Tag Archive for: Australia

Business as usual in a time of upheaval: the cost of Australia’s defence

The big defence news in Australia this year was in the 2020 defence strategic update released on 1 July. The update and its accompanying force structure plan ended speculation about the defence budget and reaffirmed the government’s commitment to the robust funding line presented in the 2016 defence white paper. It also extended that funding line for a further four years.

The 2020–21 budget released on 6 October delivers the funding promised by the government in the update and, indeed, before that in the 2016 white paper. Despite the pandemic, the defence budget grows by around 9% this year, to $42.7 billion. At 2.19% of GDP (based on the budget papers’ prediction of GDP), that easily meets the government’s commitment to spend 2% of GDP on defence by 2020–21. For those who might suggest that that occurred only because GDP fell, defence funding would still have reached 2% in a hypothetical economy that hadn’t been hit by a pandemic.

As I explain in ASPI’s new budget brief, Defence’s budget statements are consistent with the white paper and the update in funnelling much of the increased funding into the capital budget. Over the longer term, capital acquisitions grow to 40% of the total budget; this year, they reach 34%.

While that funding is necessary to deliver the new capabilities that the update assesses are needed to meet our strategic circumstances (such as long-range strike and area-denial capabilities), the growth rate presents risks for Defence. When we combine the overall budget growth, capital’s growing share of the total budget and the government’s clear expectation that Australian industry will get a big share of that money, then it becomes apparent that the amount spent on local equipment will need to grow from around $2.6 billion last year to $10 billion a year by the end of the decade.

The 2020–21 defence budget shows that the challenges for the capital program aren’t off in the distance—they’re immediate. The total capital budget is projected to grow by over $3 billion to $14.3 billion this year, or by 27.4%. It’s followed by growth of 17.7% and 11.7% in subsequent years. Considering that the capital program has averaged only around 5% annual growth since 2016, achieving that surge will be difficult, particularly with global supply chains disrupted by the pandemic.

As the defence budget grows well beyond 2% of GDP, Defence will need to demonstrate to the government that it can spend it, both to deliver necessary military capability and to stimulate local industry. If Defence can’t spend it, it risks losing it in an age of surging deficits and debt.

Workforce spending increases moderately but continues its decline as a share of the total, down to 31% this year, and is projected to reach 26% by the second half of the decade. The update says that the government will consider increases to workforce numbers next year (the funding for those people is already built into the update’s funding model). Substantial numbers could be needed to operate the future force being delivered by the hefty increases in acquisition spending, but getting there will take time. In the four years since the 2016 white paper, Defence has managed to grow its uniformed workforce by only 1,000. It’s still well short of the white paper’s target, let alone any planned but as yet unannounced increases.

While successive governments have consciously reduced Defence’s civilian workforce, the amount of work needed to deliver and sustain the force has increased. Consequently, Defence’s external workforce of consultants, contractors and outsourced service providers is now its second biggest ‘service’ at 28,632 people.

Moreover, because Defence’s Capability Acquisition and Sustainment Group has been hardest hit by the reductions (losing nearly 40% of its civilians), it has increasingly turned to industry to provide ‘above the line’ project management and professional services traditionally delivered in house.

Analysis of AusTender suggests that Defence signed nearly 2,000 professional services contracts valued at over $2 billion in 2019–20. The four major service providers that CASG is partnering with to provide above-the-line management services have also secured substantial contracts. With only moderate growth in public servant numbers forecast as the acquisition budget grows dramatically, it appears inevitable that Defence’s reliance on its external workforce will continue to grow.

The sustainment budget stays relatively steady as a share of the total, but the systems that Defence is planning to acquire will come with very large sustainment costs. Some of those increases, such as for frigates and submarines, are still a long way off, but others are here now. The F-35/Super Hornet/Growler air combat force is costing many times more than the legacy fleet. Granted, we have only a few data points for the F-35, but achieving an operating cost similar to those of legacy aircraft isn’t looking feasible.

Despite the 2020 update’s assessments of our strategic circumstances and its conclusion that we need new offensive capabilities to impose cost and risk on a potential major-power adversary, and that we won’t have 10 years of warning time to acquire those capabilities, the force structure plan that accompanied the update still has a business-as-usual look to it. That continues in the portfolio budget statements.

Spending on the naval shipbuilding plan continues to ramp up and is forecast to reach nearly $2 billion this year, even though we’re still two years from the start of construction of the future frigates and three years from the start for the submarines. That $2 billion has a lot further to climb, but there’s no sign that the sense of urgency in the 2020 update has flowed through to project schedules. With the third air warfare destroyer now delivered, the navy doesn’t get another combat vessel to sea for 10 years under the force structure plan. There’s nothing in the budget statements to suggest that that’s changed. It’s a remarkably slow return on the government’s $575 billion investment in Defence. Compared to the spending on acquiring manned platforms, the navy’s spending on autonomous and unmanned systems is virtually invisible in the budget.

Land capabilities also seem to be following a business-as-usual approach. That approach is delivering a range of substantial capability enhancements in digital systems and protected vehicles. However, if the increase in the budget for the army’s future infantry fighting vehicles from $10–15 billion to $18.1–27.1 billion (or around $50 million per vehicle)—while the threat posed by guided weapons delivered by drones, manned aircraft and ground forces proliferates rapidly—doesn’t make Defence reconsider its plan, one wonders what will. It’s time for the government to call for a timeout.

