Australia’s security architecture must evolve, not regress

The Independent Intelligence Review, publicly released last Friday, was inoffensive and largely supported the intelligence community status quo. But it was also largely quiet on the challenges facing the broader national security community in an increasingly dangerous world, in which traditional intelligence is just one tool of statecraft and national power.

After the January discovery of a caravan laden with explosives in Dural, Sydney, confusion emerged around what federal and state governments knew and when. The review was completed before the caravan was discovered, and the plot was likely beyond the review’s scope. However, government responses to the event should prompt a discussion about Australia’s national security architecture.

Australia faces an unprecedented convergence of threats. We are confronted simultaneously by the rise of aggressive authoritarian powers, global conflict, persistent and evolving terrorism, foreign interference and the normalisation of cyber warfare.

Luck will not protect us; we need structure and certainty. Australia saw these threats early and began to modernise its security architecture in 2017, including the establishment of the Home Affairs portfolio.

But the government has gradually reversed some elements of the consolidation, returning various security responsibilities to the Attorney-General’s portfolio, including for the Australian Federal Police and the Australian Security Intelligence Organisation. This reversion to an outdated model risks leaving the system ill-equipped to confront the challenges of the 21st century.

Debate on Home Affairs seems fixated on the leadership style of its former head, Michael Pezzullo. Leadership is crucial, but obsession with individual style over substance, distracts from both strategic thinking and the fundamental issue of resurrecting a system that had structural inadequacies and was demonstrably unfit for purpose. We are not simply revisiting a past model; we are resurrecting a failed one.

The Attorney-General’s portfolio, in its traditional guise, was designed for a simpler, less dangerous era. Domestic threats were minimal and tended to come one by one—for example, after the end of the Cold War, security focus shifted from espionage to the emerging threat of Islamist terrorism. The Attorney-General’s oversight was appropriate, as it focused primarily on the legal framework while security agencies executed operations.

However, the proliferation and intersection of modern threats have overwhelmed this antiquated model.

When confronted with asylum-seeker boat arrivals, global terrorism, China and hybrid threats including cyber, the previous system—notwithstanding highly talented people—struggled as the Attorney-General’s portfolio held both the legal and security responsibilities. Having public servants working on legal considerations and intelligence officers doing operations is no longer adequate.

The system’s limitations were evident well before the 2017 restructure. In 2011, prime minister Julia Gillard moved cybersecurity from the Attorney-General’s purview into her own department. Similarly, the 2012 review of illegal boat arrival policy was managed within the prime minister’s department, reflecting that the framework was not up to the task. And as a result of a review after the 2014 Martin Place terrorist attack, the Abbott government created a Counterterrorism Coordinator within the prime minister’s portfolio.

The rise of the Islamic State terrorist group in 2014 exposed policy deficits. While terror laws rightly fell under the Attorney-General’s remit, the broader policy response demanded a more strategic perspective and decisive approach. Changes were needed, partly because laws were so out of date.

But it was China’s rise that finally revealed the urgent need for a dedicated focus on national security policy. The 2016 review into foreign interference was a direct consequence of Australia’s evolving threat landscape.

Few of our closest partners’ chief law officers also function as security ministers. Typically, a dedicated security minister focuses on threat assessment and policy development, while the Attorney-General ensures that all actions are lawful.

Australia’s Home Affairs model strengthened the legal checks and balances by separating security policy and operational functions from the legal oversight function. It ensured that a single minister could not simultaneously identify a threat, determine the appropriate response and authorise the necessary actions without independent scrutiny. The previous system essentially allowed a single minister to mark their own homework.

Dividing security responsibilities between the Attorney-General and Home Affairs portfolios limits the effectiveness of both departments.

If this gradual dilution portends a future abolition of Home Affairs altogether, that would be a mistake. As the Dural caravan controversy unfolded, no one seemed able to agree on what was an appropriate amount of information-sharing between police and security agencies, and state and federal governments. This underscores the need for clarity that Home Affairs is responsible for setting, coordinating and implementing national security policy.

Home Affairs was created because the threat environment was evolving and, within our national security architecture, foreign and defence policy were covered but the third aspect of national security—domestic security—was lacking. So, what security evolution has justified its regression? The Attorney-General’s department has not shown itself to be more capable than Home Affairs in terrorism, cybersecurity or foreign interference.

Home Affairs—to the government’s credit—led the world by banning DeepSeek from government devices. Could we count on such decisive action if lawyers were doing all the work and then reviewing it themselves? Would you allow your lawyer to run your business, rather than provide essential legal counsel?

Technology amplifies threats and is advancing much faster than new laws can be written. Terrorists use encrypted apps to plot attacks and social media to attract recruits. China spreads propaganda through social media and has already begun using cyber intrusions to prepare to conduct sabotage operations in future conflict.

Australia must not only reinstate the separation between the security minister and the attorney-general; it must evolve further to confront 21st-century threats. This should include establishing a National Security Council or Secretariat, like those of many of our partner nations, including Quad countries. This body should be led by a national security adviser who provides strategic coherence and policy coordination.

To navigate the increasingly complex and dangerous global security landscape, we need to evolve, not regress.

More F-35s, more tankers: a reliable way to strengthen Australian deterrence

If the Chinese navy’s task group sailing around Australia a few weeks ago showed us anything, it’s that Australia has a deterrence gap so large you can drive a ship through it. Waiting for AUKUS or hoping Australia’s troubled shipbuilding program will deliver—in the 2030s—is a recipe for annual panic about grey zone coercion as Chinese deployments become routine.

