Australia’s innovation, science and technology environment: Providing a rationale for universities’ contributions to AUKUS Advanced Capabilities

Executive abstract

Few nations depend on their college sector as a lot as Australia does to energy their nationwide analysis and improvement (R&D). Australian universities carry out over a third of the nation’s R&D general — putting the nation eighth amongst OECD members in 2020 for the share of analysis carried out by universities, forward of friends such because the United Kingdom (24%), France (21%) or South Korea (8%). Combined with their entry to cross-disciplinary experience and world-leading analysis amenities, universities anchor Australia’s sovereign analysis functionality — delivering each important R&D and strategic expertise pipelines.

In this context, Australian universities have a main position to play within the improvement of the AUKUS Pillar II Advanced Capabilities enterprise. This is clear on condition that they produce internationally recognised analysis throughout all Advanced Capabilities workstreams, exhibiting notably robust proficiency within the fields of quantum and hypersonics.

Yet, 4 years following the announcement of AUKUS, the Australian college sector’s contribution to R&D in help of Pillar II has been exceptionally modest. Despite their aggressive edge in R&D and the massive reserves of innovation energy, each particular AUKUS-related constraints, in addition to broader systemic challenges dealing with Australia’s R&D panorama, have continued to hinder universities’ capacity to contribute to Pillar II.

It is in opposition to this backdrop that this temporary makes the case for larger college involvement in driving and cultivating the Innovation, Science and Technology (IS&T) ecosystem wanted to realise AUKUS Pillar II aims.

To date, two structural realities shaping Australia’s R&D have restricted college involvement and surprised its innovation ecosystem. First, the Australian Government has not recognised the complete scope and potential of university-based R&D outputs — each for defence imperatives and for the financial system writ massive. This has contributed to their omission from key AUKUS initiatives, constraining their position in shaping AUKUS-related R&D. Second, over the previous fifteen years, Gross Expenditure on R&D (GERD) in Australia has declined to strikingly low ranges, reaching a slim 1.68% of GDP, effectively behind the OECD common of two.7%. Largely pushed by a fall in authorities funding in R&D as a share of GDP and a lower in massive enterprise funding in R&D, this has hampered Australia’s already restricted nationwide capability to translate primary analysis into greater Technological Readiness Levels (TRLs).

Given Australia’s restricted dimension and capability in contrast to its AUKUS companions, it’s crucial that Australia enacts a whole-of-government method to R&D to catalyse a sustained, self-reinforcing cycle of Defence-related innovation that helps its AUKUS obligations and ambitions.

At universities, the drop in GERD has been exacerbated by the hovering prices of analysis in addition to a siloed and fragmented authorities R&D funding panorama. This has added to traditionally low ranges of funding for experimental analysis and of industry-research collaboration — undermining the potential for universities to advance R&D into deployable options and in flip, permeating Australia’s efforts to nurture a Defence IS&T ecosystem.

Moreover, these numerous pressures assume a distinctive character in AUKUS and broader defence-related educational analysis due to universities’ position in society and within the financial system. First, the wants of defence and security-based analysis usually collide with some conventional educational ideas round approaches to transparency and institutional autonomy. Second, they require navigating university-specific challenges, reminiscent of educational profession incentives and trajectories, and even the social license inside establishments to conduct defence-related R&D.

Together, these challenges have hindered engagement between Defence and academia. While mechanisms and schemes do exist for universities to have interaction in AUKUS Advanced Capabilities workstreams, they continue to be disjointed, poorly mapped and embedded inside a declining R&D panorama. As a consequence, the Australian Government has forfeited alternatives to leverage a key nationwide strategic functionality, limiting universities’ readiness to lean into AUKUS Pillar II R&D.

The internet result’s that Australia is much from being an ‘innovation nation’ or an ‘innovation economy’. The Australian R&D ecosystem, and specifically the college analysis sector, isn’t match for objective. The lack of presidency funding, coordination and recognition of the worth of the sector imply that Australia isn’t effectively positioned to execute the AUKUS enterprise. Given Australia’s restricted dimension and capability in contrast to its AUKUS companions, it’s crucial that Australia enacts a whole-of-government method to R&D to catalyse a sustained, self-reinforcing cycle of Defence-related innovation that helps its AUKUS obligations and ambitions.

In an period of strategic competitors dominated by new technology areas reminiscent of AI, quantum, and automation — all AUKUS Pillar II areas — Australia is at grave danger of being left behind by the developed world.

Recommendations

1. Strengthened governance and strategic coordination of the R&D panorama

The Australian Government ought to undertake a whole-of-government method to R&D and sign clear analysis priorities and alternatives for universities to embrace and ship Pillar II-related R&D. This would require leveraging and accelerating present coordination mechanisms, such because the Australian Defence Science and Universities Network (ADSUN) and the nascent Defence Research Centres (DRCs), to streamline coordination and prioritise centered and impactful R&D.

2. Improved engagement between Defence and universities

The Australian Government ought to construct upon and improve its engagement with universities. This consists of strengthening outreach by means of categorised briefings, innovation working teams and joint committees to align educational experience with Defence priorities.

3. Increased and optimised funding for R&D

The Australian Government ought to improve and strategically align public and personal R&D to meet OECD requirements, in addition to optimise funding mechanisms to bolster effectivity in help of AUKUS Pillar II R&D.

4. Embedded incentive constructions and mechanisms

Both the Australian Government and the college sector ought to evaluate incentive constructions to encourage Defence-related R&D. This consists of streamlining safety clearances, rewarding categorised analysis, and demonstrating worth in universities adopting safeguards — in accordance with Defence requirements — to conduct defence-related R&D.