The business-as-usual approach can also be seen in Defence’s management of underperforming helicopters. After stating for many years that it would make the Tiger armed reconnaissance helicopter work, and then telling parliament it was working, Defence appears to have lost patience with the aircraft due to its high cost and low availability. That’s understandable, but rushing to replace it with another manned helicopter is a high-risk move in the light of the vulnerabilities inherent in helicopters. The sunk-cost fallacy has also kept Defence from replacing another chronic underperformer, the MRH-90 utility helicopter. Incredibly, it’s Defence’s fourth most expensive capability to sustain. Between the two, Defence is spending $460 million this year to sustain them.

So there’s plenty of money coming into Defence, but there’s also plenty of room for Defence to do business differently, to get better value for money, to deliver faster and to demonstrate to the government that it can provide the military capabilities that align with the government’s strategic assessments.

Assessing the economic benefits of defence procurement: how hard can it be?

In early August, the Finance Department issued a revised set of guidelines for Australia’s federal departments and agencies to apply when assessing the economic benefit of procuring high-value goods and services. Given the intense controversy surrounding how the Defence Department measures economic benefits when purchasing major items of capital equipment, the revised approach is of considerable interest.

In terms of overarching principles, the revised guidance begin in much the same way as the original introduced just a few years ago. An economic benefit arises when a procurement boosts national productivity, typically in areas in which Australian industry enjoys a comparative advantage. Any evaluation of benefits should have regard to the effective and efficient use of government funds.

For a benefit to emerge, suppliers should therefore be price competitive and rely for their production on resources that would otherwise be unemployed or substantially underemployed. On that basis, productivity improvement isn’t normally fostered when a significant price premium is paid for preferring one source of supply over another or when supply draws resources—like skilled labour—away from equally productive, or even more productive, areas of the economy.

But even if price premiums and resource constraints apply—which is frequently the case for defence projects—a (net) economic benefit might still be obtained if production of the good or service being procured is a relatively promising source of new knowledge in the form of technologies or workforce skills that ‘spill over’ to improve productivity elsewhere. So far, so good.

Unfortunately, that’s where certainty under the revised guidelines ends and the search for meaning begins. That’s because the revised guidelines go beyond the sources of economic benefit noted above to include a set of, undefined and unweighted, ‘broader benefits’ associated with the development and sustainment of industrial capabilities, including those accorded sovereign status by Defence.

Under the new guidelines, ‘broader benefits’ for defence projects are treated as separate from the most obvious and significant forms of economic benefit, linked to the notion of sovereignty and treated as if they alone can determine the outcome of a benefit evaluation. From that, it seems projects offering negligible—or even no—national economic benefits might still satisfy the revised guidelines if they deliver a regional economic gain, a socioeconomic gain or even a non-economic gain in the form of a military–strategic advantage.

If an economic gain of any kind needs to be addressed by Defence under the revised guidelines, several aspects of its measurement appear to lie beyond the department’s analytic capabilities. One is the supply chain effects of projects, which tend to focus on the contribution of small to medium-sized enterprises. Another is how many of the inputs used by projects have alternative opportunities for employment. Finally, the department is unlikely to be able to estimate by itself whether the resources that projects need originate from industries with lower—or higher—levels of productivity.

Fortunately, all three aspects fall should within the range of economic models readily available from consultants. However, those models provide no insight into spillovers. As a result, Defence is likely to carry primary responsibility for assessing what could be the single largest source of economic benefit to arise from its procurements. As the Productivity Commission has pointed out in a defence context, ‘It is easier to assert that spillovers will eventuate than to prove they have.’ That seems to be supported by recent experience.

On the rare occasions when Defence has attempted to gauge the spillover-related savings in sustainment from preferring domestic over foreign assembly of capital equipment, its methods have attracted considerable criticism.

The two latest attempts at estimating economic impact commissioned by Defence—for the F-35 fighter jets and combat reconnaissance vehicles—reference the potential for spillovers but offer little, if any, supporting evidence. A similar situation has emerged in relation to the most recent research, commissioned by industry, into the economic impact of naval shipbuilding.

Several factors complicate any attempt by Defence to assess spillovers. Judgements must be made well before equipment projects mature. There appears to be limited historical evidence in an Australian defence environment from which to draw. And the responsibility for assessments may rest with departmental procurement managers unfamiliar with the methodologies that underpin how spillovers should be estimated.

There are many stakeholders interested in how implementation of the revised guidelines unfolds—especially in what ‘broader benefits’ entail, whether robust estimates of economic benefit will emerge and how those estimates might be weighed against demands for industrial sovereignty.

In the absence of far greater clarity on those issues, it is difficult to see how the latest revisions do much to overcome our limited understanding of how investing in defence capital equipment affects ‘jobs and growth’. Indeed, in their current form, the guidelines may substantially reduce the public’s visibility of important issues associated with defence industry protection.

Australia needs to take the lead on 5G again

In what seems like another age, back in August 2018 in the midst of yet another change in prime ministers, Australia made a world-first decision to exclude high-risk vendors from its 5G networks. Others, such as the European Union, are still struggling with their 5G decisions, but as I argue in my new ASPI report, Ensuring a trusted 5G ecosystem of vendors and technology, we can’t afford to sit back and reassure ourselves that we have long since resolved all our 5G vendor risk problems.

Although the marketing promise of 5G, as with most new technology, runs ahead of reality, and 5G rollouts have been delayed by Covid-19 and related impacts in many countries, ‘true 5G’ isn’t far away. Telstra announced in May that it had enabled its network for standalone 5G, which is what provides transformational features like ultra-low latency (as opposed to the current capability to download 4K movies to your mobile phone, which, while it may be useful in these days of social isolation, is unlikely to fundamentally change the world).

Opinions differ on what the ‘killer applications’ will be for the 5G future, but it is certain that within a few years these networks will be a key part of mission-critical and safety-critical systems. The resilience of the network will be vital to our national security—not just the privacy of data sent across it, but the availability and integrity of systems will be critical. Trust in the ecosystem of vendors that supply and support these systems will be essential.

