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In March, shortly before federal election, the Coalition government released a defence budget that continued its record of delivering the funding it promised in the 2016 defence white paper and 2020 defence strategic update.

For 2022–23, the consolidated defence funding line (including both the Department of Defence and the Australian Signals Directorate) is $48.6 billion, which is 2.11% of GDP based on the budget papers’ estimates of GDP. That funding represents a very substantial nominal growth of 7.4% compared with 2021–22. It’s the 10th straight year of real growth, but with inflation running hot, it’s hard to determine a precise percentage. We’ve estimated it at 3.8% based on the budget papers, but if inflation stays around 5%, the real growth figure will be less. That will hurt Defence. Just as inflation eats into Australian families’ budgets, it’s eroding Defence’s buying power.

As I explain in The cost of Defence: ASPI defence budget brief 2022–2023, released today, despite disruptions to supply chains, Defence and its industry partners have achieved significant increases in acquisition spending. While Defence may have fallen short of its acquisition spending target in 2021–22, it still achieved a $2.1 billion increase on the previous year, which was itself a $1.5 billion increase on the prior year. That’s translating into growing local spending, in both absolute and relative terms compared to overseas spending. I’ve written previously that the Australian defence industry will need to eat a very large elephant as Defence’s acquisition and sustainment budgets grow. So far, it’s demonstrating that it has the appetite to do that.

Capability continues to be delivered across all domains. There’s no doubt that the Australian Defence Force is getting better. But we’re seeing the realisation of risks inherent in an acquisition program built around megaprojects. Such projects take years or decades to design and deliver, while spending huge sums for little benefit in the short term. When they encounter problems, those problems are big.

The cancelled Attack-class submarine program has cost more than $4 billion and delivered nothing. The Hunter frigate program continues to experience delays and won’t get a vessel into service for over a decade. The Boxer combat reconnaissance vehicle project has spent close to $2 billion, but only 25 training vehicles have so far been delivered. While the nuclear-powered attack submarine program has the potential to deliver a huge step-up in undersea warfare capability, it’s the mother of all megaprojects and has a risk profile to match.

As the megaprojects ramp up (with more than $20 billion in infantry fighting vehicles potentially added to the list of committed funds), their cashflow requirement will increase, tying the government’s hands at a time of rapidly growing strategic uncertainty and evaporating warning time.

The new government will have some significant issues to address. Perhaps the biggest one is the size of the defence budget. The incoming government has said that it supports the current level of funding. While that continues to grow in real terms, it was originally developed in 2015 and hasn’t changed since then, despite the significant worsening of our strategic circumstances. Russia’s illegal and unjustifiable invasion of Ukraine has reminded us that war has not gone away and remains a tool of authoritarian states. China’s influence in our near region is growing and could result in a permanent Chinese military presence. The US is looking to its allies and partners to do more, as they must.

As always, the government will need to adjudicate between competing priorities for funding. At a time when Australians are dealing with the rising cost of living, spikes in energy prices and the grinding pressure of housing affordability, it may be tempting to reduce defence spending. However, the government should be aware of the results of doing so.

The budget is already full, with no pots of unallocated cash. Any short-term windfall delivered by the cancellation of the Attack-class submarine is already gone—as the cancellation of the SkyGuardian armed uncrewed aerial vehicle to help deliver a $9.9 billion offset for the REDSPICE cyber program reveals. So even holding the defence budget strictly at 2% of GDP will result in substantial, multibillion-dollar reductions to the funding line in the 2020 defence strategic update, inevitably leading to cuts in capability.

It’s not clear that the strategic update’s funding line is even sufficient to deliver the current investment plan. That program includes platforms far larger or more numerous than those they’re replacing as well as entirely new capabilities, all requiring a much larger workforce. Many capabilities have ended up costing more than was originally budgeted for in Defence’s investment plan. The nuclear-powered submarine program will cost significantly more than the Attack class; it’s anybody’s guess how much more. So the first order of business should be for the government to understand the affordability of the current plan.

Then it will need to assure itself that the planned force structure is aligned with what the government thinks the ADF should be doing. It’s easy to make a case for the tactical utility of any capability, but how does it fit into the overall strategy? The government will need to make decisions about which sovereign capabilities it needs to hold and which capabilities it can rely on allies and partners. And the nub of our current security challenge is that the former are growing while the latter are shrinking.

