Strengthening National Security and Economic Prosperity Through Enhanced Sovereign Capability

White Paper Contributors:

Wayne Judd
Chief Technologist, HPE

Roman Quaedvlieg
Director & Partner, National Security & Critical Infrastructure Program, Excelium

Tony Ockleshaw
CEO & Founder, Fifty ZOO

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Executive Summary

This white paper examines the challenges posed by the current over-reliance on global defence primes in Australia’s Department of Defence supply chain, and the associated procurement practices which lead to leakage of profits from the Australian economy, along with the expatriation of intellectual property (IP) overseas.

It also examines the phenomenon of offshore companies accessing Australia’s Research and Development (R&D) Tax Incentive program, which erodes the primary policy objective of promoting Australian innovation.

This white paper underscores the necessity to foster a robust sovereign defence industry to complement global capabilities; highlights the advantages of initiatives like the Experience Design Centre (xDC) and the Digital Sovereign Innovation Lab (dSIL); and proposes actionable solutions to strengthen our national security self-sufficiency and boost our economic prosperity.

Context and Purpose

Australia stands at a strategic crossroads. The global geopolitical landscape is shifting at an unprecedented scale and speed. This compels nation states to fundamentally reassess the scope, agility and, ultimately, the suitability, of their defence posture and capabilities to confront evolving threats to their national interests. This White Paper aims to:

  • Illuminate challenges associated with the current Australian defence procurement and capability development model.

  • Advocate for increased support of, and reliance on, sovereign capabilities.

  • Present innovative solutions and initiatives that could reshape Australia’s defence industry.

  • Encourage collaboration among defence primes, government bodies, and Australian sovereign industry.

The Imperative for Sovereign Capability

Australia’s reliance on foreign defence primes to build our defence and national security capabilities has left us vulnerable to geopolitical threats. This foreign dominance impedes our sovereign ability to design, develop, produce and sustain defence equipment and technologies that are critical to national security self- sufficiency.

Context, Definition, and Importance

The global defence industry is characterised by an oligopoly of defence hardware and software providers, colloquially referred to as the ‘Primes’. These Primes were originally established either as government-sponsored entities to service their military capability requirements, or they were private sector enterprises seeking to capitalise on their host country’s military requirements.

This symbiosis evolved into a sophisticated military-industrial complex where the Primes, in search of growth, expanded their markets outside their host nations, initially to allied countries and eventually evolving into their extensive global presence today. Apart from prohibitions on providing military capabilities to sanctioned nations and regimes, this small grouping of Primes operates today in an open capital market where they provide the full array of defence hardware, software, and professional services to numerous nation states.

In the post-WWII context, the pre-eminent Primes were anchored in Allied nations such as the US and UK and, while the list of recognised Primes today still boasts a majority of US and UK companies, over recent decades other nations from Europe and Scandinavia have joined this exclusive club. In addition to multinational defence primes, nation states such as Israel and South Korea have developed advanced defence production capabilities which have expanded well beyond the capacity required to meet their own military requirements and are now exporting major defence assets to other nation states.

Australia has not developed its defence industry in this manner. It has largely relied on global Primes and ‘allied’ nation defence manufacturers to supply major capabilities such as aircraft, naval surface and submarine platforms, land assault vehicles, and satellites. Like all nations which have adopted this approach, it has also built a modest sovereign defence capability to augment its global defence procurement model.

Sovereign Defence Capability refers to a nation’s ability to independently design, develop, produce, and sustain defence equipment and technologies critical to its national security. One of its primary objectives is to ensure that a nation is not overly reliant on foreign entities for its defence needs. A secondary objective is to retain the economic, intellectual, and social benefits which this industry provides, such as productivity, economic growth, domestic employment, talent retention, and sovereign IP accumulation.

Sovereign Defence and Interoperability with Allies

A sovereign defence industry does not mean isolation from strategic allies. Rather, sovereignty must be balanced with interoperability, ensuring that:

  • Australia’s defence technology and systems remain compatible with AUKUS, Five Eyes, and regional allies.

