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Opinion: Australia’s defence strategy must urgently reduce reliance on the United States and prioritise sovereign defence industry, as America is now politically unreliable and industrially unable to guarantee military support in a crisis, explains Strategic Analysis Australia’s Michael Shoebridge.
It’s time to notice big changes in our world when it comes to how Australia equips its military and spends the $59 billion annual defence budget. As ministers Richard Marles and Pat Conroy put the finishing touches to their brand new National Defence Strategy, they also need to wake-up and face the music on their failed approach to defence industry.
Canada, Germany, France, even the UK and Japan, are all reacting to the big changes in our world over the last two years, and while aggressive authoritarian states remain prominent, no new feature in our security environment is as big as the changed America we are experiencing with the Trump administration.
The problem is that the big – and increasing – bet that our defence planners have made on America as a supplier of most of our military needs during a time of conflict is a bad one.
The US is unreliable politically and industrially on defence
Our current defence plans use the same assumptions about America that we have had for decades, even as the facts have changed in front of our eyes. The result is we now have two key risks: one political and one very practical and industrial.
The first is that America is now simply unreliable as a political partner on security. It’s cut off support to a partner in the middle of a major war (Ukraine), cast doubt on the core element of NATO on coming to the assistance of an ally under threat, and become far more narrowly focused on its own local sphere of influence. Allies who can’t stand on their own two feet militarily are simply burdens to this new America.
The US has also become far more unilateral in its actions, and markedly less likely to consult and plan with allies than the America we have worked with for decades – as is so obvious in the case of the current war with Iran.
These behaviours and priorities aren’t anomalies. They are codified in both the new US National Security Strategy and the Pentagon’s National Defense Strategy.
So, we must have real doubts about relying on the US president (this one or a future version) directing American military support our way in a time of national or international crisis.
That’s big bad news for Australia because without a large flow of US weapons and parts, our military would stop being able to fight in a matter of weeks.
And there’s a second problem that has nothing to do with the political situation in America and its marked shift in attitudes towards allies and security. Even if the current or a future US president did want to provide support to Australia in a time of crisis, America’s defence industrial base could not be relied upon to do so.
That’s because it does not have enough production capacity to meet the US military’s own needs outside peacetime. Right now, Pentagon leaders are reportedly concerned that the war with Iran, even if it is brief, will deplete stocks, leaving the US vulnerable in other theatres. Any supply to Australia’s military will only happen once the US meets its own needs, meaning this US run down matters to us and will affect us for the years the US will take to rebuild its own stocks.
This industrial risk isn’t about politics, it’s about capacity and meeting America’s own needs before helping others.
The consequence for us from this is that, just when we would need a steady flow of American missiles, torpedoes munitions, counter missile systems, parts and other logistics support because that’s how we’re building our military, American industry would be least likely to provide that flow of support.
We know this because there is a live and anxious debate inside American national security circles about how to begin to fix this industrial production problem so they can at least have a chance of supplying their own military’s needs. That debate began before the war with Iran began and that conflict will only make it more intense.
The new bottom line
The bottom line from the new – and enduring – political risk that a US president will decide not to help Australia in a time of crisis, combined with the practical industrial reality that American defence companies don’t have enough capacity to supply the US military, is that Australia now has to do more for ourselves.
And we need to reduce, not increase, our stark dependence on American weapons, systems and resupply, even if that is going to be hard and take time.
Unfortunately, we are doing just the opposite: the government’s current defence investment plans have around 70 per cent of the Top 30 projects’ budget going to US systems, with 16 of these projects largely “of the shelf” purchases from US companies. With this plan, we are doubling down on our already considerable US dependencies.
Australia is not alone in having this new problem with our major ally. We’re just lonely in pretending the problem doesn’t exist – and lonelier still in planning to make the problem worse over the next few years.
Europeans and America’s Canadian neighbours must be more than bemused to watch Australian ministers and officials proceed “full steam ahead” with old plans based on the America we were so used to working with, because that America has gone.
The UK “Trump whisperer” Keir Starmer is dealing with a falling out with President Donald Trump over the UK government’s shifting positions on the US and Israeli war with Iran. President Trump has said the relationship between London and Washington is “not like it used to be”, and gone on to say the differences are unlike anything that had “happened between our countries before”. The leadership differences between our two AUKUS partners show the kinds of cracks that can now emerge between America and even its closest allies and increase the risks of a strategy based on dependence on American goodwill.
Beyond this, if the highly pacifist Germans have concluded that they must stand more on their own two feet, with their European NATO partners, in defence and are willing to take on billions of euros in debt to rearm and to rebuild German defence industry, something alarming has changed at the core of NATO. And that something is the US, not the threat from Russia.