AUKUS Advanced Capabilities and Australia’s innovation crucial

In April 2024, Australian, UK and US Defence Ministers reaffirmed AUKUS Advanced Capabilities as a vital engine to energy Defence-related innovation, aimed toward “pooling the talents of our Defence sectors to catalyse, at an unprecedented pace, the delivery of advanced capabilities.” This assertion, coming 4 years after the institution of AUKUS, is proof that this bold defence technology pact continues to be but to assume its place as a cornerstone of Australia’s method to accelerating its Defence innovation. With a lot of the consideration thus far centered on Australia buying a conventionally armed, nuclear-powered submarine (SSN) functionality, AUKUS Pillar II stays relegated to second-tier standing and characterised as “a solution in search of a problem.”

According to the defence management of the three nations, Pillar II charts a path ahead to combine the defence and technology innovation ecosystems of three nations to successfully ship “capabilities that will matter most in the future.” Despite this design operate, with unclear calls for from AUKUS governments and no definitive possession or bespoke funds for implementation, the scope and dimensions of Pillar II have been amorphous to date. Instead, progress has been overwhelmingly centered on creating the enabling legislative and regulatory setting for the sharing of delicate applied sciences. What restricted direct motion has been confined to workouts and science experiments reasonably than functionality improvement. One of the important thing limitations to Pillar II’s improvement has been the flexibility of the three nations to concurrently design and ship categorised army capabilities whereas deriving profit from an open innovation panorama and business partnerships. Consequently, trilateral cooperation below AUKUS Pillar II has been lowered to particular, siloed initiatives, limiting its broader ambition to harness nationwide analysis and innovation strengths to speed up functionality improvement at value.

First Assistant Secretary AUKUS Advanced Capabilities Stephen Moore throughout Exercise Talisman Sabre 2025. Source: Australian Department of Defence

Despite implementation limits, throughout all three nations, the rationale for Pillar II stays exceptionally clear: the race for vital applied sciences is now a key terrain for world and regional strategic competitors. With China arguably commanding management in printed analysis in 17 of the 23 vital applied sciences recognized for strategic competitors -— together with in AUKUS precedence areas of hypersonics, digital warfare and autonomous underwater autos, and sonar and acoustic sensors — Pillar II holds the potential for AUKUS companions to achieve a technological edge, creating pathways to cross-fertilise their R&D and elevate their R&D profile globally in addition to faucet into their companions’ R&D assets. With the US funds for defence-related Research, Development, Test and Evaluation (RDT&E) for FY2025 valued at US$145.1 billion — some 4 instances Australia’s whole Defence funds that 12 months — Pillar II offers a distinctive alternative for Canberra to leverage the comparatively bigger R&D funds of its AUKUS companions.

In Australia, each the 2023 Defence Strategic Review (DSR) and the 2024 National Defence Strategy (NDS) recognise the crucial for a strong Defence innovation ecosystem. Both of those strategic paperwork place AUKUS Pillar II as a catalyst for a strategically centered Defence R&D effort. Australia’s lack of strategic warning time and the spectre of main energy battle prompted the DSR to shift the nation’s posture from managing low-level threats to deterring nice energy battle within the Indo-Pacific by means of a technique of denial — underpinned by, amongst different components, superior applied sciences and built-in capabilities. The subsequent 2024 NDS elevated IS&T as one of many seven broader initiatives key to nationwide Defence — propelling a A$3.8 billion funding within the Advanced Strategic Capabilities Accelerator (ASCA) “to translate asymmetric technologies into Defence capability” and figuring out AUKUS as a launchpad for a power built-in by design.

Crucially, each the DSR and the NDS recognise cross-sectoral engagement and cooperation throughout Australia’s panorama to be important to attaining AUKUS Advanced Capabilities objectives. The NDS positions AUKUS as “a step change in Australia’s ability to enhance cooperation with partners, industry and academia to rapidly develop and introduce technologically advanced military capabilities into service.” Accordingly, on the core of the Defence’s 2024 Defence Innovation, Science and Technology Strategy (Defence IS&T) is a 10-year imaginative and prescient to speed up innovation to develop functionality by means of the mobilisation of Australia’s IS&T neighborhood and the harnessing of the AUKUS partnership.

Australia’s universities, by dent of their nationwide position in R&D, ought to stand on the coronary heart of this effort. Collectively, they conduct 36% of Australia’s whole R&D, effectively above charges reported by OECD nations — the place ranges of college analysis as a share of nationwide analysis stand at 24% for the United Kingdom, 18% in Germany or 12% in Japan. They harbour world-class amenities and domesticate a extremely expert expertise pipeline, uniquely positioning them as a core a part of Australian nationwide energy and a strategic asset for National Defence. Crucially, Australian universities are already conducting world-leading analysis in AUKUS Advanced Capability areas, with Australia rating among the many world’s high 5 nations for high-impact quantum analysis and patents and residence to among the most superior hypersonics packages worldwide. Yet, regardless of express references to academia within the DSR, NDS and Defence IS&T technique, in follow, the potential for universities to speed up IS&T for AUKUS Advanced Capabilities stays an unrealised functionality for Australia’s defence efforts.

Furthermore, Defence’s efforts in IS&T are hamstrung by a lack of nationwide focus and route. While the Australian Government lauds Australia’s innovation document and recognises the necessity to remodel the financial system and kick-start productiveness, it’s doing so whereas actively marginalising the college sector’s analysis efforts and overseeing a extended, bipartisan decline in gross expenditure on R&D (GERD). These critiques are hardly new — as of 2025, the Australian Government has launched two main evaluations into analysis undertaken in Australia, together with the Universities Accord Process and the Strategic Examination of R&D (SERD). Yet, regardless of longstanding calls for reform, the nationwide IS&T is wallowing, with no seen general strategic method to analysis.

Amid intensifying strategic competitors, a nationwide productiveness disaster and rising criticism of Pillar II’s lacklustre efficiency, there may be rising urgency for Australia to ship large-scale investments into IS&T by means of revitalised investments in GERD, a coordinated and centered whole-of-government strategic method to analysis investments and a sovereign and strong Defence ecosystem. For Defence, this may require bringing universities into the AUKUS Pillar II tent.

