Tag Archive for: Department of Defence

Defence needs a fresh approach to major projects in Australia’s north

While the AUKUS agreement and the defence strategic review have focused strong interest on the massive task of building, crewing and operating Australia’s future nuclear-powered submarines, the government has also agreed in principle to sizeable new defence infrastructure projects, many in Australia’s north. At face value, this is great news for the construction sector, but the industry faces challenges that must be understood by all involved, including the Defence Department.

Construction industry executives in Australia say it has rarely in recent times been more challenging to deliver large projects. Supply chains remain problematic, even beyond the Covid-19 lockdowns. Clients work assiduously to transfer every possible project risk onto their construction partners. And faced with rapidly rising insolvencies, the sector now finds itself reflecting on which clients and projects are best avoided.

Construction companies have a strong interest in identifying hidden costs, particularly those involving risk transfer, to ensure they sit with clients.

Against these changing industry dynamics, the defence review has recommended speeding up delivery of new infrastructure and renewal of existing infrastructure. That call has come at a time when the risk of accelerating infrastructure projects will test everybody involved.

Defence is not alone in this predicament. State and territory governments and private investors face the same issues. It’s undoubtedly more challenging for Defence given the urgent need for new capabilities and their associated infrastructure in a deteriorating strategic situation. The requirement to continue hardening and developing Royal Australian Air Force Base Tindal, near Katherine, is a case in point.

Much of the new defence infrastructure must be built in the north, where doing business demands a deep understanding of local markets and delivery strategies must be carefully synchronised with other industry activities. We have previously written about the importance of context and mindset to Defence’s success in northern Australia. More than in metropolitan Australia, Defence is a very large client in the north and that brings even more challenges.

Good planning today can improve the chances of success and lessen uncertainty in construction projects. International research has consistently found that most large projects that fail do so for three reasons: they are too complex, it’s often too late to build in efficiencies as a project progresses, and there’s been an insufficient focus on the costs of delays and uncertainty.

It’s critical that Defence get its project designs right early.

Defence must acknowledge that a take-it-or-leave-it approach to industry won’t attract the best contracting teams. Construction industry leaders consider carefully the risks of an inflexible or adversarial client. Construction subcontractors have become very choosy about which projects they bid for. Clients that make the effort to attract the best teams realise genuine delivery benefits. Unsurprisingly, flexibility in procurement and a mature approach to contract risk is cheaper in the long run. Defence, as a large customer in the northern Australian market, needs this flexibility and maturity because a top-down approach will not account for regional capacity.

In these challenging circumstances, Defence needs to revisit some of its contract provisions. In particular, it should consider the utility of provisions that financially punish industry partners for delays that are out of their control, like the weather, or that demand insurance coverage well beyond what’s required in the wider commercial environment. In the current operating environment, such provisions do more harm than good. They make defence work more expensive and less attractive. Let’s not forget, the industry prices project complexity and risk into its tenders, which means taxpayers end up meeting these costs, whether there are delays or not.

Inflation similarly multiplies costs. Conversations with industry associations suggest construction costs have risen by 11–13% in the past year, well ahead of the consumer price index. Meanwhile, clients across the country have been using commercial pressure to hold contractors to prices long after the agreed time. They often do so even though their own processes have delayed progress. While that may save money in the short term, it profoundly increases long-term costs. It also threatens the sector’s viability.

Unfortunately, high inflation will likely be with us for some time. Clients and the industry know that fixed-price contracts are an imperfect tool in this environment, but they’ve become used to it. The current economic and commercial uncertainty means industry must factor these risks into its prices.

Defence will be under incredible pressure to deliver significant infrastructure projects across the north in one of the most challenging periods globally for construction in recent memory. Some in Defence may be tempted to run its requirements even harder to achieve speed. But the context has changed.

Defence has a narrowing opportunity to reflect on how things might be done differently, and it must adopt the proper context and mindset to do so. Defence must avoid, where possible, anything bespoke; work hard to attract the best teams to projects; and review its suite of contract provisions that may turn uncertainty into additional costs.

The most prudent option is to hasten slowly and test ideas with industry for delivering projects on time, on budget and with full capability. As the defence review signals a northern Australia focus, careful planning and a methodical approach will ensure fast and effective action.

ADF a step closer to state-of-the-art satellite system

After a very long wait—and with the defence strategic review to be released this month—the Australian government has named Lockheed Martin as the preferred tenderer for one of its most important space projects. JP9102 will deliver next-generation sovereign satellite communications for the Australian Defence Force.

At least two, and up to four, large military communication satellites will be deployed in geosynchronous orbit (GEO) 36,500 kilometres above the earth, supported by ground stations and other infrastructure. The preferred tenderer is required to collaborate with local small and medium-sized enterprises on the project. Lockheed Martin says it will work with a diverse team of Australian space and defence-related companies supporting the ground and control segments. The project will be headquartered in Victoria and is expected to create more than 200 space industry jobs.

The Lockheed Martin system will comprise the satellites, to be controlled and operated by the Defence Department; multiple ground stations, including two new satellite communications operations centres; and an integrated management system.

This will transform ADF communications, with the satellites providing high-bandwidth, high-speed digital connectivity across a vast region, from the central Indian Ocean to Solomon Islands, and from the Arctic to the Antarctic. This coverage will provide ADF operations across much of the Indo-Pacific region with robust command-and-control networks. Initial operating capability is due to be achieved in 2027, as the ADF transitions from the Wideband Global Satcom system it shares with the US.

It’s crucial that the satellites are resilient against counterspace systems, including uplink and downlink jamming and cyberattack, as well as natural hazards such as space weather. The large satellites at the project’s core need to be seen as the beginning of a transition to resilient space capabilities for the ADF.

A follow-on capability using small satellites in low-earth orbit (LEO) is the logical next step. Space is highly contested, and the large JP9102 satellites in GEO must be complemented by constellations of small satellites in LEO. The ‘small and the many’ provide enhanced survivability, making it more difficult for an adversary to attack ADF communications and trigger a systems collapse. Small satellites don’t have the same capacity as a larger GEO-based satellite, but their greater number offers advantages, particularly in the rapid relay of information.

It is therefore interesting that Defence has issued a tender for a ‘space-based data transport and relay network … envisioned to be a flexible and configurable global converged network in space’. It is intended to be ‘resilient, enabling secure and rapid transmission and reception of multiple data types through an open systems architecture of satellites and ground assets’.

