Australian Prime Minister Anthony Albanese (left), US President Joe Biden (centre), and UK Prime Minister Rishi Sunak © Photo by Tayfun Coskun/Anadolu Agency via Getty Images
Australian Prime Minister Anthony Albanese (left), US President Joe Biden (centre), and UK Prime Minister Rishi Sunak © Photo by Tayfun Coskun/Anadolu Agency via Getty Images

AUKUS agreement sees Australia sign biggest procurement deal in its history

20 March 2023

The new AUKUS defence programme represents the biggest procurement project in Australian history and will create huge supply chain opportunities, according to the government.

Australia, the UK and US officially launched their trilateral security pact under which the latter two countries will assist Australia in acquiring nuclear-powered submarines.

Defence Minister Richard Marle said the deal represents, “the biggest defence procurement, in fact… the biggest procurement, in Australia’s history”.

Agreements with the US and UK that South Australia will produce up to five of the UK-designed Virginia-class nuclear-powered attack subs have led to high hopes for Australian supply chains.

The government has said the AUKUS programme would cost an estimated A$368bn and generate up to 20,000 jobs.

National employer association Ai Group’s chief executive Innes Willox described the project as, “probably the biggest engineering initiative” for Australia since the Snowy Mountain hydroelectric scheme, which was completed in the mid-1970s.

"The programme 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,” he said.

However, the exact percentage that Australian companies will contribute to the AUKUS supply chain remains unclear.

The defence ministry said: “Businesses right across the country in every state and territory will have the opportunity to contribute to and benefit from these opportunities over decades.

“Over the next four years, this will see A$2bn in expected investment into South Australia, and a further A$1bn in Western Australia.

“This commitment from the Australian government will require funding for the phased approach to amount to around 0.15% of GDP per year, averaged over the life of the programme.”

Willox added: "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.”

The Australian Industry & Defense Network (AIDN), a defence industry association for SMEs, called on the Albanese government to ensure as much activity as possible is undertaken by Australian companies.

“This is a unique opportunity for Australia, the US and the UK to develop a common supply chain to ensure that the full benefits of AUKUS can be realised,” the AIDN said.

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