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Australia’s defence industry is facing an intensified espionage threat, with the nation’s security agency warning that foreign intelligence services are aggressively targeting companies developing critical military technologies.
The Australian Security Intelligence Organisation (ASIO) has urged defence businesses to harden their security as new data reveals the economic toll of espionage. A joint ASIO-Australian Institute of Criminology report, The Cost of Espionage, estimates that espionage stripped $12.5 billion from the Australian economy in 2023–24 – a figure analysts believe significantly understates the true scale of the damage.
ASIO Director-General Mike Burgess said foreign governments have developed “an unhealthy interest” in Australia’s maritime and aviation capabilities, as well as dual-use technologies emerging from the defence industrial base.
“Australia’s defence sector is a top intelligence-collection priority for foreign governments seeking to blunt our operational edge, gain insights into our readiness and tactics, and better understand the capabilities of our allies,” Mr Burgess said.
ASIO highlighted a recent case involving an Australian defence contractor that had developed and commercialised a world-leading technology. After a period of strong international sales, the company suddenly experienced a collapse in demand.
Customers began returning increasing numbers of supposedly malfunctioning products. But the items were not genuine – they were cheap counterfeits. Investigators later discovered that hackers had stolen the company’s blueprints a year earlier.
The breach occurred after staff attended an overseas defence industry event and were approached by a persistent local attendee who insisted on sharing material via USB. When the USB was plugged into a company laptop, it installed malware that enabled remote access to sensitive files. ASIO believes the individual was almost certainly working for a foreign intelligence service that later passed the stolen designs to a state-owned enterprise, which produced knock-offs at scale.
The incident, ASIO said, shows the direct and tangible commercial harm caused by foreign espionage – and the risk it poses to Australia’s sovereign defence capability.
Mr Burgess said Australian defence companies must urgently strengthen their security posture by building a culture that understands the threat, recognises vulnerabilities, and manages risks appropriately.
He reminded government employees and security-cleared personnel of their obligation to report suspicious approaches. Such incidents should be raised with security managers and recorded through formal contact reporting.
Other industry workers can report concerning behaviour through ASIO’s Notifiable Incidents, Threats or Reportable Observations (NITRO) portal at nitro.asio.gov.au, or by calling the National Security Hotline on 1800 123 400.
The full Australian Institute of Criminology report is available at asio.gov.au/coe.
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