We need a national wake-up call if we are to avoid letting our greatest industrial opportunity slip.
I am in Adelaide this week, taking part in discussions with Premier Peter Malinauskas and the Committee for Adelaide on the economic opportunities and challenges ahead for South Australia. And you can’t talk about South Australian economic opportunity without talking about AUKUS.
That said, it would be a serious mistake to see AUKUS as Adelaide-centric policy. For a start, we are going to need an east coast submarine base too.
To date, SA is clearly the Australian region showing the most urgency in mobilising towards the industrial and economic change needed to see AUKUS succeed. But as Premier Malinauskas has identified, our whole nation needs to step up too.
The complexity of the tasks set out in Pillars 1 and 2 of AUKUS will need a Team Australia effort – national policy settings in education, migration, taxation, housing and infrastructure will be critical. As Premier Malinauskas said, it will be our “biggest industrial undertaking in the history of the federation”. Federation is the key word there.
Pillar 1 (the submarines) requires 20,000 more direct workers over the next 30 years. That’s a national challenge that will require massive co-ordination across governments. Perhaps controversially, our migration strategy must be part of that picture.
We also rank 55th (just behind Vietnam and well behind New Zealand) in the Coursera 2024 Global Skills Report; that too will require national urgency to turn around if we are to gain the advanced capabilities needed for AUKUS.
Succeeding will also yield nationwide rewards in deeply modernising our industrial base and wider economy. By deepening our skills base and technological know-how we will see tangible benefits throughout our economy, with diverse industries becoming more productive, better paid and future-safe.
Just as it’s a mistake to identify AUKUS only with SA, it would also be a serious mistake to define AUKUS only as defence policy. It has the potential to drive us towards a once-in-a-lifetime, whole-of-economy transformation. Almost all technologies and skills AUKUS investment will help us develop will have significant utility across all areas of our economy.
Yes, under Pillar 1 the acquisition and building of nuclear-powered submarines in Australia is a critical augmentation of our defence capabilities. But there is even bigger whole-of-economy potential (and more immediately realisable timelines) within the “advanced capabilities” stream of Pillar 2. This needs to be a bigger part of our national debate and drive a greater sense of national urgency.
Under Pillar 2 Australian industry will collaborate closely with US and UK counterparts to develop a seamless three-way research and innovation system that will give us advantages in technologies such as quantum computing and AI, hi-tech manufacturing and engineering skills.
The partnership will open doors for many kinds of Australian businesses to participate in global supply chains and projects, expanding their market reach. These advantages will flow into far more of our industrial base than subs. We can also start realising some of these benefits right now, not just rolling out of shipyards in decades to come.
Australian research and development will be another benefit from AUKUS policy. Our 2021-22 R&D spend of 1.68 per cent of GDP is half the OECD average, down from about 2.25 per cent in 2008-09. AUKUS should be catalysing a huge uptick.
Relationships between universities, research institutions, industry and governments across the nation will need more focus and guidance. They will need a higher tolerance for failure as it is likely we will fail (hopefully fast) many times and in many areas before we show success. Investment in our skills and research under AUKUS momentum will be the golden goose that keeps on laying, because these strengths will extend beyond defence. After all, the precursor of the internet, ARPANET, began as a defence research project.
And the money is there. Defence is a priority funding area for the $15bn National Reconstruction Fund, and funds could be going towards research and skills in critical technologies that boost our defence and other industries.
The shift we need to see is from viewing AUKUS as defence policy to viewing it as nation-building policy – or even economic future-proofing policy. AUKUS isn’t just about South Australian subs. To dismiss it as such is a gross disservice to our national potential.
The correct question to be asking is: How does Australia use this once-in-a-generation motivating factor to modernise and diversify our economy?
And I can only hope that every government is as excited about answering this question as we are.
Bran Black is chief executive of the Business Council of Australia
More Coverage
Only recession can make ‘ruthless’ Victoria great again
Not all is lost. Victoria has a clear competitive advantage across four world-beating exports and these mines won’t run dry. But first there will be pain.
RBA late to start raising rates, says Bullock
Conceding that her predecessor Philip Lowe should have started raising interest rates earlier, Michele Bullock on Friday said the RBA board’s concern it could be acting too late again spurred it to cut the cash rate on Tuesday.