Insight – Australia’s AU$7 billion cybersecurity opportunity

November 30, 2022

Every 7 minutes, a cybercrime is reported in Australia. The number and sophistication of these threats have increased in recent years. In the financial year 2021-22 alone, 76,000 cybercrimes were reported in Australia. This is a 13% increase over the previous year. (Source: Australian Cyber ​​Security Center (ACSC), Annual Cyber ​​Threat Report, July 2021-June 2022, November 2022).

Australia is ranked as the fifth most powerful cyber nation in the world (Source: Belfer Center for Science and International Affairs, National Cyber ​​Power Index Report 2022, November 2022). But recent high-profile cyber attacks have highlighted the need to increase the cyber maturity of companies that collect Australians’ sensitive data.

This creates significant opportunities for cybersecurity vendors to offer new solutions. Australia offers investors a range of advantages, including:

  • high demand for cyber products and services
  • a federal regulatory framework that drives the growth of the online marketplace
  • access to incentives
  • a rich talent pool
  • proximity to Asian cybermarkets
  • a strong research ecosystem and forward-looking innovation advantages.

Growing demand for cybersecurity creates investment opportunities

Australia’s online marketplace contributes A$2.4 billion to GDP. Australians spent A$5.6 billion on cybersecurity products and services in 2020 (Source: AustCyber, Australia’s Cyber ​​Security Sector Competitiveness Plan 2022).

Spending is expected to increase given the increase in cyberattacks. We are ranked ninth in the world for cyber revenue generation, which is expected to reach over $7 billion by 2027 (Statista). Our cyber marketplace has the potential to generate an additional A$800 million per year by 2026 (Source: AustCyber, Australian Cybersecurity Industry Competitiveness Plan 2022). Most Australian companies (60%) will increase their cyber budgets in 2023 (Source: PwC’s 2022 Global Digital Trust Insights Survey September 2022).

A regulatory framework that supports cyber investments

Australia’s favorable regulatory framework makes us an attractive market for developing and deploying cyber solutions close to large customers. The federal regulatory framework stimulates the growth of the online marketplace by meeting the objectives of risk management and consumer privacy.

The Australian government has legislated positive cybersecurity obligations for companies deemed to be “critical infrastructure”, in 11 sectors. The bonds require more than 2,000 companies to develop a risk management program to respond to cybersecurity. Recent high-profile cyber breaches have also resulted in increased penalties for companies that fail to adequately protect customer data.

These bonds will spur cyber-enhancement among key businesses in the economy.

Incentives to support innovation

Innovation is a key element of the local cyber ecosystem. Australia has forward-looking strengths in cybersecurity, including quantum, space and remote operations.

The Australian government offers programs and incentives to support cyber innovation. They understand:

  • R&D tax incentive: refundable tax compensation for businesses to support investments in innovative R&D. According to Deloitte, Australia’s R&D tax incentive is globally competitive for loss-making cyber-startups with aggregate revenue of less than A$20 million.
  • REDSPICE program: A$5 billion for the industry under a program that aims to triple the Australian Signals Directorate’s cybersecurity capacity and double its cyberhunting activities.
  • Cybersecurity Skills Partnership Innovation Fund: A$70 million to develop and diversify cybersecurity workforce.
  • Australian Defense Force Cyber ​​Gap Program: A $41 million program providing financial support, mentoring, and defense work experience opportunities to e-students.
  • State-Based Incentives: Some states offer payroll tax relief and job subsidies to support cyber employment. Austrade can help investors find the most appropriate visas for their needs.

Access to Australia’s rich talent pool

Australia is an ideal place to develop a skilled cyber workforce. Australia’s cybersecurity talent is comparable in scale to that of competing cities. Talent also pays off, thanks to co-investment by industry and government in developing e-skills.

Australia ranks first in the OECD for its ability to attract and retain highly skilled workers. We have a large pool of cybersecurity professionals, offering:

  • Up to 67,000 skilled workers in computer, information and network security
  • More than 3,300 certified information systems security professionalsbehind China and Japan, and tied with India for third place in the Asia-Pacific region
  • Up to AU$3 million to fund industry and education providers that help develop a skilled cybersecurity workforce.

We also offer research partnership opportunities to investors who wish to capitalize on our solid experience in innovation, particularly in the space and quantum domains. Australia is ranked fourth in the world for research impact on cybersecurity technologies.

A launch pad for Asian markets

Australia is ideally placed as a springboard to Asian e-markets. We are a leader in the Asian time zone for Foreign Direct Investment (FDI). Installing here also provides time zone advantages for global businesses that maintain a 24-hour cybersecurity footprint. Australia also has strong geopolitical alliances, which bolsters our global cyber capability.

Investing in Australian cybersecurity

Over the past 5 years, Australia has been the region’s second largest and most attractive market for cybersecurity FDI (Source: FDi Markets). Over this period, we have attracted 35% of cybersecurity investment funds in Asia (excluding China). This included venture capital and investments in mergers and acquisitions. In this way, Australian-based e-businesses have secured larger investments than those in Singapore, South Korea, Japan and India (Source: Pitchbook analysis).

Many companies around the world have chosen Australia to invest in cybersecurity. This includes San Francisco-based Arkose Labs, which conducted R&D activities for global clients from its Brisbane office. Arkose Labs provides a fraud and abuse prevention platform used by PayPal, Microsoft and Hong Kong Express. Arkose Labs has been involved with Austrade through a number of programs including the RSA Conference Cyber ​​Security Mission in 2017 and 2018.

Earlier this year, MITER announced the launch of its first international center for applied research in Adelaide. MITER is a nonprofit organization and a trusted partner of the U.S. government for applied national security research. The new MITER Center for Information Integrity and Defense will allow Australia to tap into decades of applied research to advance Australia’s sovereign capabilities. This further solidifies Australia as a prime location for space, defense and cybersecurity in the Asia-Pacific region. The center will be operational at the end of 2022.

Go further, faster with Austrade

Learn more about investing in Australia or contact an Austrade investment specialist in your area for more information on Australian cybersecurity investment opportunities.

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