The cost of Defence ASPI defence budget brief 2022–2023

The cost of Defence ASPI defence budget brief 2022–2023

One hundred & thirty-three million, one hundred & ninety-one thousand, seven hundred & eighty dollars & eighty-two cents per day.

Executive summary

Shortly before the recent election, the previous government released a defence budget that continued its record of delivering the funding it promised in the 2016 Defence White Paper (DWP) and subsequent 2020 Defence Strategic Update (DSU).

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

Despite disruptions to supply chains, Defence and its industry partners have achieved significant increases in acquisition spending. While Defence may have fallen short of its acquisition spending target in 2021-22, it still achieved a $2.1 billion increase on the previous year, which was itself a $1.5 billion increase. That’s translating into growing local spending, both in absolute terms and in relative terms compared to overseas spending. We’ve written previously that the Australian defence industry will need to eat a very large elephant as Defence’s acquisition and sustainment budgets grow.

So far, it’s demonstrating that it has the appetite to do that.

Capability continues to be delivered across all domains. There’s no doubt that the ADF is getting better. But we’re seeing the realisation of risks inherent in an acquisition program built around megaprojects. Such projects take years or decades to design and deliver, while spending huge sums for little benefit in the short term. When they encounter problems, those problems are big. The Attack-class submarine program has cost over $4 billion and delivered nothing. The Hunter frigate program continues to experience delays and won’t get a vessel into service for over a decade. The Boxer combat reconnaissance vehicle project has spent close to $2 billion, but only 25 training vehicles have been delivered. While the nuclear-powered attack submarine (SSN) program has the potential to deliver a huge step-up in undersea warfare capability, it’s the mother of all megaprojects and has a risk profile to match. As the megaprojects ramp up (with over $20 billion in infantry fighting vehicles potentially added to the list of committed funds), their cash flow requirement will increase, tying the government’s hands at a time of rapidly growing strategic uncertainty and evaporating warning time.

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

As always, the government will need to adjudicate between competing priorities for funding. At a time when Australians are dealing with the rising cost of living, spikes in energy prices and the grinding pressure of housing affordability, it may be tempting to reduce defence spending in the face of competing budget priorities. However, the government should be aware of the results of doing so. The budget is already full, with no pots of unallocated cash. Any short-term windfall delivered by the cancellation of the Attack-class submarine is already gone-as the cancellation of the SkyGuardian armed uncrewed air vehicle to help deliver a $9.9 billion offset for the REDSPICE cyber program reveals. So even holding the defence budget strictly at 2% of GDP will result in substantial, multibillion-dollar reductions to the DSU funding line, inevitably leading to cuts in capability.

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

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

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

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

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

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

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

Countering the Hydra: A proposal for an Indo-Pacific hybrid threat centre

What’s the problem?

Enabled by digital technologies and fuelled by geopolitical competition, hybrid threats in the Indo-Pacific are increasing in breadth, application and intensity. Hybrid threats are a mix of military, non-military, covert and overt activities by state and non-state actors that occur below the line of conventional warfare. The consequences for individual nations include weakened institutions, disrupted social systems and economies, and greater vulnerability to coercion—especially from revisionist powers such as China.

But the consequences of increased hybrid activity in the Indo-Pacific reach well beyond individual nations. The Indo-Pacific hosts a wide variety of political systems and interests, with multiple centres of influence, multiple points of tension and an increasingly belligerent authoritarian power. It lacks the regional institutions and practised behaviours to help ensure ongoing security and stability. And, because of its position as a critical centre of global economic and social dynamism, instability in the Indo-Pacific, whether through or triggered by hybrid threats, has global ramifications.

Because hybrid threats fall outside the conventional frameworks of the application of state power and use non-traditional tools to achieve their effects, governments have often struggled to identify the activity, articulate the threat and formulate responses. Timeliness and specificity are problematic: hybrid threats evolve, are often embedded or hidden within normal business and operations, and may leverage or amplify other, more traditional forms of coercion.

More often than not, hybrid threat activity is targeted towards the erosion of national capability and trust and the disruption of decision-making by governments—all of which reduce national and regional resilience that would improve security and stability in the region.

What’s the solution?

There’s no silver-bullet solution to hybrid threats; nor are governments readily able to draw on traditional means of managing national defence or regional security against such threats in the Indo-Pacific.

Because of the ubiquity of digital technologies, the ever-broadening application of tools and practices in an increasing number of domains, it’s evident that policymakers need better and more timely information, the opportunity to share information and insights in a trusted forum and models of how hybrid threats work (we provide one here). Exchange of information and good practice is also needed to help counter the amorphous, evolving and adaptive nature of hybrid threats.

We propose the establishment of an Indo-Pacific Hybrid Threat Centre (HTC, or the centre) as a means of building broader situational awareness on hybrid threats across the region.1 Through research and analysis, engagement, information sharing and capacity building, such a centre would function as a confidence-building measure and contribute to regional stability and the security of individual nations.