In adding a resilient network of small satellites, this will complement the large JP9102 satellites to provide global communications for ADF units on operations. The network should be scalable, rapidly deployable and able to be quickly replaced.

To improve resilience, the ADF will need complementary capabilities at LEO and GEO. The data transport and relay network, based on small satellite technologies, can more deeply leverage the contributions of Australian small to medium-sized companies, in terms of satellite development and construction and sovereign space launch, to ensure rapid replacement of lost capability in a crisis.

The JP9102 satellites may, if they are based on open-architecture design or software-based systems, take advantage of future on-orbit servicing technologies that could extend their operational life and enhance their capabilities over time. Lockheed Martin has hinted at this kind of approach with its ASPIN interface, which has an open standard and supports third-party development of supplementary mission systems for use in orbit.

The company, its Australian commercial collaborators, and Defence have a golden opportunity to adopt a new paradigm for future space capability. Rather than seeing large GEO-based satellites as a capability that, once deployed, can’t be enhanced to keep pace with technological innovation, JP9102 gives Australian commercial space companies the opportunity to embrace the next generation of in-orbit capabilities for satellite servicing. Lockheed Martin, Defence and the commercial space sector need to be innovative and bold in their thinking, both with the GEO satellites and by embracing small satellites in LEO to enhance resilience.

The JP9102 selection provides a moment where Defence, together with the Australian Space Agency, must firmly open the door to a larger role for Australia’s commercial space sector—much more than just supporting an overseas prime. To treat this as a traditional large defence project could represent a missed opportunity for Australia to demonstrate a true Space 3.0 paradigm delivering new defence capabilities rapidly and sustaining and enhancing the JP9102 capability in innovative ways that maximise resilience.

Demystifying Australia’s defence exports

The successful export of Australian company DroneShield’s counter-drone technology to Ukraine is testament to the innovative capacity of Australia’s defence industry to fill niche gaps in the global arms market. DroneShield’s success adds its products to the historical list of successful Australian defence exports, like the Ikara ship-launched anti-submarine missile and the Bushmaster protected mobility vehicle. While some exports like Ikara have been given the limelight, many of the past and current successes of smaller companies are largely unknown.

This anonymity is primarily the result of public information on Australian defence exports being reliant on sporadic self-reporting and occasional media attention. There is no official information on actual Australian defence exports, even from the Australian Defence Export Office (ADEO). The ADEO was established in 2018 to help support the previous government’s defence export strategy and to help the local defence industry win export contracts.

However, an Australian National Audit Office (ANAO) report reviewing the strategy in 2020 stated that it wasn’t possible to assess whether the strategy was working because even the Department of Defence didn’t know what was being exported since there was no obligation for companies to report exports or for the department to collect that data.

This isn’t because companies are breaking the rules and simply exporting whatever they want. In order to export, a company has to request an export permit from the Defence Export Controls unit within the Defence Department for any items on the defence and strategic goods list, which includes not only defence materiel but also explosives and other items used in civilian industries such as mining. Dual-use technologies and weapons of mass destruction also require permits. An applicant is required to include estimates of the total value of the export over the life of the permit and multi-year permits, like repair contracts.

The ADEO publishes aggregated data by measuring defence exports through export applications received and through the estimated total value of all permits issued. The statistics include the total number of applications received, finalised, processed, assessed, denied, approved and the number of certifications and permits issued by end users’ geographic region.

The ADEO statistics do not, however, equate to actual exports because the export activity under the permits is not tracked. Furthermore, ADEO statistics do not list the individual selling company, nor do they differentiate between complete platforms, subsystems, components provided to global supply chains, intangibles and service categories. For example, it’s not entirely clear whether Australia’s $2.7 billion in F-35 global supply chain contracts for more than 50 local companies are treated as military exports by the ADEO.

Overall, however, it’s reasonable to assume that the ADEO statistics significantly overestimate the value of exports because not all permits translate into actual sales.

Other government agencies also publish some data on defence exports, but they use different methodologies which produce very different assessments of the nature and value of exports. This includes the Department of Foreign Affairs and Trade’s (DFAT’s) annual reporting to the Arms Trade Treaty (ATT), an international agreement created in 2013 to establish global standards for the international trade of conventional arms.

ATT transparency reporting provides information on the category of conventional weapon, the number of category items, the permits granted, the purchasing entity, the items’ valuations and item descriptions. Like the ADEO, however, ATT reports don’t include data on the selling company or on services, global supply chain inputs and other intangibles.

While DFAT uses permit data for its ATT transparency reports, for its domestic publications it uses other information sources. DFAT uses its own estimates, as well as unpublished and tailored information from the Australian Bureau of Statistics (ABS), to track Australian defence exports. DFAT uses major conventional weapon categories, including warships, tanks and other traditional capabilities. But that means it also ‘misses’ other exports.

The ABS lists the value of the statistical category of ‘arms and ammunition’, which also covers only a small part of Australia’s defence exports.

The Stockholm International Peace Research Institute (SIPRI) publishes data on global defence exports. This is a very valuable source of international data. But it is reliant on national disclosure regimes and also focuses on traditional major systems and doesn’t track components and services.

Australian authorities’ use of broad, different categories results in widely divergent estimates of the value of defence exports. For example, in 2020–21, the ADEO estimated Australian defence exports at $2.69 billion, the ABS at $165 million and DFAT at (AHECC) $139.31 million. SIPRI lists the value at 413 ‘trend indicator values’ (TIVs; very roughly analogous to US dollars) in 2020 and 173 TIVs in 2021—but those were largely the sale of retired frigates and Hornet fighter planes rather than exports of goods and services.

This large discrepancy illustrates the lack of baseline data either at the level of individual contract or at the aggregated top level.

Without export data, it’s difficult to understand the capabilities of the Australian defence industry or evaluate the success of an export strategy designed to help domestic companies export more through tailored support, funding, promotion and market advice. More accurate data would provide greater clarity for the industry and help it promote products to future, or prospective, customers.

Defence acknowledged the absence of data identified by the ANAO and has said it has begun engaging the government and defence industry to address the issue. But as noted in the 2020 ANAO report, establishing a reliable dataset on defence exports is a complex undertaking and would also require explicit changes to the government’s policy settings on disclosure.