Why contain universities in AUKUS Pillar II innovation?

Though most Australian analysis universities surpass Defence’s in-house analysis and improvements investments in general analysis dimension and scale, universities have but to be assigned a clear position in contributing to AUKUS Pillar II. No Australian analysis establishment was profitable below the AUKUS Innovation Challenges, the flagship trilateral ‘contests’ launched by AUKUS governments to develop and establish fast, cutting-edge defence tech capabilities. Instead, vital AUKUS-related IS&T investments have been primarily channelled by means of industry-Defence collaboration, centered on extra mature and market-ready technology, reasonably than the decrease Technology Readiness Levels (TRLs) pathways related to college analysis. For instance, the much-lauded AUKUS-adjacent defence challenge ‘Ghost Shark’, Australia’s extra-large autonomous undersea automobile (AUV-XL), famous for its flexibility and faster-moving tempo, was developed by defence innovation firm Anduril in collaboration with the Royal Australian Navy (RAN) and focused greater TRLs outcomes.

Though most Australian analysis universities surpass Defence’s in-house analysis and improvements investments in general analysis dimension and scale, universities have but to be assigned a clear position in contributing to AUKUS Pillar II.

Yet, Australian universities are well-equipped to grow to be an indispensable stakeholder within the Defence R&D system wanted to ship AUKUS Advanced Capabilities. They conduct 87% of the nation’s discovery or primary analysis, reflecting their central position in advancing early-stage R&D at decrease TRLs and filling a vital hole earlier than {industry} takes ideas to greater maturity ranges. They additionally immediately fund half of the nation’s utilized analysis, surpassing peer nations, with French and South Korean universities funding 14% and the United Kingdom 30%. Moreover, central to breakthroughs reminiscent of the event of wi-fi, photo voltaic technology, the cochlear implant or quantum computing, Australian universities have earned a robust world popularity for world-class analysis, particularly in discovery science. In 2021, this contributed to the US Air Force Office of Scientific Research — by means of its Asian Office of Aerospace Research and Development (AOARD) — and the US Office of Naval Research Global (ONRG) to set up a presence in Australia, with Jermont Chen, the AOARD director, stating “The purpose is to cross-pollinate and to leverage each other. They can leverage our funding, and we can leverage their knowledge of the area…”

At the helm of these advocating for a stronger position for universities in each Defence R&D and the AUKUS Pillar II is the Group of Eight (Go8), which convenes Australia’s eight main research-intensive universities. Go8 estimates in 2022 recommend its constituent universities invested nearly A$70 million into Defence R&D yearly, representing some 44% of the full college sector funding. These collectively maintain experience throughout all AUKUS Advanced Capabilities and have signalled their curiosity in leaning into the trilateral partnership. With this scale and analysis management, the Go8 alone gives a breadth of functionality spanning frontier applied sciences and enabling areas reminiscent of provide chain resilience, ethics and Defence coverage for the Australian Government to faucet into to foster a strong Defence innovation ecosystem.

Table 1. Grid exhibiting AUKUS Pillar II functionality throughout the Group of Eight universities

Beyond its instant discovery position, the Australian college sector’s worth proposition to the AUKUS enterprise extends to purpose-built technical amenities, hubs for interdisciplinary data, workforce improvement and world educational exchanges. Australian universities are residence to publicly funded world-class analysis infrastructure and amenities, open to universities, {industry} and authorities. This entry to shared infrastructure not solely permits Defence, primes and SMEs to innovate with out vital capital funding but in addition lowers limitations of entry, accelerates innovation, and delivers each nationwide safety and broader societal advantages. Further, the sector serves as an engine room for cross-disciplinary data and innovation. Uniquely positioned to combine experience throughout engineering, science, drugs, enterprise, and coverage, it offers Defence with entry to a facet of innovation that {industry} alone can’t generate. Australian universities are additionally pivotal to growing the workforce wanted for AUKUS Pillar II and to serve Defence functionality priorities writ massive. At the cornerstone of training, they’ve the capability — nationally and in partnership with UK and US counterparts — to develop expanded pathways by means of work-integrated studying, {industry} partnerships and focused scholarships to prepare the subsequent technology of AUKUS engineers, scientists, inventors, entrepreneurs and coverage specialists.

Moreover, numerous latest case research clarify the burgeoning alternatives for university-led discovery analysis to mature into Defence- and commercial-deployable options in keeping with allied Defence and technology priorities. For instance, each Australia’s Jindalee Operational Radar Network (JORN) and Sydney-based Advanced Navigation firm illustrate how educational inputs can help the event of sovereign capabilities, underpinning Australia’s defence. Both introduced to fruition with contributions from college R&D, at this time, JORN offers the nation with a long-range over-the-horizon radar, whereas Advanced Navigation offers fibre-optic gyroscope navigation methods for Defence export packages.

Recognising this potential, the Australian Government has launched focused initiatives, such because the Australian Economic Accelerator (AEA) and the Trailblazer Universities program, to speed up university-led Defence IS&T into greater TRLs (7–9). AEA, a A$1.6 billion program, offers funding to translate and scale educational analysis into business and deployable options. The Trailblazer Universities Program, a A$370.3 million initiative to be delivered between 2022 and 2026, focuses on enhancing institutional analysis capability by embedding each large-scale cross-sectoral engagements and a commercialisation tradition inside universities. Both attest to ongoing governmental makes an attempt to encourage the event of an innovation pathway by incentivising collaboration with {industry}, supporting open Intellectual Property fashions and rewarding business outcomes. Still, the paucity of those initiatives, unfold too skinny throughout many areas, not to mention AUKUS Advanced Capabilities, restricts their large-scale affect on Defence innovation. Already oversubscribed, these initiatives would require a extra deliberate deal with Defence priorities, backed by larger funding, to create a systemic bridge that constantly interprets lower-TRL defence analysis into deployable functionality.