Boosting our air combat capability is the fastest way to address Australia’s deterrence gap. That requires two things: more combat aircraft and more airborne tankers.

For decades, received wisdom has been that 100 fighter aircraft were enough for Australia. The logic was vague and came from the Royal Australian Air Force’s four fighter squadrons retaining different mission specialisations. Given multi-role capabilities and sensor fusion of modern aircraft, this specialisations argument is outdated.

So, can 100 aircraft provide credible deterrence?

Currently the RAAF has 72 F-35A Lightnings, 24 F/A-18F Super Hornets and 12 EA-18G Growlers (electromagnetic attackers), for a total of 108 combat-capable aircraft. The jets are supported by seven A330 MRTT tanker-transports (called KC-30As by the RAAF).

Combat readiness is a different story. The Australian Department of Defence doesn’t provide combat aircraft availability numbers, but in 2019 the then US secretary of defense, James Mattis, told the US Navy and Air Force to attain an 80 percent mission-capable rate for combat aircraft.

There are four RAAF F-35A squadrons, including one that’s a training unit in peacetime. Each is allocated 18 aircraft to provide an intended 14 ready for duty while airframes and engines are cycled through maintenance. Two of the 14 are usually held as spares during squadron operations. Therefore, in a crisis the Australian government can expect to call on 36 operational F-35As. The same considerations result in just 16 F/A-18Fs and eight EA-18G Growlers being available

That’s a total of no more than 60 aircraft for a continent the size of Europe—hardly enough.

During surge operations the 60 RAAF combat jets could all be available. But during ongoing crisis operations—such as conducting defensive combat air patrols in the east, north and west of Australia or keeping aircraft next to runways for quick intercepts—the air combat force will quickly run into sustainment problems.

Historical observations of British and US combat aircraft availability show the mission- availability rate can be even worse—for example, due to unreliable parts supply.

On an island continent, air power is the fastest and most efficient means of deterrence. But we just don’t have enough air power.

The Royal Air Force operates 171 combat aircraft and 14 tankers from a land mass 3 percent the size of Australia. The Japanese air force has about 330 fighters and a land mass 5 percent of Australia’s. No other nation seems as committed as Australia to doing so much with so little. The only comparable air force in size to the RAAF is Canada’s, which has 79 fighters.

If Australia is serious about retaining strategic independence, including the ability to credibly deter an enemy, we should increase the size of the RAAF’s fighter force by two squadrons—36 aircraft—and add four A330 MRTT tankers. This should be phased alongside introduction of unmanned semi-autonomous teamed aircraft on a ratio of three uncrewed systems, including some for refuelling, for each additional crewed combat aircraft.

Increasing the fighter force to seven operational squadrons, including the existing dedicated electronic attack squadron but not the training unit, and supplementing it with about 100 autonomous aircraft would grow the RAAF’s combat capability to 240 aircraft before 2034.

A force this size reduces the fragility of the current air combat capability by adding depth through numbers and provides the government with a much broader range of options.

The flexibility of packaged air combat aircraft means they can quickly swing between roles and locations in a matter of hours. Missions can range from air policing and regional assurance to cruise missile defence, maritime strike and counter-air missions. Combat aircraft can be permanently stationed on both the west and east coasts.

The United States is the only country that could supply 36 fighters quickly. The obvious choice is the F-35A, since Lockheed Martin is pushing out 150 fighters of that design annually. Moreover, acquiring aircraft of designs that are already in-service avoids the risks inherent in introducing new types.

Over the long-term, policy settings such backing the development of long-range autonomous and teamed systems can be put in place to make us more strategically secure. But what we need now is an air combat system that helps us understand, decide and act.

The building blocks are in place. The RAAF operates the Wedgetail airborne surveillance, P-8A Poseidon maritime patrol and MC-55A Peregrine electromagnetic surveillance aircraft. Combined with the Jindalee over-the-horizon radar network and Five Eyes intelligence-sharing arrangements, these give us a reasonable understanding of what is happening in our region and where.

But there must be greater emphasis on the action part of the system—the combat aircraft—because deterrence is about the potential for response.

This is an ambitious proposal that would require significant investment in airbase and support infrastructure, particularly in the north and west of the country. But as a realistic, actionable plan that secures Australia’s future it is within our reach. And what’s more, it can be attained in years, not decades.

Pressure Points: The importance of Australia’s military presence in East and Southeast Asia

This week ASPI launched Pressure Points, an interactive website that analyses the Chinese military’s use of air and maritime coercion to enforce Beijing’s excessive territorial claims and advance its security interests in the Indo-Pacific.

The project highlights and analyses open-source data, military imagery, satellite footage, official government responses and other resources to provide the public with a reliable and accurate account of Chinese regional activity, from its intercept tactics to its excessive claims. It analyses China’s unsafe military interactions with a range of countries, and looks at the way countries use (or don’t use) their military forces to challenge China’s excessive claims in the South China Sea.

A powerful Chinese task group recently circumnavigated Australia, energising debate among Australian commentators and politicians. Canberra was provided a close-up view of Beijing’s rapidly expanding military capability and intent to deploy forces that could—under different circumstances—threaten our cities, population and vital supply routes.

Coupled with growing anxiety around the US alliance and the state of our own aging fleet, the circumnavigation led some to question the activities of Australia’s military, including our commitments within the Indo-Pacific region. Why is Australia deploying military forces to China’s backyard? Aren’t our forces better used closer to home? Why are we provoking our largest trading partner?