The problem is that the market for 5G equipment vendors that we consider to be a reasonable level of risk is highly concentrated, with Nokia and Ericsson at the forefront. From a long-term resilience point of view, the dangers are clear. What happens if one vendor fails or becomes untrusted? What about the security risks if we use just one vendor’s kit everywhere and a vulnerability emerges? After all, when flaws have been found in Apple’s iPhone software, they seem to expose almost every device in the world at the same time. Talking to regulators and telecommunications operators, it’s clear that a number of factors are holding back opportunities for new entrants that could help improve resilience.

It was never supposed to be like this. Telecommunication networks were founded on international standards for interoperability that should allow multiple vendors to work together. However, the process for setting international standards has fallen behind the pace of technology development, and also become politicised—witness some of the recent debates about ‘new IP network’ proposals from China that would put in place new mechanisms for control and centralisation of networks, and the fear US companies have of interacting with Chinese company representatives on international standards bodies due to strict interpretation of export control rules.

This frustration has led to some industry groups setting up their own ad hoc consortiums such as the open radio access network (RAN) movement, but they struggle to gain critical mass and effective funding in many cases. However, Nokia’s recent commitment to include open RAN interfaces on all its products may be a sign of momentum growing behind this movement. This is the time when Australia needs to engage with standards setting and embrace open RAN and similar projects so that we can make a difference.

Another problem is the unwillingness of network providers to integrate multiple vendors. A combination of lack of system engineering expertise and aversion to risk means it often seems easiest to buy an end-to-end solution from one vendor, but in the long term that’s probably neither the most cost-effective nor the most secure option. Redressing this balance will require a combination of carrot (such as setting up central integration lab facilities) and stick (mandating vendor diversity).

One of the big changes of 5G was supposed to be virtualisation. All the complicated processing would be done in software, even complex processing of radio signals, and the underlying hardware would become standardised and commoditised. If this model can be realised, the real innovation and value will come from developing software, not hardware, which would save on the lead time and massive capital costs to establish hardware design and manufacturing capabilities.

In Australia, we have innovative technology companies that should be well placed to develop new remote-sensing and remote-control applications, and we have ready access to vast, sparsely populated areas to test and prove them. Realising the vision of an open marketplace will not only improve the security and resilience of our communications infrastructure, but also provide new industry growth opportunities as we seek to rebuild the economy post-Covid-19.

The time for action is now. True 5G is starting to be rolled out, telecommunications operators will soon make decisions on their network architectures and vendor partnerships, and tens of billions of dollars will start to be spent on infrastructure. The actions that Australia needs to take to address the marketplace challenges would, of course, be easier and more effective to implement by building an international consensus, but that would take too long given the current distractions on top of existing divisions even among our Five Eyes allies.

In August 2018, we were ready to take bold steps and lead the way for like-minded countries. Now is our opportunity to do the same again.

After Covid-19: Australia, the region and multilateralism

Australia has enormous opportunities to influence the world for good, in ways that advance our wellbeing, security and prosperity. That’s the most striking message from ASPI’s new collection of ‘After Covid’ articles and policy proposals, whether the writers are looking at multilateralism, the Korean peninsula, Australia–India or Australia–Japan relations, women in national security, or the Bangsamoro peace process in the southern Philippines.

The other clear message is that Australia needs to think big to take up those opportunities. Simply accelerating or continuing current policies and engagement won’t produce the results we want. Waiting for others to define a post-Covid-19 agenda for us, whether that’s the United Nations, Washington, Delhi, Tokyo or Brussels, just won’t work, because everyone is groping about in search of solutions.

Notably, in several areas, Australians have done at least as much thinking about this as anyone else on the planet. It turns out that we aren’t bad at navigating concurrent crises and making decisions that attract domestic and international support. Australia’s policy and influence can help lead debates and decisions, just as we have in China policy and in technology policy, particularly with 5G and countering foreign interference.

This volume shows us that Australia is entering a more disorderly, poorer world where there’s a real risk of nations and peoples turning inward and hoping that big problems—such as intense China–US struggles over strategic, economic and technological power—will go away without anyone having to make hard choices; that, if we just wait, we can get back to business as usual. That won’t work. The risk of military conflict between the world’s two big powers, involving US allies such as Australia and Japan, will be greater in coming months and years than at most times since the Cuban missile crisis in 1962.

The authors of these papers have set out many examples of successful actions and decisions by partnerships of leaders and nations other than the ‘big two’. Some, such as the World Health Assembly agreement to have an independent inquiry into the global pandemic and its causes, resulted from successful multilateral diplomacy and engagement by Australia and others, notably the EU, but also African and Asian partners.

This volume sketches an enormous canvas for Australian policymakers.

The ambition required from our leaders and policymakers in politics, business, academia and civil society is equally enormous, but it’s essential, given what’s at stake. Putting human security and the aspirations of our region in the centre of our Pacific policy is possible and achievable and is the key to the deeper security and social and economic integration of our Pacific family.

It’s also possible, with partners, to bend ASEAN’s technological and economic integration away from the easy default path of comprehensively buying into Beijing’s techno-surveillance model of ‘prosperity’. We can help to do that by seizing opportunities to work on much broader political, security, technological and economic levels with Delhi, Tokyo, Seoul, Brussels and London. Those partnerships will also power Australia’s influence and engagement in international forums, whether the East Asia Summit, ASEAN or the UN.

Maybe the central agenda in all this is captured best by the idea that success for Australia will come from demonstrating competence in the pandemic, but also in the turbulent world following it. Doing so, as Caitlin Byrne puts it, requires us to be expert, starting at home.