A further challenge that the government will need to consider is Defence’s people problem. The number of contractors in Defence’s external workforce continues to grow at significant cost, but Defence can’t deliver its ambitious capability program without them. Is that growth the best option available to Defence or simply the only one? Moreover, the investment program will require 20,000 more uniformed personnel to operate the capabilities Defence is acquiring. With the ADF averaging net annual growth of only 300 people, is that target attainable? And, if it’s not, is the future force structure viable?

In these testing times, the government needs to seize every opportunity available to it to increase capability rapidly, even if that means overruling Defence’s long-term vision for the future force. That means doing more with what we’re already getting, such as increasing the lethality of the offshore patrol vessels that are soon to enter service.

There are encouraging signs that Defence is engaging more actively with ‘the small, the smart and the many’; that is, cheaper, disposable, highly autonomous systems that can be produced rapidly by Australian industry. Investing more heavily in such systems is a crucial hedging strategy against the risk inherent in the megaprojects; plus, such systems will figure heavily in future warfare, whatever may become of the megaprojects.

Similarly, the new AUKUS partnership’s advanced technologies programs and the sovereign guided weapons enterprise offer the prospect of delivering meaningful capabilities soon. Yet we’re two years into the guided weapons enterprise and still have heard nothing about which weapons will be produced and how it will be done. We can’t apply the kinds of timelines and processes that have been features of the megaprojects to these lines of effort.

Overall, the government has its work cut out for it. Whatever path it chooses, it will need to bring the Australian public along on the journey. To do that, the government will need to reset the conversation about the defence budget and how it’s spent. That will require a commitment to transparency, accountability and sharing information. That means accepting the risk that bad news will get out along with the good, but an informed public is fundamental to democracy.

With Prime Minister Anthony Albanese’s attendance at the Quad summit in Tokyo hot on the heels of an in-flight phone conversation with UK Prime Minister Boris Johnson regarding AUKUS, it appears that small-group configurations—‘minilaterals’—have acquired a central place in Australia’s approach to regional security. The new PM’s race to the Quad leaders’ summit only hours after his election victory demonstrates the paramount importance he, like his predecessor Scott Morrison, attaches to such cooperative mechanisms.

The terms ‘Quad’ and ‘AUKUS’ are now highly familiar to any follower of international affairs.

Defining ‘minilaterals’ defies a single or simple answer. To reduce them to their essence: they are small-group (typically 3-6 members) configurations that bring together ‘like-minded’ partners in alignment to work on practical solutions to shared policy challenges.

Exclusive minilateral groups typically unite around a common purpose that brings their members into alignment. This distinguishes them from much larger pan-regional multilateral forums aimed at simply bringing states into dialogue (such as the East Asian Summit or ASEAN Regional Forum). The latter are more inclusive, but encompass too many states to form easy consensus, and often contain antagonistic parties.

Minilaterals may be functionally specific, designed to focus on one issue area such as economics or security, or may adopt a more multi-faceted and comprehensive common agenda.

Even security-orientated minilaterals are no longer confined to ‘traditional’ security issues but increasingly focus on ‘security’ writ large to facilitate collaboration on economic, environmental and health (pandemic) and other non-traditional security challenges.

As relatively informal institutions, they are aimed at retaining flexibility and adaptability, and generally lack a developed organisational apparatus and/or infrastructure. Nor are they bound by mutual defence treaties, as found in military alliances.

Minilaterals are set apart from larger multilateral security institutions like ASEAN-plus but exist in a state of dynamic tension with them. For example, the Quad pays due deference to ASEAN ‘centrality’ in is official statements, including linkage with the ASEAN outlook on the Indo-Pacific, while—so far—AUKUS has not referenced ASEAN, and is viewed with scepticism by the Southeast Asian grouping.

Minilaterals are open-ended groupings in that they are potentially amenable to deepening or widening the field of cooperation or expanding their membership—provided the candidate state shares the core mission and values of the minilateral. Ill-considered admission of new members, or too many new members, would undermine these, effectively transforming them into multilaterals.

There are, of course, caveats to this general formula, and every minilateral will be unique. For example, the former six-party talks (2003-2009) did bring together the US, Japan and South Korea with North Korea, China and Russia for the (nominally) common purpose of denuclearising the peninsula, but the divergent interests of the assembled parties were ultimately irreconcilable, finally leading to North Korea’s withdrawal.