1. Universities face an underfunded and fragmented R&D panorama

1.1. Australia falls in need of worldwide requirements for GERD

For Australia to seize the complete spectrum of alternatives offered by AUKUS — from maximising entry to world-class analysis within the United States and the United Kingdom to staying globally aggressive within the race for superior applied sciences — it ought to proceed and improve significant funding in R&D.

In phrases of analysis outputs, Australia’s efforts are really laudable. In the well-used Australian adage, the nation’s analysis sector ‘punches above its weight’. Australian analysis contributes to 3.5% of the world’s publications and makes up 5.8% of the world’s citations. Crucially, its affect is demonstrable, with Australian analysis cited 42.2% greater than the world common. This has been achieved, although, amid an Australian analysis sector in vital decline.

US Secretary of Defense Pete Hegseth, Australian Deputy Prime Minister and Defense Minister Richard Marles and British Defence Secretary John Healey met on the Pentagon in December 2025. Source: Getty

Although R&D is well-known to strengthen nationwide progress, reportedly producing a median return of A$3.50 to financial system for each A$1 invested in R&D, Australia has not adopted methods to leverage its R&D panorama for social or financial advantages. Even the much-heralded Treasury-led “Economic Reform Roundtable” report in 2025, which centered on lifting productiveness, failed to deal with or recognise universities’ R&D contribution in its dialogue round innovation and technology writ massive — not to mention with respect to Defence. In truth, it solely references the college sector as soon as and solely when recognising its position in strengthening human capital to contribute to the Treasury’s precedence to “Build a skilled and adaptable workforce” by means of the Universities Accord.

Beyond coverage parsimony, the numbers that articulate the sector’s decline are telling.

Australian general funding in R&D as a proportion of GDP has been on a downward trajectory over the previous fifteen years, with 2022 spending ranges estimated to be some 32% decrease than in 2008. In 2021-2022, GERD was estimated at A$38.8 billion, or 1.68% of GDP — far under the OECD common of two.73% of GDP and leaving Australia in need of A$25.4 billion per 12 months throughout all sectors.

1.2. Mapping Australia’s shortfalls in nationwide funding in R&D

The decline in GERD in Australia is attributed to a fall in authorities and enterprise funding in R&D as a share of GDP. Government expenditure in R&D (GovERD) has decreased from 0.27% of GDP to 0.16% between 2008 and 2022, whereas Business expenditure on R&D (BERD) has fallen from 1.37% to 0.9% of GDP throughout this identical interval. This means Australia’s BERD is about half that of its OECD friends. This persistent underinvestment undermines Australia’s capability to commercialise its analysis, weakening its long-term technological competitiveness and constraining the event of sovereign industrial and Defence capabilities.

Figure 1. Total authorities R&D help as a proportion of GDP

To additional perceive Australia’s R&D panorama, three issues warrant consideration. First, whereas GERD has declined general, nominal R&D expenditure — together with the enterprise, authorities, greater training and personal non-profit sectors — has constantly risen throughout all sectors between 2001 and 2022. However, these will increase in nominal phrases have each lagged behind GDP in addition to fallen relative to {industry} output. The latter displays a long-term decline in enterprise analysis depth, now at a twenty-year low regardless of BERD in Australia reaching a document A$20.6 billion for 2021-2022.

Figure 2. Expenditure on R&D by sector (A$ thousands and thousands)

 

Expenditure on R&D by sector as a proportion of GDP

Second, whereas Australian funding in primary and utilized analysis is at comparable ranges to that of different OECD nations, funding in experimental improvement is the place the nation falls behind. This largely stems from restricted research-industry collaboration in addition to low and declining ranges of enormous enterprise funding in IS&T. In Australia, whereas 44% of Australian companies innovate, fewer than 10% of Australian corporations collaborate with universities. Further, with Australian massive corporations contributing some 45% of BERD, versus the OECD common of 61%, declining ranges of funding by massive firms in analysis blunts Australia’s supply of innovation outputs and constrains R&D’s multiplier results. This is vital — no OECD nation sustains a robust IS&T ecosystem with out substantial funding from massive companies.

Third, no matter funding ranges, authorities funding in R&D lacks strategic coherence, with present tasks for defining analysis priorities dispersed throughout greater than a dozen authorities portfolios. Despite quite a few evaluations of the analysis sector and coverage initiatives, nationwide analysis priorities have had minimal bearing on Australia’s analysis profile, many R&D investments have remained underfunded, and efforts to strengthen industry-university cooperation have had minimal affect. With 84% of Commonwealth R&D funding channelled by means of ‘bottom-up funding models’, the remaining ‘purpose-led R&D’ funding — offered in help of clear and articulated strategic priorities — is dominated by grants. According to the seminal ‘Strategic examination of Australia’s R&D system’, this creates a “subscale” and “disjointed” system, diluting the scope and scale of IS&T investments and eroding IS&T stakeholders’ innovation potential. This differs from Australia’s friends, such because the United States, Germany and South Korea, the place funding fashions are comparatively “more strategically directed and intentional, led by national agencies or specific strategies.”

1.3. Funding pressures have spurred the emergence of a college funding mannequin reliant on overseas funding

In universities, the affect of declining GERD and segmented, unstable GovERD have been compounded by the hovering prices of conducting analysis and general diminishing authorities funding. For each greenback of analysis grant funding from the Australian Government, universities have to make investments an extra 35% in infrastructure and overheads “just to keep the lights on” — not to mention to nurture a thriving and future-driven R&D enterprise.

