Australian Minister for Defence Industry Pat Conroy and his British counterpart, Luke Pollard, will hold the Australia-United Kingdom Defence Industry Dialogue (AUKDID) when they meet in London next week.
This is a timely return for AUKDID, which last happened in 2018. This year’s dialogue will help integrate defence industry in both countries to deliver AUKUS, the Hunter-class frigate and other projects. The ministers should also consider fresh ways to grow defence capability and the economy in both countries. For instance, by working together, Australian and British companies could increase exports to the rearming democracies of Europe and the Indo-Pacific. Coordinating on regional sustainment could yield efficiencies. The ministers should also coordinate on defence funding mechanisms that attract private capital from the financial centres of Sydney and London.
The economic upside of defence is at the forefront of Britain’s 2025 Defence Industrial Strategy, subtitled ‘making defence an engine for growth’. The strategy argues that Britain can learn from the Australian model of nurturing sovereign defence industries through strategic partnerships with foreign manufacturers. Boeing Australia’s development of the MQ-28 Ghost Bat is a case in point—a sovereign Australian capability with good export prospects, including to Europe and the United States. The strategy also highlights how AUKUS could galvanise industrial collaboration as more Australian, British and US companies register for export control exemptions.
As with any new strategy, there are some issues to address. The use of the term ‘offsets’ in Britain’s strategy risks confusing Australians, who might fear a protectionist offsets policy similar to Canada’s, which requires defence contractors to balance their domestic and foreign business. Britain is still digesting the results of a widespread consultation before ministers decide on the shape of offsets. But behind the term, Britain’s concept of strategic partnerships aligns with Australia’s 2024 Defence Industrial Development Strategy. The modest nudges to the market that Britain seems to be considering are not dissimilar to those in Australia’s Commonwealth Procurement Rules and Global Supply Chain Program.
Agreeing on the right terminology matters because Conroy and Pollard need to make the public case for defence industry collaboration. That case is stronger if it includes economic gains as well as strategic ones. Currently, the public tends to only hear commentary about the price tag for AUKUS or the location of military platforms. The ministers need to help craft a more positive narrative about the many small Australian and British companies winning work on both sides of the defence relationship. These smaller companies are often supplying the larger primes that grab all the headlines, such as BAE Systems.
Britain’s geography is an asset for Australian companies looking to export. The war in Ukraine has demonstrated Europe’s demand for Australian companies’ products, such as those that support drone and counter-drone warfare. It has also revealed the benefit of manufacturing or repairing capabilities close to the battlefront, capitalising on prompt feedback from soldiers. This concept underpins initiatives such as the US’s regional sustainment framework. Britain is a good location for Australian companies hoping to test their wares because the Australian Defence Force is training Ukrainian soldiers there.
These factors have not been lost on the many Australian companies that have set up operations in Britain. These include New South Wales-based Advanced Navigation, which makes geolocation devices tailored to battlefield conditions. It has announced the establishment of a centre of excellence in Britain, intended to be the blueprint for the firm’s expansion across Europe and the US. Similarly, Queensland-based munitions firm Nioa is investing in Britain with an eye on bilateral and regional contracts.
Looked at in reverse, closer defence industry collaboration between Australia and Britain also brings benefits in the Indo-Pacific. For instance, it is relevant to the Partnership for Indo-Pacific Industrial Resilience (PIPIR), a Biden-era US initiative that Defence Secretary Pete Hegseth has backed in. This initiative aims to apply lessons learned in Ukraine to the production of uncrewed systems in the Indo-Pacific. Britain may also have a stake in the regional sustainment hub for the radars of P-8 Poseidon reconnaissance aircraft that PIPIR will establish in Australia.
Judging by his speech at the Australian Defence Magazine Congress on 18 February, Conroy will likely use AUKDID to discuss innovative ways to raise defence funds. Under the Advanced Capabilities Investment Fund that Conroy announced, public money and private capital will co-channel up to A$1 billion into advanced capabilities, including those under AUKUS Pillar Two. Given the shared stake in AUKUS, it seems logical to develop the fund in partnership with Britain’s National Security Investment Fund and the Pentagon’s Office of Strategic Capital. Engagement through AUKDID may also help unlock the City of London’s financial resources and acumen.
AUKDID might attract some sneers from those who prefer to impose a firewall between prosperity concerns and defence policy. Some scepticism is warranted when politicians start spouting jobs numbers or fanciful economic notions about multiplier effects. But a public narrative that explains why defence can be an engine for growth is not boosterism; it builds the social licence required for rearmament. Similarly, public support for a sovereign defence industry that is networked with strategic partners builds national resilience and reinforces deterrence, which is fundamental to Australia’s national defence strategy. Any progress AUKDID makes towards this will have been well worth Conroy’s journey.
This article is part of a series about the Australia-UK strategic partnership. The British High Commission, Canberra, is supporting publication of the series, but the authors are responsible for the content.