While modelled on the existing NATO–EU Hybrid Centre of Excellence (CoE) in Finland, the centre would need to reflect the differences between the European and Indo-Pacific security environments. Most notably, that includes the lack of pan-regional Indo-Pacific security institutions and practice that the centre could use. There are also differences in the nature and priorities assigned to threats by different countries: the maritime domain has more influence in the Indo-Pacific than in Europe, many countries in the region face ongoing insurgencies, and there’s much less adherence to, or even interest in, democratic norms and values.

That will inevitably shape the placement, funding, and operations of an Indo-Pacific HTC. A decentralised model facilitating outreach across the region would assist regional buy-in. Partnership arrangements with technology companies would provide technical insight and support. Long-term commitments will be needed to realise the benefits of the centre as a confidence-building measure. The Quad countries are well positioned to provide such long-term commitments, while additional support could come from countries with experience and expertise in hybrid threats, particularly EU countries and the UK.

As with the NATO–EU Hybrid CoE, independence and integrity are paramount. That implies the positioning of the Indo-Pacific HTC core in a strong democracy; better still would be the legislative protection of its operations and data. Accordingly, we propose scoping work to establish policy approval, legislative protection and funding arrangements and to seed initial research capability and networks.

Introduction

Hybrid threats are a mix of military and non-military, covert and overt activities by state and non-state actors that occur below the line of conventional warfare. Their purpose is to blur the lines between war and peace, destabilise societies and governments and sow doubt and confusion among populations and decision-makers. They deliberately target democratic systems and state vulnerabilities, often leveraging legitimate processes for inimical ends, and typically aim to stay below the threshold of detection, attribution and retaliation.2 They’re the same activities that the Australian Government attributes to the ‘grey zone’, involving ‘military and non-military forms of assertiveness and coercion aimed at achieving strategic goals without provoking conflict.’3

Hybrid threats are increasingly of concern to governments as they grapple with the effects of digital technologies, Covid-19 and an increasingly tense geopolitical environment. Ambiguous, evolving, at the intersection of society, commerce and security, and transnational in character, hybrid threats challenge and undercut ‘normal’ conceptions of security. Unmet, they stoke division and anxiety in societies and states. They threaten to erode national security, sovereignty and societal resilience, leaving nations and their people vulnerable to coercion, particularly by authoritarian states and criminal elements.

The immediate targets of motivated hybrid activity are typically non-traditional, in the sense that government security apparatuses aren’t expected to manage and repulse them. Hybrid activity takes advantage of other, easier targets and means of generating confusion and disruption at the nation-state level: individuals may be targeted for repression or assassination; fishing vessels harassed; intellectual property stolen; commercial advantage pillaged; researchers and journalists intimidated; ethnic communities hijacked; and elites co-opted for corrupt ends.

The Indo-Pacific region is particularly vulnerable. For example, it lacks the more practised security frameworks, cooperative mechanisms and understandings present in Europe. There’s little shared awareness and understanding of the nature and consequences of hybrid threats. The region is also especially economically and demographically dynamic and socially diverse, featuring a number of competing political systems and institutions.

That offers both challenge and opportunity. In this paper, we consider the nature of hybrid threats, explore the threat landscape in the Indo-Pacific, turn our attention to the potential ‘fit’ of an Indo-Pacific HTC and make recommendations for the way forward.

A number of the thoughts and insights incorporated in this paper emerged during ASPI’s consultations with governments, businesses and civil society groups in the Indo-Pacific, as well as in Europe and the UK. We thank those respondents for their time and insights.

  1. Danielle Cave, Jacob Wallis, ‘Why the Indo-Pacific needs its own hybrid threats centre’, The Strategist, 15 December 2021. ↩︎
  2. See NATO’s definition, online, and the Hybrid Centre of Excellence’s definition. ↩︎
  3. Defence Department, Defence Strategic Update, Australian Government, 2020, 5. ↩︎

China’s messaging on the Ukraine conflict

In the early days of Russia’s invasion of Ukraine, social media posts by Chinese diplomats on US platforms almost exclusively blamed the US, NATO and the West for the conflict. Chinese diplomats amplified Russian disinformation about US biological weapon labs in Ukraine, linking this narrative with conspiracy theories about the origins of COVID-19. Chinese state media mirrored these narratives, as well as replicating the Kremlin’s language describing the invasion as a ‘special military operation’.

ASPI found that China’s diplomatic messaging was distributed in multiple languages, with its framing tailored to different regions. In the early stage of the conflict, tweets about Ukraine by Chinese diplomats performed better than unrelated content, particularly when the content attacked or blamed the West. ASPI’s research suggests that, in terms of its international facing propaganda, the Russia–Ukraine conflict initially offered the party-state’s international-facing propaganda system an opportunity to reassert enduring preoccupations that the Chinese Communist Party perceives as fundamental to its political security.

The transnational element of a ‘domestic’ problem: Policy solutions to countering right-wing violent extremism in Australia

The rise of right-wing violent extremist (RWE) ideas bursts to the forefront of public attention in flashes of violence. Shootings and vehicular attacks perpetrated by individuals motivated by hateful views stun the public. They have also sharpened government attention to and galvanised action on addressing such violence.

These incidents of violence and these disturbing trends call for renewed vigilance in confronting RWE, which ASIO has since classified as ‘ideologically motivated violent extremism’ (IMVE), in Australia’s security agencies’ policy and law enforcement responses. As governments respond to IMVE, it is important to nuance how they conceptualise the challenges posed by RWE and, therefore, scope their solutions.

