David Baverez is right: the world has left the comfortable ‘peace economy’ of 1989–2022 and has entered a ‘war economy’ defined by the supremacy of geopolitics over globalisation. In this economy, strategic resilience, not just pure efficiency, has become the ultimate measure of national power. This new era demands that we fundamentally rethink our approach to national support and industrial mobilisation. That starts with finally getting public-private partnerships (PPPs) right.
To meet the demands of strategic competition—the need for sovereign capacity, surge capability and rapid technological transition—PPPs must evolve from an infrastructure funding model to a core element of our national security architecture, and Defence must cultivate the industrial base as a strategic reserve of sovereign power. Genuine, mature Defence PPPs are not an academic theory; they are a proven mechanism for building capacity and resilience, particularly when structured to share risk and drive specific strategic outcomes.
The US Department of Defense extensively uses PPPs to maintain its Organic Industrial Base, particularly its maintenance depots. Instead of full privatisation, long-term agreements allow private firms to operate and invest in portions of government-owned assets. This model ensures that the government retains sovereign control and access to a protected industrial base for wartime mobilisation, while leveraging private sector efficiency, technology and workforce training for peacetime sustainment. The government acts as the anchor to guarantee work volume, de-risking the private firm’s investment in machinery and skills.
Since 2014, and critically after 2022, Ukraine’s defence mobilisation has been a masterclass in agile PPPs. State-owned defence conglomerate Ukroboronprom has worked in concert with hundreds of private small and medium enterprises, particularly in the drone, electronics and AI sectors. Ukraine’s success has relied on speed, low barriers to entry and a culture of innovating at wartime speed. There, partnership is not a 25-year infrastructure contract; it’s a rapidly adaptive agreement focused on minimum viable product and continuous feedback from the frontline. The state provides clear demand signals and testing infrastructure; the private sector delivers rapid, scalable adaptation.
Among many of Australia’s partner nations, PPPs increasingly deliver the protection of military and dual-use infrastructure, including supply chains and command and control networks. In the cyber domain, government-mandated resilience standards for critical infrastructure operators are underpinned by collaboration with world-leading cybersecurity firms. Here, partnership is less about finance and more about shared intelligence and aligned expertise. The private sector has the cutting-edge technology and skilled workforce, while the government provides the regulatory mandate and knowledge of the threat landscape, creating a mutually dependent system of national resilience.
For Defence to effectively harness PPPs for industrial mobilisation, it must adopt a new strategic doctrine, shifting from a procurement mindset to a strategic stewardship mindset, based around a set of principles mutually beneficial to both Defence and industry. These principles should include:
—Defence as sovereign anchor tenant with a strategic focus on demand stability. Under this principle, Defence’s acquisition and sustainment programs must commit to long-term, predictable volume contracts that extend well beyond the typical procurement cycle. This provides the certainty industry needs to invest in capital equipment and surge capacity.
—Strategic risk absorption with a strategic focus on an appropriate allocation of risk between Defence and its industry collaborators. For this to work and to foster genuine efficiency, Defence must accept strategic risk (associated with policy change, technology obsolescence and market demand fluctuation) and transfer only commercial risk (associated with delivery schedules and operational efficiency) to the private partner.
—A dual-use imperative with a strategic focus on industrial breadth. Defence must actively structure partnerships to develop dual-use capabilities where civilian mass production can pivot to military supply (such as commercial logistics networks, advanced manufacturing capacity). This broadens the industrial base far beyond traditional defence contractors and ensures that the market can leverage small to medium enterprises’ expertise, avoiding barriers to entry caused by Defence’s inconsistent demand signals.
—Transparency and velocity with a strategic focus on process reform. Defence needs to simplify and expedite the security clearance, contract negotiation and intellectual property sharing processes. The bureaucracy must be able to move at the speed of relevance, not the speed of peacetime compliance.
—Skills as national capital with a strategic focus on workforce mobilisation. Defence needs to mandate that PPP agreements include joint government and private investment in upskilling and apprenticeship programs, treating the industrial workforce as a critical strategic asset to be developed and protected.
The war economy is here. It is a world where only those who successfully reconcile the profit motive with the national interest will secure their future. Public-private partnerships are the essential tool for this reconciliation. We must stop using them to manage the budget and start using them to manage the strategic threat.