Australia has entered a new era of intense strategic competition and must find new ways to both develop and finance its national security. Specifically, the Australian government must draw in the private sector – consisting of capital lenders, equity providers – and national security and technology companies to create sovereign defence capabilities. The urgency of the challenge and need for government to do business differently from the past is captured in the 2023 Defence Strategic Review (DSR).

The DSR emphasised the need for a more 'whole-of-nation approach' to Australia’s national defence that harnesses 'all elements of national power.' The review brought into stark relief the sheer scale of Australia’s national security needs over the coming decades. Beyond fielding new military capabilities, Australia requires infrastructure and facilities, manufacturing capability, logistics and everyday operational requirements, and workforce support. The Australian government agreed with the DSR’s recommendations in whole or principle and made one of its priorities for immediate action to rapidly translate emerging technologies into capability in close partnership with Australian industry.

Although the end goal has been articulated, the path to leveraging the private sector for national security is not straightforward. As a starting point, it requires appreciating Australia’s current domestic capacity and private sector appetite for partnership, as well as how all the different moving parts fit together to create a functioning whole. Ultimately, Australia must create a 'defence-finance-tech ecosystem' where one has not existed previously.

Creating a defence-finance-tech ecosystem is not just a matter of convincing Australian capital providers like banks, superannuation funds, private equity and venture capital of the business case and identifying appropriate domestic defence and technology companies to enlist. As this report unearths, producing sovereign defence capability for Australia in a self-sustaining system at speed requires targeted policies geared to multiple dimensions. It involves policies directed towards Australian defence and dual-use start-ups and small and medium enterprise (SME); foreign-owned Defence Primes; Australian industry groups and networks; the university and academic sector; the AUKUS partnership; private capital across the spectrum; different government agencies; and Commonwealth Ministers. Multiple stakeholders with different interests and priorities must be forged together for the national good.