This report looks at four case studies, qualitative interviews, and expert literature to highlight important transnational dimensions of RWE, as well as expand the way governments understand the RWE threat and craft policy responses to it.

The result shows a clear need for governments to take a broader lens when understanding and responding to RWE. While governments may conventionally see terrorism in ‘domestic’ versus ‘international’ terms, RWE attackers and their sources and legacies of inspiration are not bound by national borders. Efforts to address RWE, then, should take into account these transnational dimensions while examining the challenge at hand and developing and implementing solutions.

The report’s recommendations point to early steps Australia can take to improve international collaboration and coordination on countering RWE. Our approaches and solutions must recognise this threat to democracy and include efforts to bolster resilience in democratic institutions and processes. Public trust and confidence in these institutions and processes is a critical element of this resilience to mis/disinformation broadly, and the violent extremism it enables. This report shows that it’s not only important for governments to take RWE seriously, it matters how governments do so.

AUKUS Update #1: May 2022

On the 16th of September 2021, the leaders of Australia, the UK and the US announced the creation of a new trilateral security partnership called ‘AUKUS’—Australia, the United Kingdom and the United States.

The three national leaders stated, ‘We will foster deeper integration of security and defense-related science, technology, industrial bases, and supply chains. And in particular, we will significantly deepen cooperation on a range of security and defense capabilities.’

At a time of rapidly increasing strategic uncertainty, when it’s increasingly clear that authoritarian regimes are willing to use military power to achieve their goals, it’s important to monitor the implementation of AUKUS so that governments and the public can assess whether it’s achieving the goal of accelerating the fielding of crucial military technologies.

To track the implementation of AUKUS, ASPI will publish regular updates on progress. This is the first of those updates.

Understanding the price of military equipment

Executive summary

Confusion reigns in discussions about the cost of the Department of Defence’s equipment projects. Whether we’re talking about media articles, parliamentary committee hearings, letters to the editor, duelling internet commentators or any other forms of discourse that address Defence acquisitions, the only thing that’s clear is that we’re almost always talking past each other when it comes to the cost of military equipment. Defence doesn’t help when it releases only a bare minimum of information. This sorry state of affairs reached its peak several years ago, when it turned out that when Defence said that the cost of the Attack-class submarine was $50 billion it really meant that the cost was somewhere around $90 billion.

The situation gets even murkier when commentators compare the cost of military acquisition projects here in Australia with ones overseas. It’s very rare that we can make a direct, apples-to-apples comparison between local and overseas projects, and very often it’s more like apples-to-orangutans. Being completely unaware of the basis of the costs they’re comparing doesn’t stop some commentators from making strong claims about the rapacity of foreign arms companies or the competence of the Australian Defence Department.

This report attempts to be a guide for the perplexed. It’s not a technical manual, but a plain-English discussion that unpacks the cost of Australian defence equipment projects. While it would be useful for those working in the field of defence and strategic studies to read the whole report, it can also be used a reference tool explaining key terms such as ‘constant’ and ‘out-turned’ dollars or different cost-estimation methodologies.

It’s important up front to acknowledge that the cost of modern military equipment can be eye-wateringly high, and there’s always a ‘sticker shock’ when we compare the costs of military systems with the costs of their civilian counterparts. Those costs are driven by the constant quest for better capability that provides an advantage in a life-and-death business. That striving in turn drives rates of cost escalation that greatly outstrip inflation in the broader economy. No Western country has yet found a way out of that endless cost spiral, and Australia is certainly not an exception.

Anyone discussing cost has to understand what’s included in the price. It’s here that comparisons of Australian and overseas projects are difficult. Australian defence project costs include all the elements needed to get a capability into service, which are known as the fundamental inputs to capability. They comprise much more than the military equipment itself and can include facilities, training systems, documentation, intellectual property, integration of the new equipment (such as a missile) onto existing systems (such as the aircraft that will launch it), science and technology programs, and so on.

Elements other than the equipment aren’t trivial and can sometimes make up half of the total acquisition cost. Australian projects also include significant risk provisions, known as contingency. In contrast, most overseas programs don’t include all of those elements, so their cost can appear significantly smaller.

In this report, I provide a hypothetical example that illustrates how the cost grows as we include these factors. If we start with available off-the-shelf equipment costing $1 billion and adjust for price escalation (including inflation and capability enhancements) and factor in all fundamental inputs to capability and contingency, we quickly get to a total acquisition cost of $3.5 billion. That’s before we include operating costs.

The report also briefly examines a current, real-world example by comparing the cost of Australia’s Hunter-class frigate project with analogous international projects. While we attempt to make some assessments, the exercise confirms that comparisons are difficult when we don’t have visibility of what’s included in the price tag.

We also attempt to debunk the popular and deeply held view that Defence projects frequently go over budget. Based on the public evidence, the opposite is in fact the case. Once the government considers a business case and gives Defence approval to enter into contracts to acquire a particular system with a set budget, the department rarely goes over budget. However, it must be said that, before that point, Defence’s estimates of the funding needed to acquire a capability can grow significantly as its understanding of its requirements and the possible solutions develops. It’s here that the infamous ‘blowouts’ generally occur, not after actual acquisition commences.

