The rise of China as a high-technology competitor to the US is one of the underlying drivers of the return to great-power strategic and economic competition. It’s a phenomenon that has enormous implications for the design and structure of Australia’s military.

Left unattended, the result will be a return of combat losses ^[1] to Australia’s military at a level not seen since the two world wars.

Facing this increasingly uncertain environment, Australia can and must push its own technology companies to provide timely and novel capabilities for the use of the Australian Defence Force. And we need to invest accordingly.

The new technological age that we are living in provides enormous opportunities for local technology companies in both the defence and space sectors. The need for such technology and local involvement was demonstrated starkly by the extraordinarily destructive attack ^[2] on the Abqaiq oil refinery in Saudi Arabia in September.

Imagery shows that the attacker—most likely Iran—was able to repeatedly hit processing tanks at the same point with small, precisely directed weapons, most likely a combination of drones and cruise missiles.

This precision attack disabled 5% of the world’s oil production and evaded sophisticated Saudi Arabian radar and air defences purchased from the US. The attack was reminiscent of the technological dominance the US displayed during the 2003 invasion of Iraq.

Most crucially, it shows that the creation and conduct of precision warfare is no longer restricted to great powers. The technology that enables this destructive military power has been democratised and it’s available independently to states great and small.

It’s not just the Iranians who have shown the destructive potential of harnessing commercially available technology. Islamic State terrorists temporarily paralysed ground operations of anti-IS forces in Iraq and Syria with off-the-shelf drones carrying hand grenades and other improvised explosive devices, forcing a reappraisal of tactics, techniques and procedures and sparking urgent research into countermeasures.

This democratisation of technology has mainly been viewed as a threat by modern defence organisations, with the reaction being to double down on the usual sources of advantage—like the big US and European defence ‘primes’.

Some of that makes sense, but even the most capable multinational primes in defence and other sectors are struggling to keep up with the speed of technological change and the fast adoption and adaptation of technologies for myriad unexpected purposes. Hand grenades slung from drones designed for hobby use are just one example.

But this threat also provides a huge opportunity in the innovation that can give the Australian military and broader defence organisation real capability advantages and an ability to do so in far shorter timescales than the three decades required to get 12 submarines in service. It can be achieved by investing in Australian technology and advanced manufacturing firms in ways that simply were unimaginable even five years ago.

The main obstacle is a psychological one based on more than a century of sourcing defence capability advantage from our principal strategic partner—the UK in the early 20th century and the US since World War II. This mindset makes the likely response to rapid technological change a doubling down on sourcing advanced—and even not-so-advanced—solutions from our key ally’s industrial base.

A smarter approach would be balancing this at-times healthy instinct with a much clearer-eyed appraisal of what the Abqaiq attacks and Islamic State have shown us.

As the army’s unfunded robotics strategy ^[3] shows, much of the technology that our military might wish to acquire and deploy will have a related use in Australia’s emerging space sector. That’s because autonomy, precision manufacturing, precision guidance and navigation, and advanced propulsion and manoeuvre technologies happen to be exactly what space activities require.

I’m thinking of companies and applied research outfits like Defendtex ^[4], Gilmour Space ^[5], Varley ^[6] and Marand ^[7], and the Trusted Autonomous Systems ^[8] defence cooperative research centre. A small company out in the light industry area of Canberra envisaged, designed and built the world-beating CEAFAR phased array radar being fitted to Australia’s warships to protect them from missile attack.

The local arms and subcontractor chains of firms like Thales, Boeing, Northrop Grumman and Lockheed Martin can also play a role by embracing local investment and manufacture. But they will need to be driven by a determined set of defence portfolio ministers, as we saw with Christopher Pyne and his successful drive for real Australian content with projects like the army’s combat reconnaissance vehicle that was won by Rheinmetall ^[9].

Beyond the ministers that should push the contracting arm of Defence—CASG—away from risk mitigation through offshore purchase with low Australian content, a structural shift is required to break the psychological hold that capability acquisition from our great and powerful friends has over Australian capability planning and development.

That won’t happen by just implementing the current defence industry ^[10] policies and tossing a bit more money or attention at the defence innovation hub ^[11].

The Morrison government can really make an impact by diverting a fraction of Australia’s $40 billion annual outlay on defence from the massive spend on slow-moving conventional major projects in the Integrated Investment Program to a new Australian version of the hugely successful US Defense Advanced Research Projects Agency ^[12] (DARPA).

An Australian DARPA with an annual budget of $300 million wouldn’t dent the mega-budgets of the future submarine, frigate or infantry vehicle projects. It would, though, do what Prime Minister Scott Morrison wants from his revamped bureaucracy: get results fast. It would do that by bringing real capabilities that adapt and apply commercial technologies and products to Australia’s military personnel in a timely and efficient manner.