This isn’t the place to advocate for a particular solution. We believe that transparency is in principle a good thing but acknowledge that stakeholders have a broad range of concerns about full disclosure. For example, Defence has repeatedly stated at Senate estimates hearings that once an export permit is granted, any export is essentially a commercial matter, and requiring companies to disclose exports would impinge on commercial confidentiality.

In sum, establishing a more comprehensive system of export disclosure will require engagement between the government, parliament, defence industry and civil society.

Having undertaken a wide survey of export disclosure regimes in Western democracies, we would note that there are a very wide range of approaches. Perhaps the most comprehensive disclosure is conducted by the US’s Defence Security Cooperation Agency, but few regimes come close to that gold standard. We would also note, however, that Australia’s system sits at the lower end of the disclosure spectrum.

As a first step to filling the data gap, we have attempted to aggregate any data we could find on Australian defence exports. This includes sources such as company media releases, annual reports and media reports.

We have taken a very broad view of defence exports; we include not just traditional ‘platforms’ and major systems, but also subsystems, components and services. We regard providing training facilities to foreign militaries as an export.

The dataset provides (where we could identify it) information on the selling company, the recipient, the export, the year of order, the year of delivery and the value, as well as the source of information. Where possible, the dataset also tracks whether an export has seen prior or subsequent service in the Australian Defence Force.

While this is not comprehensive or complete dataset, we hope this new resource will help provide a better understanding of Australia’s defence export industry. We think it will show that Australia has a robust, internationally competitive defence industry that has won export success far beyond the headline stories that many of us are familiar with.

The dataset can be accessed in section 9 of APSI’s Cost of Defence public database.

Understanding Australia’s submarine commitment

In March, the government is expected to announce its plans to implement the ambitious proposal for an Australian force of nuclear-powered submarines (SSNs) that is at the heart of the AUKUS agreement.

Any scheme for an Australian SSN force must meet several conditions if it is to be viable. The first is that it must include solutions to address the looming shortfall in Australia’s submarine capability that can’t be met in time by ab initio building the boats in Australia. It must then provide a practicable and cost-effective way ahead for long-term construction of SSNs that is effectively coordinated with one or both of our AUKUS partners. As is becoming increasingly clear, meeting the shorter-term capability requirement and developing a mature SSN construction line will require substantial efforts not only by Australia but also by at least the US and possibly the UK.

Australia’s commitment to SSNs has profound implications for the way in which the defence budget must be managed. The level of understanding of the full requirements for raising, training and sustaining an effective defence force has never been high in Australia, either within government or outside it. Apart from the frequency with which the full on-costs of major projects are deliberately underestimated to secure their political approval, there has long been a tendency to manage any pressure on the budget by reducing the funds allocated to sustainment, in particular, while allowing maintenance of defence facilities to be done on a shoestring. Both of these practices may well be happening now as the defence organisation struggles to find the money to meet the demands of a difficult international environment when the government has so many other priorities. Bad at the best of times, these tendencies are worse when there are serious prospects that Australian forces will be required at little notice to assert the national interest.

And if we have been poor at understanding the on-costs of our platforms, the irony is that we have been—and continue to be—even worse at estimating the true requirements for and the associated on-costs of people, whether in uniform or not, no matter whether they’re ‘poor bloody infantry’ or the most highly qualified engineers.

The point is that the operation of an SSN force and all that this involves, even after the submarines are in the water, for maintenance, base support, quality control and other technical governance will introduce a new factor—a commitment of human effort and of funds that is not only substantial but also non-reducible to an extent that even meeting the demands of air safety has provided no precedent in the Australian experience.

Concerns expressed over the potential intrusions into Australia’s ability to make sovereign decisions have been well meant, but have generally focused on the wrong target. It is not the operations of the submarines themselves that will be subject to any real loss of national autonomy in a mature system but the working of the governance regime for nuclear power. The US in particular will want to be satisfied that Australia fully meets whatever commitments it makes to nuclear-power standards and safety, and it will insist on inspection regimes which guarantee that. Such regimes will not only apply to the submarines, their power plants and their support infrastructure, but also include critical assessment of the management bureaucracy. It is not a subject much discussed, but it is difficult to avoid the impression that American concerns were a critical factor behind the reforms of the UK system that resulted in the setting up in 2016 of the UK Defence Nuclear Organisation as the focal point and sponsor of the UK’s defence nuclear enterprise.

All this requires not only that Australia commit itself consciously to the total bill for nuclear power but also that the implications for the defence effort as a whole be completely understood for what will be in practice an irrevocable and irreducible commitment.

Here, a fully thought-out SSN plan also needs to include a complete understanding of the opportunity costs involved and confirmation that SSNs are indeed the most effective capability that Australia can select to meet its strategic challenges.

That itself will call for a degree of sophistication which has rarely marked the national debate on defence policy, whether within government or outside it. The report of the defence strategic review to be presented to the government next month might help provide some of the answers, particularly for the shorter term and about the way the transition from conventional submarines to SSNs will be managed.

In some ways, we have been here before, though we made a mess of things each time. The grand ideas of AUKUS are in many ways no novelty to Australian strategic thinking. The problem is that the history of Australian defence policy is marked by a series of ambitious force structure plans that have failed to be fulfilled. As with the SSN project, the most important of these have been maritime focused, recognising Australia’s situation as an island continent that is dependent on the maintenance of supply flows and for which achieving a secure region is a much higher priority than defending actual territory. Either Australia has attempted to create a force of sufficient weight that it could make a substantial contribution to regional collective defence, as was the case in 1923 with the plan to create a force based on new cruisers and submarines, or there was an explicit effort to develop an independent capability for power projection, as was the case in 1947 with the creation of the Fleet Air Arm based on two aircraft carriers.

The 1923 example may have the louder resonance for the present day, given that’s when Australia’s plan to create a submarine flotilla emerged from an Imperial Conference. Six submarines were to be our contribution to the large submarine force permanently based in the Far East, serving as a standing deterrent and the ‘trip wire’ against any Japanese incursions into British possessions in Southeast Asia. But only two of the six boats ever materialised, and by 1931 they were given to the British because the Australian budget could no longer afford them.