Some commentators have suggested that focusing on the cost ignores the value those systems provide—why quibble over a few billion here or there when the security of the country is at stake? I’d argue that it’s difficult to assess value for money if you don’t understand how much money you’re paying. This study aims to help Australians understand how much they’re paying. It’s only then that we can make informed decisions about military spending.

Chapter 1: Introduction

One of the greatest areas of confusion in public discussions of the cost of defence is the price of military equipment. It’s hard to know what Australia is paying for its weapons, which makes it hard to know whether we’re paying the right price or getting value for money.

The Defence Department doesn’t release information on the price it’s paying for particular items, but only high-level project costs—and then only for some projects. Those numbers include a wide range of elements beyond the equipment itself. Public discussion is confused and confusing when commentators take the project-level numbers and crudely reverse-engineer the cost of individual items from them.

To address that shortcoming, commentators look for relevant cost information overseas. But often the issue gets even murkier when Australian costs are compared with overseas numbers. Some national defence agencies, particularly the US Defense Department, publish very detailed information, yet their numbers are generally not amenable to a direct apples-to-apples comparison with Australian data.

The following is an example that illustrates why we need to be cautious even when using numbers from a reliable source. The Defense Security Cooperation Agency (DSCA) manages the US’s Foreign Military Sales program which allows partner countries to acquire US-made military equipment at the same price as the US military. The DSCA has to notify the US Congress of potential sales that have been approved by the US State Department. Those notifications are public and are a useful source of information, but they can be misleading when misused.

In April 2020, the DSCA notified Congress of the potential sales of 10 AGM-84L Harpoon Block II air launched anti-ship missiles (Figure 1) to India for US$92 million and of 10 of them to Morocco for US$62 million.1 It would be wrong to assume that India was being gouged US$9.2 million per missile while Morocco was getting them at a bargain price of US$6.2 million. Both sales also included ‘containers, spare and repair parts, support and test equipment, publications and technical documentation, personnel training and training equipment, US Government and contractor representatives’ technical assistance, engineering and logistics support services, and other related elements of logistics support’.

In fact, the cost of a Harpoon missile itself is nowhere near US$9.2 million, or even US$6.2 million. At almost the same time as those DSCA announcements, the US Navy awarded a contract to Boeing in May 2020 worth nearly US$657 million for 467 Harpoon Block II missiles and support equipment for various foreign military sales customers.2 So the price of an individual missile was less than US$1.4 million.

This example shows that we need to be careful even when comparing numbers taken from the same source that seem to have similar scope. But it also shows that the cost of a weapon itself is only one part of the total cost of a project or program and that the weapon is only one part of an effective military capability. Depending on whether you’re developing a cost for the weapon or for the capability, you’ll come up with dramatically different numbers.

Figure 1: Harpoon anti-ship missile: US$1.4 million, US$6.2 million or US$9.2 million?

Source: Defence image library, online.

Unfortunately, many commentators aren’t careful when using cost figures whether from here or overseas. This results in murky numbers being used to justify strong claims such as that the US’s latest nuclear-powered submarine would cost substantially less than the Attack-class conventional submarine, or that Australia is being taken for a ride by unscrupulous company X or country Y, and so on.

In this report, I start by looking at why the ‘sticker shock’ for modern weapons is so high to start with. I then look at how different definitions of cost sit along the spectrum from weapon to complete capability resulting in very different scope. I explain key concepts in cost estimation. The report then provides a hypothetical example illustrating how these definitions and concepts increase the cost as we move from weapon to capability. We’ll reinforce that with a real-world example drawn from the Navy’s Hunter-class frigate program. The report ends with a chapter that examines the validity of the popular view that Defence’s projects often go over budget.

Full Report

To continue reading, please download the full report here.

About ASPI

The Australian Strategic Policy Institute was formed in 2001 as an independent, non‑partisan think tank. Its core aim is to provide the Australian Government with fresh ideas on Australia’s defence, security and strategic policy choices. ASPI is responsible for informing the public on a range of strategic issues, generating new thinking for government and harnessing strategic thinking internationally. ASPI’s sources of funding are identified in our Annual Report, online at www.aspi.org.au and in the acknowledgements section of individual publications. ASPI remains independent in the content of the research and in all editorial judgements. It is incorporated as a company, and is governed by a Council with broad membership.

ASPI’s core values are collegiality, originality & innovation, quality & excellence and independence.

Important Disclaimer

This publication is designed to provide accurate and authoritative information in relation to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering any form of professional or other advice or services. No person should rely on the contents of this publication without first obtaining advice from a qualified professional.

© The Australian Strategic Policy Institute Limited 2022

This publication is subject to copyright. Except as permitted under the Copyright Act 1968, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Enquiries should be addressed to the publishers. Notwithstanding the above, educational institutions (including schools, independent colleges, universities and TAFEs) are granted permission to make copies of copyrighted works strictly for educational purposes without explicit permission from ASPI and free of charge.

First published May 2022.