Over the previous three many years, funding pressures have incentivised universities to cushion the fallout from authorities insurance policies which have decreased public funding within the sector with different sources of income. This consists of worldwide pupil charges. Both sides of politics’ readiness to cross-subsidise Australian analysis by means of a pipeline of full-fee-paying worldwide college students has successfully created a funding mannequin that immediately ties Australia’s sovereign analysis functionality to overseas funding. Notwithstanding the dangers related to exposing Australia’s analysis sovereign functionality to world market shocks, this has given rise to a funding mannequin the place IS&T stakeholders are pushed by completely different strategic imperatives.

As a consequence, regardless of performing over a third of the nation’s general R&D, Australian universities face a patchy, resource-constrained R&D panorama, characterised by silos and competing priorities, obstructing visibility of accessible alternatives, funding streams and initiatives to conduct analysis in areas of strategic curiosity. This undermines their potential to embrace high-impact, high-visibility analysis initiatives and constrains their capacity to plan, scale and maintain long-term analysis.

2. Impediments dealing with defence-related R&D mirror these dealing with Australia’s R&D panorama

2.1. Gaps in R&D funding have cascaded into Defence’s IS&T panorama

The Defence-related IS&T panorama very a lot echoes Australia’s analysis panorama — resource-constrained, fragmented, insufficiently built-in with {industry}, with university-led R&D’s potential to advance defence priorities largely untapped. In truth, Defence isn’t cited as soon as amongst Australia’s National Science and Research Priorities, which, launched in 2024, present the Australian Government’s main steering to align efforts and funding in science and innovation over the subsequent decade. Instead, “critical technologies such as artificial intelligence (AI), quantum and robotics” are referenced solely within the context of the net-zero transition.

Further, although Australia’s Department of Defence elevated its R&D funds share from 2.6% to 2.73% in 2024, it nonetheless trails behind its AUKUS counterparts. In 2023-2024, the United Kingdom allotted roughly 3.9% of its whole Defence funds to R&D, with plans to improve this to 7% within the subsequent few years, whereas the United States reportedly allotted some 17%. Crucially, regardless of authorities statements and coverage paperwork framing Pillar II R&D as a precedence, Australia has not offered devoted funding, systemic help or embedded incentive mechanisms to spur analysis for Pillar II. According to Professor Tanya Monro, Chief Defence Scientist and head of the Defence Science and Technology Group (DSTG), that is considerably deliberate — AUKUS Pillar II isn’t supposed as a standalone funding stream for working trilaterally, however reasonably as a mechanism to leverage respective nationwide strengths and to ship improved alternatives for IS&T stakeholders to contribute to multilateral defence-related analysis efforts. In 2024, she defined “There is no pot of gold at the end of the rainbow for people who Aukusise their R&D.” In follow nonetheless, the dearth of a distinct, clear ‘Pillar II-only’ funds line, together with the absence of enabling constructions and mechanisms to underwrite such analysis, has restricted traction in AUKUS Pillar II.

Defence isn’t cited as soon as amongst Australia’s National Science and Research Priorities, which, launched in 2024, present the Australian Government’s main steering to align efforts and funding in science and innovation over the subsequent decade.

In Australia, the affect of a lack of devoted funding for AUKUS Pillar II analysis wants to be considered inside the wider nationwide context of extended general declining funding throughout the R&D system as a share of GDP and low ranges of BERD. This has contributed to companies’ offshoring the event of significant Australian safety and Defence R&D capabilities. From a nationwide safety perspective, this has left Australia reliant on overseas innovation and industrial ecosystems to entry core capabilities, heightening dangers that home wants would compete with different nations’ priorities within the occasion of a contingency.

In response, the Australian Government has launched a suite of coverage levers designed to stimulate Defence-related BERD and strengthen sovereign functionality, such because the Australian Industry Capability (AIC) Program, which requires main Defence contractors and overseas prime suppliers to display how they may maximise Australian {industry} participation, technology switch and workforce improvement throughout their provide chains. The AIC now aligns with the broader framework of the Sovereign Defence Industrial Priorities (SDIPs) set out within the Defence Industry Development Strategy, which identifies vital industrial capabilities important to nationwide safety. Complementary initiatives such because the Global Supply Chain (GSC) Program, centered on connecting native corporations with world primes and integrating them into worldwide Defence worth chains, have secured A$2.35 billion in contracts for greater than 307 Australian suppliers. Nonetheless, these mechanisms have but to reverse Australia’s low enterprise R&D depth. Australian SMEs nonetheless lack the required scale to translate R&D into deployable outputs, whereas prime Defence contractors choose to each perform a proportion of their Defence R&D outdoors Australia and favour in-house functionality improvement, reasonably than externally-commissioned analysis.

2.2. Pathways for Defence-related R&D for Australian universities exist, however require larger strategic coherence and visibility

Beyond funding pressures, the Defence-related R&D panorama underpinning AUKUS Innovation in Australia has inherited most of the points stemming from the nation’s fragmented analysis panorama. While Australia harbours a various portfolio of present analysis and innovation mechanisms that align with AUKUS Pillar II, the absence of a whole-of-government method has created an unwieldy Defence R&D panorama, inflicting inefficiencies, silos and duplication that hamper each progress and accountability. At a college degree, this fragmentation fosters confusion round which and the place clear pathways exist for researchers to faucet into Defence-related R&D funding, in addition to blurs clear route on precedence areas to deal with. This units up a robust preliminary disincentive to prioritise Defence-related analysis.

With analysis funding and exercise unfold throughout a number of companies and jurisdictions, the sheer complexity of mapping out the completely different priorities and institutional mechanisms out there to universities to conduct Defence R&D — and by extension to contribute to AUKUS Pillar II aims — is a working example of the advanced and fragmented nature of Australia’s IS&T panorama. The following part offers an outline of present packages, providing larger visibility into the interdependencies, gaps and silos that at the moment constrain coordination and coherence throughout the ecosystem as well as to highlighting actual alternatives.

