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The Federal Government’s Defence White Paper signals a complete redesign of the relationship between the Australian Defence Force and industry.

The Turnbull Government’s broader National Innovation & Science Agenda ^[2] has significantly impacted this White Paper and companies that are innovative, collaborative and internationally focused will benefit. And it isn’t just a document that’ll reap benefits for large international corporations. This White Paper establishes investment funds and support mechanisms for smaller, innovative service and technology start-ups, which could be the most exciting aspect of the entire document.

Previous Defence White Papers and Industry Policies have tended to be more focused on international prime systems companies with large globally-integrated supply chains, but now it’s our small to medium Australian innovators that could benefit the most from the DWP’s new industry policy.

While the detail is still to come, $230 million for the Centre for Defence Industry Capability ^[3] (CDIC), $640 million for an Innovation Hub and a further $730 million for the Next Generation Technologies Fund ^[4] represents a $1.6 billion, 10-year investment which should flow to Australian small to medium companies and entrepreneurs.

Innovation and entrepreneurship aren’t words typically used to describe the Australian defence industry sector—but this industry policy may in fact be remembered for being the document that established the beginning of their association.

If the CDIC is well led, the Innovation Hub and Next Generation Technologies Funds are well managed and the cultural change described in the First Principles Review delivered, Australia could witness the growth of an export focused group of national security entrepreneurs. Just as the start-up mentality begins to gain traction in the Australian economy, Defence plans to inject hundreds of millions of dollars to accelerate those ideas into reality.

In a nation where small business employs around 4.5 million people ^[5] the redesign of the industry engagement programs will be welcomed. The move from some 35 disparate Defence support programs (not including tens of other Federal Government and state industry support programs), to two streamlined avenues for the defence industry to interact and collaborate with the Department of Defence is a big and welcome change. The CDIC will give a regionally accessible ‘shopfront’ for SME’s seeking to work with Defence. A case management style of support will help business understand Defence’s technology and service requirements, seek support and/or sell innovative ideas and technologies that give the ADF an edge.

Execution risk will be front of mind for defence industry leaders wary after years of relative stasis in the industry policy space. Exactly how the new Next Generation Technology Fund will operate under the Defence Science and Technology Group isn’t clear. What, if anything, will replace the Strategic and Priority Industry Capability Programs is left unanswered. And the absence of a Naval Shipbuilding Plan will leave parts of the sector nervous.

There’s a sense of optimism in Australian defence industry. Now it’s time for the hard part.