Cover image: ADF’s new Australian designed Hawkei protected vehicle at the Thales Protected Vehicles facility in Bendigo, Victoria. Defence image library, online.

Funding

No specific sponsorship was received to fund production of this report.

  1. Defense Security Cooperation Agency (DSCA), ‘India—AGM-84L Harpoon air-launched Block II missiles’, media release, US Defense Department, 13 April 2020
    DSCA, ‘Morocco—AGM-84L Harpoon air-launched Block II missiles’, media release, US Defense Department, 14 April 2020: https://www.dsca.mil/press-media/major-arms-sales/morocco-agm-84l-harpoon-air-launched-block-ii-missiles ↩︎
  2. US Defense Department, ‘Contracts for May 13, 2020’, US Government ↩︎

Building genuine trust

A framework and strategy for Indigenous STEM and cyber pathways

Executive summary

Indigenous recruitment and retention in the Australian Defence organisation is defined by a high target of 5% participation in the armed services and 3% in the Australian Public Service component of the Defence Department by 2025. The participation target is a point of pride and a source of clear goodwill and has provided momentum in several areas of Defence for Indigenous employment and pathways.

However, the individual areas of success and effort are yet to translate into an effective whole-of-Defence framework with cohesive lines of effort. This policy report suggests how that can change. It provides a framework and strategy for Defence to support science, technology, engineering and mathematics (STEM) recruitment and retention and cybersecurity careers, particularly through engagement with the vocational education and training system and through targeted relationship building with university- and school-based Indigenous STEM initiatives.

We propose that Defence should enact a wider set of supporting measures—particularly in data and reporting to track professional development—that’s more likely to create more sustainable success that delivers organisational improvements and outcomes for Defence. That should include mechanisms to enhance the achievements of the Indigenous Procurement Policy.

Defence must ensure that it meets its immediate skills shortfalls as well as its long-term obligations under the Closing the Gap initiative and the Defence Reconciliation Action Plan to foster genuine and meaningful relationships built upon trust with Indigenous peoples.

We suggest how that’s possible through a framework and 56 recommendations focusing on 12 areas of activity:

  • data, reporting and user-experience web design
  • career pathways
  • defence and technology contractors
  • community engagement
  • procurement and business development
  • veterans’ employment and procurement
  • the vocational education sector
  • universities
  • recruitment
  • retention
  • coordination with other public agencies
  • international partnerships.

Action on those recommendations will ensure that Defence is an employer of choice and fosters genuine and meaningful trust with Australia’s Indigenous peoples. And it will also build Defence’s capability to keep our nation safe and secure in a more dangerous world.

Introduction: Building trust—what’s visible and what are the blind spots?

The recruitment and retention of Indigenous Australians in the Defence organisation is defined by high ambitions. The aim is to reach 5% Indigenous participation in the armed services and 3% in the Australian Public Service (APS) by 2025. However, the implementation of employment pathways is lagging due to weak engagement with the talent pool, especially with Indigenous Australians who are training in science, technology, engineering and mathematics (STEM) fields in the vocational education and training (VET) and university sectors. Weak talent market mapping means that current success rates in Defence recruiting are unlikely to be maintained, particularly as competition to attract and retain Indigenous workers increases.

A common story in the services and Defence APS is the slow progress on the policy reform that’s urgently needed to build Indigenous employment pathways into Defence and through to the wider defence ecosystem, including veterans’ employment. Defence needs to demonstrate that it invests in the long-term training, retention and advance of Indigenous personnel.

Our discussions with Defence personnel have revealed that silos in the Defence organisation work against Indigenous recruitment and retention. The services are driving much reform, but a comprehensive data picture and an annual public report that canvasses what’s working well—that establishes clear process metrics, benchmarks and areas for attention, including in recruitment, retention, training and professional development—means that many work areas are without a clear guide or a definition of success beyond participation targets, so their efforts are unfocused and can be discordant.

Developing measures and public reporting, including on how senior leadership is achieving Indigenous targets within the workforce, will be an important step forward. It will cement Defence’s leadership role as an exemplar to other parts of government and the wider defence industry. It will also ensure that Indigenous employment is addressed as part of the renewed drive to optimise defence data, as outlined in the Defence Data Strategy 2021–2023.1

Setting up Indigenous employees for success within the One Defence team requires Defence personnel at all levels to have greater situational awareness of the grassroots reasons for Indigenous Australians joining, staying in, or leaving the organisation. Developing career pathways requires policy and procedures geared towards addressing the drivers and impediments to jobs and training in cities, regions and remote Australia for Indigenous men and women of different ages.

Addressing career pathways and enhancing retention require a mindset that anticipates employee issues—including cultural factors—and addresses them so that Indigenous Australians decide to join and stay. The cultural integrity framework for the APS, sponsored by Defence, will be an important part of that effort. The framework seeks to provide support for employees and leaders so that Indigenous personnel are invested in as a resource in Defence and in the Australian Government’s broader strategic thinking and so that their experience and insight are valued appropriately.