Australia’s deep investment in minilateral formations is relatively easy to account for. The country’s formidable array of defence networks includes its pivotal alliance with the US and its special strategic partnership with Japan, and extends to trilateral and quadrilateral cooperation, and beyond. As a geostrategically located ‘middle power’ Australia is deeply affected by the swirling currents of competition in the Indo-Pacific but lacks the indigenous resource base and capabilities to provide for its security independently. Allies, partners and minilateral alignments are therefore a strategic necessity to safeguard Australian national interests (often in tandem with its values). Several minilaterals such as the Quad, AUKUS and others are also ‘networked’ into the US ‘hub-and spokes’ alliance system in the Indo-Pacific; the greater edifice upon which Australia depends to ensure its national security and uphold the regional rules-based order.

Despite being overshadowed by the larger powers of the US, Japan, India and the UK, Australia’s contributions to the Quad and AUKUS are viewed positively by its partners. It brings assets such as its geostrategic location (training grounds and facilities, especially in the Northern Territory), diplomatic influence (especially in the increasingly crucial South Pacific), a small but capable military, (with ambitious plans for modernisation) and a ‘can-do’ attitude. In return it intensifies its interaction with these major powers, gains access to advanced defence technologies and acquires a more influential voice in shaping the regional security environment. This becomes a ‘virtuous circle’ as the major powers assist Australia develop its engagement and capabilities, the country’s appeal as a valued partner increases commensurately.

Though the Quad and AUKUS have dominated discussion of Australia’s minilateral activities, the practise of minilateralism to supplement (and reinforce) the US alliance and the broader ASEAN-led regional architecture did not begin or end with these two examples. Several other minilateral configurations remain important to Australian strategic policy.

In particular, the Trilateral Strategic Dialogue (TSD) process with the US and Japan, initiated in 2001, holds high potential and is overdue for a renewal, having last met in 2019. The TSD unites Australia and Japan as the two most proactive of America’s allies—and ‘special strategic partners’—into a closely knit and potentially highly effective mechanism, especially when it comes to addressing more traditional military threats. With shared adhesion to Washington’s’ Indo-Pacific strategy, the military forces of the three powers are complementary and interoperable, and, unlike the Quad, are less subject to equivocations over strategic signalling, as witnessed recently though India’s divergent response to the Russian invasion of Ukraine.

Likewise, the 1971 Five Power Defence Arrangements involving Australia, the UK, New Zealand, Malaysia and Singapore, is an often overlooked relationship, yet it remains an important facilitator of defence cooperation in peninsular Southeast Asia, creating synergies with AUKUS and Britain’s Indo-Pacific ‘tilt’ policy.

The list goes on. One could mention the Australia–India–Japan trilateral, but this would seem of relatively less utility than the Quad itself, or the Australia–India–France trilateral, again of lesser import and utility, and recently tainted by the diplomatic travails between Canberra and Paris over AUKUS. Not all minilaterals acquire the profile and relevance of the Quad or AUKUS.

Of course, the diplomatic landscape is littered with defunct or otherwise moribund minilaterals such as the six-party talks, the Korean Peninsula Energy Development Organization, the Trilateral Cooperation and Oversight Group and the Trilateral Cooperation Secretariat. Each and any minilateral is subject to dissolution, but certain configurations appear to be going from strength to strength with both political endorsement and strategic analyses taking optimistic views on the Quad and AUKUS.

There is good reason for Canberra to support greater integration within its most prominent minilateral mechanisms as they provide valuable intersections with—or alternatives to—both the US alliance and the multilateral regional architecture. In this respect they add another powerful instrument to Canberra’s diplomatic and strategic toolkit as Australia faces unprecedented challenges to its national security.

China is seeking a security, policing and communications cooperation deal with 10 Pacific island countries, according to documents seen by Reuters. Chinese Foreign Minister Wang Yi’s whirlwind tour of the Pacific beginning today in Solomon Islands will reach its peak at a 30 May foreign ministers’ meeting in Fiji.

China has pushed a draft communique to the 10 Pacific island countries involved in advance of the meeting. Almost immediately, Federated States of Micronesia President David Panuelo expressed concern about the Chinese Communist Party’s intent.

This pushback is vital for regional stability and the cynicism over China’s intent or motivation is key—why is China doing this and why now? As ASPI’s Executive Director, Justin Bassi recently wrote, China’s ‘end game is to push out US and allied interests, achieve regional hegemony, create vassal states, control access to supply chains and improve its ability to take Taiwan with minimal costs’.

Panuelo also recently wrote to Solomon Islands Prime Minister Manasseh Sogavare urging him to reconsider the potential regional security impacts of a Chinese military presence in Solomon Islands. Panuelo fears this new, broader agreement could increase tensions and spark a new Cold War between China and the West.