  • Joint development programs - such as hypersonic weaponry, quantum computing, and cyber security capabilities - continue under a “Sovereign-First, Interoperability-Compatible” framework.

  • The Defence Integrated Investment Program (DIIP) prioritises co-development opportunities in missile defence, undersea warfare, and next-generation communications infrastructure.

Current Geopolitical Environment

The geopolitical environment features multiple intersecting dynamics:

  • Global Tensions: Increased multi-party conflict in the Middle-East (e.g. Israel v. Hamas, Hezbollah, Iran, and Yemen); bilateral conflicts which draw in unilateral and multi-lateral participation (e.g. Ukraine, Russia, NATO, and North Korea); aggression and hegemonistic intent by China against smaller North and South-East Asian nation states and in disputed maritime tracts; and geostrategic positioning by allies which subsequently invoke potential direct threats to Australia (e.g. increased US forces based in Australia).

  • Increased Militarisation: In response to the evolving geopolitical context, nation states are significantly expanding their military capability and capacity. Australia, by way of example, has increased its modest investment in defence capabilities to 2.02% of GDP over the last decade. Current political discourse indicates this commitment is likely to increase to 3% of GDP, resulting in additional tens of billions of dollars being invested in defence capability.

  • Asymmetrical and Space Capability Evolution: The evolution and advancement of defence capability is no longer measured by the number of aerial, maritime, land, personnel, and ballistic assets that a nation state has managed to accumulate. The advent of emerging critical technologies has exponentially increased the proliferation and efficacy of asymmetrical war fighting capabilities and has created new contested battle fronts such as information theft, chip manufacturing, space dominance and cyber warfare.

  • Supply Chain Vulnerabilities, IP Protection, and Isolationism: Globalised supply chains present potential disruption risks through natural hazards such as pandemics and disaster events, or through threat actors deliberately targeting military supply chains to degrade or disrupt capability. Isolationist trade policies can disrupt supply chains for component parts, such as critical minerals required to produce computer processing chips. Intellectual property protection, including trade embargoes, is becoming increasingly more prevalent as nation states seek to preserve their technological edge over rivals.

  • Technological Advancements: Rapid developments in cyber warfare, artificial intelligence, quantum technology, sonar weapons, and armed unmanned systems require nations to be at the forefront of innovation.

The Role of Global Defence Primes in a Sovereign Strategy

While this paper identifies the challenges posed by over-reliance on global defence Primes, it is equally essential to recognise their critical and perpetual role in Australia’s defence ecosystem.

Australia’s national security is existentially dependent on the military capabilities provided by these Primes, and it is inconceivable for us to decouple from this approach.

Rather than decoupling, Australia should pursue a hybrid approach, leveraging collaborative models that have the defence Primes’ capabilities within our defence ecosystem as a perpetual feature, but also:

  • Ensure any IP developed in Australia remains under sovereign ownership or control while still contributing to allied nations and multilateral pacts through structured technology transfer agreements such as those within the AUKUS pillars.

  • Require increased reinvestment into Australian sovereign defence industry, particularly in critical capabilities such as AI, cyber resilience, and advanced manufacturing.

  • Implement clear compliance mechanisms to enforce Australian Industry Capability (AIC) requirements, ensuring local Small and Medium-sized Enterprises (SMEs) benefit meaningfully from defence procurement.

A hybrid model ensures Australia retains control, and benefits from, its sovereign defence capabilities, while still benefiting from global defence capabilities, expertise, and innovation.

Challenges with Current Australian Defence Industry Practices

Australia’s reliance on Primes underpins our defence and national security but it also leaves us heavily dependent on non-sovereign capability. Not having a domestic defence innovation capability could also leave us vulnerable to the dynamic geopolitical environment and the rapid emergence of non-conventional threats – our ability to independently, and swiftly, innovate is crucial to designing, developing, producing and sustaining our own defence equipment and technologies in response to these threats.

