Overlooked homegrown firms plead for defence contracts
New modelling shows a small shift in weapons and equipment contracts to Australian-owned firms could lift GDP by $8bn and create 43,000 jobs.
Australian-owned defence companies are pleading for a greater share of the nation’s military contracts as new modelling shows a small shift in weapons and equipment contracts to local firms could lift GDP by $8bn and create 43,000 jobs.
The Albanese government announced major reforms on Monday to create an independent arms procurement agency under a new capability tsar, but the domestic defence industry says deeper changes are needed to build “genuine sovereign capability”.
Official data shows just two homegrown defence companies are among the nation’s top 15 military suppliers, reaping only about $5bn over the past five years out of $87bn worth of contracts.
US and other foreign-owned firms with Australian subsidiaries dominate the nation’s arms market, sending profits and jobs offshore.
Analysis for an alliance of Australian defence and technology companies found if an additional 5 per cent of defence procurement contracts were delivered by Australian-based companies, and if an additional 10 per cent of domestic ADF contracts went to Australian-owned and operated firms, it would add a “defence dividend” of $5bn-$8.1bn to the nation’s GDP.
The employment impact of the proposed shift would be an additional 25,569 to 43,205 Australian jobs, according to the modelling by DeltaPearl Partners.
“Our central finding is clear: a strategic reallocation of Defence procurement funding is one of the most powerful policy levers available to the government to maximise domestic economic benefit, create high-value jobs and build genuine sovereign capability,” the economic advisory firm said.
The analysis warned the nation’s reliance on foreign defence companies placed the Australian Defence Force well down the queue to purchase critical weapons systems, risking shortages in the event of a major conflict.
“A foreign-owned subsidiary operating in Australia, while contributing to our local industrial base, may face directives from its home government that conflict directly with Australia’s national interest during a crisis,” the analysis said.
“In this context, directing more procurement spending toward Australian firms is a valuable tool for a nation to build a resilient sovereign military value chain.”
It highlighted the example of the Australian-designed Bushmaster protected vehicle, built in Bendigo by French-owned company Thales, which had reaped hundreds of millions of dollars from producing the vehicle.
“The real question is: How many local jobs and (how much) net economic benefit would be created if an Australian prime (contractor) was selected to deliver (Bushmaster) contracts?” DeltaPearl said in its report.
The modelling was undertaken for the Sovereign Australian Prime Alliance, which includes Western Australian shipbuilder AUSTAL, Queensland munitions company NIOA, Macquarie Technology Group, Nova Systems, Gilmour Space Technologies, Aspen Medical and beleaguered tech start-up DroneShield, whose share price crashed last month after its directors sold off all their stock.
It followed a 2025 report by the Australian National Audit office that found “Defence has not maximised Australian industry participation through the administration of its contracts”.
World-leading Australian government-owned company CEA radar and privately held NIOA are the only local firms among Defence’s top 15 contractors over the past five years.
Defence Minister Richard Marles said on Monday the government’s new Defence Delivery Agency would give taxpayers “much bigger bang for buck”, streamlining defence procurement in the biggest reform of its type for 50 years.
“It puts a focus on delivery, and will ensure that it is much more sharp in the way in which it is undertaken,” he said.
“It will mean that advice comes to government much more early in the process about the challenges that are facing any particular program, any particular project, so that we can ensure those projects are delivered on time and on budget.”
The Sovereign Australian Prime Alliance said it welcomed Mr Marles’s comments on “the importance of defence acquisition programs delivering an economic return for Australia’s taxpayers who fund these programs”.
“For too long Defence has been siloed from the government’s broader economic agenda,” it said.
“We hope the Defence Delivery Agency will empower procurement teams to fully understand the value of sovereign capability and bring Defence closer into line with the industry policies of Future Made in Australia and Buy Australian Plan.”
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