However, for our SSN effort, if we don’t take care, there may be closer parallels with the 1947 carrier plan in what followed over the long term. The carrier program went ahead but was dogged from the outset by barely adequate funding and the difficulties of finding the additional resources to adapt to changing technology. For the next 33 years, the navy had the experience of trying to maintain a major capability, in this case fixed-wing seaborne aviation, when the nation was unwilling to provide the full funding for the capability actually required, whatever the rhetoric that accompanied the initial commitment. That the navy was able to achieve so much with its aircraft carriers and their air groups between 1949 and 1981 was remarkable, but there was a price. Not only did naval aviation itself struggle at times, but there can be no doubt that the remainder of our maritime forces suffered. The difference this century is that such ‘making do’ cannot be enough.

The lesson is obvious. If Australia is to embark on the SSN program, the bill in people, money and infrastructure must be understood and met from the first and in full.

Allan Hawke: the Queanbeyan boy who invested in his people

Allan Hawke stayed the Queanbeyan boy he was born, while also becoming one of the most respected, connected and insightful public servants of our time.

For a man of such achievement and prominence, it’s probably unusual to say that he was prevented from delivering on his real potential.

A partial list of the powerful roles he filled tells part of the story: secretary of three commonwealth departments, chief of staff to prime minister Paul Keating and high commissioner to New Zealand, complemented by his time as chairman of the Canberra Raiders rugby league club and the ‘go-to’ head for multiple radioactive issues that needed sane, insightful review.

Why, with such a record, could he not have achieved his full potential? Because the role he was purpose-built for and had begun was cut short when he was sacked as the secretary of the Department of Defence in September 2002, some three years into a role that could—and should—have lasted for a decade.

It’s an alternate history, however. The directions and changes Allan Hawke had begun but not completed as secretary hold up well in 2022, 20 years on, as the things that still need to be done in and to Defence. They are the issues that high-flown reforms have re-identified and sought to change with mixed results since then, as we saw with the 2012 Pathway to Change cultural reform program, the 2016 First Principles Review and the 2020 Defence Transformation Agenda.

Perhaps that’s because Allan was that unusual beast—an ‘outside insider’. He had spent enough time inside the Defence machine to know it deeply and well, but had gained a critical and different perspective from time spent in other places and types of organisation, some that looked back on and interacted with the cumbersome Defence machine.

He brought knowledge, enthusiasm and purpose to the role, instead of having to learn about the complexities and proclivities of the place as he began his time as its leader. I have heard another former secretary without such a deep prior knowledge of Defence describe it as like a foreign posting where the natives seem friendly but might be out to kill you. Allan knew the natives better than that.

Unusually for a secretary, he was interested in the planning and business process of the organisation as well as its strategy and achievements. He wasn’t primarily focused on managing the minister and advice to the minister, with a side interest in organisational leadership and management. These were complementary and reinforcing priorities, with his role as the leader of the civilian element of Defence and, with the chief of the defence force, of the whole defence organisation, being his core understanding of what he was there to do. He used the fashionable language of corporate planning but was really centred in clarity of purpose, understanding of, and improving performance and achievement of clear outcomes.

That doesn’t sound unusual, but two things made it so: Allan’s passionate commitment to the purpose of Defence—to defend Australia and its national interests—and his focus on investing in the people in Defence to make their performance matter and their sense of purpose a driver to do much more than ‘turn the handle’ in the various roles they had.

The ‘learned helplessness’ speech he gave on 17 February 2000, 100 days into his time as secretary, is widely quoted and still holds a light up to Defence. ‘Learned helplessness’ as the catchphrase for what he said is probably the most misleading thing about it. Yes, he did say, ‘There are certainly elements of what I would call a culture of learned helplessness among some defence senior managers—both military and civilian.’ And he did note that ‘not to put too fine a point on it, too many of our people lack confidence in many of Defence’s senior leaders. Justified or not, Defence’s leadership is seen as lacking coherence, as failing to accept responsibility and as reactive.’

His central message and purpose was much bigger than this criticism, though. He wanted to instil confidence and motivation in the people across the organisation—in senior and junior roles— about the work they did and he wanted to do that by giving them a much more personal stake in the organisation’s success. He called this getting ‘results through people’.

And, against the run of play, instead of large-scale, top-down or external reviews and change plans, he had an alternative path. ‘Macro change can be awfully seductive. In my opinion, enabling people through an organisation to improve the processes in which they are intimately involved is far more powerful.’

That meant delegation of authority to people across Defence, not over-centralisation in the secretary and CDF. As Allan put it, ‘If I have a dog, why would I bark myself?’ This clashed with then-ministerial expectations that the secretary would personally have the micro details of every issue.

Allan refused to lead or operate this way as it undercut his basic conception of leadership—using and empowering all the brain power and talent he had available to him. That’s something micromanagement can never do. His model was to understand the totality of the organisation and its operations, and to bring the detail experts he needed when engaging with ministers. That still seems healthy and right to me.

Allan was also a principled public servant, deeply committed to serving the ministers and government of the day. He showed that through frank and fearless advice combined with a deep respect for his own role.

As secretary, he knew he had a place to stand and he felt the responsibilities and obligations of that role, knowing them to include—but be more than—serving the minister of the day. He understood he was a steward of a key institution in our system of government and society, and that its health and future were in his care.

While many leaders in the government and corporate worlds say ‘people are our most important resource’, Allan did much more than talk to make this real. He invested in his people, and the biggest investment he made was by giving them his own time. That continued well beyond when direct working relationships had ended, with Allan checking in at key moments in many of our careers and lives, usually at just the right time and in just the right way. I received a text from Allan a few months ago at just such a moment and its wisdom made me travel back in time to when I had the pleasure of working directly for him in the office of the secretary in 2001.

Back to the proud Queanbeyan boy he stayed throughout his life. The football-loving, inquisitive family man who was the twinkling ball of energy and drive that everyone mourning his death knows well. Former ABC sports journalist Tim Gavel has captured much of this in his obituary of Allan. I am sure others will add their own memories and thoughts over the coming days and weeks.

I’ll end this short note with one symbolic thing from his first day as secretary of Defence. The day before his arrival, an alarming thing was discovered. Allan Hawke didn’t drive the standard white sedan that was the essential hallmark of a departmental secretary. He had a bright red Holden Special Vehicles V8 that was so low slung it’d have got hung up on the first of several speed bumps on its way to the secretary’s special spot deep in the Russell Defence complex.

The speed bumps were removed the evening before and the Summernats-style machine burbled into its spot for the secretary’s first day. Allan bounced out and got to work. The Queanbeyan boy had arrived and change was afoot.