Underlying all the new international opportunity for Australia is an urgent need to be as competent, expert and ambitious in domestic policy as we’ve shown we can be on the global stage. And that means thinking bigger than a newly painted but old agenda for our economy based on deregulation, tax cuts and spending restraint once the peak of the Covid-19 crisis is over. That’s because the global economy and international system have been changed by the pandemic.

Our ambitions to create energetic international partnerships with like-minded nations and groups on security, human rights, technology and economics require a national approach that’s equally creative and vibrant and necessitate our engagement with multilateral organisations and processes. That means breaking stale old federal–state positioning and politics. We need to use the billions of dollars that are going to be spent trying to kickstart Australia’s economy in ways that align with the directions our writers have identified.

So, the Pacific step-up will be turbocharged through greater understanding of and investment in human security, which may open the door to more opportunities for Australian investment, business and people-to-people links. Supply-chain vulnerabilities for India, Japan, the EU and Australia can be overcome through combined public–private investments that create new enterprises and new partnerships throughout our economies, as long as our leaders resist siren calls to resurrect protected industries in each of our nations.

And the pandemic has demonstrated even further the potential for state-sponsored and -derived technologies (such as high-tech surveillance systems and e-commerce platforms) to change the nature of state–citizen interactions in ways that simultaneously reduce people’s freedom and states’ sovereignty if those technologies are adopted uncritically. That opens opportunities for partnership with others facing the challenges of building digitally based economies while protecting social and political freedom.

That’s a dizzying array of policy directions, but they’re all bounded by two ideas: what we do here in Australia helps set the foundation and direction of our global and bilateral partnerships, and what we do internationally can change global directions.

Policy, Guns and Money: The cost of defence, Australia’s cyber strategy and TikTok in Europe

In this episode, Michael Shoebridge talks to Marcus Hellyer about the key findings of his Cost of defence 2020–21 report. The report usually comes out as a single volume, but this year it’s being released in two parts. Part one discusses the changes brought about by the defence strategic update and the first months of the coronavirus pandemic.

Next, Bart Hogeveen and Tom Uren from ASPI’s International Cyber Policy Centre rate the Australian government’s cybersecurity strategy out of 10 and consider its broader implications.

ASPI’s Daria Impiombato and Alexandra Pascoe finish the episode with their thoughts on the global rumblings around the wildly popular social media app TikTok.

The internal risks to Australia’s new defence strategy

The 2020 defence strategic update released last month provides a sobering analysis of Australia’s strategic environment and the risks we must manage. The document lays out a conflation of pressing issues and concludes that ‘major power competition has intensified and the prospect of high-intensity conflict in the Indo-Pacific, while still unlikely, is less remote than in the past.’

Defence policy is all about managing risk, and in this regard the update has been well received. Its frank, forthright but balanced tone about the risks of our strategic environment has been appreciated by the public and the policy community alike. But getting our defence policy right isn’t only about understanding our external environment. Aligning strategy, force structure and operating concepts is just as much about managing our internal risks and challenges.

In addressing these challenges and the increased risk of conflict, the strategic update makes a number of issues clear. The focus is no longer on fighting wars of choice in the Middle East with our major-power ally. It is in the Indo-Pacific—especially the area from the northeast Indian Ocean through maritime and mainland Southeast Asia to Papua New Guinea and the southwest Pacific—where the Australian Defence Force must be prepared to operate, and if need be fight.

The update provides a significantly revised set of strategic objectives. The first of these is ‘to shape Australia’s strategic environment’. This the ADF should be able to take in its stride.

Australia’s military has a long and extensive history of deep engagement in our region, from the persistent presence of the navy in regional waters to the army’s and air force’s extensive engagement activities and our broad portfolio of military exercises with regional partners, big and small. A stronger emphasis on military diplomacy has been apparent in the ADF for the better part of a decade.

But other objectives of the new strategy, to ‘deter actions against Australia’s interests’ and ‘to respond with credible military force’ in a potential high-end conflict, will provide a profound challenge to our military culture. They strike deep into the heart of our military services’ pre-existing ideas about capabilities, organisation, doctrine and structures, as well as the ability of the ADF to operate as a joint force. This goes fundamentally to the ability of our military to adapt and innovate.

For instance, it took over a decade from the release of the 1976 Australian defence white paper to the 1987 The defence of Australia white paper to align strategy and force structure. The internal battles among the three military services and with the Defence Department during this decade are legendary. In the lead-up to the 1987 white paper, Defence Minister Kim Beazley broke the deadlock by commissioning Paul Dibb to undertake an independent review of Australia’s defence capabilities.

The 2020 update’s strategic reassessment must translate through to Australia’s defence planning, force structure changes and the ADF’s operating concepts. But, as the document lays out, unlike in the past, we don’t have the luxury of time.

Previous defence planning had assumed a 10-year strategic warning time for a major conventional conflict. The update makes it clear that this is no longer ‘an appropriate basis for defence planning.’

Changes are required now, and they are not insignificant. The ADF has been deployed on operations and developed combat experience over three decades in the Middle East. This experience is built mainly around counterinsurgency and maritime security operations. A generation of experience has been acquired by the ADF, with each of the individual services embedded with their US military counterparts, in places far from Australia where access and bases are secure.

This stands in contrast to the new role this strategy requires of our ADF. The geography is local. Their tasks require a much greater emphasis on operating as a joint ADF, as opposed to single services. The threat is much more centred on high-end conventional conflict, and the role is denial.

