ABSTRACT
The in-country spending by Australian Defence on acquisition and sustainment of defence materiel accounts for about 0.2 percent of GDP. A third of expenditure on the acquisition of platforms and systems is spent in country (the corresponding figure for sustainment is over 70 percent). The Australian defence industry is predominantly foreign owned and employs 2.9 percent of the domestic manufacturing workforce. Against this background, the chapter examines the evolution of Australian defence industry policy since the mid-1970s with particular reference to the nexus between procurement of materiel, supply security and defence industry development (i.e., the policy of defence industry self-reliance in support of Australia’s ability to pursue certain sovereign military objectives without the need for allied combat support). It also discusses the present structure, conduct and performance of the defence industry as well as Defence’s ambitious procurement plans, which aim, inter alia, to enhance the defence industry’s “sovereignty”. There are some concerns, however, that the sustainment of in-country legacy industry capabilities that appears to dominate the proposed defence procurement agenda will make it difficult to support the most technologically critical industry capabilities, which are yet to emerge as the on-going 4th industrial revolution radically changes warfighting technologies and materiel requirements.
