This content is produced by The Australian Financial Review in commercial partnership with BAE Systems Australia.

Australia’s need to develop a strong homegrown cyber security sector received a shot in the arm in September when the Federal Government undertook to fund a Cyber Security Cooperative Research Centre (CyberCRC) with up to $50 million.

Commenting on initiatives such as the CyberCRC, the Assistant Minister for Industry, Innovation and Science, Craig Laundy, said the government’s industry policy is about enabling economic transformation through innovation.

“It’s about creating new industries, and new opportunities,” Laundy says.

According to the Chair of the Australian Cyber Security Research Institute, David Irvine, the funding will help to create a more mature national cyber security capability.

“Cyber security is a strategic priority for Australia’s national security, including for its critical infrastructure. Furthermore, beyond national security it also impacts increasingly upon Australian businesses, governments and private individuals,” Irvine said at the time of the announcement.

“Australia needs to build its own indigenous cyber security expertise, growing our national capability in cyber security research, development and commercialisation.”

For Irvine, there is scope for Australia to build a strong capability in the sector and he believes the government’s Cyber Security Strategy “ticks all the right boxes”, but he wonders who is going to implement it and how.

He suggests the CyberCRC, which brings together 24 participants in a cooperative effort, “should be critical in this regard”.

The big question is: can actually make it work?

For many in Australia’s tech sector, the answer is a tentative “yes” but we have to overcome a few obstacles such as the innate conservatism of Australian business when it comes to taking a risk on innovation in a new sector. If we can overcome that aversion to risk the upside is potentially enormous.

The general feeling is that if Australia were to really build up its national capability in the cyber security space, we could become a stronger player internationally. We still will not rival Silicon Valley or Israel’s Beersheba.

Two reasons we cannot compete with Israel, even though we are  often told by investors, the media and business leaders that we need to follow their example, is that we do not face the same existential risks it faces, and (more perceptibly) we do not have national service.

The close relationship between Israel’s government, military and private sector is often cited as the reason they have a booming innovation sector but one of the reasons for those ties is compulsory military service. It allows the government and military to stream people with particular expertise into specific projects such as cyber security.

When those people finish their national service, they still have the connection to the military and their knowledge goes out into commercial programs.

And in the case of Israel and cyber security, their government has recognised that cyber warfare has to be in the toolkit of their armed forces. Put bluntly: the nature of Israel as a state and some of the threats it faces would suggest it has to invest a lot in the sector and be a leader.