Details of the AUKUS nuclear submarine agreement announced in March have highlighted the critical role the submarines will play in protecting and defending Australia, as well as the profound flow-on impacts the AUKUS trilateral security partnership can deliver for Australian industry and supply chains.
Author: Innes Willox, chief executive of the national employer association, Ai Group
The program will contribute to skills development in Australia on a massive scale. Tens of thousands of jobs will eventually be created requiring upskilling as well as skill sharing among our AUKUS partners.
Delivering maximum benefit for Australia from this historic agreement will require the highest level of cooperation between governments, defence and industry.
The AUKUS partnership is much more than submarines. Australia is making a massive technological commitment as part of the agreement.
There will be extensive spill-over benefits in technological advancement and technology sharing including around artificial intelligence and quantum technology with its promise of major developments in weapons, communications, sensing and computing technology.
Now the deal has been inked, the next major priority for the AUKUS governments will be to work to reduce the trade, regulatory, and bureaucratic barriers that could hinder the historic partnership, to create a cohesive industrial base and build the required workforce. These are among the important issues that must be addressed to underpin AUKUS success.
It is vital that strong benefits are captured for domestic industry from the AUKUS collaboration and we will be looking closely at the details around the local build and domestic supply chain aspects of the overall program to ensure that these benefits are realised.
The confirmation that South Australia will build up to eight of the AUKUS submarines is most welcome. As well, the capacity and capability of Australian supply chains will benefit from the agreement including through the Collins Life of Type Extension project.
It is important to note that a significant percentage of the program spend will come from sustainment and the majority of this will be delivered locally.
Ai Group has joined with partner organisations in the US and UK – the U.S. Aerospace Industries Association (AIA) and the U.K. trade association for aerospace, defence, security and space organisations (ADS) – to create an industry framework to operationalise the AUKUS arrangement.
An important part of that agreement is support from US industry to address a significant barrier in defence industry: the US export control system.
There is much to do in each country to ensure that our respective industries and regulatory systems are fit for purpose. Given our long history of defence trade with the US, we are particularly encouraged by many of the practical suggestions by the AIA in its statement, Operationalising AUKUS: Recommendations for the US system.
Trade takes two to work and many of the barriers faced by US firms also impact their Australian business partners and
we commend AIA for addressing those issues with specific recommendations for AUKUS-friendly changes to the US system. These include:
- Revising U.S. Code to give the U.K. and Australia licensing exemptions from International Trafficking and Arms Regulations (ITAR), similar to the current exemption for Canada.
- Amending the Defense Production Act (DPA), allowing projects in the United Kingdom, Australia, and New Zealand to be considered domestic projects, which recognises the integrated nature of the defence industrial bases. The DPA currently only treats the U.S. and Canada as domestic sources.
- Establishing an “AUKUS Industry Forum”, where the shared industry partners could provide insights into AUKUS capability planning, development and delivery with an additional focus on regulatory processes inhibiting cooperation.
Looking ahead, Ai Group and our partner AUKUS industry associations have agreed the priorities should be:
- Enhancing trade and technology transfers;
- Eliminating bureaucratic and regulatory barriers impeding the timely delivery of capabilities;
- Building shared, robust, and resilient trade and contracting systems; and
- Sharing workforce talent and expertise and strengthening international collaboration.
In terms of the workforce talent challenges that lie ahead, it was very fitting that the South Australian Government recognised 36 graduates from our South Australian Defence Industry Scholarship program on the day following the AUKUS announcement.
Delivered by Defence SA and Ai Group, the scholarship program is creating vocational and career pathways for the next generation of high skilled talent into South Australia’s defence industry.
The 36 new graduates were recognised for their endeavours as undergraduate or honours university students undertaking research and project work in the state’s defence industry.
Hosted across seventeen defence industry companies in South Australia, including Defence Primes, around 65 higher education students completing science, technology, engineering, maths, and business degrees have made lasting contributions to South Australia’s defence industry capabilities and high skilled workforce, many of them moving into defence industry roles following their internships as part of the scholarship program.
With the thousands of new jobs to be created over the next 30 years through the AUKUS partnership, these latest graduates from the Program will have guaranteed work in the defence industry for decades to come.
To find out more about the South Australian Defence Industry Scholarship Program, visit defencescholarships.aigroup.com.au.
Ai Group also delivers the Victorian Defence Industry Scholarship for the Defence Science Institute and DMTC. If you would like more information about this program, visit victoriandefencescholarships.aigroup.com.au.
Australia’s defence sector looks forward to a new phase of industry collaboration as the respective governments act to ensure the AUKUS agreement succeeds in delivering on its ambitious aims.