The type was designed to meet RAAF Specification 3/38 for an "ab initio" training aircraft. It was a tandem seat fixed tailwheel-undercarriage monoplane aircraft with a fuselage of steel tube and fabric construction and wings and tail made of wood. Despite the simplicity of the design, construction of the first of two CA-2 prototypes, begun in October 1938, was not completed until September 1939 (this was partly because CAC was still building its factory during this time period). The first prototype flew for the first time on 19 September 1939 fitted with a Gipsy Major series II engine, fitted with a metal DH variable pitch propeller. The aircraft proved to be underpowered with this engine so the second prototype was fitted with a Gipsy Six, removed from a Tugan Gannet, along with its wooden propeller, prior to its first flight in early November the same year (the first prototype was subsequently also re-engined with a Gypsy Six from a Tugan Gannet). Although in-flight performance was improved, the heavier engine negated any benefits to take-off performance obtained from the increased power, so the decision was made to install a 165D Warner Scarab radial engine driving a Hamilton Standard 2B20 two-bladed propeller. The two prototypes were fitted with Scarabs in mid-1940.