The ‘pathway’ metaphor is often deployed to describe Indigenous training and employment programs and equity and social inclusion initiatives.2 Pathways are rarely straight lines. Indigenous employment pathways aren’t just about entry points, but are also about systemic training and development opportunities within Defence and beyond into veterans’ employment. Defence will need to approach attraction broadly to reach school leavers and students in the VET and university sectors. Defence and other agencies will need to ensure that the growth of Indigenous opportunities is part of the government’s revised ‘industry cluster’ model for skills development.3

One bright spot is the Indigenous businesses sector, which is a growing source of employment, labour market information and training for young Indigenous people. Defence is a driver in that sector. In 2020–21, Defence outstripped its target of 676 contracts, awarding 6,476 contracts worth $610 million to Indigenous businesses.4 Although that was a doubling of contract value, from $300 million to $600 million in one year, a House of Representatives committee report tabled in August 2021 suggested various measures to increase the capability of the Indigenous business sector in order to push the sector further up the value chain. Since 2015, Defence has awarded $1.86 billion in contract value to more than 550 Indigenous businesses.

Problems in the Indigenous business sector, such as ‘blackcladding’ (creating a management structure that satisfies the ownership criteria for the Indigenous Procurement Policy but in which control of the enterprise can be vested in non-Indigenous managers), are not adequately addressed by current policy. Indigenous business operators have said that they feel discriminated against in procurement panel processes and that they have higher barriers to overcome. Although that view is also characteristic of many non-Indigenous small and medium-sized enterprises (SMEs), it risks undermining Defence’s current achievements.

The size of Defence’s procurement portfolio creates an expectation that it should take a leading role in procurement policy reform. Improved opportunities that reinforce the expansion and maturation of sovereign industrial capability through Indigenous businesses would be a step forward, given that Indigenous businesses have substantially better employment outcomes for Indigenous people than non-Indigenous businesses.5 However, that will be a real challenge, as the sector needs to mature in its training and finances to deliver to Defence. A veterans’ business procurement policy could strengthen relationships with Indigenous veterans.

Initiatives for Defence and other parts of government that tie together training, scholarships and pre-apprenticeship programs would provide a major lift to current efforts. Initiatives to build capability (business incubators, venture financing and ensuring that existing policy tools are being used effectively and opportunities for veterans’ businesses) would increase the ability of Indigenous businesses to deliver higher value contracts. There are risks in all those areas, so Defence’s activities will need to be communicated clearly to stakeholders and political decision-makers, and the linkage of those policies to Defence’s core purposes—delivering capabilities for the government to use to advance Australia’s security—must be clear.

This is a clear point of difference between the broader defence industry and the Defence organisation. Defence’s ambitions include a market-leading participation target, using procurement as a driver of an economic and social uplift, and a commitment to meet Closing the Gap targets. Defence can encourage industry to take up the challenge, given its stake in key areas such as cybersecurity. In the broader business environment, there’s patchy engagement with reconciliation processes (particularly the registration of reconciliation action plans with Reconciliation Australia) among major defence contractors, including those that provide recruitment advertising or provide technology. This is an area where Defence can influence overall change in the sector.

There will always be tension for Defence and government between targeting problems that are clearly visible (and for which data is available) and addressing blind spots. Labour market data on Indigenous Australia is notoriously unreliable, so government action can be misaligned. For example, an effort to improve the quality of labour force statistics by the Department of the Prime Minister and Cabinet’s Central Analytics Hub was shelved because of the Covid-19 pandemic, the bushfire season and data access problems. Defence can be a powerful advocate for improved federal and state data collection as a basis for policy and implementation in this area.

Visible data creates a bias towards taking action that seems relatively straightforward, but which in fact will require concerted efforts on multiple fronts and involve several government portfolios or work areas. For example, the Certificate IV in Cybersecurity qualification in the vocational sector is only four years old. The curriculum was developed by TAFE administrators and several technology and cybersecurity companies and overseen by the Victorian Registration and Qualification Authority, but with no Defence involvement.

A seemingly straightforward solution, such as directing recruitment efforts towards TAFE cybersecurity students, can be surprisingly complicated. Current data (from 2020) shows that 129 Indigenous students were studying for the Certificate IV in NSW, 55 in Queensland and 275 in Victoria.6 Twenty-four registered training organisations across the country are currently approved to deliver the course.7 However, the National Centre for Vocational Education Research public data isn’t disaggregated to the campus level, so exactly where those students are learning (including online) is difficult.

This is why relationship building comes up so often in discussions with those in Defence charged with attracting Indigenous candidates and with their counterparts in the education sector responsible for guiding students into careers. Relationships trump everything when data is ambiguous, and raw numbers (on, for example, completion rates) might not tell the full story of Indigenous perseverance. For example, Indigenous students are much more likely than non-Indigenous students to experience conflict between study and family commitments, including caring for children or other family members, which affects results.8

Defence hasn’t built strong enough relationships through frequent interactions with the VET and university sectors, including Indigenous Elders in universities and Indigenous pro-vice chancellors (some of whom are ADF veterans). Its signature cyber initiatives—the ADF Cyber Gap and Cyber Defence College—don’t have a visible Indigenous engagement strategy or a clear link to the Defence TAFE Employment Scheme. TAFE is a major trainer of Indigenous Australians.

