We're all in this together

Insights from KPMG's Australia Geopolitics Hub

In an increasingly competitive geopolitical environment, national security is considered a ‘whole-of-nation' responsibility. Businesses, public institutions and citizens themselves are expected to make an active contribution to the economic and security wellbeing of their country.

The whole-of-nation approach creates opportunities for businesses. In many countries (including Australia) the desire to increase sovereign capabilities means that companies in ‘strategic’ sectors (including defence industries, energy, and technology) can attract significant government support.

Whole-of-nation also means that companies may be urged to not always make the most profitable business decisions. These same strategic sectors face growing restrictions that limit where they can buy from, where they can sell to and whom they can turn to for investment.

Citizens are also expected to contribute to whole-of-nation national security. As Insight 3 demonstrates, this expectation relies on national unity, which can be shaken by contentious global issues.

The whole-of-nation trend can seem intuitive – of course everyone has an interest in Australia’s security. But the increasing expectation to “ask not what your country can do for you” will have complex implications in the years ahead.

Insight 1: Strategic opportunities

The whole-of-nation responsibility for national security presents opportunities for organisations in some sectors. For example, the "Future Made in Australia" act aims to increase domestic self-sufficiency in certain key sectors, and provides support for those industries. The growing importance of sovereign supply chains could benefit clean energy firms, and also companies in industries like Defence, healthcare, and critical infrastructure.

Other whole-of-nation opportunities include data privacy, cybersecurity and fair competition policies that improve the environment for Australian tech startups, while investments in digital infrastructure aim to position Australia as a hub for innovation. Furthermore, recent budgetary support for small-to-medium enterprises in strategic sectors will help entrepreneurs scale up, diversify, and explore new markets.

Insight 2: Constraints on businesses

As all organisations are expected to contribute to the ‘whole-of-nation’ national security goal, more and more companies face limitations on their business decisions. This especially impacts companies in strategic industries, like defence and tech.

For example, partnerships between universities are being actively discouraged if the other institution is not in a geopolitically aligned country. If universities participate in AUKUS Pillar II, they must uplift institutional cybersecurity and face significant oversight of any potentially sensitive research.

Supply chains are also impacted. For example, in the defence industries sector, companies must work with domestic or “trusted international” partners. This affects where organisations can do business, and significantly impacts small-to-medium enterprises which may not have the flexibility to rapidly reconfigure markets and supply chains.?

The more strategic an industry is, the more likely an organisation will face business constraints. In this complex landscape, companies need to consider the current regulatory landscape, and how it is likely to evolve.

Insight 3: Divisive issues impact national unity

As governments and institutions pursue a 'whole-of-nation' approach to national security, they expect citizens to do their part. This relies on a sense of national unity and shared mission. However, a range of deeply polarising domestic and international issues are making this unity difficult to maintain.

Conflict in the Middle East is one of these polarising issues. There have been protests in many countries, including in the United States and Australia. The level of unrest and state responses to these protests have varied, but in all cases, they have revealed polarised public opinion.

To rally the whole-of-nation to contribute to national security, governments and companies alike will need to manage these deep disagreements. Companies will need to decide when and how to take a stand on polarising events, and CEOs of some of the world’s biggest companies are already struggling with this task.