These anxieties discount three important facts:

First, Australia’s economic and security interests are intertwined with the Indo-Pacific region. The Indo-Pacific has prospered for decades on the back of international law and rules and norms that have helped to shape the behaviour of states, both large and small. As outlined on Pressure Points, China is increasingly using its military and tactics below the threshold of war to challenge these rules and norms, coerce and deter other countries, and advance its strategic interests.

Regional deployment of Australia’s military helps push back on China’s unwanted advances and protect existing rules and norms, especially when our military conducts activities that challenge China’s excessive territorial claims (such as transits through the Spratly or Paracel Islands). International law is only likely to hold if countries such as Australia are willing to physically enforce it. But, as we have seen on five separate occasions since early 2022, these activities are not without risk. We should expect China to continue to use aggressive and unsafe behaviour to deter our military presence.

But the risk is worth it. Australia cannot afford the continued expansion of China’s excessive claims and the development of a Sinocentric order, which prioritises laws that favour Beijing’s interests, rather than an agreed set of international rules and norms. A continued military presence that supports international law and Australia’s partnerships is firmly in our interest.

Second, we should take stock that it is Beijing’s behaviour that is changing, not our own. Australia’s military has a long history in the Indo-Pacific region. Our warships have been sailing through the South China Sea since World War II. Our defence force has worked with partners across East and Southeast Asia (including China) for decades to increase common understanding and build military interoperability. Our military presence has been longstanding and consistent, and it is founded on longstanding regional partnerships with countries that want Australia to remain militarily engaged in the region.

In comparison, since late 2021 China has used unsafe military manoeuvres to coerce and deter the armed forces of the United States, Australia, Canada, the Philippines and the Netherlands. The actions of China’s Coast Guard and maritime militia have mirrored this increase in aggressive military behaviour, but they rarely project beyond the first island chain.

We are not provoking China—China is provoking us. Beijing seeks to disrupt and deter our longstanding military presence, as well as the presence of other militaries. Thankfully, the tide isn’t necessarily flowing in China’s favour. We have seen more countries deploy military forces to East and Southeast Asia in 2024 than in the previous decade. This presence acts as a bulwark against China’s aggressive behaviour.

Third, China has shown its ability to project military force into our region. We can expect this to continue. The circumnavigation was not a quid pro quo—Beijing was not trying to say ‘if you stay out of our backyard, we’ll stay out of yours’. China’s development of a blue-water navy capable of undertaking extended deployments in our region is part of a broader strategy of national rejuvenation, in which China becomes the pre-eminent global military and economic power.

The pursuit of this strategy will increasingly challenge Australia’s interests. But if we are going to challenge military actions from China, this is best done transparently with partners in the South China Sea, rather than on our own doorstep. China has demonstrated its ability to employ multifaced and flexible tactics to achieve incremental advances over time.

It is necessary to challenge China’s excessive claims in the region, while also responding to its increased military presence in our immediate vicinity. But to do both, Australia must dramatically boost the currently depleted capacity of the Australian Defence Force.

Australia surveys volatile and unpredictable geoeconomics

The international economics of Australia’s budget are pervaded by a Voldemort-like figure.

The He-Who-Must-Not-Be-Named is Donald Trump, firing up trade wars, churning global finance and smashing the rules-based order.

The closest the budget papers come to hinting at Voldemort are two references to the ‘US administration’.

Last year, Treasurer Jim Chalmers worried about a ‘fraught and fragile’ world. This year, the anxiety is realised; what was fragile is in pieces. Chalmers mourned a ‘volatile and unpredictable’ global economy, telling parliament: ‘The 2020s have already seen a global pandemic, global inflation and the threat of a global trade war. The whole world has changed as a consequence.’

Surveying that changed world, the budget papers predict global growth will stay subdued for the next three years, because of ‘considerable uncertainty’ (hi, Voldemort). Treasury’s three-year estimate of global growth is 3.75 percent, ‘the longest stretch of below-average growth since the early 1990s’.

In the budget, Treasury estimates the effect of the United States imposing a 25 percent tariff on all imports of durable manufacturing goods, such as steel and aluminium. While the tariff may lead to ‘a reduction in the real GDP of Australia, China and the United States over time’, the total effect of the tariffs on Australia’s economy by 2030 is ‘modest’. The indirect effect of the tariffs is nearly four times as large as the direct effect, reflecting the importance of trade flows between Australia, China and the US.

Inflation in the US would persistently increase as imports become more expensive, Treasury notes, while Australia would see ‘a small temporary increase in inflation’ because of depreciation of the Australian dollar. Model in retaliatory 25 percent tariffs by all countries, including China and Australia, and ‘the loss in real GDP is amplified’.

Treasury lists the factors pushing against China: immediate pressure from its property downturn, trade conflict with the US and ‘longer term, structural challenges, including a shrinking workforce and lower productivity growth’. While China grew by 5 percent last year, the forecast for this year is 4.75 percent, falling to 4.25 percent by 2027.

Japan’s growth is expected to be around 1.25 percent this year, then lower in 2026 and 2027. India is expected to keep powering on at more than six percent over 2025–27, driven by ‘robustness in domestic consumption, increased government spending, easing of monetary policy, and an expansion of the manufacturing sector’.

Beyond China, East Asia is forecast to grow by 4 percent over 2025–27, with domestic demand in key economies bolstered by an easing of monetary policy. ‘However, escalating trade tensions could dampen investor confidence and weigh on growth.’

The Voldemort effect on Australia’s discussion of geoeconomics is the same on geopolitics. What Canberra thinks of Trump versus what Canberra publishes about the administration is the difference between night and day.

