Australia Defense Market Report and Forecast 2024-2032

Australia Defense Market Size

The defense market in Australia reached USD 50.0 billion in 2023. The market is expected to grow at a CAGR of 5% between 2024 and 2032, reaching almost USD 77.5 billion by 2032.

Australia Defense Market Outlook

• As per industry reports, Australia's annual defense expenditure ranges from USD 25–30 billion, with a significant portion allocated to defense acquisition and sustainment.

• As per the Australia defense market dynamics and trends, the country's defense purchasing was reinforced in March 2016 by the Defence White Paper, outlining a USD 145 billion acquisition plan through FY 2025-26. Subsequently, the 2020 Defence Strategic Update introduced a ten-year USD 190 billion acquisition plan concluding in FY 2029-30, further fortifying Australia's defense planning and investment strategy.

Australia Defense Market Growth

Australia is poised to increase defense spending, driven by expanded acquisition programs focused on aircraft, submarines, naval vessels, and missiles. This strategic shift in the Indo-Pacific region is in response to China's military advancements and growing influence. The defense strategy emphasizes deterrence capabilities through new platform acquisitions. Key priorities include safeguarding national security, protecting regional stability, and upholding a rules-based Indo-Pacific order.

The growth of the Australia defense market is robust, with sectors like submarines, naval vessels, missiles, and unmanned aerial vehicles leading the way. The country is building a resilient defense industry, exporting innovative technologies, and supporting a capable Australian Defence Force (ADF). Collaboration with global partners, particularly the U.S., is central to Australia's defense strategy, underpinned by agreements like ANZUS, Five Eyes, and AUKUS.

Australia Defense Market Trends

AUKUS, announced in 2021, emphasizes technology collaboration beyond nuclear-powered submarines to include cyber capabilities, artificial intelligence, and quantum technologies. Australia's defense acquisition policy aims for increased expenditure, nuclear submarine acquisition, skills transfer, and in-country research and development is a crucial trend in Australia defense market. Recent strategic reviews reaffirm long-term defense acquisition plans, underscoring Australia's commitment to strengthening national security and regional stability while aiding the market development.

Recent Developments

As per the defense market analysis of Australia, HII’s Mission Technologies division announced on July 2024 that it was granted a five-year contract for the supply of supply chain services to the Department of Defence in Australia. This contract is expected to facilitate the export licensing process and offer more opportunities for Australian suppliers.

Industry Outlook

As per the Australia defense industry analysis, the defense sector in Australia contributed around USD 10.6 billion to the gross value as of 2022-23, which was an increase of 4.1 compared to the previous term. The defence sector employed around 64,100 people and consisted of around 5,544 businesses as of 2023. The overall expenditure on defense contributed around 0.44% to the economy’s GVA in the fiscal year 2022 to 2023. As per the data reports for 2022, Professional, scientific and technical services contributed around 45.2% to the GVA, whereas the manufacturing sector contributed 15.4 to the GVA.

The government of Australia released a new National Defence Strategy (NDS) in May 2024 which aligns with the Defence Strategic Review. This strategy focuses on deterrence by denial and talks about the resources and the investments which are to be made in the military sector. Moreover, it focuses on investments in maritime, intelligence, logistics, and aerial, which can boost the capabilities of the military sector, further boosting the growth of the Australia defense industry.

As per the data gathered in 2021 from the Australian Defence Force (ADF), Australian Army, Royal Australian Navy and Royal Australian Air Force, 0.4% of the people above 15 were serving in ADF, whereas 2.4% had served before in defense services. This indicated a growing interest in employment in defense forces, supporting the market growth.

Some market players are retrofitting old machines into modern systems so they align with the strategic objectives of the present times. For instance, AML3D Limited announced on July 2024 that it has received an order from Century Engineering, a defense supplier, for the conversion of the existing AML3D robotic welding system to an ARCEMY metal Additive Manufacturing machine. These efforts to deliver high-end and sustainable systems are further boosting the Australia defense industry revenue.

Factors Contributing to the Growth of the Australia Market

• Increasing geopolitical tensions in the Asia-Pacific region prompting defense enhancements.

• Substantial government investment and budget allocation towards defense modernization.

