In 2025 the Australian Government introduced significant reforms to the Commonwealth Procurement Rules (CPRs), lowering procurement thresholds for economic benefit assessments, strengthening preferences for local businesses, and formally defining “Australian business” in procurement policy.
The Sovereign Australian Prime Alliance (SAPA) tasked DeltaPearl Partners to set out arguments for and against stronger preferences for Australian defence suppliers (services and materiel) in Australian Government procurement using robust, quantitative evidence. Both government and industry have expressed an interest in understanding the actual economic returns that might be gained from a relative increase of procurement spending with Australian defence suppliers, hence the completion of this analysis.
Our central finding is clear: a strategic reallocation of Defence procurement funding is one of the most powerful policy levers available to the Australian Government to maximise domestic economic benefit, create high-value jobs, and build genuine sovereign capability. This relates to procurement of both services and materiel. The economic analysis and modelling in this report demonstrate that prioritising genuinely Australian-owned and operated prime contractors delivers substantial fiscal and strategic benefits, termed the “defence dividend.” This approach minimises profit leakage offshore, strengthens domestic supply chains, and fosters high-value job creation, innovation, and export potential. However, the CPRs and current framework do not deliver adequately on these goals.
Three budget-neutral scenarios were modelled (i.e., assuming no change to the Defence budget set out in the National Defence Strategy) to quantify the national benefit of a revised procurement approach. All three scenarios create positive impacts through increased local jobs, taxes, and indirect supply chain stimulus.