Opportunities out there to universities through the Australian Department of Defence

DSTG, ASCA and the Groups and Services innovation arms function the three leads for the Defence IS&T Enterprise. Despite DSTG’s position as the primary conduit for and accomplice of college analysis, together with its strategic dedication to align R&D with AUKUS Pillar II technology streams, there may be nonetheless uncertainty and a lack of readability over how universities can entry related analysis alternatives for Defence analysis or help AUKUS Pillar II analysis.

Similarly, ASCA, Defence’s main company to speed up functionality supply to the ADF by means of innovation, has a mandate spanning the innovation pathway from TRL 1 to 9. Within the context of Pillar II, ASCA is recognised as enjoying “an important role … [with] key technology themes relevant to AUKUS workstreams (hypersonics, trusted autonomy, quantum technology and information warfare)” in addition to the Australian lead within the AUKUS Innovation Challenges. Nonetheless, although ASCA’s mandate consists of collaboration with universities, in follow, it has largely engaged with {industry} companions, given its main deal with transitioning prototype and disruptive applied sciences into acquisition pathways and minimal viable functionality for the ADF.

Australian Minister for Defence Industry Pat Conroy and Chief Defence Scientist Professor Tanya Monro AC on the Indo Pacific International Maritime Exposition, November 2025. Source: Australian Department of Defence

Universities can additional entry related Defence analysis funding alternatives through the Groups and Services, such because the Australian Army Research Centre and the Navy’s Autonomous Warrior train, in addition to set up collaborations, such because the Jericho Smart Sensing Laboratory (JSSL) between RAAF Plan Jericho and the University of Sydney. However, communication of those alternatives isn’t centralised, neither is there a platform the place they’re systematically listed, or explicitly linked to AUKUS Pillar II. This hampers visibility and entry — limiting universities’ participation and undermining general transparency.

Other related funding schemes and pathways

These methods, packages and companies characterize a pattern of funding streams and mechanisms arising from Defence. To these, also needs to be added related grants from the Australian Research Council (ARC), CSIRO, the Office of National Intelligence, the Department of Industry, Science and Resources (DISR), the Department of Education or state governments, in addition to abroad schemes — the place eligibility extends to Australian academia — notably from the US Department of Defense, Intelligence Advanced Research Projects Activity (IARPA) and the UK Defence and Security Accelerator (DASA). Though every of those initiatives is probably not explicitly designed for AUKUS Pillar II, they provide additional help in translating primary science packages into business purposes. Together, they attest to the supply of schemes related to AUKUS Pillar II throughout the invention, translation, industrialisation and coverage domains, and recommend there may be general adequate protection for the superior functionality areas.

Yet, the absence of unifying mechanisms and coordination implies that pathways to accessing funding for each academia and {industry} are usually not all the time simple, visibility is scarce and fragmentation systemic. While there will be advantages from a decentralised system — in the primary, creating larger flexibility for various concepts and larger innovation to flourish — in Australia, the dearth of scale, coupled with scattered authorities and {industry} help, leaves university-led R&D alternatives unrealised and generally discontinued.

The vary of mechanisms mentioned is summarised in Figure 3, highlighting the breadth of Australia’s analysis and innovation packages related to Defence and AUKUS Pillar II, whereas revealing an ecosystem that is still dispersed and troublesome to navigate.

Figure 3. Snapshot of the Innovation Pathway Ecosystem for Australia, related to AUKUS Pillar II

i. AUKUS companions’ counterparts for the AUKUS Innovation Challenge embrace the United States Defense Innovation Unit (DIU) and the United Kingdom Defence and Security Accelerator (DASA). Disclaimer: This dataset is indicative solely and based mostly on publicly out there sources. Some assessments are approximate or inferred and shouldn’t be considered official classifications. While the desk exhibits most schemes as protecting all six AUKUS Advanced Capability domains, in follow, many packages (reminiscent of ARC Discovery or CRCs) are usually not Defence-specific. They are broad, open-ended funding mechanisms which will help Defence-relevant superior functionality initiatives, however don’t assure such outcomes.

2.3. Defence is on monitor for higher engagement with universities, however wants acceleration

In response, Defence has sought to reinforce collaboration and engagement with the college sector by establishing numerous integration mechanisms to strengthen workforce, networks and experience. For instance, DSTG’s NAVIGATE program is proactively embedding exterior researchers — largely from academia — inside Defence on fixed-term placements to expose them to Defence priorities and speed up the interpretation of educational and {industry} experience into functionality — an initiative that might be leveraged and expanded inside AUKUS Pillar II companions to foster joint innovation and expertise alternate.

Further, below the 2024 IS&T Strategy, Defence is updating the present Australian Defence Science and Universities Network (ADSUN), Defence’s automobile to socialise its analysis priorities and dealer relations between analysis stakeholders on the state degree through co-funded nodes, to grow to be a “highly visible and effective national mechanism.” The technique additionally foreshadows the institution of Defence Research Centres (DRCs), recognising the necessity for long-horizon, university-anchored hubs linking Defence scientists, {industry} and finish customers. Analogous to US University Affiliated Research Centres (UARC) fashions, these DRCs would serve to consolidate analysis round Defence-defined missions, successfully shifting universities’ position from unbiased discovery towards sustained, directed partnerships centered on functionality outcomes.

