Australia was an early adopter of capability-based planning and has evolved its methodologies and processes for force development and materiel selection using this paradigm over several decades. The presentation opens by describing the evolution of defence strategy in order to provide an historical perspective on how major equipment projects have been justified, identified, and initiated since Federation. The release of the 2000 White Paper heralded acceptance and government mandate for systematic analysis of capability development and the presentation describes the approaches that have been developed to meet this end. These approaches are then discussed against a systems engineering framework that leads to the conclusion that the contemporary approaches could well be described as capability engineering. The presentation concludes with an overview of research issues being tackled to understand and evolve this socio-technical system