Over the next decade, the Albanese government has committed to spend as much as $7 billion more on counter-drone systems under the 2026 Integrated Investment Program.
It raises the spending ceiling on sovereign counter-drone capabilities to $10 billion and drones to $12 billion.
Defence Industry Minister Pat Conroy said Australia had learned lessons from warfare in Ukraine and the Middle East, as he unveiled two initial contracts on Monday.
"What we're seeing here behind us would once be thought of in movies like Star Wars or in other science fiction, but this has arrived today," he told reporters at SYPAQ Systems' Port Melbourne factory.
"Star Wars is happening right now in Australia."
The $31 million in contracts paves the way for further development of next-generation counter‑drone platforms, Fractl and Corvo Strike.
Fractl, a high-powered counter-drone laser system, can track objects as small as a 10c coin at more than 100km/h and is powerful enough to burn through steel.
AIM Defence is moving to enhance the platform's ability to counter individual and swarms of drones as SYPAQ Systems develop Corvo Strike, an interceptor drone to track, target and destroy larger models.
"These two systems are designed to work in concert to provide a layered effect to protect the soldiers, sailors and aviators that do the dirty, difficult and dangerous tasks on our behalf," Major General Hugh Meggitt said.
Mr Conroy said the "cheap but high advanced" technologies would rebalance the cost-benefit ratio of shooting down drones and could one day be considered for export to like-minded allies and partners.
"You don't want to be in a position long-term, and this is common sense, to have to fly $3 million missiles to take out a $100,000 drone," he said.
"These systems are in the tens of thousands of dollars and that's the whole point of this."
Australia's 2026 National Defence Strategy, unveiled on Thursday, set aside an extra $53 billion in funding over the next decade as the nation confronts the "most threatening" strategic circumstances since the end of WWII.
The extra money will increase Australia's defence spend to three per cent of gross domestic product by 2033, up from 2.33 per cent.
The Trump administration had called on allies such as Australia to boost defence spending to 3.5 per cent of GDP.
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