"The Federal Government’s decision today to acquire nuclear submarines as part of the new ‘AUKUS’ trilateral relationship between the United States, the United Kingdom and Australia has profound industrial and geo-political implications for Australia," Innes Willox, Chief Executive of the national employer association Ai Group, said today.

"This is one of the most consequential defence capability decisions ever taken by an Australian government. It has undoubtedly been driven by the Government’s assessment of our regional conditions and will have implications for our political and economic relationships with the United States, the UK, China and France, as well as perhaps Europe more broadly given France’s influence on European institutions.  One area to immediately watch will be if Australia’s proposed FTA with Europe, which is currently under negotiation, is impacted.

"Our strategic relationship with key regional partners such as India, Japan, Singapore and New Zealand will also undoubtedly shift as this new security partnership takes hold.

"This is obviously a devastating blow to Naval Group and their staff in Australia who have been heavily invested in the current submarine project. Utilising the skills and capabilities already developed will be important to the project’s success.  We should not be quick to write-off the work already done on further developing Australi’s skills base.

"Industrially, the announcement that the submarine will continue to be built in South Australia with supply chains across the country is welcome.  A key issue will be when that production will start, as well as how sustainment, which takes up to 70 per cent of work done on a submarine, will be undertaken.  Any decision to simply import submarines from either the US or UK without Australian industrial input would be a setback for developing our domestic capacity and capability.

"Naturally, at this early stage, there are many questions about the project that need to be worked through, including achieving an equitable outcome for any existing commercial agreements.  This would include businesses and individuals that have invested for their role in the previous submarine plan - including in training - and how to incorporate them in the new arrangements.

"There are also issues to work through on how Australian capability is developed and embedded in areas such as cyber capabilities, artificial intelligence, quantum technologies, and additional undersea capabilities.

"Defence needs to immediately bring strong collaboration and cooperation with industry to turn this announcement into a reality and to leverage from it the development of competitive domestic capabilities.

"The assessment of our geopolitical circumstances which clearly underpins this decision and change in direction means that we cannot afford to wait until the late 2030s for delivery of a new fleet of submarines.  A key metric of success will be if working submarines are delivered and sustained in Australia ahead of the schedule that was already in place," said Mr Willox.

Media Enquiries:

Tony Melville - 0419 190 347