The maker of the Ghost Shark submarine drone has warned that Australia needs to be able to produce its own weapons domestically to deter aggressors, after the Ukraine war sparked a global rush to bolster homegrown defence capabilities.

In Ukraine, the mass deployment of low-cost drones has transformed the battlefield, setting off a push by governments to look at defence technology that can be produced more cheaply and on home soil, rather than through the complex supply chains used for most military hardware today.

An example of the trend in Australia is the Ghost Shark, an automated submarine that will be produced in a Sydney factory being officially opened this week. The federal government announced in September that it would buy an unspecified number of Australian-designed Ghost Sharks for $1.7 billion from US defence firm Anduril, saying these would boost the navy’s underwater capabilities.

Shane Arnott, the Australian engineer who led the design effort for the cutting-edge Ghost Shark, said Australia risked being left behind in the race to defend itself if it did not develop and produce defence technology more quickly.

“Gone is the time for thinking in small minds,” he said. “We are in a different world right now, you need big ideas and big thinking.”

“[If Australia doesn’t accelerate its defence development and production], we will be crushed. We’ll be crushed by the threat, we will be crushed by our allies.”

Already, Australia is a net importer of new weapons, primarily from the US. In 2024, Strategic Analysis Australia’s research head, Marcus Hellyer, estimated that “over the past decade or so, around one-third of [defence] acquisition dollars have been spent locally and two-thirds overseas”.

The 2024-25 Defence budget stands at $55.7 billion, which is slated to rise to about $100 billion by 2033-34 as Canberra prioritises long-range strike capabilities, local resilience and nuclear-powered submarines.

While Anduril has garnered attention over its nimble manoeuvring through Australia’s infamously slow defence procurement sector, a wave of innovation is taking over the global defence sector. The change is seen in the areas of drones and counter-drones, spurred by conflict in Ukraine and the Middle East.

A 2023 defence review found the 20 biggest acquisitions for the Australian military were on average 25 months behind schedule.

Anduril takes a “Silicon Valley” approach to Ghost Shark, the extra-large autonomous undersea vehicle that can conduct intelligence, surveillance, reconnaissance and strike operations down to 6000 metres on missions of up to 10 days.

Ghost Shark is smaller and quieter than a conventional sub, and so it can conduct deep-sea monitoring of undersea cables, which can be targets for sabotage. It can also do mine laying and strike operations. Importantly, it can take over “the dull, dirty and dangerous missions from the crewed submarines, freeing them up to do more complex missions”, Arnott said.

Before joining Anduril in 2021, Arnott drove Boeing Australia’s MQ-28 Ghost Bat loyal wingman drone project, an autonomous vehicle designed to fly alongside crewed jets. After attending Melbourne University, Arnott, a native of Wangaratta, joined a CSIRO spin-off, which was later bought by Boeing. There, he became one of the company’s youngest technical fellows.

The Ghost Shark can do work “in more and riskier places – especially since high danger of destruction of an uncrewed vessel may be acceptable”, wrote Sam Goldsmith of Red Team Research.

“Maritime choke points, such as straits, are likely locations, but it’s conceivable that a line of Ghost Sharks might assemble off, say, the north-west coast of Australia and listen for enemy submarines in the open ocean.”

Unlike traditional defence contractors, Anduril aims to develop its products far more quickly, including testing them in the field and then making changes as needed.

Josh Copland, Innovation Norway’s defence program lead for Australia, said he takes Arnott’s views with a grain of salt but “the gist of it is on point” because there is a “core problem with the defence procurement process”.

Copland is watching Anduril closely because it “is challenging” the procurement status quo. Copland said Australia can’t go through a four- to five-year process before even trialling capabilities.

“We need to be quicker than that, and you need only to look at Ukraine and the innovation cycle that they go through and the sheer volumes of war stocks that they go through very quickly to understand that that’s the new reality of conflict that we would face,” Copland said.

Limited success

Michael Shoebridge, director of Strategic Analysis Australia, said that while Anduril has had “limited success” with the Ghost Shark, the problem of an overly slow defence procurement process – which he traces back to the Cold War – remains.

“That Cold War approach to procurement simply has been outpaced by the faster-moving digital approach, and that’s why Anduril bringing that faster-moving digital approach from the tech world is a disruptive entity in defence procurement.

“At the moment, Anduril’s Ghost Shark is the exception that proves the rule.”

But the rule is a “stately, requirements-heavy, very slow procurement approach” to Australia’s defence, Shoebridge said.

Shoebridge agrees with Arnott’s assessment of the challenge Australia faces, but “until the processes are changed and the mindset of the senior officials changes, it doesn’t matter what companies are able to do”.

Given a destabilising security situation in the Indo-Pacific, Chinese ships circumnavigating Australia and conducting live-fire exercises, the use case for uncrewed stealth sub appears good.

One US-based defence engineer who is familiar with Anduril’s products said the company’s “strength is getting to minimal viable product quickly and then marketing the hell out of it”.

A third of the estimated $386 billion cost of AUKUS is to account for the risk of cost blowouts, according to The Guardian.

Chris Zappone travelled to Anduril as a guest of the company.