A new report by the Business Council of Australia (BCA) and the American Chamber of Commerce in Australia (AmCham) shows how AUKUS Pillar II is critical to advancing Australia’s national security and economic diversification through greater innovation, skills and defence investments.
Australia’s AUKUS Pillar II Opportunity reveals that getting AUKUS Pillar II right would both strengthen Australia’s defence capability and build economic resilience, while attracting more capital to Australia for needed future industries.
Business Council Chief Executive Bran Black said the AUKUS partnership presented an opportunity to build out capabilities such as quantum, artificial intelligence and advanced cyber, which could be applied to other parts of the economy.
“AUKUS Pillar II is not just about building submarines — it’s about building national growth-generating capability and new technologies,” Mr Black said.
“By aligning our defence priorities, technological capacity, research excellence and private-sector dynamism, we can deliver the advanced capabilities AUKUS demands while creating high-value jobs and new industries.
“AUKUS can provide an ecosystem to build technologies to ensure Australia is globally competitive in a digital economy.”
AmCham Australia CEO April Palmerlee commended the report and thanked members of the joint AmCham-BCA AUKUS Pillar II CEO Advisory Group for their contributions and insights.
“Australia’s acquisition of conventionally armed, nuclear-powered submarines under Pillar I of AUKUS is ‘full steam ahead’, as President Trump declared recently in his successful bilateral meeting with Prime Minister Albanese,” Ms Palmerlee said.
“Now, we must take this critical opportunity to mobilise the private sector and accelerate the development of these advanced capabilities through Pillar II.”
“This report outlines how Australia can activate Pillar II to deliver short-term defence capability and drive long-term innovation that will enhance our national security and economic resilience, delivering for Australia and the alliance.”
The report outlines reforms are needed to unlock the benefits of AUKUS Pillar II:
- Establishing an “optimal pathway” for Pillar II delivery.
- Creating an AUKUS visa to attract specialised talent.
- Developing a shared security-clearance and cyber-accreditation framework among the three nations.
- Creation of a sovereign Technology Co-Investment Fund (Tech-CoIn).
- Accelerating the National Reconstruction Fund into dual-use technologies such as quantum, AI and cyber security to enhance benefits to the wider economy.
- Strengthening Australia’s skills base through a National Digital and AI Skills Partnership with industry, education providers and governments to ensure workforces can meet the demands of advanced and dual-use technologies.
- Reforming Australia’s R&D settings by simplifying the Research and Development Tax Incentive (RDTI) to a consistent 18.5 per cent offset above the company tax rate and removing the $150 million cap to encourage innovation and collaboration.
“Defence success now depends on innovation and private-sector mobilisation,” Mr Black said.
“We need to build a stronger national innovation base – that means reforming R&D settings, upskilling our people, and attracting the investment that turns great ideas into real capability.”
The report also proposes three projects that the private sectors across AUKUS nations could take the initiative to establish.
These are:
- Creating a testing ground for AI, where experts can check that AI and autonomous systems are reliable and safe
- Building a quantum-based network that protects sensitive information from future cyber threats
- A virtual training range where AI can mimic real cyberattacks, helping businesses and nations prepare for them
“These types of projects will give Australia a unique leadership role across major commercial and defence technologies, which will underpin a huge component of the AUKUS partnership,” Mr Black said. “By combining AUKUS investment and innovation reform, we can increase Australia’s economic resilience and back new industries that will deliver jobs and opportunities.”