Defence has set itself an ambitious goal in the Defence Reconciliation Action Plan 2019–2022: ‘fostering genuine relationships built on trust.’9 Trust is intangible, but high-trust organisations have lower costs and ensure social cohesion in the face of rising uncertainties.10 How Defence holds itself to account and builds long-term relationships with Indigenous Australians will be a key marker of its future success.

To build trust makes the task of Defence more ambiguous and success more difficult to assess in the short term. Box-ticking exercises will risk jeopardising Defence’s ambitions to be an employer of choice. Defence isn’t a social policy portfolio, but it does have obligations under wider government policies, particularly the National Agreement on Closing the Gap. The population growth of Indigenous Australia is shifting towards the southern capital cities and the more populous states and territories, which is something to keep in mind when allocating resources because of the potential to exacerbate existing inequalities in access.11

The harder task is to forge relationships with communities and address the impacts of Defence’s past policies with Indigenous people, as indicated in the Defence Reconciliation Action Plan. Aspects of this work are being done through the engagement activities of the Indigenous Liaison Officer network and through initiatives such as the appointment of Indigenous elders to military bases. But some foundational blocks are missing, such as an Indigenous youth engagement strategy and a digital service design attuned to the way Indigenous candidates access internet services, including for labour market information.12

Fostering genuine trust is necessary for Defence to truly represent the nation that it protects. There are opportunities to partner with Indigenous Australians, build capacity alongside them and prioritise their leadership so that the collection and use of data, strategies on staff training and development, and strategies on youth, veteran, business and community engagement are developed in genuine partnership.

Full Report

We warmly encourage you to download and read the full report, which can be found here.

Acknowledgements

ASPI ICPC would like to thank all of those who peer-reviewed drafts of this report, including Major General Marcus Thompson, Stephen Chey, Michael Shoebridge, Fergus Hanson, John Coyne, Miah Hammond-Errey and Anastasia Kepatas. We’re also grateful to individuals we consulted in government, industry and academia, including participants at a workshop with Indigenous members of the Australian Defence Force that helped to shape and focus this report.

This report was commissioned by the Australian Department of Defence Strategic Policy and Intelligence Group. The work of ASPI ICPC would not be possible without the support of our partners and sponsors in governments, industry and civil society.

Within this report, the term ‘Indigenous’ is used to refer both to Aboriginal people and to Torres Strait Islanders.

What is ASPI?

The Australian Strategic Policy Institute was formed in 2001 as an independent, non‑partisan think tank. Its core aim is to provide the Australian Government with fresh ideas on Australia’s defence, security and strategic policy choices. ASPI is responsible for informing the public on a range of strategic issues, generating new thinking for government and harnessing strategic thinking internationally. ASPI’s sources of funding are identified in our annual report, online at www.aspi.org.au and in the acknowledgements section of individual publications. ASPI remains independent in the content of the research and in all editorial judgements.

ASPI International Cyber Policy Centre

ASPI’s International Cyber Policy Centre (ICPC) is a leading voice in global debates on cyber, emerging and critical technologies and issues related to information and foreign interference and focuses on the impact those issues have on broader strategic policy. The centre has a growing mixture of expertise and skills, including teams of researchers who concentrate on policy, technical analysis, information operations and disinformation, critical and emerging technologies, cyber capacity-building, satellite analysis, surveillance and China-related issues. The ICPC informs public debate in the Indo-Pacific region and supports public policy development by producing original, empirical, data-driven research. The centre enriches regional debates by collaborating with research institutes from around the world and by bringing leading global experts to Australia, including through fellowships. To develop capability in Australia and the Indo-Pacific region, the ICPC has a capacity-building team that conducts workshops, training programs and large-scale exercises for the public and private sectors. We thank all of those who support and contribute to the ICPC with their time, intellect and passion for the topics we work on. If you would like to support the work of the centre, contact: icpc@aspi.org.au

Important Disclaimer

This publication is designed to provide accurate and authoritative information in relation to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering any form of professional or other advice or services. No person should rely on the contents of this publication without first obtaining advice from a qualified professional.

© The Australian Strategic Policy Institute Limited 2022

This publication is subject to copyright. Except as permitted under the Copyright Act 1968, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Enquiries should be addressed to the publishers. Notwithstanding the above, educational institutions (including schools, independent colleges, universities and TAFEs) are granted permission to make copies of copyrighted works strictly for educational purposes without explicit permission from ASPI and free of charge.

First published April 2022.
Front and back cover images: ‘Silhouettes in the sky’, Marcus McGregor Cassady.

Funding

Funding for this report was provided by the Australian Department of Defence Strategic Policy and Intelligence Group.