To give you a hint of Canberra’s dark reality, consider US international relations professor, Daniel Drezner. His writing on US foreign policy is always measured and carefully judged, but on Australia’s budget day he published an article titled: ‘American Foreign Policy Is Being Run by the Dumbest Motherfuckers Alive’.

Canberra shares the horror, even if it’d use more Australian-flavoured swearwords. The contortions this forces on policy statements is on display in Australia in the World – 2025 Snapshot, issued by the Department of Foreign Affairs and Trade.

Foreign Minister Penny Wong’s foreword observes: ‘Australians face confronting signs that assumptions we have relied on for generations are less assured, with international security increasingly fragile. We live in a world of increasing strategic surprise—ever more uncertain and unpredictable.’

Any global scene-setter from an Australian foreign minister during the past 80 years would have had the US at its heart. Not this foreword. Perhaps there’s a Voldemort sighting in Wong’s lament: ‘Authoritarianism is spreading. Some countries are shifting alignment … Institutions we built are being eroded, and rules we wrote are being challenged.’

The text of the document drops the coyness to judge: ‘President Trump’s America First agenda envisages a different role for the United States in the world.’

The Trump reality is balanced by the paper’s traditional statement of what the US has been: ‘The United States of America is our closest ally, principal strategic partner and largest two-way investment partner. The Indo-Pacific would not have enjoyed its long, uninterrupted period of stability and prosperity without the United States and the security it provides, and it remains critical to a favourable balance in our region.’

Working for that balance, the DFAT strategy is to ‘prioritise region, relationships and rules’, focus on the Indo-Pacific and seek ‘unprecedented’ partnerships in the South Pacific while ‘turbocharging our economic ties with Southeast Asia’.

And hope that a volatile and unpredictable Voldemort doesn’t wreck too much.

The five-domains update

Sea state

Australian assembly of the first Multi Ammunition Softkill System (MASS) shipsets for the Royal Australian Navy began this month at Rheinmetall’s Military Vehicle Centre of Excellence in Redbank, Queensland. The ship protection system, which uses launched decoy projectiles to defeat incoming sensor-guided missiles, will be integrated into Australia’s ANZAC-class frigates and Hobart-class destroyers. The system has already been operated by New Zealand’s two ANZAC-class frigates for about 10 years.

Last week, Defence announced upgrades to the main transmitter at the Harold E Holt Communication Station near Exmouth, Western Australia—the first major overhaul since the facility was commissioned by the US navy in 1967. The Australian-operated very-low-frequency antenna array contributes to US nuclear deterrent through long-range communication with US ballistic-missile submarines. Maintenance will be carried out on a rolling schedule, to ensure the station remains in operation.

Flight path

China’s J-36 stealth fighter was back in the sky for its second test flight, this time flying solo. The test flights seemingly reveal two unique features: a diverterless supersonic inlet design that assists in regulating air flow and a three-engine layout. Both features suggest supersonic speed capabilities. The timing of its debut signals China’s readiness to challenge the United States’ aerial dominance in the Asia-Pacific region. Last weekend the US made a surprise announcement awarding the Next Generation Air Dominance contract to Boeing for the F-47 fighter jet.

Canada will become the first buyer of Australia’s Jindalee Operational Radar Network (JORN). The world-leading radar technology system can detect and track targets thousands of kilometres away by refracting high frequency radio signals. Its sale could be Australia’s biggest defence export to date. The surprise announcement from new Canadian Prime Minister Mark Carney comes despite the US’s long-held interest in acquiring the technology.

Rapid fire

The first two of 42 planned High Mobility Artillery Rocket Systems (HIMARS) vehicles were delivered to Australia this week. The Albanese government accelerated the acquisition of the US-made precision-strike platform. The systems will be fielded by the 10th Fires Brigade and improve army capabilities. The delivery follows the signing of a memorandum of understanding between Australia and the US in March for co-assembly of Guided Multiple Rocket Launch System (GMLRS) munitions for use with HIMARS platforms. Assembly will begin at Orchard Hills in Western Sydney later this year.

At the end of February, Defence Minister Richard Marles inspected the first batch of the Australian army’s new AS9 self-propelled artillery and AS10 armoured ammunition resupply vehicles. The South Korean designs will be manufactured by Hanwha at its Armoured Vehicle Centre of Excellence at Avalon. Australian supply chain partners are already producing components to support delivery. The AS9 is the army’s first self-propelled artillery piece. The army currently operates M777 towed artillery.

Final frontier

An Australian-made nanosatellite was successfully launched into low-Earth orbit as part of Defence’s Buccaneer project. Weighing less than ten kilograms, Buccaneer Main Mission was a collaboration between Adelaide-based Inovor Technologies and the Defence Science and Technology Group. Over its 12-month operational lifespan, the nanosatellite will gather data on how radio waves propagate through the upper atmosphere, potentially improving Australia’s over-the-horizon radar capabilities.

At the end of last month, US-based Varda Space Industries retrieved its Winnebago-2 space capsule after re-entry over remote South Australia. The landing site, Koonibba Test Range, is about 500km north-west of Adelaide. It is operated by Australian firm Southern Launch in partnership with the Koonibba Community Aboriginal Corporation. As the first commercial return to a commercial spaceport anywhere in the world, this is a landmark moment for Australia’s space industry.

Wired watchtower

Microsoft has released research showing that Russian state-sponsored hacking groups are expanding cyber operations to target critical infrastructure and governmental organisations in Western countries, including Australia. The BadPilot campaign is associated with Russian state actor Seashell Blizzard, and intrusions have targeted sectors such as energy, telecommunications and defence manufacturing. Hackers exploit known but unpatched vulnerabilities in widely used IT management and remote access software platforms. Once they gain access, they maintain their presence in compromised networks using legitimate remote-access tools such as Atera Agent and Splashtop remote services.