The changes required will be profound. The 2020 update therefore leaves us with more questions than answers. How will the joint ADF operate in our region, especially one defined by a maritime environment featuring expansive archipelagos with population, infrastructure, economic and military power clustered in littoral areas? How will the air force provide protection to the navy in these areas? How well can the navy deploy and sustain our army in this region? How will our army fight?

The current force structure and most of our planned military capabilities predate the new strategic approach. They are largely the products of single-service preferences conceived under different strategic circumstances. That means much of our planed military expenditure doesn’t address these questions, and in some cases it exacerbates the problems.

However, the current military is armed with some key positional advantages for this challenge. The decisions to create the ADF in 1976 and then to create a joint command structure in 1987 have endeavoured to make our military more than just a sum of its parts. More recently this was supported by the 2015 first principles review, which provided for a capability manager for joint capabilities and streamlined the powers of the chief of the ADF. In addition, the quality of the ADF leadership at the moment is very high and they seem focused on the task ahead.

Most significantly, the 2020 update provides the ADF with an essential clarification of the strategic direction. It will, however, live or die on Defence’s ability to drive through the required reforms.

The risks are real. Despite decades in development, the ADF’s single service cultures and parochialism still run deep. Reform has often been too slow; as the first principles review noted, there have been 48 previous reviews dating back to 1973.

In an era that our army describes as ‘accelerated warfare’, the internal risks we need to overcome to manage our external environment will be critical. Otherwise, we might just find that our prevailing military culture eats our new strategy for breakfast.

Defence diplomacy’s key role in shaping Australia’s strategic circumstances

Prime Minister Scott Morrison released the 2020 defence strategic update to define Australia’s evolving challenges and provide guidance on defence policy, capability and force structure. The new strategic objectives are to ‘shape’, ‘deter’ and ‘respond’. It appears to be a straightforward direction, but what meaning do these three words convey?

Defence language can be difficult to interpret for the uninitiated. Simple terms often carry broad and complex meanings, and the true intent of a strategy may not be immediately apparent without some assistance in translation.

During a discussion on the ABC radio program PM, host Linda Mottram described the new strategy as ‘heavy on hardware, short on diplomacy’. Indeed, the prime minister’s speech—which included so much about new weapons (including long-range missiles), naval vessels, and air and space capabilities—makes that an obvious conclusion. It’s clearly deter and respond, and is certainly heavy on hardware.

But what of the concept of shape? It’s not necessarily about new weapons or use of force. In this case, the strategy is heavy on diplomacy, specifically defence diplomacy, a not well understood thread of the craft of international interaction.

During her speech to ASPI on the strategic update, Defence Minister Linda Reynolds said that she’d known defence diplomacy was important before assuming the role, but now understood ‘just how critically important our relationships are not just in our region across the Indo-Pacific but globally’. The chief of the Australian Defence Force, General Angus Campbell, agreed and noted that the strategy implied ‘engagement, partnership to build communities in our region’. So, how is this achieved?

Defence diplomacy generally happens at two levels: between individuals or small groups and through large-scale interaction during training or exercises. These activities occur not in isolation or for their own sake, but in support of whole-of-government foreign policy initiatives.

I witnessed firsthand the value of military diplomacy during my time as a student at Pakistan’s National Defence University, followed by three years as the defence adviser to Australia’s high commissioner in Islamabad. Pakistan is a complex country dominated by its military, but close relationships with Pakistani officers enabled me to assist the diplomatic mission with unique perspectives and access to key decision-makers.

Military officers are pragmatic, have shared experiences and often are prepared to communicate at a professional level when politics and international relationships are strained. I recall attending a reception in Islamabad and debating the cause of heightened tensions along the line of control in Kashmir with Pakistani and Indian officers. I discussed the merits of Chinese claims in the South China Sea with Chinese, US and Vietnamese attachés, and the complexity of the situation in Syria with Turkish and Arab counterparts. Continued communication among defence diplomats during difficult times can be invaluable.

Large-scale interaction between militaries is also a powerful tool for breaking down barriers and encouraging understanding across international boundaries and cultures. Participation in international training exercises encourages personal interaction at all levels, from the senior commanders down to the most junior sailors, soldiers and airmen. Through engagement, Australia can not only contribute to regional military capability, but also foster a deeper comprehension of Australians and our culture.

Military personnel from across our region often have limited opportunities to travel, and a visit to Australia for an exercise will leave them with so much more than new skills and procedures. When I met with young soldiers returning to Pakistan from courses and training in Australia, they spoke enthusiastically of new friends, the smell of the Australian bush, the excitement at seeing their first kangaroo and bewilderment that people eat meat pies. New insights, understanding and fond memories are powerful ways defence diplomacy shapes the region and relationships.

Ample opportunity exists in northern Australia to support military engagement with our neighbours. The top half of Australia is blessed with training ranges that are among the largest and best equipped for modern military training. As ASPI’s John Coyne suggests, there’s spare capacity to increase international utilisation of these facilities, through either joint exercises or unilateral training following a model like the Australia–Singapore Military Training Initiative.

The Northern Territory sits at the doorstep of Southeast Asia, and north Queensland with three major simulation-enabled training facilities is ideally positioned to support the government’s Pacific step-up. Each can support deployments from its near regions to offer a unique opportunity to enhance Australia’s defence diplomacy and regional cooperation.

This is one critical way the word ‘shape’ becomes more than an objective in a strategy document—it is an outcome brought to life though people-to-people defence diplomacy. The hardware is critical to the strategy, but the desire of all Australians is that it never be used in anger. We can help to ensure that if we achieve the strategic goal of mutual understanding through engagement and partnership to build communities in our region.

Morrison aligns defence policy with new reality as Australia muscles up to China

At first blush, Prime Minister Scott Morrison’s speech releasing the defence strategic update last week was more than a little startling. Its language and tone were blunt to a degree that would have seemed unthinkable a few years ago. Or even 12 months ago.