Australia’s climate risk assessment and defence review must work together

The government’s announcement of a climate security risk assessment has been widely welcomed. Importantly, the timing of the risk assessment overlaps with the defence strategic review also announced by the new government. Advice has already been forthcoming about how the government might best execute the climate risk assessment. What’s also needed is clear thinking on how the risk assessment and the defence review can be made to work together.

Australia’s near region is exceptionally exposed to climate-change impacts. For example, Indonesia is experiencing some of the fastest sea-level rise in the world, is highly exposed to non-climate disaster risks like earthquakes and volcanoes and is at the centre of worrying shifts in critical climate drivers like the El Niño–Southern Oscillation. Defence will be a key part of how Australia copes with a future shaped by such realities, something its leadership is already very conscious of.

In key ways these reviews are very different processes. The climate risk assessment will reportedly be led by the head of the Office of National Intelligence, Andrew Shearer, and Defence will ‘provide input on defence-specific issues’. In other words, the climate risk assessment is being led by the intelligence community from within government. Because it is led by ONI, which is an internationally focused agency, we can surmise that it is an outward-facing assessment.

The defence review has a much broader remit. It is being led by two independent commissioners, former defence minister Stephen Smith and former defence force chief Angus Houston, although they will be supported by the department. The review will examine ‘the Australian Defence Force’s structure, posture and preparedness in order to optimise Defence capability and posture to meet the nation’s security challenges over the period to 2032–33 and beyond’. To make policy recommendations for Defence, with its operational responsibilities both at home and abroad, it will have to account for climate impacts in both spheres.

The defence review is under immense time pressure. Smith and Houston have only until early next year to deliver. The timeline for ONI’s work isn’t clear. If the assessment is to usefully inform the defence review, though, it will have to move even more quickly.

So how might the climate risk assessment, the defence review and subsequent work be connected?

First, the findings of the climate risk assessment shouldn’t simply form a standalone section in the defence review. Climate risks should be integrated throughout. The government’s terms of reference are clear: the review ‘is to be informed by intelligence and strategic assessments of the most concerning threats which challenge Australia’s security’. The climate security risk assessment must be high on the list of these inputs.

Integration might involve dual-purposing some of Defence’s people and have them working on both the assessment and the defence review, something that is quite possibly already happening.

Defence probably also needs to do further thinking about the domestic components of the climate security challenge. ONI might be doing regionally focused work, but Defence as an operational organisation is being asked to confront climate impacts both at home and abroad.

Climate change is a systemic change whose immediate and long-term consequences will be felt across the huge range of Defence’s responsibilities. It must be part of the calculation across the review, not artificially (and erroneously) separated from ‘core business’.

Second, and once again because climate change is a systemic change, the defence review’s climate-change-related prescriptions should have a whole-of-government perspective. Like every aspect of this review, that will be tough because of the short timeframe. But any systemic challenge necessarily overwhelms any siloed response.

Defence’s role in responding to climate change intersects with the responsibilities of a number of other government agencies, not only but most obviously elements of the Department of Home Affairs and the Department of Foreign Affairs and Trade, and the defence review ought to reflect that. Time is clearly of the essence, so rough and ready integration is the only real option for now.

Third, while climate change considerations should pervade the defence review, they should nonetheless lead to unique recommendations and investments. For example, what climate intelligence capabilities are needed to pre-empt the worst possible outcomes? What existing or new exercises and wargames can be used to prepare for climate impacts? Defence is already grappling with the climate resilience of its infrastructure, but what more needs to be done on that score?

One important area is the calibration of Australia’s disaster response capabilities. Before forming government, Labor flagged that it would consider setting up a civilian ‘national emergency task force’. The balance between responsibilities and resources in this area held by Defence, the broader government and society is contentious. Addressing this issue requires consideration of how Defence can meet government and public expectations most efficiently, as well as of what is provided by other agencies and organisations.

Defence’s leadership team is acutely aware of this challenge. The service chiefs have continually reiterated that an increased, more frequent commitment of Defence to domestic disaster response activities is the new normal. At the same time, it has been widely acknowledged that there are significant opportunity costs to operational readiness and Defence’s workforce that come with these commitments. Helping to get the balance right would alone make the climate assessment and defence review worthwhile.

Under this umbrella, too, is the question of how the ADF responds to climate change impacts in conjunction with Australia’s regional partners. No country has enough capacity on its own—not Australia, and not our more populous but less wealthy neighbours. Identifying how certain assets can be shared and investments coordinated to build the capacity of key regional partners might be options here.

Fourth, the timeframes at play mean that both ONI’s security assessment and the defence review can only be an opening gambit. Calls for something like an ‘office of climate threat intelligence’, properly integrated across government and drawing on expertise outside of it, reflect this ongoing need.

Both review processes simply don’t have time to thoroughly synthesise the breadth of domain and policy expertise that climate change implicates. And the climate science underwriting appropriately granular assessments of our regional and domestic future keeps evolving and improving. So, at least for Defence’s part of the puzzle, the defence review might address how the assessment will be iterated to inform Defence’s decision-making beyond this moment.

ONI’s climate risk assessment is likely to be exactly what it is labelled. The defence review will need to consider the insights gleaned from that assessment, among other analyses, and formulate sensible policy responses. Their respective authors need to get it right, together.

Australia’s force posture review is a much bigger deal than the name suggests

The Labor government’s election platform contained a commitment to conduct a ‘defence force posture review’. Historically, Australia’s defence posture reviews have mainly considered where Australian Defence Force assets are based. Different stakeholders have inconsistent goals: the Department of Defence wants to consolidate in fewer, larger bases to save money; regional towns want to hang on to what they have; and boosters in the north and west push for more ADF assets to be at the ‘pointy end’ in—no prizes for guessing—the north and west.

The result is generally only a slow change in posture, although occasionally there are large-muscle movements, such as the relocation of the heaviest of the army’s three combat brigades from Holsworthy near Sydney to Darwin or moving the submarine force from Sydney Harbour to Garden Island near Perth.

But in defence terminology, force posture reviews are not about what capabilities should be in the ADF; that’s the role of force structure reviews. In recent decades, capability reviews have been conducted as part of a white paper process to work out what the ADF needs and how much of that it can reasonably afford.

