Defence: What to expect post the 2023 Defence Strategic Review

15 February 2024

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With the Defence annual budget exceeding $50 billion for the first time in 2023-24, and with further increases expected as a percentage of GDP, the Government continues to invest heavily in Australia’s defence capabilities.

However, following the 2023 Defence Strategic Review, the focus of investment has shifted and challenges for security readiness have emerged. These challenges include:

  • advancements in technological capability;

  • instability within our region and competition for power in the Indo-Pacific region;

  • national security threats including cyber, espionage and insider risk;

  • climate change and the impact of more frequent natural disasters;

  • military force design and structure to meet future challenges; and

  • re-prioritisation of committed spending.

As a result of this shift, we expect numerous impacts to businesses operating within Australia’s Defence industry, including the following:

  • Shifting future spend to areas that better align with the 2023 Defence Strategic Review and AUKUS priorities. Defence is seeking to rationalise existing contracts and arrangements and difficult decisions will need to be made regarding the reprioritisation or cancellation of projects that do not align with this strategy.

  • Accelerating procurement activities and taking on an appropriate amount of risk to facilitate more rapid procurement while staying firmly within legislative and probity requirements. The aim is to deliver minimum viable capability within the shortest time.

  • Partnering with sovereign organisations that can be trusted to deliver on government priorities. The Federal Government will shortly issue the ‘Defence Industry Development Strategy’ which will outline how Defence will engage with the wider industry to deliver on recommendations from the 2023 Defence Strategic Review.

The agenda set by the 2023 Defence Strategic Review and the focus on AUKUS requires a significant shift in priorities – this will be driven by Defence, however Australia’s Defence industry will also need to actively embrace this change.

More from the author, Partner Deb Stokoe

The Defence annual budget exceeded $50 billion for the first time last financial year. It is expected to further increase as the government continues to invest heavily in Australia’s defence capabilities.

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