AUKUS ^[1] is more than the exquisite capability of submarines. It is an agreement on values that will defend the three partners, the US, UK and Australia, and their regions from the destabilising forces of rising authoritarianism.

Ensuring the success of AUKUS requires steady progress across the three member countries as each embraces the partnership as a national endeavour in which it becomes ingrained both in the public sectors but also, vitally, in industry.

The legislation passed by the United States Congress in December 2023 authorising the sale of three Virginia-class nuclear attack submarines to Australia, brings AUKUS Pillar 1 a step closer to reality and paves the way for Australia to invest US$3 billion in US shipyards to increase capacity and accelerate production. This is positive progress and much needed ahead of the upcoming US presidential elections.

But the real promise and test for AUKUS is not limited to the anticipated transfer of the submarines—it is the experiment in how far allies can broaden and deepen whole-of-nation integration among military forces, defence industrial bases, security sectors and the innovation ecosystems on which those sectors depend.

It means that AUKUS is more than a government sector enterprise. Rather, the role of private capital in meeting the objectives and countering the challenges should match the ambition of its creation.

Public-private partnerships (PPPs) that unlock clean capital—sources of capital free from adversarial state controlling influence—can enable the AUKUS governments to pass that test. With the right incentives and access to defence investment priorities, private investors can move more quickly than governments to inject money directly into infrastructure and defence technology areas priorities, help balance accountability and risk against strategic imperatives, and provide desirable returns for investors.

The need for regular, intensive public-private engagement—enhancing ties between governments’ own domestic capital sources while forging new relations with the private sectors in AUKUS partner countries is a call that ASPI analysts in DC hear more and more from both the government and industry. Many venture capitalists, hedge fund managers, and critical mineral firms are eager to advance the AUKUS cause while advancing their own bottom lines. But they need the partner governments to provide more guidance about their needs and the opportunities for companies to fill gaps.

Adopting new models for PPPs will not be easy, but the government and the private sector working together to identify obstacles and designing solutions can help deliver the outcomes necessary for securing AUKUS partner interests across the Indo-Pacific. AUKUS partners understand that a whole-of-nation effort is required for AUKUS to be successful and there is a compelling opportunity for Australian Defence—perhaps in coordination with the US—to work directly or in parallel with private investors keen to provide alternatives to Chinese funding. Strategic engagement of the private sector is central to making AUKUS successful on the scale and in the timeframe necessary to deter China.

In discussions between the government and industry since the passage of the US legislation, ASPI has identified three central themes that articulate what some private actors think when operationalising AUKUS as one application of PPPs. The key points are engagement, transparency, and predictability.

The first theme centres on enhancing ties between governments and the private sector. ASPI DC discussions revealed a consensus among venture capitalists, hedge funds, and mining firms that the ambitious AUKUS initiative demands widespread engagement by each government in both their domestic and foreign private sectors. Part of this engagement requires recognition that a business-as-usual approach is not only insufficient to meet AUKUS’ goals but would be to the detriment of the principal strategic interest of building and sustaining deterrence in the Indo-Pacific.

The private industry actors noted that while their interest was ultimately in protecting their bottom line, moonshots such as AUKUS come with the sort of risks that businesses encounter each day. But that risk pays off, as NASA demonstrated in 1969. For AUKUS to succeed, governments must take risks, noting that some investments, technologies, and capabilities will succeed, whereas others will not, and they must be resilient in that gamble for the greater goal.

Likewise, the challenge for the private sector is finding national security investments that deliver an attractive ROI beyond their typical short-term horizons and meeting security standards to become trusted partners as AUKUS unfolds over the coming decades. There has been movement in this direction in the US with the establishment of the Office of Strategic Capital (OSC) in 2022. The OSC aims to address the deterrent of risk in emerging technology to enable significant private sector investment.

The second recurring theme is a desire for greater transparency. It was a puzzle knowing where to find the front door, deal flow, or who to contact to make investments in the defence industry. In particular, the group of industry specialists ASPI spoke to noted private actors in the US do not hear about opportunities in Australia, and it is a challenge not knowing who to talk to in the Australian government or the Defence Department regarding investment opportunities. This challenge also is heightened by the difference in the US and Australian systems when it comes to Defence’s role in investing in regional capability development and infrastructure that supports defence activities.

Concerns also surfaced about the complexity of understanding deal flows in Australia, including the review process and final award mechanisms. Despite existing access points like the Integrated Investments Program ^[2] established in 2016, and the recent Advanced Strategic Capabilities Accelerator ^[3], investing in Australia’s national defence necessitates clear access points. For instance, one private sector mining operator stressed that business needs can and often do operate in proximity to defence requirements. This particularly occurs in the resources sector where critical minerals are vital for building trusted and self-sufficient supply chains, highlighting that such public-private linkages should be leveraged. The issue of access points can potentially be addressed in the forthcoming ^[4] national defence strategy due for release in the first half of this year. Still, creating multiple integration pathways is crucial for public-private investments, capital flow, gap identification, data sharing, and building a secure critical minerals supply chain network.

The third theme that emerged was that AUKUS governments need to optimise how to balance accountability and risk management with advancing strategic interests. Delays in policy reform, development, or removal of hindering policy levers, notably ITAR, will likely have significant multiplier effects that harm vital strategic interests. Providing clear pathways to access government, moving swiftly but responsibly, building transparency, and having a higher risk appetite are all essential ingredients to move AUKUS forward. This realignment is pivotal for capability development, unlocking private capital, transitioning prototypes to mature technologies, and understanding how the private sector leverages its competitive advantage for the national interest.

There is an attitudinal shift taking place across AUKUS governments that is strategic and active and has the potential to design a new compact with the private sector to help achieve AUKUS’s goals. Harnessing this potential is vital, and actively creating pathways that enable public-private partnerships is fundamental to build and sustain deterrence against China in the Indo-Pacific.