Labor started off with talking about a force posture review. Its election policy stated that ‘force posture is about adapting to the evolving security and strategic environment, its impact on where the ADF is based and on facilities, and how the ADF is affected by domestic and demographic issues’.

But it also stated that the review needed to consider ‘whether Australian defence units, assets and facilities are prepared for the military to take action in a timely way amid a deteriorating strategic situation’. And that takes us down the path of a force structure review—namely, determining what should be in the ADF. It also hints at the really big, difficult issue of mobilisation—how you quickly create a wartime military out of a peacetime one.

As the new government finds its feet, its force posture review is looking increasingly like a force structure review, or even a white paper—with potential big policy, structure and budget challenges to consider. Deputy Prime Minister and Defence Minister Richard Marles said in India last month:

I come to the position conscious of a profound responsibility: to ensure Australia has the capability necessary to defend itself in the toughest strategic environment we’ve encountered in over 70 years. It will involve a generational reinvestment in the size, capability and structure of the Australian Defence Force. In service of this goal, I have instructed my Department to commence a new Force Posture Review to inform decisions I expect to make in the months ahead.

In short, the review’s remit will be about a lot more than deciding whether to move more ships up north.

In one sense, a lot of the underpinning work has been done already; the government has endorsed the key assessments of its predecessor’s 2020 defence strategic update. That includes the focus on our (very large) near region, the need for capabilities to impose costs on an adversary at greater range from Australia, and the pressing requirement to do more faster since we can no longer rely on a decade of warning time before a major conflict.

But there is still much to do—including how to make any of this a reality rather than a policy aspiration given Defence’s current timelines. Quite properly, the new government has said it isn’t assuming that the previous investment plan is perfect. There will of course be stakeholders suggesting there’s no need for major changes, and that, even if the government might for some reason have some new ideas, there’s no sensible alternative to what it has inherited. That would be the wrong approach. The government needs to make the investment plan its own.

Of course, that won’t be easy, for several reasons.

Defence always plans on spending every cent of the budget the government has said it can, in this case the 10-year funding line set out in the 2020 update. Putting anything new in means that something already in the plan has to be delayed (which just moves the problem down the line), shrunk or cancelled. That means unhappiness for some stakeholders. We saw that recently with the previous government’s cancellation of the SkyGuardian armed drone to free up cash for the REDSPICE cyber program.

But the growing defence budget is already under strain. The new AUKUS agenda that’s about bringing new digital and high-technology capabilities into the military fast (cyber, artificial intelligence, uncrewed underwater systems, hypersonic missiles—and, of course, the eye-wateringly expensive nuclear submarines) is bringing funding pressure. Add to the mix the growth already planned for the ADF of 18,500 personnel by 2040, and it’s looking like more money will be needed to afford it all. That’s all without any new ideas to deal with our worsening security environment—like ways to deter China from its clear ambition to have its military operate in and around the South Pacific, and close to Australia.

The government has said it supports the 10-year funding model set out in the 2016 defence white paper and reconfirmed in the 2020 update, including the $270 billion in funding for new capability, but it isn’t just facing the kinds of internal defence budget pressures discussed above. It’s also dealing with a broader range of pressures, including deficits extending well into the future and the threat of economic recession. Given this, it may be tempting for the folk in the Finance Department and Treasury to advise their ministers to give Defence a straight 2% of GDP, which has become a sort of benchmark for credible levels of spending. But that would actually represent a cut of many billions of dollars compared to the funding line in the 2020 update, inevitably resulting in reductions to defence capability and delays to programs.

Even if the government adheres to the update’s funding line, inflation is eating away at its buying power. When actual inflation is running nearly 5% higher than the rate built into the 2020 update’s assumptions, Defence is likely losing billions in buying power per year. And those losses compound. The defence budget needs more money just to tread water.

And then there’s the additional cost of nuclear-powered submarines. In the long term, they will cost a lot more than the now-cancelled Attack-class program. In the short term, the cash freed up by the cancellation has already been put to other purposes such as missiles, helicopters and cyber, further tying the new government’s hands.

That doesn’t mean it’s hopeless; there is $270 billion to put to use, after all. But it will require active prioritisation and decision-making. The sunk-cost fallacy has to be rigorously exposed. And everything truly has to be on the table. How the new government handles the $25-billion infantry fighting vehicle decision, which is scheduled to be made in the third quarter of this year, will say a lot about its thinking. Will it simply press on with the previous government’s plan? Or will it reconsider the scale of opportunity cost and invest a chunk of that funding in capabilities suited for a maritime theatre?

Finding the money for big, new acquisitions in the short to medium term will be hard. With no cash sitting around, freeing up the resources needed for things such as a new conventional submarine to fill the capability gap will create tsunami-sized ripples across the investment program.

To perfectly align capability with funding, Defence would normally aim to conduct a white-paper-scale exercise that spends 18 months considering every aspect of expenditure and resourcing over the next two or three decades and sets a capability target sometime off in the 2040s. That would be a mistake. We don’t have the time for that.

Distant targets allow people to admire problems at leisure and plan for ultimate yet unachievable perfection. Consider our sorry history of submarines since the 2009 white paper that has left us even further away from having any new ones than we were 13 years ago. Fortunately, the government looks like setting a tight deadline, with the review to report back at the same time as the nuclear submarine taskforce in March next year.

Whatever the government calls its review, it needs it to deliver a plan quickly that can provide capability quickly. That means a focus on priorities and implementation, not just crisp policy statements and ambitions. And that almost certainly means breaking with some of Defence’s long-cherished capability ambitions and forging a different path from the previous government. Marles’s approach of appointing external figures to lead the review already signals a break with precedent. But they and the teams supporting them in Defence, Finance and Treasury have got their work cut out for them if the ‘force posture review’ is to do what Australia’s security demands.

Australia’s siloed force design doesn’t bode well for archipelagic warfare

The electioneering in Australia over the security agreement between China and Solomon Islands has obscured important questions about why the deal came about and its future implications. At the core of China’s grey-zone tactics is the principle of putting the onus of escalation on unwilling parties by making them get on an escalation ladder. Does Prime Minister Scott Morrison’s declaration of a Chinese base as a ‘red line’ trump that or play neatly into Beijing’s hands? It at least raises the question of what Australia’s military options are if that line is crossed.

In the 2020 defence strategic update, the government outlined its three strategic objectives for defence planning: to shape, to deter and to respond.

