Technology advancement is critical, but it is not the only essential ingredient for the success of AUKUS Pillar II. Without progress on two unheralded ‘functional’ areas – information sharing and innovation – which underpin the technological areas of Pillar II, as well as trilateral coordination across the board, long-term success will remain elusive.

Almost two and a half years on from the initial announcement of AUKUS, the first significant shift of focus from Australia’s planned acquisition of nuclear-powered submarines came in the form of a joint statement from the AUKUS Defence Ministers Meeting in December 2023. The announcement represented a more substantial focus on Pillar II and evidenced some progress, albeit incremental, in operationalising some of the advanced capabilities.

The 1 December announcements largely centred on the six technological areas – AI and autonomy, advanced cyber, quantum, undersea capabilities, electronic warfare, and hypersonics and counter-hypersonic capabilities – including new exercises and initiatives. Some included bundling existing programs into the AUKUS banner, such as the Deep Space Advanced Radar Capability, which started in 2017 and had locations pencilled in for Australia, the United Kingdom and United States before AUKUS was launched.

Two weeks later, a UK-provided AI algorithm was used – for the first time – to process data on a US Maritime Patrol Aircraft and this week it was announced that an Australia-hosted trial was conducted last year where US and UK robotic platforms were targeted with electronic warfare, electro optical and position, navigation, and timing attacks by Australian scientists – all framed under Pillar II.

These announcements are commendable; however, key questions remain: What is AUKUS Pillar II delivering beyond business-as-usual capability innovation and collaboration? How can AUKUS Pillar II harness industry’s enthusiasm in Australia?

Former Australian Prime Minister Scott Morrison set the AUKUS objective at the time of its creation as "build[ing] the trilateral capability beyond the subs." To achieve this, focus is needed on trilateral coordination and industry engagement mechanisms, and the functional areas of innovation and information sharing, which underpin the success of Pillar II’s technological capabilities.

Prior to this announcement, these functional areas had received limited attention since April 2022. The December 2023 announcements on information sharing and innovation were a very welcome step in setting AUKUS up for success. This includes the trilateral ‘AUKUS Innovation Challenges’ to be launched in early 2024. The first ‘Challenge’, focused on electronic warfare, will see “companies from across all three innovation ecosystems” compete for prizes.

AUKUS partners also flagged that they are aligning their “defense innovation ecosystems by creating seamless opportunities for trilateral cooperation.” However, more must be done. Industry and academia are enthusiastic about being involved in Pillar II. Their integration was recognised with the much-welcomed launch of the ‘AUKUS Advanced Capabilities Industry Forum’ and an ‘AUKUS Defense Investors Network.' Yet, from the outside, Defence risks doing well in its business-as-usual innovation and integration, including under AUKUS, but it is hard to see how they will deliver transformative innovation.

Australia needs AUKUS to drive a fundamental step-change in capability development. Expanding innovation ecosystem engagement and coordination mechanisms to a broader set of industries will be key to building linkages across sectors. Devising solutions on core issues like intellectual property management must be a priority if truly trilateral innovation is to be part of Pillar II’s ambition.

Not long before the passage of the US’ 2024 National Defense Authorization Act, which exempts Australian goods and technology from US export control licencing requirements, Deputy Prime Minister Marles introduced Australia’s own export controls reform to parliament. Under the Defence Trade Controls Amendment Bill 2023 there would be an AUKUS-wide “export license-free environment which will support industry, higher education and research sectors” in all three countries, estimated by Defence department modelling to be worth $614 million to the Australian economy across the next 10 years. The Bill would expand on current controls to make the unauthorised supply of listed defence and dual-use technologies to non-AUKUS foreign persons or entities within Australia, or between non-AUKUS entities overseas – with some exceptions – criminal offences.

Responses to the bill have raised concern over the changes jeopardising research collaboration with non-AUKUS nations, especially in the university sector, and compromising innovation. Despite being introduced to Parliament mere weeks after being first announced, the bill, now with a parliamentary committee for inquiry that has sought public submissions, is unlikely to progress before mid-2024.

Mechanisms that foster ‘mission’-based innovation and remove barriers to information sharing, technology transfer and collaboration are vital to the success of Pillar II, whatever form they come in, be that legislation or policy change.

There is a need to trilaterally coordinate the implementation, messaging and measurement of Pillar II. As Susan Gordon, former Deputy Director at ODNI, aptly suggested, the trilateral alliance requires a shared ‘quest’ or aspirational goal to serve as a beacon to guide Pillar II advanced capabilities. Jen Moroney of RAND emphasised the need for a comprehensive framework to effectively manage and structure the collaborative efforts of AUKUS. Embracing such suggestions would lead to a much-improved trilateral approach.

This represents an opportunity for the three governments to make a more consistent, coherent and visible case for cooperation across Pillar II. The December 2023 announcement is a great start, but trilateral announcements should not only articulate the necessity of collaboration, but also how it will be harmonised across all three governments and their bureaucracies.

Equally important is the role played by their respective technology and industrial ecosystems in propelling this agenda. While the need for intelligence and technical secrecy will likely persist, enhancing transparency on the impact of these technologies on our capabilities and their coordination presents an avenue for progress. Harnessing the enthusiasm of industry and researchers and providing mechanisms to integrate innovations into Defence is an opportunity and priority we must embrace.

Deputy Prime Minister Richard Marles noted that the December 2023 meeting will be “regarded as a critical moment in the history of Pillar II." For that to be the case, delivery on AUKUS Pillar II will need to transcend business-as-usual defence collaboration, engage and harness industry enthusiasm and substantial expertise and deliver significant capability.