Reliance on Global Defence Primes

Dominance of Foreign Primes: Australia’s defence procurement has been, and continues to be, heavily reliant on a subset of Primes. Australia has persistently encouraged those Primes to manufacture military assets domestically to stimulate local employment and retain a portion of the defence spending in the Australian economy. This approach has unquestionably resulted in retained benefits, but it has also resulted in patchy and unsustainable patterns of growth in domestic sub-industries, particularly in the construction of naval assets. The ‘Valley of Death’ in the Australian (defence) shipbuilding industry is a well-studied phenomenon. Empirical evidence also supports the notion that large Australian defence procurements have generally not been delivered on time or on budget, nor attained the requisite levels of capability.

Limited Local Involvement: Current procurement practices result in limited sovereign SME participation and, consequently, economic leakage. Australian SMEs usually have minimal participation in major defence procurement programs, limiting the growth of local expertise and domestic capabilities. While efforts have been made by successive governments to compel increased Australian SME participation in defence acquisition and sustainment programs, the reality is that Australian SMEs only ever form a minor or supporting role in the delivery of defence programs. Australian SMEs may be included in bids for large defence procurement programs to meet essential Australian Industry Capability (AIC) procurement criteria, however subsequent enforcement of that AIC participation hasn’t been prevalent or consistent.

Economic Leakage: Profits and IP Sent Overseas

Profit Repatriation: As part of accepted commercial structures, a portion of profit earned from Australian defence contracts is repatriated by the Primes to their overseas headquarters or other locations. While Australia wholly supports open market participation and encourages approved foreign investment and multinational operations, increased domestically-derived profit retention would benefit the Australian economy.

Intellectual Property Migration: IP developed in Australia, especially with taxpayer-funded support, can be owned and controlled by foreign entities, and is at risk of being migrated offshore, potentially disadvantaging Australia’s innovation ecosystem and long-term economic benefits.

Australia’s R&D Tax Incentive Program

Tax Incentives: The Australian Government has implemented attractive R&D tax incentive schemes with the primary objective of stimulating domestic innovation across the full range of domestic sectors and industries. While this stimulus has clearly manifested in some technological exports with a concomitant inflow of revenue into Australia, several unintended practices have developed under these incentive programs.

One of those is foreign companies utilising Australia’s R&D Tax Incentive program to subsidise their R&D activities with up to 48% of their Australian R&D spend being reimbursed, but not necessarily benefitting Australia. Not only do some of these reimbursed revenues get expatriated from Australia to other jurisdictions where the foreign companies are headquartered, moreover, IP generated from this R&D activity is at risk of not being retained within Australia nor contributing to Australia’s economy. This fundamentally undermines the policy objective of the R&D Tax Incentive program provided by the Australian Government.

Limited Tax Contributions

Tax Minimisation Strategies: Some multinationals pay lower effective tax rates in Australia compared to local companies, reducing the potential economic benefits for Australia, and disadvantaging local companies by diluting their ability to compete.

Corporate & Tax Structure: Complex corporate structures and taxation practices, while perfectly legal, make it challenging to both retain profits in Australia or assess the true tax contributions from these overseas entities operating in Australia.

Case Studies: Defence Primes’ R&D Spending and Australian Tax Contributions

Global defence Primes are a critical segment of Australia’s defence and national security ecosystem, however their economic contributions are largely confined to providing jobs to Australians and getting limited support from Australian SMEs. There is a substantial difference in benefit between the employment of Australians and building our national sovereign defence capability.


Lockheed Martin

Global Presence:
World’s largest Defence contractor.

R&D Spending:
Over $1.5 billion USD annually.

Australian Operations:
Significant contracts, including the F-35 Joint Strike Fighter program.

Tax Contributions:
Reports suggest lower effective tax rates in Australia relative to local companies due to a global and sophisticated tax structure.