The Australian Securities and Investments Commission is taking fixed-income broker FIIG Securities to court after a 2023 cyberattack. The attack affected FIIG’s entire IT network and resulted in the theft of approximately 385 gigabytes of confidential data, potentially exposing the personal information of around 18,000 clients. ASIC alleged that FIIG failed to update and patch its software and lacked sufficient cybersecurity measures, leaving its systems exposed to intrusion and data theft. This breach contributed to growing concerns over Australia’s cybersecurity resilience and was part of a broader pattern of intrusions, including those attributed to state-backed groups.

Economic security and geostrategic competition: fostering resilience and innovation

Australia and other democracies have once again turned to China to solve their economic problems, while the reliability of the United States as an alliance partner is, erroneously, being called into question.

We risk forgetting lessons of the past when we cling to the long-gone notion of the free market, which Beijing sees as democracies opening themselves to China’s unfair business practices. Economics and security are closely linked: we must build resilience and foster innovation to prevent economic dependencies that weaken our security.

We should be concerned when countries impose tariffs on friendly countries, as the US is doing. It erodes trust, weakens solidarity among like-minded democracies and dangerously risks a tit-for-tat approach of revenge tariffs that will leave us all poorer. This drives inflation while passing costs onto consumers.

But while we need to keep working for a different outcome—as the Australian government is doing—we mustn’t focus on spot fires when the forest is ablaze.

Almost a decade ago, Australia led the world by abandoning an outdated foreign policy of balancing economics and security. We recognised that trade interdependencies didn’t deter conflict and that short-term financial interests should never outweigh security concerns. Balance sounded good in theory but in practice meant trade-offs that left us unsafe.

It was China’s actions that forced the change: having become our largest trading partner, Beijing used our economic reliance as leverage to implement a systemic program of security breaches and threats against us, from cyber intrusions to foreign interference.

Unfortunately, recent trends reveal that security trade-offs weren’t abandoned so much as temporarily paused. Many democracies are responding to immediate cost of living pressures and hoping security threats can be kicked down the road. This is a policy of security crisis delay, not deterrence.

Economic prosperity is needed to pay for security, and security without prosperity leaves us vulnerable to decay. But as is the case for individuals and households alike, assurance comes at a cost. So, the key question that confronts is what is the short-term price—an insurance premium of sorts—that we are willing to pay for long-term confidence of our prosperity and security?

Western countries need to look beyond resilience and risk reduction to embrace a more comprehensive strategy—one equally focused on (shared) innovation and competitiveness, especially in those emerging technologies that will determine future prosperity and security.

Brad Glosserman correctly argues that, in response, the US and its allies have been ‘doing economic security wrong’ by focusing almost exclusively on resilience and risk reduction. This has meant overlooking deterrence, and not prioritising future competitiveness. Partners and allies must define key industries and sectors, and stop choosing cheapest associated supply chain.

They must strengthen resilience by establishing frameworks to protect critical and emerging technologies from intellectual property theft and economic coercion by China. And, as Raquel Garbers argues, enhanced deterrence requires education on what economic warfare is and how it works, and with tools that disincentivise economic activities with hostile states.

Glosserman correctly emphasises the importance of supporting innovation and ‘unlocking innovative potential’. Resilience requires us to move beyond traditional notions of just protecting the economy to an approach that prioritises innovation and technological leadership.

To establish an effective strategy, we must understand what specific policies governments can implement to foster a innovation in critical and emerging technologies. This also requires increased collaboration between the US and its allies, particularly in areas where China has a strong lead.

We need to leverage the strengths of countries such as India, which ASPI’s Critical Technology Tracker has identified as an emerging centre of research excellence, to diversify research partnerships and build a more resilient global innovation network. We must also be wary of the short-term focus of shareholder capitalism and its negative impact on long-term economic security.

We should consider how can we rebalance the capitalist model to prioritise, incentivise and reward long-term investments in innovation and resilience. The prosperity and economic growth needed to best provide national security won’t result from protectionism, but from a long-term strategic approach to emerging technologies.

Doing so, however, will still require us to remember you get what you pay for. Any savings we gain from prioritising cheap supply chains in the present will ultimately be outweighed by higher security costs in the future.

We need to remember that short-term disagreements with friends will pass as they have before. National interests may on occasion come into sharp contest, but strategic alignment will persist. It is systemic and malign challenges that require our collective focus and investment.

The dangerous collapse of US strategic sealift capacity

The US Transportation Command’s Military Sealift Command (MSC), the subordinate organisation responsible for strategic sealift, is unprepared for the high intensity fighting of a war over Taiwan.

In the event of such a war, combat commanders would look to MSC’s approximately 125 ships to transport about 90 percent of US Army and Marine Corps equipment into the Western Pacific for combat operations: fuel, ammunition, vehicles, missile launchers, spare parts and more.

MSC readiness levels have dropped to 59 percent, due mostly to vessel material condition and age. Most of its sealift ships are reaching an age at which maintenance and repair costs are ballooning, and service-life extensions won’t improve readiness.

Most alarmingly, current estimates indicate that the sealift fleet will lose 90,000 to 180,000 square metres (1 million to 2 million square feet) of capacity each year as ships reach the end of their useful life. That compares with the current capacity of about 840,000 square metres (9 million square feet).

