Budgets, the economy and the Defence Strategic Review

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Current debate over how to defend Australia in a more threatening strategic environment points to an urgent need to strengthen the capabilities of the ADF, partly through purchasing new types of weapons incorporating the latest technologies. 

Standing in the way of that need being realised are two factors. One is a trillion dollars of government debt and intense demands for higher expenditure on other public priorities ranging from health care to climate change. The other is a perception that any shift in defence investment away from more established to new types of weaponry would threaten jobs and growth. 

Among the few options available to Defence to overcome both obstacles is avoiding a significant price premium for preferring the domestic over foreign supply of major weapons platforms and systems through a more targeted approach to Australian industry participation. 

That option need not detract from Australia’s independence or economic welfare. Indeed, available data indicates positive outcomes can be achieved, on both fronts, if at least part of what’s saved through avoiding high price premiums in some areas of defence capability development can be re-invested in others.

However, that depends on avoiding the defence industry policy pitfalls of the recent past. Linking an updated defence capability plan to an outdated industry policy is, at best, a high-risk venture. More realistically, it represents a path to disappointment.

This paper addresses how Defence can not only save money when purchasing a new cadre of weaponry but do so in a way that benefits the economy. Both issues relate to affordability which may ultimately determine the impact of the Defence Strategic Review.

Marles’s Defence Strategic Review—an exploding suitcase of challenges to resolve by March 2023

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Stephen Smith and Angus Houston have an enormous amount to do and almost no time to do it.  Prime Minister Albanese and Deputy Prime Minister Richard Marles chose them to be the independent heads of the Defence Strategic Review.  

The Review is to report before March 2023 so that the Albanese government can make decisions on it at the same time as they are deciding about the path that gives Australia 8 nuclear submarines within an AUKUS partnership that makes these safe and effective. 

Before they even get to thinking about their task – ‘to ensure Defence has the right capabilities to meet our growing strategic needs’ —Smith and Houston will need to confront the ugly fact that Defence’s current plans are already unaffordable despite the large and growing defence budget the Albanese government has committed to. 

Nasty choices and sub-optimal trade offs are needed before any new ideas that take money are even put forward. And the only mega project not yet agreed to that can provide potential savings is the $20-27bn Army plan to buy an additional 450 heavily armoured vehicles for purposes that aren’t clearly connected to Australia’s needs in our region. These must now be made clear if it is to proceed, in whatever form.

But even multi-billion dollar megaproject is a distraction to the real work. The Review must give Marles what he needs to provide practical, urgent direction to defence in four big areas:

  • Climate change and the Defence Force’s inescapable – but unwanted – role;
  • China’s direct security challenge in Australia’s near region – making our strategic environment uncomfortably clear, not complex as we like to tell ourselves;
  • New ways to increase Australian military power quickly – because no taxpayer is going to give defence more funding if it can’t show it has different, faster ways to increase the ADF’s, military power; and
  • The danger of prioritising ‘integration’ in all things in pursuit of the military nirvana of ‘every sensor a shooter and every shooter a sensor’ – because this highly aspirational goal is the enemy of getting capabilities into the hands of our military fast.

This Strategic Insight unpacks the exploding suitcase of Defence and sets out the key paths the Review can take.

‘Deep roots’: agriculture, national security and nation-building in northern Australia

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This report offers a multidisciplinary analysis of the various components that make up and influence the vast and complex agriculture industry network in northern Australia. It examines the economic and historical underpinnings of the agriculture industry we know today; the administration, direction and implementation of agricultural policy and funding across levels of government; the many and varied demographic and cultural characteristics of the northern Australian population; and the evolution of place-based physical and digital infrastructure.

The role of infrastructure and infrastructure funding in northern Australia plays a key role in the report’s narrative, which outlines the implications for national security, economic prosperity, service delivery, social cohesion and policy implementation if prevailing arrangements aren’t reformed to a sufficient standard that addresses contemporary challenges.

The report also examines biosecurity vulnerabilities, mitigation strategies for those vulnerabilities and their strategic and national security implications, and the long-term positioning of the north of Australia as critical for future growth, prosperity and security. The focus on opportunities presented by the north’s unique nature throughout the report culminates in a set of recommendations for policymakers to take a unified and big-picture approach across a daunting array of issues and disciplines.

This report suggests:

  1. a unified message among all relevant stakeholder groups with awareness of the strategic role of the northern agriculture sector
  2. greater investment in agricultural research to grow and protect agricultural industries (prosperity is key to security)
  3. greater engagement of Indigenous populations, with genuine appreciation for the role of Indigenous people and their connection and knowledge of land and  water as the key to unlocking potential.
  4. a cohesive nation-building plan.

Breaking down the barriers to Industry 4.0 in the north

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Innovation in northern Australia is thriving. It’s not clear why there’s a culture of innovation in the north, and perhaps that represents a focus for social research. However, there’s no doubt that innovators in northern Australia are seizing the opportunity to pursue solutions that generate economic benefits, contribute to national resilience, and respond to defence needs.

This special report highlights how innovators in the north are at the leading edge of the fourth industrial revolution and draws attention to the challenges they face.

Industry 4.0 represents opportunities to transform, but it’s not just about developing and adopting smart technology. And it’s not about evolutionary or transformative change; it’s a different way of thinking that will allow us to leap into a different future. To reap the transformative benefits from Industry 4.0 we need to adopt leading-edge technology in the best way to deliver better outcomes from the perspective of a wider range of interests.

But there are barriers. Australia has regulatory and standards frameworks and mechanisms that have evolved from traditional Industry 2.0 process thinking and Industry 3.0 manufacturing. There are inherent conflicts within and between sectors that safeguard the status quo of outdated and broken supply chains and wasteful manufacturing paradigms.

Through the lens of real experiences and success stories, this special report shines a light on the opportunities and challenges, and highlights what’s needed to better harness those opportunities. In particular, we need to:
•    Drive national capability through a philosophical positioning that’s supported by practical examples of innovation.
•    Acknowledge that economic theory underpinned by a need to have large-scale manufacturing and production lines for viability is thinking not aligned with the opportunity that Industry 4.0 presents.
•    Align government thinking and practice with the growing environmental, social and governance mindset of business and the growing expectations of investors, consumers and the community.
Northern innovators have a commitment to Australia, its future and the kind of world that they want to create for future generations. Thus, they conceptualise, create and deliver by leveraging Industry 4.0 thinking and technology.

Technology doesn’t drive change, but how they use it does. This is sovereign capability in action.