BAE Systems

Global Defence Company:
UK-based with extensive global operations

Australian Operations: Significant operations in Australia and is the longest standing Prime in the country, dating back to 1953, which is reflective of our historical alliance with Britain.

R&D Spending:
Over £1 billion GBP annually.

Local Impact:
Engaged in projects like the Hunter Class Frigate Program. Profit and IP flow through structures optimised for the UK parent company.

Boeing

Global Leader in Aerospace:
Extensive Defence and Commercial Operations.

R&D Spending:
Approximately $2.5 billion USD annually.

Australian Footprint:
Largest footprint outside the US Portion of profit expatriated.

Use of Tax Incentives:
Accesses Australia’s R&D tax incentives. IP derived from this activity is, at least partially, owned by its US parent company.

Raytheon Technologies

Advanced Technologies:
Focused on aerospace and Defence systems.

R&D Spending:
Exceeds $4 billion USD annually.

Australian Activities:
Supplies critical defence technologies. Retained local economic and IP benefits are unclear.

Thales

European Defence Giant:
Specialises in electronics and systems.

R&D Spending:
Around €1 billion EUR annually.

Australian Projects:
Involved in critical defence infrastructure. Local versus offshore IP retention is unclear.

Northrop Grumman

Innovative Systems Provider:
Engaged in aerospace, electronics, and information systems.

R&D Spending:
Approximately $1 billion USD annually.

Australian Engagements:
Active in defence projects,but retained local economic and IP benefits are unclear.


These case studies highlight the significant global R&D investments by defence Primes, the extent of their operations in Australia, and the need to ensure that Australia’s sovereign industry collaborates with them to optimise our national benefits.

Australia’s R&D Spend

Global Primes collectively have the motivation and capacity to outspend Australian SMEs in R&D. Traditional government grant models that disburse small portions of industry funds to ensure everyone gets a ‘slice’ of the pie will not rectify this imbalance. As these incentives are not structured to scale, modifying government investment models and projected outputs would take too much time to implement, have too many stakeholders to fully address the situation, and is not the solution.

National R&D Investment

Significant Expenditure: Australia invests approximately $14 billion AUD ($8.68 billion USD) annually in R&D across all sectors. Despite this investment, Australia’s R&D intensity (R&D expenditure as a percentage of GDP) lags leading OECD countries.

Comparison with Defence Primes’ Global R&D Spending

Lockheed Martin: Spends over $1.5 billion USD annually on R&D globally.

Boeing: Allocates around $2.5 billion USD annually to R&D.

Thales: Invests approximately €1 billion EUR ($1.03 billion USD) in R&D each year.

BAE Systems: Spends over £1 billion GBP ($1.25 billion USD) annually.

Raytheon Technologies: R&D expenditure exceeds $4 billion USD annually.

Northrop Grumman: Invests around $1 billion USD annually.

These figures illustrate that a subset of global defence Primes invest a similar amount in R&D to Australia’s entire national R&D investment, emphasising the need for strategic collaboration and increased domestic investment.

Advantages of Developing Sovereign Defence Capability and R&D

Building a national sovereign defence capability and an R&D retention strategy will reap benefits across the economy, in national security, through job creation, and in skills development and talent retention.

(a) Economic Benefits:

Retention of Profits and IP: Ensuring that profits and IP remain within Australia boosts the national economy and facilitates reliable and secure investment in local industries.

Supply Chain Development: A robust sovereign industry stimulates the growth of domestic supply chain networks, reducing dependency on foreign entities.

Export Opportunities: Developing unique defence technologies opens avenues for exports, further enhancing economic growth. The AUKUS agreements provide a conducive environment to capitalise on locally developed defence and national security capabilities.

(b) National Security Enhancement:

Autonomy: Sovereign capability reduces reliance on foreign suppliers, ensuring that critical Defence and National Security needs can be met without external imposed constraints.

Rapid Response: Local industries can adapt more swiftly to emerging threats and technological changes.

Secure Supply Chains: Mitigates risks associated with global supply chain disruptions or geopolitical tensions affecting foreign suppliers.

