Mr Conroy made those remarks at a National Press Club address after the contract was announced.
State Member for Euroa Annabelle Cleeland, expressed frustration over the decision, labelling it a devastating blow for the local community.
The now scrapped agreement would have seen the manufacturing of 155-millimetre M795 artillery ammunition at Thales’ Benalla munitions facility.
The deal would have seen Thales produce 15,000 rounds of artillery ammunition annually by 2028, with the capacity to scale up to 100,000 rounds.
A Thales Australia spokesperson said it was aware of the decision by the Department of Defence to reassess its manufacturing approach on 155mm M795 ammunition.
“As a Guided Weapons and Explosive Ordnance strategic partner, we are continuing to work with the Department on its reassessed 155mm requirements,” the spokesperson said.
Ms Cleeland said the move robbed Benalla and the broader north-east region of significant opportunities for jobs, infrastructure development and long-term economic growth.
“This is yet another example of Labor abandoning regional Victoria — pulling vital investment and jobs from towns like Benalla while pouring billions into Melbourne projects,” Ms Cleeland said.
“Benalla was set to become a national hub for advanced defence manufacturing, delivering up to 550 secure jobs.
“With the stroke of a pen, Labor has torn that away, burying the decision in a vague media release that failed to even mention Benalla.”
Beyond the direct employment opportunities, the partnership promised major flow-on benefits to the community.
“During meetings with contractors, we were told that a portion of the investment would be returned directly to Benalla as a legacy project,” Ms Cleeland said.
“We identified urgent needs — housing to avoid pressure on the local rental market, relevant TAFE courses to upskill workers, and new accommodation for Benalla Health staff.
“These were real, tangible benefits that would have made a lasting difference for our community. They are now gone because of this decision.”
The Department of Defence released a statement following the decision to cancel the contract.
“The 2024 National Defence Strategy and the 2024 Australian Guided Weapons and Explosive Ordnance Plan highlighted the importance of establishing and uplifting Australia’s domestic missile and munitions manufacturing capabilities,” the statement read.
“The 2024 Integrated Investment Program includes $16 billion to 21 billion over the decade to invest in Guided Weapons and Explosive Ordnance priorities.
“In 2023, Defence tendered for the establishment of a domestic forging capability to manufacture 155mm M795 artillery projectiles.
“Since then, there have been notable changes in the global defence industrial base. This has included a surge in international demand for naval 5-inch and a significant increase in global capacity to produce 155mm projectiles.
“This has required Defence to reassess its manufacturing approach on 155mm projectiles.
“In addition, Defence will work with industry to accelerate production of naval 5-inch for the Australian Defence Force, and explore export opportunities to support international partners.
“As a result, Defence has decided to cease the current procurement activity and will refine its 155mm projectile requirements, prior to re-approaching the market.
“Defence remains committed to working with industry to deliver a 155mm M795 forging capability by 2028, producing 15,000 rounds each year with further additional capacity that will be determined as part of the re-approach to market.”
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