Recent fleet exercises also indicate that most of MSC’s vessels cannot complete long voyages or are completely non-mission-capable. Without immediate investment, sealift will remain largely incapable of supporting major sustained combat operations.

US planning takes for granted that sea lines of communication will be contested from homeport in the United States to theatre in the western Pacific. Contested logistics add an additional layer of complexity for war planning, specifically because MSC’s strategic sealift fleet, already stretched thin and atrophied, would be subject to attack. Ships and their cargoes would be lost.

The US Transport Command will likely have to activate its Voluntary Intermodal Sealift Agreement (VISA), which allows access to civilian commercial shipping to supplement military sealift capacity. While VISA enables increased lift capacity on paper, that comes with an implied trade-off: every commercial vessel seconded to military service is lost to US commercial capacity and revenue. There is also a risk that commercial shippers will suffer grievous losses in maritime combat. The government could compensate them, but their businesses would be badly damaged.

In 2017, the US Maritime Administration estimated that US civilian merchant shipping was 1800 qualified mariners short of requirements. Since then, that number has almost certainly increased. Obviously, in the event of a major mobilisation, the US will need sailors for its merchant ships.

The MSC’s strategic sealift fleet is woefully inadequate. While VISA may ease some of the inadequacy, it is unclear how effective civilian vessels would be in wartime. Moreover, even if the transport command activated VISA, the civilian merchant fleet would likely be crippled by a potentially fatal lack of interoperability among crews for want of shared experience. The US also faces a critical shortage of trained personnel.

The US Transport Command must take immediate steps to mitigate US sealift’s capability and capacity gaps. Failing this, the US and its regional allies and partners that also rely on US sealift face defeat. This is not because the US military cannot fight and win, but because the US military cannot support and sustain itself at scale on the other side of the Pacific.

Recapitalising the sealift fleet must be the MSC’s primary focus. The US needs to breathe new life into its domestic industrial base and revitalise its ability to rapidly construct ships. Fleet modernisation will obviously require building ships, but the US should also consider buying foreign vessels to bolster its merchant fleet until production capacity improves.

The US Merchant Marine must improve mariner recruitment and retention. No amount of new shipping or industrial capacity will make up for a lack of qualified sailors. The maritime administration should consider new incentive programs to bring talent to crews and vessels.

While it is vital to reinvigorate the US shipbuilding industry, and to attract and retain qualified sailors, these actions alone are not enough. The MSC must also conduct regular theatre-level exercises to train the sealift force and develop interoperability in the event VISA is activated. Fleet exercises lay bare problems in peacetime, providing the advantage of time to think through those problems.

In a war, any level of sustained attrition would quickly turn catastrophic without sufficient sealift. Underpinning all of this is the need to develop a comprehensive national maritime strategy. Such a strategy must align US policy objectives with resources and reality in the Pacific. This process is likely to be uncomfortable and require trade-offs, but it is fundamentally necessary. The alternative is almost certainly humiliating defeat for want of weapons, ammunition, fuel and equipment.

General John J Pershing, himself keenly aware of logistics, said ‘infantry wins battles, logistics wins war’. His axiom has likely never been truer. It is time to recognise that the US maritime logistics problem must be solved.

Defence budget doesn’t match the threat Australia faces

When Australian Treasurer Jim Chalmers stood at the dispatch box this evening to announce the 2025–26 Budget, he confirmed our worst fears about the government’s commitment to resourcing the Defence budget commensurate with the dangers Australia now faces.

A day earlier, Deputy Prime Minister and Defence Minister Richard Marles had advised that the government’s sole Defence initiative for the 2025–26 budget cycle would be to bring forward a paltry $1 billion from the 2028–29 financial year, shared across 2026–27 and 2027–28.  So, the much vaunted ‘generational investment in Australia’s Defence’ has been put off for a few more years, at least.

This marginal reprofiling of funds ($900 million additional in 2026-27 and $237 million additional in 2027-28 – so, in fact a little more than $1 billion) has been applied to submarine and missile capabilities, which continue to take up an expanded amount of defence capital expenditure

Consolidated funding for Defence, the Australian Signals Directorate and the Australian Submarine Agency in 2025–26 is estimated to be $58,988.7 million. It’s a nominal increase of $2,380.5 million (4.2 percent) over expected 2024–25 spending. Adjusting for expected inflation, as expressed by the 1.0 percent GDP deflator, the real increase will be 3.2 percent.

And to our considerable frustration, a detailed reading of the defence budget highlights that the government continues to pay only lip service to the readiness and sustainability of the current force-in-being, with the largest spending increases on capability sustainment tied to the F-35 Lightning force ($190 million) and Collins-class submarines ($235 million). While $133 million is allocated to sustainment of a new Defence Logistics program, there is little to no change overall to sustainment funding, usage and workforce from last year’s budget.

As we noted in The cost of Defence: ASPI Defence budget brief 2024–2025, the urgency of our current security environment (eloquently expressed in the independent Defence Strategic Review in 2023, confirmed by this government in the National Defence Strategy (NDS) in 2024, and made manifest by the inability to properly track the Chinese naval flotilla’s circumnavigation of Australia just weeks ago) is not being matched by resources from the public coffers.

There are four possible reasons why the government continues to stint on resources that match the threat Australia faces.

Firstly, it may not really believe that the threat is as great as it spelt itself out in the NDS. The rhetoric of Australia ‘facing the most challenging strategic environment since the Second World War’ may conceivably have been used solely as a means of mobilising some action within the government but without any real concern that Australia was becoming increasingly vulnerable.