(c) Job Creation and Skills Development

Employment Opportunities: Growth in the defence sector creates highly skilled jobs across engineering, manufacturing, and technology sectors and assists with transitioning the Australian workforce away from fossil-fuel industries.

Skill Retention and Renewal: Developing sovereign capabilities and industries helps prevent the ‘brain-drain’ by retaining talented professionals within Australia. It also contributes to skill renewal in workforces transitioning from legacy and declining industries, such as car manufacturing.

Education and Training: Stimulates investment in education and training programs aligned with industry needs.

Defence Innovation Program

ASCA is not the answer. More government grants and innovation accelerators supporting small, fragmented, and independent R&D approaches does not work for the end users – the Australian Defence Force (ADF) and national security apparatus. Australia’s SMEs need a facilitator to help them collaborate to produce end-to-end solutions to solve defence and national security problems.

Advanced Strategic Capabilities Accelerator: The Australian Department of Defence has long recognised the need for defence capability innovation, partially at least, derived from the private sector. It has therefore developed funded innovation programs to promote, stimulate, and support efforts within industry to either solve problems or to create new technologies and capabilities for defence application. While many military units have their own R&D and innovation budgets, the major public-facing defence innovation program is the Advanced Strategic Capabilities Accelerator (ASCA).

ASCA is a relatively new initiative, having built on its predecessor, the Defence Innovation Hub (DIH). It expands beyond simply allocating innovation grants by introducing more proactive subprograms to drive industry engagement and development. There is little doubt that ASCA is an improvement on DIH, and several projects have led, or are leading to, the establishment of sovereign, developed defence capabilities. However, ASCA still operates under bureaucratic constraints as it is bound by Australian Government procurement guidelines which, to some extent, stifle agility and innovation. Several of the major challenges are:

  • ASCA is still largely a grant program.

  • Grants are administered through lengthy and complex procurement processes.

  • Grantees are mostly compartmentalised from end-users and each other.

  • Limited-to-no participation by ASCA in the innovation cycle.

  • Limited accountability in expenditure and outcomes.

Innovative Initiatives:


Experience Design Centre (xDC)

Overview

The Experience Design Centre (xDC) is a collaborative initiative between Australian SME, Fifty Zoo Pty Ltd, Hewlett Packard Enterprise (HPE) and Intel®. The xDC serves as an innovation hub where Australian SMEs, global tech companies, and government agencies collaborate to address and solve complex defence and national security challenges, through a structured design- thinking process.

Advantages

  • Collaborative Problem-Solving: Facilitates multi-stakeholder engagement to co-create solutions.

  • Accelerated Innovation: Shortens the development cycle from concept to prototype.

  • Capacity Building: Enhances the capabilities of Australian SMEs through exposure to global best practices.

  • Risk Mitigation: Early-stage collaboration reduces the risk of project failures and cost overruns.

  • Secure Enclave: Conducted in a classified enclave to ensure IP protection and compliance with Protective Security Policy Framework (PSPF) frameworks.

  • Economic Benefits: Keeps IP and profits within Australia, contributing to economic growth.

  • Australian Retention: Keeps innovative thinking and problem solving within Australia.

Digital Sovereign Innovation Lab (dSIL)

Overview

The Digital Sovereign Innovation Lab (dSIL) is an initiative aimed at providing Australian sovereign industry with access to advanced tools, data, and resources necessary for developing defence capabilities. Uniquely, the dSIL is funded by a mix of defence Primes, government investment, global tech companies and private partnerships. Access to the technology and tools sets will be offered to sovereign industry for free, promoting widespread participation and innovation.

Advantages

  • Cost-Free Access: Eliminates financial barriers for SMEs to engage in high-level R&D activities.

  • Enhanced Collaboration: Encourages cooperation between Primes and sovereign industry, fostering trust.

  • Skill Development: Provides training and resources that upskill the local workforce.

