Australian defence exports have been in the news, with reports that Australian equipment is having an impact in Ukraine’s struggle to evict Russian invaders. These include Thales Australia’s Bushmaster protected mobility vehicle, Droneshield’s counter-drone systems, EOS’s Slinger air defence weapons, and Sypaq’s cardboard drones—reported recently (but not confirmed) to have been used to strike Russian airfields.

Considering the general doom and gloom around Australia’s manufacturing sector, readers might be wondering where these advanced technologies have come from. But reports of the demise of Australia’s technological base are overstated. We have significant technological and industrial capability here and we should not let views that suggest otherwise blind us to the potential contributions Australian industry can make to defending Australia.

For example, it’s fashionable to invoke the Harvard Atlas of Economic Complexity to bemoan the backwardness of Australia’s economy. According to the Atlas, Australia currently ranks 93^rd in the world for economic complexity, consistently falling from 55^th in 1995. That puts us right between Uganda and Pakistan. Before last year’s election, then-shadow assistant minister for Treasury Andew Leigh, himself an economist, described this as a ‘troubling picture’.

But when the Atlas ranks the United States 15^th—behind Slovenia and Hungary—something is amiss. And when it ranks Australia 30 places behind Eswatini, the country formerly known as Swaziland, we need to be deeply sceptical. Unlike Australia, Eswatini isn’t designing, manufacturing, and exporting the world’s largest electric ship or world-leading air-defence radars—or urgently needed defence equipment to Ukraine.

Under the bonnet, the Atlas is driven by a remarkably simple engine. First, it only looks at exports. Secondly, the Atlas assesses a country’s economic complexity based on the diversity of its exports and their ubiquity. Ubiquity measures the number of countries that export that product; the more countries that export it, the more ubiquitous it is and the lower the complexity value assigned to the product. That’s based on the questionable assumption that if lots of people produce it, it can’t be hard and therefore isn’t complex.

Australia’s largest export, iron ore, is ranked 1183 out of 1222 products in the Atlas’s database. Coal, our second largest, is 1153. That’s because lots of countries export them. Consequently, the algorithm spits out our miserable complexity ranking of 93^rd in the world.

Unfortunately, such assessments reinforce stereotypes that Australia can’t produce advanced military equipment. Or even if it could, that it would take longer and cost more. But we should be very wary about basing opinions about what Australia can and can’t produce on our ranking in the Atlas and its measure of Australian industry’s complexity.

In particular, the Atlas’s exclusive focus on exports can mislead. Around 90% of the things that go into maintaining our very capable Collins-class submarine are produced here, but since the Collins isn’t exported, none of that shows up.

Moreover, exports are outputs, but that glides over the very complex inputs that are used to generate Australia’s resource exports. These include complex metal construction, transport systems, software and robotic and autonomous systems. Many of these inputs are generated in Australia, but that doesn’t figure in the Atlas’s algorithm. 

Digging up huge volumes of natural resources at globally best prices is only possible with dizzying amounts of technical and industrial competence, provided by the big resource companies and the huge set of suppliers and tech subcontractors they work with. The scale and competitiveness of Australian agriculture is also powered by an agriculture sector that is technically sophisticated and enormously capable (it’s use of drones is a simple example).

Dismissive assessments of our capabilities are also belied by Australian industry’s ability to move across sectors when provided with the right demand signals. The buzzword of the day is ‘adjacent’; Australia’s advanced space, aerospace, autonomous systems, AI and biotechnology sectors are all ‘defence adjacent’ and can potentially be called upon to generate defence capabilities. But so are the more traditional sectors that support those dreadfully ‘ubiquitous’ exports such as minerals and energy. For example, the construction and heavy engineering company Civmec was able to draw upon its vast capabilities in the resource and energy sectors to move rapidly into naval shipbuilding and construct the Navy’s new Arafura class offshore patrol vessels.

The key factor limiting the speed of our response to our deteriorating strategic circumstances isn’t the ability of Australian industry to create advanced new military capabilities, but the willingness of the Department of Defence to move rapidly to mobilise and harness our industrial base. Harnessing this capacity has to include a willingness to remove the large number of barriers to entry to the defence market—which are almost all creations of Defence officials—that turn away and discourage such non-traditional defence players. Numerous reviews have recommended ways to make the Department’s acquisition processes both more agile and open to local suppliers. So far that’s an innovation which has gained little traction with ministers – who must drive such change.

In contrast, the rapid ramp up of Ukraine’s military capabilities suggest that in time of crisis, it’s possible to both accelerate an acquisition system and mobilise the national industrial base by stripping away process and focusing on outcomes.

Perhaps in return for our equipment exports, we can import some of Ukraine’s sense of urgency and make use of the many things Australia does well to improve our security.

Dr Marcus Hellyer is Head of Research at Strategic Analysis Australia