According to Reuters, Panuelo pointed out that this was a ‘pre-determined joint communique’. The CCP would like all Pacific island countries to blindly follow the script, but Panuelo is unlikely to be the only Pacific leader to have issues with the agreement.

The challenge for Australia and the region is that we are competing with China’s ‘predatory mercantilism’ which undermines the international rules-based system and directly threatens our interests. Australia, the US, New Zealand and others should back in the Pacific islands, which means pouring sunlight on China’s actions and intent. The draft regional agreement and Wang’s visit are clearly part of a scaled-up effort towards Chinese regional hegemony and influence in critical economic and security sectors.

Some Pacific countries have existing bilateral policing relationships with China, with Fiji’s being the most developed, but a regional agreement such as this would likely aim to take engagement to new heights.

The draft communique reportedly pledges cooperation on data networks, cybersecurity and smart customs systems. This would provide the CCP with opportunities to collect biodata and conduct mass surveillance. Some of this may be used for policing, but it will also serve other purposes for the CCP. Increased transparency, including leaks, of China’s human rights abuses of religious minorities in Xinjiang and the harsh crackdowns of entire cities during the Covid-19 pandemic should be a deep concern to all in our region.

In the lead up to the APEC leaders’ summit in Port Moresby in 2018, Papua New Guinea accepted about 200 gifted surveillance cameras and a Chinese EXIM bank loan for a Huawei-built data centre. Although proving too costly to maintain, this data centre was later revealed to be highly vulnerable to remote access and the information it collected would have been readily accessible by the CCP.

China’s proposed action plan also reportedly includes the provision of forensic laboratories. China has previously gifted digital forensic labs across Southeast Asia, including to Vietnam. ASPI’s Mapping China’s Tech Giants project shows that these labs were developed in cooperation with Meiya Pico—a CCP-affiliated digital forensics and information-security company that has been linked to the surveillance software MFSocket scandal.

The CCP could use some of this surveillance data for other malign purposes that do not serve the interests of Pacific island countries. The risks that mass surveillance and monitoring technologies can pose to developing countries have already been highlighted in numerous cases across Africa.

China’s extraditions in Fiji in 2017 and Vanuatu in 2019 should also serve as a reminder that Pacific sovereignty isn’t one of Beijing’s concerns when tackling crime abroad. Both events raised concerns over China’s policing and extradition practices and questioned Fiji’s and Vanuatu’s abilities to uphold the law in their own countries.

Preventing the opportunity for surveillance activities like those identified above is part of the reason Australia has already invested enormous amounts of money into outbidding China and blocking its access to critical digital infrastructure in the region.

Mass surveillance is against Australia’s values and interests, at home and abroad. Australia’s new Prime Minister Anthony Albanese has made it clear that ‘Australia should always stand up for [its] values’.

These agreements and the potential for a Chinese military presence are not just against Australia’s interests but the entire Pacific’s, so more leaders need to make their voices heard. They also need to know they will have Australia’s ongoing support to meet their development, security and training needs.

Australia’s new government couldn’t be clearer with its intentions to listen to the Pacific and build even further on the already significant Pacific step-up investment.

Foreign Minister Penny Wong said on her first day in her new role that Australia wants to ‘help build a stronger Pacific family’ and ‘bring new energy and more resources to the Pacific’.

This includes plans to establish a new Australia Pacific defence school that will increase training programs for select Pacific countries’ defence and security forces.

Focusing on our Pacific relationships first and foremost is essential through practical support and investment in critical sectors that will drive development and security. But more money is not the silver bullet. To outcompete China without using its tactics of bribery, bullying and breaching of sovereignty, Australia needs to push back, and hard, against actions that are not in our interest and support the Pacific voices that share our concerns. This requires resources backed in by influence and power in the region, ensuring transparency of malign behaviour and a mobilisation of like-minded partnerships and alliances.

Australia has a new government and the climate war draws to a close.

The voters have delivered a realignment of politics as well as power.

Labor has crept back into office with a historically low primary vote. Only one third of electors made the party their first choice.

The ALP is triumphant but this is more tough win than triumph. Still, a ‘win is a win’, a pragmatic phrase for a close election that’s changed much.

Anthony Albanese is Australia’s 31st prime minister. He joins Gough Whitlam (1972), Bob Hawke (1983), and Kevin Rudd (2007), to become the fourth Labor leader to take the party from opposition to government since World War II.

After nine years in office, the Liberal Party is pushed into purgatory, losing House of Representatives seats to Labor, the Greens and independents.