  • Secure Enclave: Hosted in a highly classified and secure enclave to ensure IP protection an compliance with PSPF frameworks.

  • IP Retention: Protects and supports the development of IP within Australia, ensuring long-term economic benefits.

  • Market Confidence: Builds the ADF’s confidence in local providers by demonstrating the quality and reliability of sovereign solutions.

Funding Model: Primes Supporting Sovereign Industry

  • Primes’ Contribution: Defence Primes can co-fund the dSIL as part of their commitment to developing local capabilities.

  • Mutual Benefits: Primes benefit from a stronger local supply chain, potential partnerships, and demonstrated commitment to Australia, while SMEs gain resources and opportunities to contribute to significant defence projects.


Hewlett Packard Enterprise (HPE) and Intel®: Catalysts for Sovereign Innovation

Historical Significance

Hewlett Packard Enterprise (HPE) and Intel® are among the most iconic and transformative companies in IT history:

  • HPE: A legacy rooted in innovation, HPE emerged from Hewlett-Packard, founded in 1939 in a Palo Alto garage—an origin that marks the birth of Silicon Valley. Today, HPE leads in advancing edge-to-cloud technologies, enterprise computing, and AI-driven solutions.

  • Intel®: Founded in 1968, Intel® revolutionised computing with the creation of the world’s first microprocessor in 1971, laying the foundation for the modern digital era.

Value to Sovereign Industry

  • Validation of Vision: Their participation underscores confidence in Australia’s potential to lead in defence innovation.

  • Technology Access: HPE and Intel® provide exposure to cutting-edge tools and methodologies.

  • Global Leadership: Having these global IT leaders as partners elevates Australia’s standing on the international stage, attracting further investments and collaborations.

  • Commitment to Innovation: HPE’s and Intel®’s support underscores their belief in the power of innovation to address critical challenges, from national security to disaster management.

Pride and Partnership

The support of HPE and Intel® symbolises the broad recognition of Australia’s capabilities. It is a matter of immense pride that such globally respected institutions share the vision of empowering Australian industry and strengthening sovereign capability. Their backing demonstrates how international collaboration, when aligned with national priorities, can drive transformative change.

Proposed Solutions

Increase R&D Investment in Australia

  • Government Commitment: Allocate additional funding to defence-specific R&D to match or surpass investments made by global Primes.

  • Incentivise Private Investment: Offer tax incentives and grants to encourage private sector R&D spending within Australia..

Foster Collaboration Between Primes, SMEs, and Government

  • Consortium Models: Establish collaborative frameworks where all stakeholders work jointly on defence projects.

  • Shared Innovation Hubs: Expand initiatives like xDC and dSIL to facilitate ongoing cooperation.

  • Transparent Processes: Implement clear guidelines to ensure open communication and trust among participants.

Policy Reforms to Incentivise Local Investment

  • Reinvestment Requirements: Mandate that a percentage of pre-tax revenue from the local entity by Primes in Australia be reinvested into local industries.

  • IP Ownership Policies: Require that IP developed using Australian taxpayer funds remains, at least partially, within Australia.

  • Tax Reform: Close loopholes that allow Primes to minimise their tax contributions.

Implement Frameworks for IP Protection

  • Legal Safeguards: Strengthen laws to protect IP developed by Australian entities.

  • Standardised Agreements: Develop template contracts that ensure fair IP sharing between Primes and SMEs.

  • Dispute Resolution Mechanisms: Establish clear processes for resolving IP-related conflicts.

Strengthen Defence Industry Procurement & Enforcement

  • Update definitions: Refine the legislative definition of a Sovereign Entity to enhance national security and sovereign economic outcomes in Government procurement and taxation revenue. The stricter definition of sovereign can be applied to existing government programs and incentives without extensive rework.

  • Participation targets: Enforce sovereign targets in all major defence contracts.

  • Enforce Australian Industry Capability (AIC) commitments award: Implement financial penalties for Primes that fail their commitments.

  • Expand sovereign manufacturing hubs: Ensure key defence supply chains remain under Australian control.

