Tag Archive for: Australia-US relations

Australia’s nuclear-powered submarines will be worth the wait—and the cost

The United States has never sold a nuclear-powered vessel to any nation. In 1958 it transferred technology that enabled the UK to build its own nuclear-powered submarines (SSNs) and ballistic missile submarines (SSBNs). Washington’s decision to provide this technology to Australia under the AUKUS agreement is tough, complex and, in some ways, frightening. It reflects a late realisation that the US needs effective allies, particularly in the maritime environment of the Indo-Pacific. Canberra is among Washington’s most trustworthy friends.

The only US ally exempt from its cumbersome International Traffic in Arms Regulations (ITAR) is Canada, and that arrangement was briefly suspended in 1999–2001 over doubts about the Canadian security regime.

For AUKUS Pillar 1 (submarines) and Pillar 2 (technologies) to work, the UK and Australia require the same exemption. Australia’s SSN requires more. The US Congress must be convinced that our security systems can be trusted with secrets, and that the boats sold to us will not dangerously deplete US combat capability. This is arguably America’s most important weapons system and one that potential enemies will be unlikely to match.

For Australia this is a long-term program. There’s urgency in our defence situation, but our immediate major tasks are to support American and British submarines rotated through the HMAS Stirling naval base and to train crews, maintenance personnel and construction workers. We hope that deterrence works and those boats don’t have to turn lethal. They will come just in time to replace our six Collins-class submarines as the development of underwater interception capabilities makes the environment lethal for conventional boats.

Submarines are valuable for surveillance, reconnaissance, insertion of special forces, mining and countermining, and to deliver lethal effects at sea using torpedoes and missiles, and, increasingly, on land. Their capacity to remain clandestine and locate anywhere at sea optimises their deterrent value. The conventionally powered Collins boats carry similar weapons, but SSNs have many more of them. SSNs can range over broader areas at greater speed, which heavily complicates the task of any potential enemy. When an SSN has fired a weapon and its general location is known, it can rapidly vacate the zone.

An adversary’s surface warships or submarines have four routes through the archipelago to Australia’s north to reach our waters. A Collins can intercept, but it doesn’t have the speed to follow. An SSN has that speed and it can reposition rapidly if necessary. Our military capabilities on the surface or on land can potentially be targeted but SSNs cannot. That’s why the government sees their essential deterrent value. We have no equivalent. The defence minister is constantly being asked why we must have SSNs despite their high cost. The $369 billion over 30 years is a bagatelle compared with what we will spend on the National Disability Insurance Scheme and many other social programs over that period.

This is the essence of our deterrence: a heavy weapon that can hit targets on land and sea. Previously that was the role of the F-111 bomber. Years ago my Indonesian defence counterpart, the late General Beni Moerdani, told me that when those around the cabinet table with him were angry with Australia and inclined to do something about it, he would remind them that Australia had an aircraft that could put a bomb through a specific window. That capability is effectively restored by SSNs—and the delivery system can’t be seen.

Australia won’t have its first SSN for 10 years. The beginning of the program is the most fraught, but it will be challenging throughout. The plan is to fold the AUKUS bills in Congress into the US National Defense Authorization Act. One of the plan’s strongest supporters, Democratic Representative Joe Courtney, tells me the Senate still hasn’t appointed conferees for this process. The House has. Conference is how disagreements between the Republican-controlled House and the Democrat-controlled Senate are rationalised. The House Foreign Affairs Committee backed the plan 48–0. In the Senate, Republican Roger Wicker has put a hold on it. He wants from the president a full industrial base plan before supporting the sale. That isn’t necessary and the industrial build-up is proceeding at pace.

The question for Wicker and others is not whether Australia should have SSNs but whether a target to get 66–69 SSNs in the US inventory can be reached if we get ours. During the Covid-19 pandemic, the number of boats delivered drop to 1.2 a year when 2.3–2.5 is necessary. Available numbers dropped to 60% because of maintenance challenges. It is now back to 67% and SSN production has climbed to two per year. The US Navy wants 80% available and believes that can be reached by 2028.

The US has almost finished building Block IV Virginia-class SSNs, the version we want. A much bigger Block V version is now the focus. It has a substantially larger number of vertical launchers for cruise missiles with ultimately a hypersonic missile version. This capability replaces the launchers in four soon-to-be-paid-off converted SSBNs.

This month a five-year industrial agreement between submarine builder Electric Boat and its 3,400 skilled employees was completed. The agreement incorporates a substantial wage rise, retention bonuses, a lift in retirement savings, a comprehensive medical plan and increases in vacation and sick leave. These conditions also apply to the 5,000 workers the company has been trying to recruit this year. It reached 4,000 in August. It is also outsourcing production to other companies, with assembly in the main yards. Americans can do things quickly when money and workforce are available. Joe Biden’s administration will need to convince doubters and the $3 billion Australia is putting in is proving useful in discussion in Congress.

Exemption from ITAR is critical. I thought that had been achieved in 2010 when we and the British negotiated the Defence Trade Cooperation Treaty which ratified a 2007 agreement between George W. Bush and John Howard, but it fell short of the Canadian exemption.

ITAR makes cooperation with US companies difficult because, if a good product is developed, sales to third countries may be blocked. The US is deeply concerned about Chinese intelligence capabilities. The director of the Australian Security Intelligence Organisation, Mike Burgess, noted that after AUKUS was announced a massive Chinese espionage effort was detected aimed at Australian government, industrial and educational entities.