  1. Department of Defence (DoD), Defence Data Strategy 2021–2023, Australian Government, 2021, online. ↩︎
  2. Jack Frawley, James A Smith, Andrew Gunstone, Ekaterina Pechenkina, Wendy Ludwig, Allison Stewart, ‘Indigenous VET to higher education pathways and transitions: a literature review’, ACCESS: Critical Explorations of Equity in Higher Education, 2017, 4(1), online. ↩︎
  3. Department of Education, Skills and Employment (DESE), ‘New industry engagement arrangements—Industry clusters’, Skills Reform, Australian Government, 2022, online. ↩︎
  4. Huon Curtis, Khwezi Nkwanyana, ‘Where to next for government policy on Indigenous procurement?’, The Strategist, 17 December 2021 ↩︎
  5. Boyd Hunter, ‘Indigenous employment and businesses: Whose business is it to employ Indigenous workers?’, Centre for Aboriginal Economic Policy Research (CAEPR), Australian National University, 2014. ↩︎

  6. ‘Table builder’, National Centre for Vocational Education Research (NCVER). ↩︎
  7. ‘Organisation / RTO search’, Training.gov.au, 2022. ↩︎
  8. K Hillman, The first year experience: the transition from secondary school to university and TAFE in Australia, Australian Council for Educational Research, Camberwell, 2005. ↩︎
  9. DoD, Defence Reconciliation Action Plan 2019–2022, Australian Government, August 2019. ↩︎
  10. A Green, G Janmaat, H Cheng, ‘Social cohesion: converging and diverging trends’, National Institute Economic Review, 2011, 215, R6-R22. doi:10.1177/0027950111401140; O Schilke, KS Cook, ‘A cross-level process theory of trust development in interorganizational relationships’, Strategic Organization, 2013, 11(3):281–303, doi:10.1177/1476127012472096; P Spoonley, P Gluckman, A Bardsley, T McIntosh, R Hunia, S Johal, R Poulton, He oranga hou: Social cohesion in a post-COVID world, Centre for Informed Futures, University of Auckland, 2020. ↩︎
  11. Australian Bureau of Statistics (ABS), ‘Estimates and projections: Aboriginal and Torres Strait Islander Australians’, Australian Government, 2019. ↩︎
  12. Defence has a youth engagement and development strategy but not one that’s specific to Indigenous youth. DoD, ‘The Defence Youth Engagement and Development Strategy’, Australian Government, no date. ↩︎

The Hunter frigate: An assessment

Powerful and survivable large surface combatants, in numbers commensurate with the expected threat and national budgetary limitations, remain central in the order of battle of any navy of a middle-power such as Australia, but they need to be fit for purpose. 

Australia’s government policy has acknowledged deteriorating geostrategic circumstances since 2009, culminating in its 2020 Strategic Update where we are not left in any doubt of the concern over China’s intentions and a stretched United States. The warships Australia acquires should be suitable for the circumstances it finds itself in.

Doctrine describes how the fighting will be done; policy determines which fight to prepare for. This report explores the disconnect between doctrine and policy, which has led Australia to building a warship that is unsuited for its purposes. It offers better alternatives, and suggestions to prevent being in a similar situation in the future, including using AUKUS to form a relationship with the USN to participate in its forthcoming new large destroyer program.

Artificial intelligence: Your questions answered

This collection of short papers developed by the Australian Institute for Machine Learning (AIML) at the University of Adelaide and the Australian Strategic Policy Institute (ASPI) offers a refreshing primer into the world of artificial intelligence and the opportunities and risks this technology presents to Australia.

AI’s potential role in enhancing Australia’s defence capabilities, strengthening alliances and deterring those who would seek to harm our interests was significantly enhanced as a result of the September 2021 announcement of the AUKUS partnership between the US, the UK and Australia. Perhaps not surprisingly, much public attention on AUKUS has focused on developing a plan ‘identifying the optimal pathway to deliver at least eight nuclear-powered submarines for Australia’.

This AIML/ASPI report is a great starting point for individuals looking to better understand the growing role of AI in our lives. I commend the authors and look forward to the amazing AI developments to come that will, we must all hope, reshape the world for a more peaceful, stable and prosperous future.

University of Adelaide, Australian Institute for Machine Learning - logo

Artificial intelligence and policing in Australia

ASPI’s Strategic Policing and Law Enforcement Program is delighted to share its new Strategic Insights report, Artificial intelligence and policing in Australia by Dr Teagan Westendorf.

Digital technologies, devices and the internet are producing huge amounts of data and greater capacity to store it, and those developments are likely to accelerate. For law enforcement, a critical capability lagging behind the pace of tech innovation is the ability and capacity to screen, analyse and render insights from the ever-increasing volume of data—and to do so in accordance with the constraints on access to and use of personal information within our democratic system.

Artificial intelligence (AI) and machine learning are presenting valuable solutions to the public and private sectors for screening big and live data. AI is also commonly considered and marketed as a solution that removes human bias, although AI algorithms and dataset creation can also perpetuate human bias and so aren’t value or error free.

This report analyses limitations, both technical and implementation, of AI algorithms, and the implications of those limitations on the safe, reliable and ethical use of AI in policing and law enforcement scenarios. This publication closely examines usage of AI by domestic policing agencies to model what success looks like for safe, reliable and ethical use of AI in policing and law enforcement spaces. It also explores possible strategies to mitigate the potential negative effects of AI data insights and decision-making in the justice system; and implications for regulation of AI use by police and law enforcement in Australia.

AI ‘algorithms’ or ‘models’ promise to: enable high volumes of data processing at speed, while identifying patterns human judgement is not capable of; supercharge knowledge management while (supposedly) removing human bias from that process; and operate with ethical principles coded into their decision-making.

This ‘promise’, however, is not a guarantee.