  • Commit to open source: Adopt open-source and open systems defence tech frameworks where feasible, reducing reliance on proprietary foreign systems.

Definition of a Sovereign Entity: QANTAS

Australia’s national airline, QANTAS, has a definition of Sovereign Entity within its Constitution which would better serve the country. Key definitions include:

  1. At all times, at least two thirds of the Directors must be Australian citizens.

  2. The chairperson must be an Australian Citizen.

  3. A quorum consists of three Directors which must include a majority of Directors who are Australian Citizens.

  4. The principal place of operations must be in Australia.

  5. At no time can a Foreign Persons or entity have Relevant Interests in shares in the company which, in aggregate, exceed 49% of the issued share capital.

  6. IP must reside in Australia.

  7. If a public company, the company must be listed on the ASX.

The Value to the Nation

Economic Impact Analysis

  • GDP Growth: Increased domestic defence production can significantly boost the national economy.

  • Return on Investment: Retaining profits and IP ensures long-term financial returns from defence projects.

  • Diversification: A strong defence industry can stimulate advancements in related sectors like aerospace, cybersecurity, and advanced manufacturing.

Strengthened National Security

  • Strategic Autonomy: Reduces dependency on foreign entities, enhancing Australia’s ability to act independently.

  • Supply Chain Resilience: Local production mitigates risks associated with global disruptions.

  • Technological Edge: Investing in sovereign capabilities keeps Australia at the forefront of Defence technology.

Enhanced Global Standing and Influence

  • Regional Leadership: Demonstrates Australia’s commitment to regional security and stability.

  • International Collaboration: Positions Australia as a desirable partner in global defence initiatives.

  • Soft Power Projection: Showcases national innovation and capabilities, enhancing diplomatic influence.

Conclusion

The evolution of the defence industry since World War II has resulted in Australia’s reliance on global Primes for its major military capability acquisition for the foreseeable future. The unprecedented geopolitical context dictates that Australia must continue to develop its defence posture and capabilities deliberately and carefully through a hybrid approach which integrates global and sovereign capability development.

While its overseas capability procurement is very mature, further work needs to be done to ensure that Primes are held accountable against specified requirements in the delivery of those programs, and that this overseas procurement is complemented by a robust and effective sovereign defence capability ecosystem.

Such a sovereign defence ecosystem will bring not only direct national security benefits such as decreased reliance on Allies and other nation states, but also will bring demonstrable indirect benefits, such as increased productivity and greater retention of economic and intellectual wealth. Private sector efforts are exceptionally capable of complementing, the construction of a robust and effective sovereign defence ecosystem. Initiatives like the xDC and dSIL exemplify the potential for innovative collaboration, and with strategic policy reforms, Australia can secure a stronger, more self-reliant future.

Call to Action

Government Leaders:

Implement policy changes that promote sovereign capability development and ensure that defence investments benefit Australia holistically.

Defence Primes:

Embrace transparent collaboration with Australian SMEs and commit to reinvesting in local industries and retaining IP within the country.

Sovereign Industry:

Leverage opportunities provided by initiatives like xDC and dSIL to innovate, collaborate, and contribute to national defence objectives.

Stakeholders:

Unite in a shared vision to strengthen Australia’s defence capabilities, economic resilience, and global standing.

References

  1. Australian Government, Department of Industry, Science, Energy and Resources. Australian Innovation System Report.

  2. Lockheed Martin Corporation. Annual Reports and Financial Statements.

  3. Boeing Company. Investor Relations - Financial Reports.

  4. Thales Group. Annual Reports and Registration Documents.

  5. BAE Systems. Financial Statements and Annual Reports.

  6. Raytheon Technologies. Investor Relations - Annual Reports.

  7. Northrop Grumman Corporation. Annual Reports and Financial Information.

  8. Australian Government, Department of Defence. Defence Industry Policy.

  9. Australian Taxation Office. Corporate Tax Transparency Reports.