In September 2021, Australia, the UK, and the US formed the AUKUS security partnership. Credit: DLeng/Shutterstock.

The Australian government has announced an investment of A$262m ($163m) aimed at bolstering the local defence industry and establishing a supply chain for nuclear-powered submarines under the AUKUS agreement.  

Over the next two years, this initiative is set to support approximately 125 businesses across Australia, enabling them to meet the requirements of submarine construction and maintenance within the AUKUS framework.  

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This move follows the AUKUS Naval Nuclear Propulsion Agreement in August 2024, which came into effect recently. 

It paves the way for the transfer of Virginia-class submarines from the US to Australia starting in the 2030s, alongside the sharing of information and equipment from the UK for Australia’s SSN-AUKUS submarines.  

In September 2021, Australia, the UK, and the US formed the AUKUS security partnership.  

In March 2023, they revealed a plan to develop nuclear-powered submarines in Australia while upholding strict non-proliferation standards. 

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Meanwhile, Australia’s existing Collins-class submarines will undergo a life-of-type extension to keep them operational and available until the 2040s, aiding the transition to Australia’s future nuclear-powered submarines. 

The latest financial injection is expected to enhance existing programmes and introduce new ones, with the initial funding directed towards three areas.  

The Defence Industry Development Grants Program will provide eligible businesses the necessary funds to improve security, acquire skills, obtain international accreditations, and invest in manufacturing capital equipment.  

The expansion of the Global Supply Chain Program is designed to create commercial opportunities for Australian suppliers by connecting them with major submarine industry suppliers from the UK and US.  

Furthermore, the Defence Industry Vendor Qualification Program will be expedited to facilitate the inclusion of Australian products, such as mechanical assemblies and electro-mechanical components, into US submarine supply chains.  

Efforts will also be made to work with AUKUS partners to simplify processes and mitigate regulatory hurdles for Australian companies.  

Deputy Prime Minister Richard Marles said: “This new AUKUS agreement now in effect will further bolster the strong continued progress the Australian Government is making with AUKUS partners to deliver Australia this vital capability. This is a further demonstration that AUKUS is happening now. 

“The momentum we are building for Australia’s conventionally-armed, nuclear-powered submarine program is exemplified by the workforce we continue to build and the growing opportunities for Australian industry.”