This would certainly be backed up by this government’s actions: a focus on military capability spending almost entirely as additions to the order of battle well into the 2030s and in the 2040s, while continuing to underspend on the readiness and sustainability of current forces.

A second possible explanation is that the government may not yet trust the Department of Defence’s ability to spend more. Marles has certainly been critical of Defence, claiming that it lacked the culture of excellence necessary to deliver on the government’s agenda.

The NDS speaks to the need for both strategic and enterprise reform of the Defence organisation, and for the organisation to become fit-for-purpose if it is to gain access to the resources needed to build the force set out in the 2024 Integrated Investment Program, the long-term spending plan. This would not be the first government to hold back on funding defence until it actually sees reform resulting in a more effective and efficient delivery of Defence’s outputs.

Thirdly, the government perhaps does not want to be seen responding to the Trump administration’s call for allies to increase defence spending. There has certainly been a huge spike in anti-US, anti-AUKUS commentary since the Trump administration came to office in January.

Fourthly, the government may not believe that the politics of additional funding to Defence make sense less than two months before the election due by May. At a time when average Australians are struggling with cost-of-living challenges, and this pre-election budget seeks to allay concerns within the electorate that the Albanese government has not done enough to meet its previous election commitments to making Australians better off, funding Defence may not be seen as an election winning strategy. A February Ipsos poll shows defence being quite far down the list of concerns that face Australians.

The 2025–26 budget is, sadly, an opportunity lost. In failing to adequately fund defence, the government has lost the opportunity for at least one year to convince our interlocutors in the US that Australia is doing enough to build up its forces. As defence funding will reach only 2.33 percent of GDP in 2033–34, we are still a far from the expectation of the nominated under secretary of defence for policy, Elbridge Colby: that we will spend at least 3 percent of GDP on defence.

The budget is also a lost opportunity for Australian industry, which is becoming increasingly frustrated at slow defence procurement. More and more companies are abandoning the defence market due to the risk averse, overly bureaucratic and delayed or abandoned project cycles they are forced to deal with.  Without market signals that Defence is seriously investing in Australian industry and is committed to building the Australian national support and industrial base it needs to deliver capability, we stand to lose considerable expertise, workforce and sovereign industrial capability, that can never be replaced.

And finally, the budget is a lost opportunity for Australia’s defence and security.  Since the 2020 Defence Update, successive Australian governments have warned that the security environment facing Australia is worsening exponentially. Recent events have demonstrated just how fragile peace and stability is and highlighted the need for Australia to have a force-in-being that is prepared and ready to defend Australia. The ministerial foreword to the NDS started with the axiom that there was no ‘greater responsibility for the Government than defending Australia’.

The failure of this year’s budget to meet that responsibility will make all Australians less secure.

It’s time for the ADF to train in Asia-Pacific languages

The proposed negotiation of an Australia–Papua New Guinea defence treaty will falter unless the Australian Defence Force embraces cultural intelligence and starts being more strategic with teaching languages—starting with Tok Pisin, the most widely spoken language in PNG.

More generally, the ADF needs a language training program focused on its region, shifting from an outdated focus on Middle Eastern languages. Linguistic interoperability and cross-cultural intelligence are necessary for building a trusted, sustainable partnership in the region.

By realigning its language priorities, the ADF can maximise operational effectiveness with minimal investment. At this stage, there is very little known about the defence treaty, outside of its proposed negotiations. Noting PNG’s geographic proximity to Australia, a defined defence treaty is overdue.

Yet despite their historical ties and close geographic proximity, Australia and PNG have a complex and, at times, fragile relationship. From colonial legacies to contemporary frictions over aid, security interventions, and the conduct of ADF personnel, trust cannot be assumed.

For defence cooperation to succeed, Australia must do more than rely on formal agreements or institutional goodwill. True partnership requires social license—genuine, earned trust between military forces, governments and local communities. Language and cultural fluency are fundamental for building that trust.

One of the greatest obstacles to effective Australian military engagement is language training. For two decades, the ADF has prioritised such Middle Eastern languages as Arabic, Urdu, Pashto and Farsi, reflecting what is now a former operational focus. Australia’s strategic priorities have shifted to the Indo-Pacific, so its military language training should, too.

Even harder to justify is continued ADF training in the languages of European countries whose armed forces play a small role on this side of the world and, in any case, use English as a NATO standard.

PNG presents a particularly challenging linguistic environment, with over 840 living languages. But Tok Pisin is a practical choice. As an English-based creole, it is fairly easy to learn for ADF troops and is useful in military, governmental and community settings.

Bahasa, in either its Malay or Indonesian form, should also be considered for wider ADF language training. Though distinct, the two branches of the language are mutually intelligible, enabling communication with around 300 million of Australia’s neighbours across Indonesia and Malaysia. It is a cost-efficient option that is highly relevant to contemporary ADF operations.

Linguistic interoperability alone is not enough; it must be paired with deep cultural understanding. Effective military cooperation is not just about tactics and technology; it is about people. To foster lasting partnerships, ADF personnel must be able to engage with counterparts from neighbouring countries on their terms, understanding local norms, social structures and historical sensitivities.

Missteps in communication and behaviour can rapidly erode trust. Historical examples support the importance of linguistic interoperability: In my role at the Australian War Memorial, I have been reviewing operational benefits of deeper cultural intelligence between British officers and Pacific island troops in World War II. Without cultural fluency, Australia risks being seen as an external force imposing its own agenda, rather than a genuine partner committed to PNG’s sovereignty and security.