Shaping, deterring and responding should be a whole-of-government effort, and yet no minister or secretary is responsible for coordinating strategic use of Australia’s comprehensive national power. The Chinese Communist Party, by contrast, has the United Work Front Department to do exactly that. Arguably, coordination was a function of the national security adviser, a role that was created in 2008 and eliminated in 2013 and its responsibilities absorbed by the secretary of the Department of the Prime Minister and Cabinet. However, while the advisers could at least give the problem their full attention, strategy is broader than just security and the position lacked the necessary authority.

Strategic coordination is too important to be a part-time job for a busy departmental secretary and too hands-on for a cabinet committee. Would Australia have done better in Solomon Islands if it had had a united front work department with Australian characteristics, with its own secretary?

The 2020 strategic update sets out the geographical priorities for defence, the highest of which is our immediate region. Force design is supposedly strategy-led, yet the answer remains a balanced force optimised for nowhere in particular. An outsider looking at the future Australian Defence Force might reasonably conclude that it’s designed to plug components into a US-led coalition, as it has in the past.

If force design really is strategy-led, then we could expect to see a future force optimised for fighting in the region in areas like Solomon Islands, as I have previously pointed out. To fight where strategy demands, Defence would need to develop a concept for archipelagic campaigning, including anti-access and area denial (A2/AD). ASPI’s William Leben describes something similar, though my answer differs from his in several key respects.

Archipelagic warfare has more interdependencies than any other form of warfare. It is an environment in which a champion team will always beat a team of champions. The most important feature of an archipelago is that all the sea is joined together and all the land is not. That’s a statement of the blindingly obvious, but it’s remarkable how many otherwise capable military professionals fail to understand its implications. Next most important is that it’s easier to hide A2/AD systems ashore than at sea (submarines excepted) and that a suitable island for hiding such systems can be obtained without the large numbers of troops required to take and control large population centres. And you can’t sink an island. Those fundamentals are the foundations of success or failure in archipelagic warfare.

A couple of years ago in a related discussion, a respected and very able senior army officer said: ‘You have to remember, we are the Australian Army, not the Australian Marines.’ That’s true, but shouldn’t we ask why? This illustrates the problem of letting Defence, and the tribes within it, decide for themselves what they exist for.

The effects of this are real, not just philosophical. Australia’s ability to manoeuvre in an archipelago has always been poor. It is currently limited to three large amphibious ships. Many eggs in few baskets is exactly what China’s A2/AD systems are optimised against. Three ships are inadequate for distributed operations, which bodes ill for future combat in places like Solomon Islands.

Defence’s planned replacement of heavy landing craft (Joint Project 2048 Phase 5) was cancelled in 2010 because neither the navy nor the army was willing to allocate any personnel to it. Both services decided their own priorities, independently of strategic guidance. The operational concept document for the army’s current littoral manoeuvre project, Land 8710, had to be developed in the absence of an overarching joint operational concept. The replacement mentality means that capabilities that would be essential to archipelagic manoeuvre but not in the current ADF inventory will probably never even be thought of, let alone funded.

A significant fleet of ocean-capable medium landing craft would not only enable distributed manoeuvre but also free the landing helicopter docks for conversion to carriers, as the Japanese are doing with the Kaga and Izumo. Their aircraft, including helicopters, V-22 Ospreys and F-35Bs, could operate from the islands, supported by medium landing craft (which can carry a lot of fuel and munitions), as well as from their carriers.

Other capabilities unlikely to see the light of day without a concept for archipelagic warfare include coastal naval forces, minelayers (crewed or otherwise) and small to medium hovercraft for crossing the extensive mudflats in the region, or navigating rivers during the logging season when they’re full of tree trunks.

Until strategic-policy-led force design is imposed on Defence from above, and corresponding geography-specific theatre concepts developed, it seems likely that the future force will continue to be designed by the tribes, each of which aspires to be a champion in its own chosen arena rather than to contribute to a champion team in which it might not have the starring role. We shouldn’t be surprised to see the future force looking like a more modern and powerful version of its predecessor, optimised, consciously or otherwise, to do what we have done in the past, rather than what we need to do in the future.

How Defence and the ADF can help Australia achieve its aims in Southeast Asia

The Australian government’s 2020 defence strategic update was released with a catchy tagline: ‘Shape. Deter. Respond.

The second two of these strategic objectives are incontrovertibly part of the traditional role of the military: to deter actions against Australia’s interests and respond with force as required. The first encompasses a wider role.

At the time, I wondered how much thought had been given to how this role interacts with the other arms of statecraft tasked with shaping the international environment—that is, diplomacy and development. But it opens an interesting discussion about how Australia’s defence organisation can contribute in innovative ways.

A recent report from the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D) offers some intriguing ideas for how the Defence Department and the Australian Defence Force can help shape the region in Australia’s interest.

For example, Defence potentially has a significant role in supporting a positive vision for Australia as a climate change leader with Southeast Asia. Of course, Australian and Southeast Asian defence forces will continue to enhance their disaster relief coordination to build interoperability and trust.

Beyond that, Defence could integrate a climate perspective into its bilateral defence cooperation, ASEAN defence dialogues and defence diplomacy, raising awareness of how climate risks manifest and a preventive approach. As a consumer of energy, Defence can contribute to the emergence of sectors such as green fuel by building renewables into its supply chains. And Australia can follow other countries in developing a defence policy response to the risks and challenges of climate change.

Another area in which Defence can be an exemplar of positive behaviour is civil–military cooperation. While Australia has sometimes been cautious about emphasising liberal values of democracy and human rights in its foreign policy, its strong civil–military collaboration and governance framework represents an avenue through which it can enhance and expand its engagement in Southeast Asia to strengthen effective whole-of-nation responses to humanitarian and security issues. This is particularly relevant against the backdrop of rising authoritarianism in the region.

One pathway to model effective civil–military engagement would be to implement a regional framework for collaboration between civil society and military on humanitarian assistance and disaster relief. Australia’s significant role in providing HADR in Southeast Asia through the ADF could be enhanced by co-resourcing the development of an integrated framework to better manage HADR across the region. The ADF has well-developed, up-to-date policy and operational guidance for military assistance to civil authorities domestically and would be well placed to work with partners to develop a regional framework of national, bilateral and multilateral policies, operational guidelines and capabilities.

