In August, Mike Burgess, Australia’s chief of intelligence, disclosed a significant figure: foreign espionage cost the nation $12.5 billion in the past year. This figure is based on actual espionage incidents identified by Australia’s intelligence community, which included 24 major cases.

One notable incident involved hackers linked to a foreign government who infiltrated the computer network of a prominent Australian exporter. They stole sensitive documents that provided their country with a competitive advantage in contract negotiations, resulting in hundreds of millions of dollars in lost revenue for the Australian company. In another case, an Australian defense firm fell victim to a foreign operative who posed as a client. This individual introduced a malware-infected USB stick into the company’s laptop, leading to the theft of product blueprints. Within months, a foreign competitor began mass-producing counterfeit products, costing the Australian manufacturer millions.

Australia’s approach to addressing espionage is innovative, as it quantifies a national security threat that often remains hidden from public view. The government has prioritized espionage as a core national security issue. It has established structured partnerships with the private sector, allowing for real-time information sharing and threat disruption between government and businesses.

This situation serves as a cautionary tale for Canada, which, as an open economy with many innovative companies, is a prime target for espionage. Canadian firms have previously experienced theft of prototypes before patents were filed. Adversaries have also exploited stolen insights into research and development processes to gain an advantage in global markets. High-stakes business deals have collapsed without explanation, only to later be connected to covert theft.

While Canada has not released an estimate of the financial impact of espionage, Australia’s findings suggest that Canadian businesses may be losing tens of billions of dollars annually due to similar threats. However, the financial losses are only part of the issue. Australian officials emphasize that the most severe consequences of espionage—such as loss of strategic advantage, erosion of sovereign decision-making, and compromised military capabilities—cannot be measured in monetary terms.

Despite the increasing risks, Canada lacks a formal framework for addressing espionage in collaboration with industry. Current security measures rely heavily on informal outreach and ad hoc conversations, leaving Canadian companies vulnerable to sophisticated state actors. This gap in institutional support also limits security agencies' understanding of adversaries' activities within the Canadian economy.

Prime Minister Mark Carney’s upcoming National Security Strategy presents an opportunity for Canada to address these shortcomings. Canada could benefit from adopting Australia’s model by: - Directing security agencies to form institutional partnerships with industry, including formal intelligence-sharing agreements, sector-specific threat assessments, and joint preparedness exercises. - Establishing dedicated liaison roles within security agencies to provide targeted Canadian firms with clear points of contact for emerging threats. - Reallocating government resources to ensure security agencies have the necessary personnel and technology for regular, secure interactions with industry.

The cost of inaction is significant. Australia has calculated the potential economic impact of unchecked espionage. For instance, the theft of trade secrets from a publicly traded company could result in a $900 million loss for Australian shareholders. Additionally, espionage-related sabotage of critical infrastructure could inflict a $6 billion hit to the economy within a week. The erosion of public trust in government security measures further complicates the issue.