• Rising focus on cybersecurity and advanced technological warfare capabilities aids Australia defense demand growth.

• Strategic partnerships and defense agreements with allied nations.

• Development and procurement of advanced military equipment and technologies.

• Expansion of defense research and development initiatives.

Challenges Faced by Manufacturers in the Australia Market

• Complex and lengthy procurement processes.

• High costs associated with the development and maintenance of advanced defense systems negatively impact Australia defense demand forecast.

• Dependence on foreign technology and expertise.

• Stringent regulatory and compliance requirements.

• Limited domestic manufacturing capabilities and supply chain constraints.

• Political and budgetary fluctuations impacting defense spending.

Key Growth Opportunities in the Australia Market

• Investment in indigenous defense manufacturing and technology development offers lucrative Australia defense market opportunities.

• Expansion of cybersecurity and intelligence capabilities.

• Development of next-generation defense technologies such as AI and autonomous systems.

• Enhancement of naval and aerial capabilities through new acquisitions and upgrades.

• Opportunities for private sector involvement in defense projects.

• Focus on space defense initiatives and satellite communications.

Market Competition in the Australia Defense Market Share

The key players in the Australia defense market include BAE Systems Plc, Boeing Co., Thales SA, Lockheed Martin Corp., RTX Corp., and Northrop Grumman Corporation.

Competitive Strategies by Key Players 

• Brand Differentiation: BAE Systems Plc and Boeing Co. focus on leveraging their global expertise and proven track record to secure major contracts, which can boost Australia defense demand.

• Product Innovation: Thales SA and Lockheed Martin Corp. invest in cutting-edge technologies and develop innovative defense solutions to meet specific needs.

• Expansion of Product Lines: RTX Corp. and Northrop Grumman Corp. expand their offerings to include a wide range of defense products and services, from cybersecurity to missile systems.

• Strategic Partnerships: BAE Systems Plc and Boeing Co. form alliances with local companies and academic institutions to enhance their technological capabilities and meet localization requirements that can increase Australia defense market value.

• Sustainable Practices: Thales SA and Lockheed Martin Corp. invest in sustainable and eco-friendly manufacturing practices to align with government policies and consumer expectations.  

Australia Defense Industry Segmentations

Australia Defense Industry Report and Forecast 2024-2032 offers a detailed analysis of the market based on the following segments:

Market Breakup by Type

• Defense Equipment Maintenance, Repair and Overhauling Services

• Defense Support and Auxiliary Equipment

• Weapons and Ammunition
  • Artillery and Mortar Systems
  • Infantry Weapons
  • Missile and Missile Defense Systems
  • Ammunitions

• Vehicles
  • Land-based Vehicles
  • Sea-based Vehicles
  • Air-based Vehicles

• Communication Systems

• Personnel Training, Simulation, and Protection Equipment

• Others

Market Breakup by Operation

• Manual

• Autonomous Defense Equipment

• Others

Market Breakup by Platform

• Land

• Airbrone

• Army

• Navy

• Air Force

Market Breakup by Region

• New South Wales

• Victoria

• Queensland

• Western Australia

• Australian Capital Territory

• Others

Competitive Landscape

Key players in the Australia defense industry design, manufacture and offer products and services supported by government investments as well as mergers and acquisitions in the market.

• ASC Pty Ltd.

• Austal Limited

• Australian Missile Corporation

• Boeing Aerostructures Australia Pty Ltd.

• Aerotec Qld Pty Ltd.

• Stralis Aircraft Pty Ltd.

• Airspeed Pty Ltd. 

• Thales Australia Limited

• Others

Australia Defense Market Regional Analysis

According to the government reports, New South Wales at USD 3,432 million, Victoria at USD 2,249 million, and South Australia at USD 1,684 million contributed the most to defense market share in Australia in 2022-23. On the other hand, New South Wales, South Australia, and Western Australia witnessed the highest gross value-added growth between 2021-22 and 2022-23.

Key Highlights of the Report

Australia Defense Market Report Snapshots

Australia Defense Market Size

Australia Defense Market Growth

Australia Defense Market Trends

Australia Defense Companies

Australia Defense Market Regional Analysis