The success of the Australia–PNG defence treaty will not be determined by the text of the agreement alone. It will be measured by the strength of relationships built on the ground. To ensure this partnership is meaningful, Australia must move beyond generic regional engagement strategies and make a deliberate investment in linguistic and cultural capability.

The first step in revising ADF language training is clear: Tok Pisin must move to the centre. If funding allows, Bahasa makes sense as a second-order line of effort.

In international military deployments, every word matters, every cultural nuance shapes perception, and every action either builds or erodes trust. If Australia is serious about its commitment to its neighbours, especially PNG, it must invest in linguistic and cultural capabilities.

China’s shadow fleet threatens Indo-Pacific communications

China is using increasingly sophisticated grey-zone tactics against subsea cables in the waters around Taiwan, using a shadow-fleet playbook that could be expanded across the Indo-Pacific.

On 25 February, Taiwan’s coast guard detained the Hong Tai 58 after a subsea cable was cut in the Taiwan Strait. The vessel was registered to Togo but crewed entirely by Chinese nationals. It had Chinese characters on its hull and operated under multiple identities with conflicting markings, documentation and tracking data. In another incident in early January, the Shunxing 39—a Chinese-owned vessel flagged under both Cameroon and Tanzania—was implicated in damaging a section of the Trans-Pacific Express subsea cable, an important telecommunications link between Taiwan and the United States.

While China has targeted Taiwan’s undersea cables for years as part of its grey-zone operations, it has subtly shifted tactics. Previously, vessels involved in suspected acts of sabotage were registered to China. Now, they are increasingly operating under foreign flags, forming a shadow fleet. This strategy resembles Russia’s subsea cable tactics in the Baltic Sea.

States such as North Korea and Iran often use shadow fleets—ageing vessels registered under flags of convenience—to get around sanctions, to trade or transport illegal or prohibited goods, or to undertake illegal fishing. The vessels are operated through intricate corporate structures, with shell companies established in one country, management based in another and vessels registered elsewhere again, providing states with deniability. They use deceptive tactics including manipulating identification systems, turning off tracking systems and changing names and flags. If caught, vessels can be easily abandoned and their legal entities dissolved, rendering traditional countermeasures such as sanctions largely ineffective.

Since its invasion of Ukraine, Russia has relied on a large shadow fleet, not only to evade oil sanctions but also to conduct a campaign of hybrid warfare against NATO—including allegedly damaging European subsea cables and critical infrastructure. For example, in December, Finnish authorities seized the Eagle S after it allegedly damaged five subsea cables. The tanker was flagged under the Cook Islands but operated by a Dubai-based company with Indian management. Moscow denied any involvement, pointing to the vessel’s non-Russian links.

China has also surfaced in Russia’s operations. In November, the Chinese-flagged Yi Peng 3—which had departed from a Russian port—was suspected of severing two undersea cables, one linking Lithuania to Sweden and another connecting Germany to Finland. In 2023, the NewNew Polar Bear, a Chinese-flagged but Russian-crewed vessel, was responsible for damaging Baltic subsea cables and a gas pipeline. China admitted the vessel was responsible for the damage, but claimed it was accidental.

These cases highlight the value of shadow fleets as tools of hybrid warfare. Subsea cables are notoriously susceptible to accidental and environmental damage. Proving intent to sabotage and holding parties accountable is very difficult.

Despite this, NATO has been working to expose and deter Russia’s hybrid warfare tactics.

Taiwan has taken note. In January, it blacklisted 52 Chinese-owned vessels suspected of operating as its shadow fleet registered in countries such as Cameroon, Tanzania, Mongolia, Togo and Sierra Leone. Following the recent cable-cutting incidents, Taiwanese authorities publicised detailed evidence—including vessel ownership, flag state and tracking system manipulation details—to pre-empt China’s denial. They have also been tracking and boarding suspicious vessels. Taiwan recently raised the alarm about a Russian-flagged vessel lurking for weeks over a subsea cable, recognising the growing coordination between China and Russia in hybrid warfare operations.

While Taiwan has borne the brunt of these efforts so far, China is unlikely to be overly concerned about deniability over future subsea cable sabotage affecting Taiwan. After all, Beijing’s primary goal is to exert pressure on the island, not conceal its intentions.

However, what happens in the Taiwan Strait will not stay in the Taiwan Strait. China’s shadow-fleet tactics are likely to expand across the Indo-Pacific, where maintaining a level of deniability would be beneficial. China already deploys grey-zone tactics in the region, from intimidation of vessels in the South China Sea and targeted incursions in disputed territorial waters, to strategic infrastructure investments that create leverage over its neighbours. Targeting subsea cable infrastructure is another tactic in Beijing’s coercion toolkit—one that targets connectivity while maintaining plausible deniability and operating in the grey-zones of international law and accountability.

The Indo-Pacific—with its vast maritime distances, congested shipping lanes and uneven surveillance capabilities—is fertile ground for such operations. Frequent accidental cable damage and existing territorial disputes may further complicate attribution and response. The region’s economic ties with China would make coordinating any responses even harder.

From filing patents on subsea cutting technology to unveiling a powerful new deep-sea cable cutting device, China’s clearly gearing up to expand its subsea cable operations. As Taiwan works to protect its critical infrastructure, the rest of the Indo-Pacific should enhance regional cooperation and reassess existing deterrence strategies.

If recent incidents in the Baltic Sea and around Taiwan are any indication, disruptions in the Indo-Pacific are not a question of if, but when. The most effective counter to Beijing’s shadow-fleet operations is exposure through public attribution and communication. After all, a vessel cutting cables near a state’s shores may well be flying a neighbour’s flag but taking its orders from Beijing.