Defence industry sounds warning on stagnation on key phase of security pact
New report warns AUKUS's advanced military capability plan has stalled after four years, as defence companies remain unclear how to participate in the program.
AUKUS’s “Pillar 2” plan to develop advanced military capabilities has shown little progress over nearly four years amid a lack of funding and an absence of clarity over what it is trying to achieve, Australia’s defence industry has warned.
The Australian Industry Group said in a new report that companies were in the dark on how to participate in the trilateral program that was supposed to turbocharge the development of undersea drones, hypersonic missiles, artificial intelligence and quantum computing.
It came amid fresh Pentagon criticism over Australia’s level of commitment to the AUKUS partnership, and a question mark over high-level talks between the Albanese government’s most senior ministers and their Trump administration counterparts.
Richard Marles hit back at Pentagon policy chief and AUKUS sceptic Elbridge Colby, who is reviewing AUKUS’s “Pillar 1” submarine program, saying Mr Colby’s boss, US Defence Secretary Pete Hegseth, had made clear his support for the pact.
But the Defence Minister confirmed that arrangements were yet to be finalised for this year’s AUSMIN talks with Mr Hegseth and US Secretary of State Marco Rubio, who were due to travel to Australia for the annual summit but were yet to agree to lock in the visit.
The Ai Group’s report, backed by consultations with more than 100 industry stakeholders, said AUKUS Pillar 2 needed to evolve from a policy framework to a commercial initiative with a clear road map so companies could participate.
“Our research shows that while there is strong political backing for AUKUS Pillar 2, the initiative must be given clear capability and acquisition pathways and specific, designated funding,” Ai Group chief executive Innes Willox said.
“There is a lack of clarity across industry as to what AUKUS Pillar 2 is trying to accomplish. Some see it as a research program, others as a procurement initiative, and still others as about policy reform. This is hampering industry engagement and investment decisions.”
The report found there was “a perception of a lack of meaningful progress” across the Pillar 2 program, “that the avenues for industry engagement are unclear”, and that the initiative “lacks the required designated funding and resourcing to achieve its stated aims”.
It called for the government to develop a clear national strategy explaining Pillar 2’s purpose, funding and timelines, arguing the program needed to move on from “policy development” to focus on capability delivery.
“The groundwork is set, but progress must speed up,” Mr Willox said.
The report follows years of aspirational statements by all three AUKUS partners – Australia, the US and the UK – over the Pillar 2 initiative.
Both AUKUS pillars are due to be discussed at upcoming AUSMIN talks between Mr Marles, Foreign Minister Penny Wong, Mr Hegseth and Mr Rubio.
But Mr Marles said discussions were still under way about when and where this year’s meeting would occur.
With the last AUSMIN meeting in Annapolis, Maryland, this year’s talks were supposed to be hosted by Australia. But there has been chatter in diplomatic and political circles that the top US officials are reluctant to travel to Australia for the meeting.
Mr Marles said the meeting would happen this year, but details were still being ironed out.
“One way or another there’ll be an AUSMIN. I mean, we’re flexible about how that AUSMIN occurs, and we always are. It’s how AUSMIN has occurred in years gone past,” he told the ABC’s Insiders program.
Mr Hegseth pointedly urged Australia to lift defence spending to 3.5 per cent of GDP at his last meeting with Mr Marles in May.
The Australian reported on Saturday that the Pentagon believed Australia would be unable to adequately defend itself or deliver on its AUKUS commitments unless it met the “new global standard” for defence funding.
But Mr Marles said he was “in lock-step” with Anthony Albanese, who has resisted lifting Australia’s defence spending from 2 per cent of GDP.
“The focus is on what our capability requirements are and then resourcing them,” he said.
Mr Colby, the US Undersecretary for Defence Policy, cast a shadow over AUKUS by initiating an “America first” review of the agreement and calling for Australia to pre-commit future US-supplied Virginia-class submarines to a potential US war with China.
“I’ve spoken to Elbridge Colby’s boss on a number of occasions, and that’s the Secretary of Defence, Pete Hegseth … And we have an ongoing dialogue, and there is support in the United States for AUKUS,” Mr Marles said on Sunday.
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