Australia nuclear submarine deal signals future investment in local defence businesses

Small businesses in the defence industry are closely following a deal between the Australian, US and UK governments that will help Australia build nuclear-powered submarines.

Prime Minister Scott Morrison said in a statement today that the UK and the US have agreed to a new security partnership called AUKUS, which aims to manage new challenges in the Indo-Pacific region by modernising Australia’s defence capabilities.

The partnership’s first initiative will see Australia leverage the US and UK’s military experience to acquire nuclear-powered submarine technology. But the announcement has also cast doubts over the government’s $90 billion program with France’s Naval Group to acquire 12 new Attack-class submarines.

Horden Wiltshire, chief executive of Acacia Systems and former Submarine Commanding Officer in the Royal Australian Navy, expects the new partnership will lead to more investment in Australia’s sovereign defence capabilities.

“It’s too early to tell which way it’s going to go but it is good news for businesses if the government continues to invest in sovereign capability,” Wiltshire tells SmartCompany.

Wiltshire says the government is yet to officially announce whether the deal with France’s Naval Group has been scrapped, although “everyone is drawing that conclusion”.

As part of the AUKUS partnership, Australia will establish a Nuclear-Powered Submarine Taskforce in the Department of Defence to lead the acquisition of the eight nuclear-powered submarines.

Wiltshire says adding nuclear-powered submarines to the navy will significantly enhance its capability as nuclear power gives vessels speed, increases endurance and removes the need to recharge batteries.

Acacia Systems, a defence software engineering company based in South Australia, has supported the Australian Defence Force for three decades and welcomes the government’s new security partnership.

“From our perspective, we think this will present many opportunities but it’s still early days,” Wiltshire says.

Wiltshire says government policy over the past five years has sought to benefit thousands of local submarine suppliers, including in the platform systems and combat system supply chains.

“There has been a real change in government policy and Acacia has certainly been the beneficiary of that change in policy,” he says.