But they are of a piece with the government’s recent stands, notably during the pandemic, when it has been much more direct in what it says on matters relating to security—broadly defined—and less concerned about China’s reaction.

This includes (especially) its drive for an inquiry into the origins of Covid-19, its calling out of recent escalating cyberattacks on Australian governments, public bodies and businesses, its denunciation of disinformation campaigns by China (and Russia), and its tightening of the scrutiny of foreign investment bids.

Sometimes the government is coy about publicly naming China, as with the cyberattacks and the foreign investment changes, although no doubt has been left about the country in mind. At other times it’s more full-on.

In his speech, Morrison identified the deteriorating situation in the region and announced a ‘pivot’ in Australia’s defence posture.

This means the Australian Defence Force is to concentrate on our near region, defined as ‘the area ranging from the northeastern Indian Ocean through maritime and mainland Southeast Asia to Papua New Guinea and the Southwest Pacific’. The government doesn’t rule out excursions further afield as part of coalitions, but downplays them.

Morrison also pivoted to elevating the importance of deterrence in Australia’s military capability. Though the $270 billion ‘spend’ on hardware over a decade doesn’t actually represent a big increase from the 2016 figure of $195 billion, the significant change is that the purchase of long-range strike weaponry is committed, and, more importantly, there are moves to produce munitions and missiles in Australia instead of relying solely on distant suppliers.

While this was not a defence ‘white paper’, it’s worth comparing the thinking behind it with that in recent white papers.

Back when Kevin Rudd was PM, a major consideration underpinning the 2009 white paper was the growing power of China, and the long-term risk of a maritime strike against Australia. That paper was seen as ‘forward-leaning’.

The 2013 and 2016 white papers walked back from the 2009 thinking, although it was noted at the time that the 2016 paper presented ‘a gloomier outlook than previous editions, especially the further out the strategic timeline is projected’.

With China’s increasing assertiveness, Morrison is alert to the danger of Australia’s vulnerability in the event a miscalculation or misadventure leads to conflict between China and the United States.

The defence pivot is designed to increase the military costs for an enemy thinking of attacking Australia, and to boost the ability to strike back at a distance if such an attack occurred.

The more difficult strategic environment Australia faces has not come upon us overnight. It’s been gradually bearing down over a number of years, with China’s increasing power and the stronger note of aggressiveness in its voice and actions. At the same time, there’s been the relative decline in US power in the Asia–Pacific and, under Donald Trump, a good deal of unpredictability in its policy.

As its military and economic strength has increased, China has been active in stretching its influence widely—openly through the Belt and Road Initiative and in a more clandestine way through foreign interference operations.

Prime Minister Malcolm Turnbull introduced legislation to protect against foreign interference in late 2017, straining relations with China in the process. This followed an inquiry by former journalist and China expert John Garnaut, who worked in Turnbull’s office and then in the Department of the Prime Minister and Cabinet.

But the government was still trying to maintain a fair degree of nuance in its China policy. Events and Morrison’s style have stripped much of that away.

When Australia went out ahead of other countries demanding the Covid-19 inquiry, the old hands around Australian diplomatic circles were horrified. So were those in the business community anxious for the government to avoid upsetting China (even more).

Australia’s stand brought predictable reactions from the Chinese authorities, in both harsh rhetoric and trade retaliation.

China already had Australia ‘in the freezer’, so the Chinese reaction has been a step up, rather than something new—but it’s a big step up.

More than once in his speech, Morrison invoked the 1930s, a decade that started with the Great Depression and ended with a catastrophic world war. ‘That period of the 1930s has been something I have been revisiting on a very regular basis, and when you connect both the economic challenges and the global uncertainty, it can be very haunting’, he said.

In political and diplomatic terms, it was a risky reference, elevating the idea of a threat to a much higher level.

While the economic consequences of the declining relations with China are serious—we’ve seen action against our barley exports and statements discouraging Chinese students from coming here—Morrison knows squaring up to China would have him in tune with the Australian public.

The recently released Lowy Institute poll, taken in March, found, ‘Trust in China is at its lowest point in the [16-year] history of the poll, with 23% saying they trust China a great deal or somewhat “to act responsibly in the world’’.’

Morrison didn’t have a public profile on defence issues before becoming prime minister. But it’s known that he took a strong interest when the chief of the ADF briefed senior ministers. He was also alert on the China front as the Turnbull government became more exercised. When he was treasurer, Huawei was banned from the 5G network, and David Irvine, who has the strongest national security credentials and is a former ambassador to China, was made chair of the Foreign Investment Review Board.

There is a tough-minded advisory circle around the higher reaches of the Morrison government. It includes Cabinet Secretary Andrew Shearer, who was previously deputy director-general of the Office of National Intelligence, ONI Director-General Nick Warner, Defence Department Secretary Greg Moriarty, ADF Chief Angus Campbell, Home Affairs Secretary Mike Pezzullo (who wrote the 2009 white paper), and Justin Bassi, the chief of staff to Foreign Minister Marise Payne.

They are clearly getting a sympathetic hearing from a prime minister who is injecting a new message into Australia’s foreign relations and pursuing new muscle for its defence posture.

‘That future is now’: defence minister explains strategic update

Defence Minister Linda Reynolds has mapped out why Australia needs to quickly develop a much more potent defence force to deal with looming threats in a dangerously uncertain future.

In a speech to ASPI in Canberra (video below), Reynolds said the 2016 defence white paper made it very clear that Australia needed to maintain its capability edge, adapt to rapidly changing strategic circumstances, and prepare for the complex and high-tech conflicts of the future.