Though laudable, each mechanisms would profit from larger readability. Currently, with every ADSUN node holding its personal governance and funding preparations, ADSUN 2.0 seeks to set up a extra cohesive and built-in nationwide framework. While higher anchoring ADSUN within the wider Defence ecosystem is critical, for larger affect, ADSUN 2.0 wants to deal with present challenges associated to resourcing and enablement, fragmented engagement throughout states, and uncertainty round objectives or measurable deliverables in accordance with Defence priorities. At current, there may be additionally restricted readability on coordination between ADSUN — which hyperlinks Defence with universities — and Office of Defence Industry Support (ODIS) — which connects Defence with {industry} — risking misplaced alternatives to align analysis, innovation and commercialisation pathways throughout the Defence ecosystem. Meanwhile, concrete route, funding alternatives and well timed implementation for DRCs stay missing to date. While present collaborative university-defence centres, such because the Centres for Advanced Research in high-frequency technology (CADR-HF Technologies), in Chemical, Biological, Radiological, and Nuclear circumstances (CADR-CBRN), or in robotics and autonomous methods, might present some indication as to how DRCs will likely be modelled, ambiguity round timelines, funding streams, fashions and mechanisms underpinning these centres has resulted in little additional route and undermined general transparency. Finally, as per the IS&T technique, Industry are poised to play a position in DRCs; nonetheless, their distinct priorities from universities — searching for Intellectual Property (IP) technology, market entry, with shorter-term income cycles reasonably than analysis excellence or popularity — will essentially require tailor-made co-investment and IP frameworks to steadiness these differing objectives.

2.4. Fragmentation of Defence IS&T alternatives inhibits efficient Defence-university engagement

Beyond impeding the supply of significant analysis, this fragmentation of the analysis panorama drives unhelpful competitors between universities, exacerbates disconnects between Defence and universities and different analysis establishments and limits visibility of academia’s potential contribution to Defence R&D. The plethora of short-term funding packages and contracts specifically lessens strategic misalignment between Defence and universities, resurfacing tensions between Defence’s choice for de-risked, scalable options vs academia rewarding depth of experience, whereas including administrative complexity by means of disparate mechanisms, overlapping timelines, reporting necessities and priorities.

While universities are central to Australia’s discovery analysis base, Defence isn’t in a position to totally seize universities’ experience and potential of their efforts to ship efficient capabilities into the arms of the ‘war fighter’ — with university-led analysis on well being or the setting to improve nationwide resilience, for instance, being neglected regardless of having Defence purposes.

Together, persistent underinvestment and lack of clear innovation pathways have fostered siloed and arguably calcified partnerships between the college and Defence sectors. From a whole-of-government standpoint, this erodes cross-sectoral connectivity and mutual literacy between Defence and academia, exacerbating present wedges and creating inefficiencies. As a consequence, whereas universities are central to Australia’s discovery analysis base, Defence isn’t in a position to totally seize universities’ experience and potential of their efforts to ship efficient capabilities into the arms of the ‘war fighter’ — with university-led analysis on well being or the setting to improve nationwide resilience, for instance, being neglected regardless of having Defence purposes. In flip, universities grapple to articulate how their work aligns with Defence wants — without delay hindering and obscuring their potential contribution to the AUKUS Advanced Capabilities enterprise. Cognisant of those challenges, each DSTG and ASCA have initiated outreach with universities, participating with senior college management and convening categorised briefings.

Despite some progress, sustained and further engagement is required to overcome decades-long underinvestment and lowered industry-defence-university centered collaboration. For AUKUS Pillar II, this restricted cross-sectoral connectivity on the nationwide degree is compounded by the inherent coordination and sensible challenges in conducting trilateral Defence-related analysis at universities, from navigating three units of tertiary training bureaucracies and legislative frameworks, to aligning completely different funds cycles, to balancing competing priorities.

3. Universities face each shared and distinct AUKUS-related challenges

Although a full evaluation of AUKUS-related challenges lies past the remit of this temporary, universities, too, are confronted with the limitations now related to AUKUS, reminiscent of navigating export controls, coordinating vetting processes and streamlining compliance necessities throughout three nations. These challenges assume a distinct kind in academia, intersecting with ideas of educational freedom, transparency and institutional autonomy.

Compliance with export controls offers an illustrative instance. In Australia, universities should adhere to the Defence Trade Controls Act and the Defence Strategic Goods List, which regulate delicate technology transfers when conducting Defence-related R&D with worldwide companions. In 2023, reform discussions round definitions of ‘fundamental research’ alone have been indicative of the complexity in making use of export controls to college analysis. Similarly, a set of limitations relates to the intersection of safety obligations, compliance necessities and the realities of the educational workforce. For universities to have interaction in delicate or categorised Defence analysis, they’re usually required to keep membership within the Defence Industry Security Program (DISP), which entails stringent requirements and vital administrative prices. Academics, in flip, typically require a safety clearance from the Australian Government Security Vetting Agency (AGSVA). These — restricted to Australian residents and involving advanced vetting processes — pose a structural problem for a sector the place a sizeable section of lecturers are born abroad.

Compounding these challenges are the inducement constructions of academia, the place profession development has historically depended closely on accessible publication. Defence analysis, in contrast, usually restricts public dissemination to shield delicate outcomes, creating a rigidity between operational safety and educational aspirations. This renders long-term engagement much less engaging or reasonable for many researchers with out applicable sector-wide mechanisms to recognise their R&D contributions. Even in cases when universities have sought to present different profession development alternatives (i.e. appointment of ‘professor of practice’ positions), publications and citations too usually stay as key standards used to assess eligibility for students to obtain funding by means of conventional analysis companies. Similarly, academia hardly ever rewards partnerships or translational outcomes, neglecting to incentivise engagement with {industry}. This misalignment stifles sustained engagement in Defence R&D. Discussions from USSC roundtables instructed that restricted funding, restrictive circumstances and misaligned college KPIs had led main college schools to scale back participation in Defence-related analysis regardless of the promised alternatives arising from AUKUS Pillar II.

Lastly, universities should steadiness strengthening authorities belief with sustaining social licence to conduct Defence-related analysis. First, perceived as weak to info breaches, universities are required to display robust safety cultures and safeguards for categorised work. ASCA’s management has reportedly raised considerations round universities’ capacity to handle delicate dual-use analysis, citing reliability, safety tradition and publicity dangers. Concurrently, some lecturers and members of the general public have traditionally expressed scepticism round universities conducting Defence-related R&D, based mostly on preconceived unfavourable views of defence analysis or considerations round educational independence, business and authorities pressures, workforce values or lack of transparency, to title a few. These considerations resurfaced throughout some college campuses in 2025 amid wider conversations round universities’ funding portfolios and partnerships, with pupil protests condemning the militarisation of the college sector, prompting main Australian universities to rethink their investments in Defence and security-related industries.

