Australia’s foreign policy and place in the world have long been considered the domain of diplomats, defence officials and national-security decision-makers in Canberra. There are no departments of foreign affairs or defence, or intelligence agencies, in Australia’s state and territory governments.

It is the federal government that is responsible for maintaining and developing the US–Australia alliance, including under difficult and unpredictable presidents like Donald Trump. Canberra determines how Australia deals with hostage-taking in Iran, responds to Chinese cyber intrusions and works with the Pacific on climate strategies. It also decides which foreign militaries we partner with to build capability and strengthen deterrence.

But the reality is that, in today’s interconnected and digital world, subnational governments are increasingly influencing the development of Australian foreign and security policies and the extent to which they are implemented. The power of the states and territories, and their diplomatic influence in places like Washington, are getting harder to ignore.

In parallel with the federal government, our states and territories are reaching out globally, seeking not just cultural and social ties, but substantive partnerships that can offer economic prosperity yet also result in security risks. Whether pursuing direct foreign investment or providing policy assurances to foreign investors and governments, state and territory officials have played a key role in Australia’s economic success. They’re often astute at building the kinds of people-to-people connections that deliver deals and projects quickly.

But not all of their interactions and decisions have been consistent with national-level policy. Some, like the Northern Territory’s 2015 decision to lease the Port of Darwin to Chinese company Landbridge for 99 years, revealed weaknesses in the system at both national and territory levels. Victoria’s signing of a memorandum of understanding on China’s Belt and Road Initiative in 2018 was a wake-up call for federal policymakers. In response, and more broadly due to the realisation that China was using subnational diplomacy to undermine Australia’s federal system and as a workaround to national policy it didn’t like, the federal government introduced the Foreign Relations Act 2020 to deal with such inconsistencies.

Covid-19, meanwhile, was a lesson in how powerful the states and territories can be in their own right. Today, our states and territories are increasingly on the international stage engaging in diplomacy, largely in search of trade deals and investment opportunities. Australia’s premiers and chief ministers are building their global presence and influence by meeting ambassadors, signing agreements with foreign governments and leading delegations overseas.

Scroll through the media of state and territory officials this year and you’ll find agreements with Indian states, trade deals with Vietnam and attendance at global dialogues. In September, Northern Territory Chief Minister Natasha Fyles visited ^[1]Washington ^[1] to ‘advance the territory’s role’ on issues such as the US Marine Corps’ rotational force in northern Australia and met with senior officials including Ely Ratner ^[2], the influential US assistant secretary of defence for Indo-Pacific security affairs. Such subnational diplomacy seems clearly in the national interest.

But inconsistencies remain. Earlier this month, new Victorian Premier Jacinta Allan held a meeting with Chinese Ambassador Xiao Qian at which she described ^[3]the Victoria–China relationship as ‘a partnership built on respect, trust and friendship’. This is quite different from Australia’s recent experience, reflected in both public attitudes towards China (only 15% of Australians surveyed by the Lowy Institute in 2023 said they trusted China to act responsibly in the world) and the position of the federal government, which steers away from parroting Beijing’s language on mutual trust and is ‘seeking a stable relationship with China’.

State and territory international influence is particularly important in Australia’s alliance with the US and for realising the full potential of the AUKUS pact.

Both the alliance and AUKUS need the kind of grassroots, local-level support that subnational governments can help build and maintain. AUKUS in particular would benefit from a social licence that is still being constructed. For AUKUS to thrive, the building and sharing of economic activity, industrial bases, technological innovation, workforce education and skills development that’s needed will take place not only in Canberra and Washington, but in diverse locations spread throughout cities and remote areas across both large countries.

It would be wrong for policymakers in Canberra to view the states and territories as simply passengers in this journey or only impediments; they need to be partners. But, for such a partnership to work, the states and territories will need to focus not only on what is in their own interest, but what is the national interest—and for some that is a change.

Achieving AUKUS—the most ambitious defence-, security- and technology-focused endeavour Australia has forged—will require a level of strategic cooperation, collaboration and collegiality with the states and territories that Australia hasn’t had since World War II. Alignment of interests and effort will require collective and strategic statecraft that hasn’t always come naturally to Australia and our bureaucracy.

Prime Minister Anthony Albanese’s visit to Washington next week provides the opportunity to further build this more integrated approach to statecraft, while also providing a moment for both governments to consider the respective and collective opportunities for their subnational partners to accelerate and prosper from AUKUS.

In a new ASPI report ^[4], released today, we recommend that the government work with the US to place subnational diplomacy on the AUSMIN agenda, consider a new branch and ambassador for subnational diplomacy in the Department of Foreign Affairs and Trade, boost the Department of Prime Minister and Cabinet’s capacity to support subnational AUKUS engagement and set up secondments into the states and territories. Australia’s intelligence community is already building subnational outreach and engagement, but it should use the 2024 independent intelligence review to explore whether new mechanisms are needed, for example, to support Australia’s preparedness in the face of a crisis. Finally, the prime minister–led intergovernmental National Cabinet should ensure it continuously scopes out more space on its agenda to focus on international affairs and security challenges.

The US and Australian federal governments should identify how to increase collaboration with subnational levels to harness the power of collective action for both economic prosperity and national security. This collaboration will also help Australia and the prime minister prosecute our national interests and global objectives in Washington, including keeping a US government that’s pulled in many directions focused on Australian priorities, from Indo-Pacific stability to implementing AUKUS. Encouraging and sharpening that focus is in the interests of Australia’s states and territories as well.