’s broader defence industrial challenges.

A statutory authority without clear authority, funding and strategic mandate risks becoming another coordination body with limited ability to shape outcomes. Australia already produces no shortage of strategies, forums and engagement mechanisms. Industry doesn’t need another institution focused mainly on advocacy and networking. Industry needs institutions capable of accelerating decisions, reducing duplication and integrating capability planning across governments and sectors.

The federal–state dimension creates the central tension in the Defence West debate.

Canberra controls defence policy, capability acquisition and strategic priorities. State governments naturally focus on jobs, investment and regional economic growth. Those interests frequently align but don’t always converge neatly, particularly in an unprecedented era of our largest trading partner being our strategic adversary.

A stronger Defence West could help align Western Australian industry with federal priorities and allied demand. It could also deepen competition between jurisdictions if states begin treating defence industry primarily as a contest for economic advantage rather than a nationally integrated capability system.

Australia cannot afford that fragmentation.

The answer doesn’t lie in centralising every decision in Canberra. Defence industry operates across highly diverse regional economies with different industrial strengths, infrastructure bases and workforce characteristics. State agencies can play critical roles because they understand local industry conditions far better than many federal departments. The federal-government oversight provided by the 2020 Foreign Relations Act mitigates the risk that states and territories might pursue international partnerships at odds with the national interest.

But state-level initiatives must connect to a coherent national industrial strategy, notwithstanding that there will always be competition in the federation.

Australia does have institutional experiments which offer useful lessons.

ASC Pty Ltd demonstrates how commercially structured entities can preserve sovereign industrial capability across decades of political and strategic change. While it has had its critics, ASC’s structure allowed it to retain specialised expertise, support long-term capability development and operate with greater commercial flexibility than a conventional department.

CEA Technologies reflects a different lesson. The federal decision to transition CEA into a government business entity recognised that some technologies now carry such strategic significance that governments want closer alignment between industrial capability and national security priorities.

ASPI is another hybrid by institutional design. ASPI operates as both a Commonwealth company and a not-for-profit, with the aim of balancing independent analysis with accountability.

All institutional models come with trade-offs. Greater flexibility can reduce direct oversight. Stronger government alignment can narrow independence. Commercial agility can create governance risks. But Australia can no longer design institutions primarily around administrative convenience and dated assumptions.

Australia’s institutions were largely designed for an era of strategic warning time, stable supply chains and incremental technological change. The world we face today is very different. Governments now need institutions capable of moving at the speed of strategic competition.

The deeper problem confronting Australia extends beyond establishing state entities to support the national defence endeavour. Australia still approaches defence industry as a collection of sectors rather than as an integrated national capability system. The defence industry now intersects directly with energy security, critical minerals, infrastructure resilience, workforce development, advanced manufacturing and alliance management. Governments therefore need institutions capable of coordinating those connections rather than managing them in isolation.

This type of integrated approach is called for in Chapter Two of the 2026 National Defence Strategy. Implementing the National Defence Strategy requires changes to policy areas, like education, where the states and territories play a key constitutional role. Some progress has been made, such as joint federal-state defence workforce initiatives for science and technology skills and apprenticeships. The update of the Defence Industry Development Strategy, which is expected around mid-year, is a chance to go further and to improve alignment with the equivalent strategies of states and territories. Regardless of structure, Australia needs institutions to shift their focus to national objectives. This shift won’t be achieved by creating more institutions for their own sake.

But Western Australia’s reforms could help advance that shift if Defence West receives a genuinely strategic mandate tied to national capability priorities rather than narrow jurisdictional interests.

Correction: because of an editing error, an earlier version of this article misstated the department that Defence West is currently a part of. It is the Department of the Premier and Cabinet.