Recommendations

For Australia to totally capitalise on the AUKUS enterprise and set up a strong IS&T system that drives steady innovation, Australian R&D stakeholders ought to take into account the next suggestions:

1. Strengthened governance and strategic coordination of the R&D panorama

The Australian Government ought to undertake a whole-of-government method to Defence-related R&D. The Australian Government requires a real strategic method to Defence IS&T — one which recognises its integral contribution to each AUKUS and the Australian Government’s productiveness agenda extra broadly, outlines clear route and priorities with commensurate funding streams, in addition to offers clear incentives to spur BERD in Defence, together with AUKUS and AUKUS-adjacent superior capabilities.

Defence ought to clearly sign the analysis alternatives and priorities at which universities ought to lead, help and spend money on, in addition to the place they might additional collaborate throughout the Defence IS&T ecosystem.

Defence ought to uplift and adequately useful resource the Australian Defence Science and Universities Network (ADSUN 2.0) to act because the central coordination and communication framework linking Defence, universities and {industry} throughout states and territories, in shut alignment with the Office of Defence Industry Support (ODIS). This consists of establishing constant nationwide governance, clear aims and metrics, and a unified method to funding and engagement, guaranteeing alignment with the broader Defence IS&T ecosystem and AUKUS Pillar II priorities.

Defence ought to speed up the institution of Defence Research Centres (DRCs) with devoted funding, clear pathways and governance in parallel with set priorities aligned to Defence challenges and probably AUKUS Pillar II Advanced Capabilities. Models ought to accommodate the distinct roles of presidency, universities and {industry} to foster enduring, outcome-focused collaboration and positioning within the ecosystem.

Defence ought to clearly sign the analysis alternatives and priorities at which universities ought to lead, help and spend money on, in addition to the place they might additional collaborate throughout the Defence IS&T ecosystem.

2. Improved engagement between Defence and universities

Defence ought to maintain and improve its categorised briefings to universities. These briefings are important for universities to achieve a clear understanding of Defence priorities and drawback units — a vital enabler for growing coherent innovation and commercialisation pathways aligned with operational functionality necessities. Early communication on timings and location for these briefings is additional important, as is a thought-about effort to guarantee they’re held throughout the completely different states and territories.

Defence ought to convene an ‘Innovation Working Group’ to enhance universities’ understanding of the ADF’s operational wants whereas leveraging academia’s main technical experience. The Australian Government ought to mannequin such working teams on the Army’s Land or Maritime Environment Working Groups to have interaction with students and R&D stakeholders with and with out a safety clearance.

Defence and the college sector ought to set up a joint authorities and college committee for Pillar II R&D, convening senior Defence officers and college leaders. Academic leaders, positioned on the forefront of rising technology tendencies, might additionally function a standing pool of experience to help authorities in figuring out and assessing new and disruptive applied sciences, complementing Defence’s inner functionality.

3. Increased and optimised funding for R&D

The Australian Government ought to raise GovERD and incentivise greater BERD ranges for GERD to not less than match the OECD common in R&D spending.

The Australian Government ought to streamline a cross-agency strategic method for analysis funding writ massive to help AUKUS Advanced Capabilities. With restricted scale and funding, Australia can’t meet AUKUS Advanced Capabilities aims with out coordinating and streamlining funding throughout its authorities companies.

The Australian Government ought to embed collaborative R&D necessities and incentives inside present packages to improve personal funding in analysis partnerships, enhancing nationwide innovation efficiency and supporting superior capabilities (e.g. by means of the Australian Industry Capability Program, Global Supply Chain Program (Defence/CASG), the Industry Growth Program (DISR) or the Defence Industry Development Grants Program (Defence/CASG).

Defence ought to make clear pathways out there to translate primary R&D into utilized analysis. This entails mapping present analysis alternatives in addition to factors of interface between {industry}, the Australian Government and universities.

4. Embedded incentive constructions and mechanisms

The Australian Government ought to streamline safety clearances for Australian researchers and innovators. Vetting processes for college stakeholders centered on superior capabilities analysis areas ought to be prioritised.

Defence ought to conduct systemic engagement with universities to help institutional readiness for universities to contribute to AUKUS Pillar II. This consists of ongoing engagement to guarantee all components of AUKUS Pillar II priorities, incentives, schemes and regulatory necessities are recognized and understood.

Universities, collectively and individually, ought to set up clear educational recognition and reward pathways for researchers conducting categorised Defence analysis. Universities ought to create types of recognition — reminiscent of distinctions or fellowships — rewarding researchers’ contribution to AUKUS Advanced Capabilities proportionate to the complexity and significance of the R&D.

Legacy analysis funding companies ought to broaden evaluation standards to embrace categorised defence analysis profession recognition. This consists of the Australian Research Council and the National and Medical Research Council. The use of citations and publications because the chief foundation for funding choice disincentives categorised Defence analysis and dangers overlooking impactful recipients.

Universities ought to set up and talk clear safeguards to conduct categorised Defence-related R&D. Universities want to display to the Australian Government that they’ve applicable mechanisms to safeguard their Defence-related R&D. Clear steering and institutional help want to be offered to college employees searching for to pursue Defence-related analysis.

The Australian Government ought to present clear steering and related funding streams round safeguards wanted for universities to conduct Defence-related analysis. For universities to totally lean into Defence-related analysis, they require larger readability and help to entry applicable amenities and implement applicable safety mechanisms for categorised analysis.

Universities ought to improve institutional mechanisms that facilitate {industry} collaboration and analysis commercialisation, together with simplified IP and contracting processes, focused partnership funding and structured help for spin-offs.