‘Ladies and gentlemen, that future is now’, Reynolds said, ‘and the government and Defence must respond’.

A review of the strategic underpinnings of the 2016 defence white paper, begun by the Defence Department last year, found that the security environment had deteriorated far more rapidly and in ways that could not have been predicted four years ago. ‘Our region is now facing the most consequential strategic realignment since the end of World War II’, Reynolds said.

‘Historically, defence planning had assumed a decade-long warning period for any major conventional attack against Australia. This is no longer valid.’

In what she described as ‘an incredibly dynamic age’, Reynolds said shifts in power and pressure on rules, norms and institutions were endangering the global order.

Accordingly, Defence thinking, strategy and planning had shifted gears. Across the Indo-Pacific, countries were modernising their militaries and increasing their preparedness for conflict. Regional nations now had submarines, next-generation combat aircraft and highly effective land forces.

New weapons and technologies, including hypersonic glide and long-range missiles, autonomous systems, space capabilities, artificial intelligence and cyber capabilities had increased range, speed, precision and lethality.

‘Quite simply, they are transforming the characteristics of warfare’, Reynolds said.

The defence minister said the government was committed to shaping security developments in Australia’s immediate region.

‘Government has directed Defence to sharpen its capabilities across five defence domains—maritime, land, air, information and cyber, and space—to build an even more potent ADF.’

The minister said the ADF’s capacity to deter and respond would be sharpened in many ways.

Reynolds said the ADF’s weapons systems would be formidable, with more potent capabilities to deter adversaries and keep their forces away from Australia.

Long-range strike capabilities would enable the ADF to threaten potential enemy forces and infrastructure from greater distances. These would include the long-range anti-ship missile, or LRASM.

The goal was to strengthen the ADF’s ability to deter and respond to threats to Australian interests. ‘Possessing weapons of this type influences the decision-making of those who seek to threaten our national interests.’

‘Let me be clear, though, the government is not planning to invest in intercontinental ballistic missiles’, Reynolds said. ‘We are focused on the protection of our deployed forces from ballistic missile threats, rather than the protection of the Australian continent. This is in line with the current threat assessment.’

Reynolds said Australia’s submarine capability underpinned the country’s credibility and influence as a modern military power. They were the vanguard of strategic lethality and deterrence, with substantial firepower, stealth, endurance and sustained presence. ‘Our regionally superior Collins-class submarines are already very capably demonstrating all of these effects.

‘We will see further refinements to our future Attack-class submarines, ones that will strengthen our capability to maintain peace and security in the region.’

Along with the rising threat of combat, nations were increasingly employing coercive tactics that fell below the threshold of armed conflict with cyberattacks, foreign interference and economic pressure seeking to exploit the grey area between peace and war.

‘In this grey zone, when the screws are tightened, influence becomes interference, economic cooperation becomes coercion, and investment becomes entrapment.’

Reynolds said the transnational threats of terrorism, violent extremism, organised crime and people-smuggling remained. The Covid-19 pandemic was still an active and unpredictable threat that was dramatically altering the global economic and strategic landscape. The post-Covid-19 world would be more unstable, more dangerous and more vulnerable to the impacts of technological and economic disruption.

‘All of these pressures are contributing to uncertainty and tension, raising the risk of military confrontation, and also compromising free and open trade’, Reynolds said. ‘Australia must be prepared for all of these strategic challenges.’

The capability of the ADF to support civil authorities dealing with natural disasters and domestic crises would be increased, but that must be done without degrading the ADF’s ability to deliver core military effects.

The army’s lethality would be enhanced with greater mobility, speed, firepower, protection and situational awareness brought by long-range and enhanced missile systems, and upgrades to the protection, weaponry and communication systems of existing vehicle fleets, including the Bushmaster and Hawkei armoured vehicles. ‘We will also leverage robotics, automation and AI to enhance our land systems’, Reynolds said.

‘We will acquire capabilities such as new large landing craft, inshore patrol craft and also uncrewed ground vehicles. These investments will enhance the capacity of our land forces to conduct multifaceted operations—whether in conflict, crisis or cooperation.’

The air combat capability of a fifth-generation Royal Australian Air Force would be expanded with its F-35A joint strike fighters and E/A-18 Growler electronic attack aircraft fitted with options including long-range strike weapons, teaming vehicles, loitering munitions, and remotely piloted, semi-autonomous and autonomous aircraft.

‘The Jindalee Operational Radar Network will be expanded to better monitor Australia’s eastern approaches. And we will enhance our intelligence, surveillance and reconnaissance capabilities.’

Reynolds said that in addition to the physical air, maritime and land domains, Defence was increasingly focusing its capabilities in the information and cyber grey zone where a new and broadening offensive was challenging the nation’s sovereignty.

With growing frequency, cyberattacks target all levels of government, industry, political organisations, education, health, essential-service providers and operators of other critical infrastructure.

The ability of Defence and the Australian Signals Directorate to conduct defensive and offensive cyber operations was being enhanced at a cost of $15 billion over the coming decade. ‘In cyber warfare, there are no front lines. And given the blurred boundaries between military and civilian impacts in cyberspace, this investment will support the government’s broader national cyber security agenda.’

Reynolds said space was increasingly critical to the ADF’s warfighting effectiveness, particularly for real-time communications, situational awareness and rapid information delivery, and Defence was working closely with the United States, the Australian Space Agency and industry to advance its space capabilities.

That would include new satellites to increase self-reliance and resilience and enhanced satellite imagery, data processing and analysis capabilities with a bigger geospatial intelligence workforce.

