Defence begins at home

Australia has a unique opportunity to reinforce its national security by fostering a stronger domestic defence

Australia has a unique opportunity to reinforce its national security by fostering a stronger domestic defence industry. For decades, foreign defence contractors have played a significant role in our military supply chains, but it’s essential that Australian businesses are given a greater role in shaping our future security landscape.

The recent procurement shake-up from the government is a much-welcome and much-needed course correction. For the first time, more concrete rules clearly define what it means to be an ‘Australian business’ in the context of government contracts; simply having an ABN doesn’t cut it anymore.

In other words, it’s no longer enough for a company to have a post box in Canberra while funnelling profits and skills offshore. To be recognised as an Australian business, firms must have at least 50 percent Australian ownership or be primarily traded on the ASX, and their principal place of business must be right here in Australia.

This is a positive step forward in ensuring that Australian companies have a fair shot at securing national defence projects, helping to build sovereign capability and strengthen our local industry. For years, the lack of a clear definition edged out Australian-owned businesses. The new rules shift the balance, finally giving Australian companies a fair shot at securing our national defence.

But rules only work if they have teeth. The focus now should be on effective implementation, ensuring they translate into meaningful action, especially when it comes to defence, technology, critical infrastructure and other key national pillars.

The reality is, we have world-class Australian companies developing and deploying cutting-edge defence technology overseas in regions such as Ukraine and for allies including the United States. If our technology is good enough for the world’s leading military power and most pressing conflicts, it’s more than capable of safeguarding Australia.

When Australian companies are involved in major projects, they’re often relegated to subcontractor status, with foreign multinationals leading key initiatives. The government’s ‘broader economic benefits in procurement’ metric is intended to change this, by making job creation, supply chain resilience and retained economic value key factors in contract decisions. But again, that only works if it’s enforced.

By prioritising Australian-led defence capability, Australia can create thousands of high-skilled jobs, onshore technological innovation and build a more self-reliant defence industry.

The importance of this shift is underscored in a report published by Insight Economics in October, which found that Australia’s ICT sector significantly contributes to Australia’s economy: in 2021 it generated $167 billion—roughly 8.5 percent of Australia’s GDP—and in 2024 supported more than 830,000 highly skilled jobs.

We need a government that actively prioritises Australian companies, not just when it’s convenient, but as a core pillar of our national security. That means making retained economic value a decisive procurement factor, ensuring that every contract strengthens our defence industry, not just foreign balance sheets.

It also means making sure Australian companies lead, not just support, major defence projects. The US has figured this out: its In-Q-Tel model ensures homegrown defence startups are backed by government investment, keeping critical technology in American hands. Australia must take a similar approach. Australian firms shouldn’t just be considered for defence contracts; they should be the default choice.

By investing in Australian defence companies, we can ensure that our future defence capabilities are resilient, our economy benefits from retained investment, and our national security remains firmly in Australian hands. If we get this right, Australia will be stronger, safer and better prepared for the future.

This article was published by The Conversation.

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