Canada has smelt the coffee and is on the move
The change is so marked that Canada, America’s most intertwined partner in defence industry, and the partner that shares a continental defence system – NORAD – with the US against nuclear and other airborne threats, has begun to reduce its huge defence dependencies on the US. That’s a wake-up call for sleepier, more complacent partners like Australia.
Canada is doing a lot more than being shocked and talking about its new security environment. Prime Minister Mark Carney’s speech at Davos about the end of the post war international order got a lot of media attention, but the much more sobering and practical thing he’s done since then from a defence perspective is set out a new defence industrial strategy for Canada.
It gets real fast. Canada was on track to buy roughly 70 per cent of its military’s needs from America, continuing an approach that has lasted since the Second World War, something that looks eerily like Australia’s current plan. Now, he has set a target for the Canadian defence organisation to procure 70 per cent of its needs from Canadian firms – a photo negative of the previous plan.
And he’s directed an increase of 240 per cent in Canadian defence industry revenues, meaning he’s prioritising local industry that is capable of supplying Canadian military needs.
To do both these things, he is taking advantage of the national security exceptions in Canada’s international trade agreements and obligations – something that the Australian government has refused to do.
Prime Minister Carney’s policy direction is summarised in the tagline “Build, Partner, Buy”. Canada’s defence ministry and acquisition agencies must prioritise buying what they need from Canadian industry as their primary approach. When this is not possible having Canadian firms partner with foreign firms on production, again with a local focus. Only if both these approaches fail will Canada buy what its military needs overseas – or over the border.
Prime Minister Carney’s visit to Australia this week was a chance for Australians from the prime minister down to hear and talk with him. The joint statement he and Prime Minister Anthony Albanese released at least has a section on defence and security cooperation, but is largely welcoming existing initiatives which are useful but unambitious. We have missed an opportunity to join him in a deeper defence industrial partnership where we “Build and Partner” together, combining our countries’ defence companies to meet our needs.
Australia has had the wake-up calls we need as we watch America radically reset its approach to the world and to its allies. And the challenges and shortfalls in US defence industry’s capacity are all covered in detail in multiple open source reports.
It’s not Joe Biden or HW Bush’s America anymore
But our ministers and the defence bureaucrats who advise them have simply stuck with the plans they made when Joe Biden was the US president and when they could assume American industry had so much capacity it could supply the Pentagon’s needs and have plenty left over for us. That’s the only explanation for the current plan to make ourselves even more dependent than we are now on US systems.
Multibillion-dollar cash splashes on AUKUS sub facilities for BAE to use to eventually install Rolls-Royce reactors and Lockheed Martin combat systems into a tiny number of extraordinarily expensive submarines is no substitute for high volume local production of “the small, the smart and the many” – from drones to missiles and all the other consumables of conflict our military will need to last even a few weeks into a war. And government venture capital schemes without the Australian military as a reliable customer are a path to nowhere.
Without at least recognising the value of Australian companies with their headquarters and production in Australia, no defence industry policy can be successful in the international environment we find ourselves.
So, the first step is to change the ridiculous and empty definition of “Australian sovereign defence industry” set out in the government’s lengthy but ineffectual “Defence Industrial Development Strategy” from early 2024. It’s a definition so devoid of meaning that big foreign defence companies like Lockheed Martin and BAE are labelled as Australian sovereign industry, and, even more absurdly, Chinese companies like Huawei and Hikvision fall within the definition. In times of crisis when we need them most, foreign-owned firms must make their home governments a priority, not us.
This does nothing to build local companies or Australian production capacity independent of big foreign defence supply chains.
Now, with the Canadian – and European – examples of adaptation to the difficult new reality of an unreliable America and a dangerous world in front of us, it’s time to act.
Even the Pentagon gets why allies will reduce dependence on the US
One of the weirdest aspects to Australia’s plan to spend an increasing amount on US weapons and systems is that even the key Pentagon strategist, Elbridge Colby, understands that’s a bad idea. At the recent Munich Security Conference, he noted that, as countries spend more on defence “we understand that you’re going to need to indigenise a large fraction of that production. Otherwise people in Germany or Poland or whatever are going to say: ‘Why are we only sending money across the Atlantic?’”
Ministers Marles and Conroy must throw out their earlier defence industry policy and investment plan failures and show us new plans that start to make Australia’s military less dependent on the whims of a US president – and less vulnerable to the weaknesses of American defence production.
Those new plans must radically shift investment into Australian firms that can produce a flow of what our military will need when we need it – during a conflict. Canada has lit up the path for us to follow. It’s time to get started.