Perhaps moving further out of its comfort zone, Defence could play a role in Southeast Asia’s post-Covid-19 recovery and growth. A region that has economic inequity and instability will be detrimental to Australia’s national security. For example, low or unequal economic growth could create a breeding ground for fundamentalist movements and terrorism. Increasing strain from humanitarian crises, authoritarianism, social unrest and ethnic tension may contribute to further regional instability. These are significant factors affecting nations’ resilience to respond to challenges and resist coercion from others.

This means growth is a goal that shouldn’t be understood as only about development cooperation: it also has implications for defence and diplomacy. Defence cooperation that supports stability, resilience and sovereignty in the region contributes to economic growth and development, and Defence should see itself as having a place at the table when it comes to recovery and growth in the region.

Defence can play a role in championing human security—talking about it publicly, and explaining how insecurity at the individual level undermines national stability and how fragility and conflict at the state level undermine security for individuals. Australia’s national security and international engagement strategy in Southeast Asia should treat investing in human security and state security as complementary and mutually reinforcing endeavours, not competing paradigms.

The AP4D process suggests that Defence should challenge itself to see the national security and defence implications of a range of regional challenges. It also shows the value for Defence of Australia’s development and diplomacy program. There can sometimes be a tendency to place more and more burdens on the ADF—both because of its competence and because it enjoys a high level of public trust. We should be careful of this tendency and be clear on what Defence is optimised to achieve. Defence should play a leadership role in advocating for development and diplomacy as important elements of foreign policy, recognising that it is in Defence’s self-interest for Australia to use a range of tools to shape its international environment.

Coordinating each arm of statecraft to maximise its impact requires understanding that all agencies have a role to play. Defence should be alive to the responses it can bring to an integrated series of interventions—and the value of working with strong diplomacy and development programs.

Putting defence innovation into the hands of the ADF personnel who use it

Last September, the Australian government announced a review of defence innovation, science and technology following six years of operation of the Defence Innovation Hub.

This news was quickly trumped when a mere three days later Prime Minister Scott Morrison unveiled the AUKUS pact and the significant news that Australia would acquire nuclear-powered submarines. The dry topic of defence innovation has barely seen further discussion since.

Yet, in announcing the review, Defence Industry Minister Melissa Price noted that it was commissioned because the defence innovation system ‘is not performing as well as I would like and we need to know what the solutions are to solve the challenges in this area’.

So, what is wrong with Australia’s defence innovation enterprise? Do we need an Australian version of the US Defense Advanced Research Projects Agency? More Makerspaces? Greater engagement with the innovation experimentation groups in individual army units?

No.

All we need is for the independent lead for the new review, David Peever, to retable his report from the 2015 first principles review.

The first principles review criticised Defence’s capability-development construct, in particular the disconnection between customers and the purchaser and unnecessary handover points—such as between the then Capability Development Group and the then Defence Materiel Organisation.

Importantly, the review recommended the establishment of a single, end-to-end capability-development system—what was later termed ‘One Defence’. The concept aimed to avoid great ideas, concepts and initiatives suddenly being thrown onto the desk of the Defence Materiel Organisation with little context, knowledge or support.

Attend any Defence Innovation Hub conference and the first thing you’ll hear from the spokesperson is that the hub doesn’t issue grants, it issues procurement contracts. While the hub may pride itself on this distinction, it’s also important to note that this organisation doesn’t procure or deliver capability for the Australian Defence Force. In fact, after five years, more than 148 contracts and $240 million spent, the impact from the hub’s procurement contracts is questionable. The organisation’s most recent annual report is very careful in its language on project outcomes, stating that completed projects are ‘now approaching the stage at which they could be considered for potential acquisition’ (emphasis added).

In its guidance notes to industry, the hub says that ‘acquisition decisions are made through separate processes that you [the applicant] will need to navigate’.

Why has so much time and money delivered so few if any tangible operational outcomes for the ADF?

Because, love it or loathe it, the only organisation that does capability acquisition for Defence is the aptly named Capability Acquisition and Sustainment Group.

CASG needs to be the first stakeholder in the assessment process, not the last—and not while holding the latest great idea and being told to ‘consider’ the ‘potential’ of acquiring a product in the future … maybe.

The Defence Innovation Hub doesn’t support an end-to-end capability function as recommended by the first principles review, so it’s no wonder industry is frustrated with the process of engaging in the defence innovation system. The current processes don’t enable innovative products and sovereign business to scale up—and the best way to scale up is through a purchase order from a major acquisition project.

Reshaping this system doesn’t require massive restructuring or burdensome administrative costs; it can exploit the existing opportunities in the defence capability life cycle. We don’t need to dilute our relatively low defence spending and create our own DARPA. Instead, capability managers must drive innovation in CASG and the Defence Science and Technology Group by moving early-stage technology out of the lab and into the hands of the warfighter as an acquired, sustained capability.

The chief defence scientist—who incidentally is the capability manager for innovation—has made great progress through the STaR Shots initiative. But more can be done for what the defence transformation strategy calls ‘relatively lower-risk incremental innovation from industry technology’.

The defence capability manual recognises that ‘clear and coordinated innovation pathways that bridge the gap between early-stage technology development and acquisition are essential to create a more agile and proactive approach to capability development and sustainment’.

To facilitate those innovation pathways, Defence needs to enforce the ‘One Defence’ concept throughout the organisation and align the Defence Innovation Hub with CASG.

That should entail the capability managers directing CASG to publish capability problems and technology needs for future acquisition projects. (If you think it can’t be done, I would respectfully refer you to US Special Operations Command annual Special Operations Forces Industry Conference.)

The alignment of the Defence Innovation Hub to the technology needs of upcoming acquisition projects will assists CASG to break down its barriers to innovation and increase the speed of acquisition. A recent Australian National Audit Office report on Defence’s major projects identified schedule slippage as a product of ‘the underestimation of both the scope and complexity of work, particularly for developmental projects’.

So let’s enable collaboration with industry by de-risking projects early in the capability life cycle and aligning innovation proposals with actual acquisition needs—and reduce incidents like the Defence Innovation Hub investing $7.35 million in an alternative to rigid-hull inflatable boats when CASG had already committed $53.3 million to procuring 41 vessels of an existing solution.

This alignment will greatly benefit both Defence and defence industry in strengthening partnerships and provide a more agile and proactive approach to capability development and sustainment.