Electorally, the heart has been ripped from the Libs; they’ve lost a swathe of heartland suburban seats that have defined the party. They’ve toppled from their base, symbolised by the loss of Kooyong by the deputy leader, Treasurer Josh Frydenberg. Kooyong isn’t just heartland, it’s the heart—the seat held by Robert Menzies, the founder of the Liberal Party. The  identity crisis arrives as a heart attack.

The colour imagery of the ‘teal’ independents gets it exactly—the teals merge the Liberal blue with the climate imperatives of the Greens. Thus, the teals attacked from the Liberal centre in those heartland seats as the base rose up.

In claiming victory, Albanese declared, ‘Together we can end the climate wars.’ Victory for the teals, as much as for Labor, defines the result of the war.

The Liberal history of denialism crashed into an electorate that’s decided the science is settled. The ABC’s Election Compass found climate change was the top election issue nominated by 25% of respondents.

Prime Minister Scott Morrison strained mightily to drag the Libs closer to the science side of the fight, but he becomes another political casualty of climate. On the roll of those who fell on the front line, Morrison joins Malcolm Turnbull, Tony Abbott, Julia Gillard and Kevin Rudd—five prime ministers whose careers were deeply wounded and then truncated by the conflict.

The five prime ministerial casualties reflect the intensity of the climate war that has run for 15 years. Following a decade of skirmishing, date the start of major hostilities from 2007, when John Howard lost office. Howard took some wounds in the climate debate, but it wasn’t the defining issue in the defeat of his government.

Indeed, if we’d implemented the 2007 climate policies of either John Howard or Kevin Rudd (and they had much in common) we’d be much further down the road to where Australia needs to be. The climate war has sent us wandering through no-man’s land for 15 years, and the teal women have declared that we’re finished with that no-man’s stuff.

Today’s identity crisis for the Liberal Party shows how international issues have shaped and remade Australian political parties during our 120 years of federation.

Labor split three times during the 20th century—in World War I, the Great Depression, and over the challenge of communism (in Bob Carr’s vivid phrase, ‘Labor blew its brains out’). Nothing so dramatic for the conservative temperament. Instead, the anti-Labor parties spent the first half of the 20th century fusing and rebranding themselves under half a dozen party banners.

The Menzies genius—calling politics ‘both a fine art and an inexact science’—was to create a Liberal brand that’s endured for 75 years and constantly delivered power. Now the Libs must refashion their identity to save the brand.

Savour the brutal efficiency of an Australian election. Counting started as the polls closed at 6pm on Saturday. Just after 10pm, Morrison rang Albanese to concede defeat. By 10.50pm, Morrison was speaking to Australia, announcing he’d step down as Liberal leader. Fifteen minutes before midnight, to chants of ‘Albo’, the man who will serve as the 31st  prime minister fronted the cameras.

The electoral efficiency is delivered by the sturdy structures of Australian democracy—the political and policy agreements of a successful country that has much that it can agree on. That truth was reflected in the Labor–Liberal consensus in defence and foreign policy and the shared refusal to surrender to China’s trade coercion.

Almost as soon as Albanese is sworn in as prime minister today, he’ll board the plane for the Quad summit in Japan. That’s continuity in action. The Quad message to Beijing from Albanese is that China has to do the reset: we can talk after you take your hands off our throat.

Labor has embraced the AUKUS agreement Morrison created with the UK and US. AUKUS is Morrison’s defence legacy. If the nuclear submarines surface, then AUKUS becomes his monument in the same way Menzies holds ANZUS.

History should give Morrison a better score than Turnbull and Abbott in judging nine years of Liberal government. Abbott took the Libs back to office, but the party cut him down as unsuitable after only two years. Turnbull bears the scars of a leader deposed twice by his colleagues, both in government and in opposition.

Morrison confronted Covid-19, climate change and China and the new era of strategic competition.

On climate, he dragged the Libs to the point where he was talking about ‘decarbonisation’ as a positive rather than a negative, stepping beyond his performance as treasurer, when Morrison brandished a lump of coal in parliament. His achievement as prime minister was to disarm the Liberal denialism on net-zero emissions. As political performance inside the party, ScoMo nailed a political pirouette, doing bomb disposal while zooming down the mountain on one ski.

The new parliament will define the terms of the settlement in the climate war, delivering benefits that will be both domestic and international.

Join that thought about Australia’s national need and international standing to Albanese’s pledge to hold a referendum to write our First Nations peoples into the constitution, to honour ‘the oldest living continuous culture in the world’.

Change the government, change the country.