Reynolds said Defence capabilities would be further enhanced by targeted research that brought together the distinct strengths of academia, industry and publicly funded research agencies to address the biggest strategic challenges. ‘Over the next decade, the government has allocated $3 billion of capability investment funding for Defence innovation, science and technology.’

All of these capabilities would help Australia deter and respond to attacks and support neighbours when needed, Reynolds said.

Australia is getting the long-range missiles needed for a contested Indo-Pacific

For the first time since the retirement of the F-111C bomber in 2010, the government looks set to restore a long-range deterrence and strike capability to the Australian Defence Force. This is a very sensible move.

The 2020 defence strategic update, and accompanying force structure plan, mark a decisive shift in approach from the 2016 defence white paper. The update recognises that Australia must respond to a more adverse strategic outlook, characterised by an assertive China, and highlights the risk that strategic competition between Beijing and Washington could escalate into a major conflict in our region.

The key message is that Australia must deter threats from major-power adversaries far away from our shores. The update announces ‘the procurement and integration of advanced longer-range strike weapon systems onto combat aircraft to allow the Air Force to operate at greater range and avoid increasingly sophisticated air defences’. A centrepoint will be the acquisition of the AGM-158C LRASM (long-range anti-ship missile) for the F/A-18F Super Hornets and, eventually, other platforms.

The LRASM is a vast improvement on the much older, less capable Harpoon anti-ship missile system, and the US has approved the sale of up to 200 of them with related equipment to Australia for $1.47 billion. The main benefits of the LRASM are its long range—at least 370 kilometres, compared with the Harpoon’s 124 kilometres—and its ability to attack in intelligent swarms and to autonomously determine the best path to strike a vessel.

The LRASM is also being designed to be carried on the P-8A Poseidon maritime patrol aircraft, and potentially could be integrated into the vertical launch systems on the navy’s Hobart-class air warfare destroyers and Hunter-class frigates. Replacing the Harpoon with the LRASM would dramatically boost Australia’s anti-ship capabilities and reduce the need for the launching platform to approach inside the range of an adversary’s weapons.

The LRASM acquisition is a good starting point for building a credible long-range strike and deterrence capability. And it’s long overdue, given the expanding lethal envelopes of Chinese anti-ship missiles, which could strike our naval forces outside the range of the defensive missiles they have now. But an even more capable strike potential will be needed, and the force structure plan outlines a number of potential capability acquisitions.

The plan makes clear that options for investing in hypersonic weapons will be explored under a development, test and evaluation program.

It suggests the ‘acquisition of remotely piloted and/or autonomous combat aircraft, including teaming air vehicles, to complement existing aircraft and increase the capacity of the air combat fleet’. That implies manned–unmanned teaming, and Boeing Australia is already developing an airpower teaming system centred on the ‘loyal wingman’ drone for precisely this role.

As the Australian Defence Force’s offensive capability grows, the update contemplates introducing a more effective defensive capability, noting that ‘survivability of our deployed forces will also be improved through new investments in an enhanced integrated air and missile defence system and very high-speed and ballistic missile defence capabilities for deployed forces’. This is likely to be the SM6 missile, which would also give a ballistic-missile defence capability within the atmosphere, and a potential land-attack capability for the navy’s Hobart-class and Hunter-class vessels.

So, the update is boosting both the offensive and defensive capabilities of our forces. That’s precisely what’s needed for the emerging threat environment we face as a rising China invests in offensive strike warfare capability. But is it enough? Not quite.

The ADF needs to have better situational awareness at greater distances from Australia. Chinese area-denial capabilities include medium- and intermediate-range anti-ship ballistic missiles. Its DF-26 anti-ship-capable IRBM has a 5,000-kilometre range. The ability to strike at such systems isn’t contemplated in the new force structure plan, so although our ability to strike at greater range is a welcome development, it’s still not sufficient to counter these threats. We are still vulnerable.

An essential feature of the US–Australian alliance is the joint facility at Pine Gap, which, among other duties, supports global missile early warning via the space-based infrared system. Any missile launched from China against the Australian mainland, or deployed forces, would be detected by that system, and a warning would be transmitted through Pine Gap, providing some time for defensive measures. For Australia, that capability is likely to come with a ship-based missile defence system as alluded to in the update.

With that in mind, enhancing Australia’s ability to monitor an adversary’s mobile missile systems and be prepared for a possible launch would go a long way towards improving our preparedness to deal with such threats.

Although it’s not suggested that a long-range strike capability for the ADF necessarily implies attacking targets deep inside mainland China, an ability to strike at such systems if they were forward-deployed, perhaps to bases in the South China Sea, would help counter the threat these systems pose. A DF-26 fired from Hainan Island could just reach Darwin Harbour. A DF-17 missile carrying a hypersonic glide vehicle deployed into the Spratly Islands could reach Darwin and also RAAF Base Tindal. The force structure plan notes that geospatial information and intelligence are part of the defence enterprise, and satellites that can detect, track and monitor ballistic-missile activity would directly support both defensive and offensive strike options.

The force structure plan and the strategic update indicate that we will look to acquire hypersonic weapons as a deterrent—if we can see forward-deployed ballistic missiles, we can strike them. Having the ability to detect and strike at an adversary’s long-range missile systems with ground-based long-range missiles should be the next step beyond LRASM if we’re serious about long-range strike. The US has already begun developing such a capability. Australia needs to consider acquiring a weapon like this and working with the US to develop it into something more potent with longer-range.

One option might be to adapt a weapon designed for conventional prompt land strike as an anti-ship-capable weapon to attack an adversary’s naval forces at sea. That would in turn open up a requirement for satellite-based ocean reconnaissance, a capability Australia could easily help develop. It would dramatically expand our deterrence and strike capability well beyond that implied by a weapon like the LRASM.