Mr Netanyahu was speaking to a group of ministers on the second day of a historic four-day visit to Australia, which included a large business delegation from the Jewish state.
Both prime ministers today signed an air services agreement to make travel between the two countries easier.
They also agreed on bilateral cooperation on technological innovation, research and development.
A joint statement released by both countries expressed concern about most of the Middle East flash points, including condemning the Islamist militant group Hezbollah, and supported Australia's contribution to the fight against IS in Iraq and Syria.
“We recognise the importance of defeating Islamist terrorism in the Middle East and indeed around the world for the safety of all of us,” Mr Turnbull said.
Mr Netanyahu said cyber security cooperation was one of the keys to the fight.
“This is one of the great paradoxes, we have to fight the barbarians on the technological turf it's amazing that's seldom happened before,” Mr Netanyahu said.
The Israeli prime minister also said he would like to triple trade between the two countries.
"Our trade is a $1 billion - it should be at least double or triple that and I'd like to encourage Australian and Israeli companies to increase their trade," Mr Netanyahu told the meeting.
Mr Turnbull told the meeting the two nations should be doing more to co-operate.
"There is so much scope for co-operation," he said.
"We have the same values - democracy, freedom, the rule of law.
"We are combating the same enemies - terrorists that seek to subvert those values and deny us our ability to live in a free society - and we are both committed to the innovation which we know will drive the productivity to keep rising in aspiration, in achievement, in prosperity."
The two leaders also visited a Jewish school where they were given a huge reception.
Earlier this morning, Lucy Turnbull hosted Sara Netanyahu at a Kosher bakery in Sydney’s eastern suburbs.
On Thursday night, hundreds are expected at a pro-Palestinian rally at Sydney Town Hall.
This gathering comes a day after both prime ministers fielded questions over the conflict between Israelis and Palestinians.
Yesterday, Mr Turnbull said Australia still hoped for a two-state solution with Israelis and the Palestinians living alongside each other.
-With AAP