Defence News says a strong effort is being mounted in the administration and Congress. The Senate Foreign Relations Committee recommended a different approach to ITAR reform which scooped us up, and that has passed the Senate 86–11 as an amendment to the 2024 defence policy bill. Kurt Campbell, National Security Council coordinator for the Indo-Pacific, said this was not ‘whether to’, but ‘how to’. The State Department has also established an AUKUS trade authorisation mechanism as an interim capability to speed up technology transfer.

The Americans have identified areas including quantum computing, artificial intelligence and hypersonics where our research is ahead of theirs. Anthony Di Stasio, who oversees Defence Production Act grants, has suggested Australia would help bolster US supply chains for critical minerals like cobalt and explosive materials like TNT.

We need patience. The American decision-making environment is complicated. We know how to work it but we can expect much frustration. We can only hope that our diplomatic skills and those of our allies prevent a major conflict in our region while we restructure.

Events in the Middle East and Ukraine may divert attention when we need intense US legislative concentration on the AUKUS issues, but we have time. No SSNs are due until the 2030s and, in the meantime, the structures to support rotating allied forces are relatively easy to establish. The future crews can be trained on allied boats. The capability is worth the effort.

The dysfunctional US as great and powerful friend

The phrase ‘great and powerful friend’ is a totem of Australian defence, setting strategy since federation.

The totem’s purpose is to make and manage The Alliance—capitalise and underline it as crucial and central. The search for certainty adds punctuation: The Alliance?

Certainty is ever beset by alliance questions of interest, commitment and degrees of difficulty. Judge how the great and powerful friend will express its greatness. Count its power and weigh that against other powers.

At the heart of the US –Australia alliance lies the friendship calculation. What is the strength of the insurance? What will Washington do for Canberra if things get truly tough?

Australia’s longest-serving prime minister, Robert Menzies, coined the totem, although he expressed it in the plural, as ‘great and powerful friends’. The ‘friends’ usage meant Menzies could do a heart-and-history embrace of Britain, while swivelling his eyes and head to the new alliance with America.

The ANZUS Treaty, secured by Menzies’s government, is in its eighth decade, and the totem still does symbolic duty. The totem’s deeper use, though, is as a gauge, to measure the constant question: how fares the great and powerful friend?

Answering that question, an outstanding Washington strategist, Robert Gates, has just pronounced the US ‘the dysfunctional superpower’.

Gates rose from entry-level analyst to become director of the Central Intelligence Agency from 1991 to 1993. Then he was secretary of defence from 2006 to 2011, serving in the cabinets of both a Republican and a Democrat president, a rare bipartisan achievement. Gates damns the unpredictable mayhem of Washington as it faces extraordinary international challenges, beginning his Foreign Affairs article:

The United States now confronts graver threats to its security than it has in decades, perhaps ever. Never before has it faced four allied antagonists at the same time—Russia, China, North Korea, and Iran—whose collective nuclear arsenal could within a few years be nearly double the size of its own. Not since the Korean War has the United States had to contend with powerful military rivals in both Europe and Asia. And no one alive can remember a time when an adversary had as much economic, scientific, technological, and military power as China does today.

Beyond the accounting of external challenges, the essay is striking for its pessimism about what ‘fractured political leadership’ means for the US’s global role.

The division of powers is a design feature that builds conflict into the workings of Washington. Yet today’s dysfunction can divert and distract the superpower. Gates sees no ‘long-term strategy to ensure that the United States, and democratic values more broadly, will prevail’. A wise owl—an insider’s insider—worries that domestic political warfare will cause America to lose the geopolitical contest:

The United States finds itself in a uniquely treacherous position: facing aggressive adversaries with a propensity to miscalculate yet incapable of mustering the unity and strength necessary to dissuade them. Successfully deterring leaders such as Xi [Jinping] and [Vladimir] Putin depends on the certainty of commitments and constancy of response. Yet instead, dysfunction has made American power erratic and unreliable, practically inviting risk-prone autocrats to place dangerous bets—with potentially catastrophic effects.

Donald Trump may be more symptom than cause (though he’s a helluva symptom), as Gates laments: ‘Both friends and adversaries wonder whether Biden’s engagement and alliance-building is a return to normal or whether Trump’s “America first” disdain for allies will be the dominant thread in American policy in the future. Even the closest of allies are hedging their bets about America.’

The hedging quandary will get no public attention as Anthony Albanese heads to the White House next week for his first visit as prime minister, offering his version of the totem: ‘The Australia–United States relationship is unique in scale, scope and significance, reflecting more than 100 years of partnership between our nations.’

The scale–scope–significance combo will allow the PM to lift his eyes above the Washington mayhem. Albanese will hew to the familiar frame of the great and powerful friend, even if a prime minister from Labor’s left will never lift the phrase from the Liberal Party founder.

Menzies, though, was a canny realist beneath the silver tongue and political carapace. And the calculations underpinning the three dimensions of his totem can take the alliance temperature in a time of feverish temper.

On the power measure, the US still has military weight that puts it in a class of its own, as Gates comments: ‘All told, the United States spends more on defense than the next ten countries combined, including Russia and China.’

The economic element of power tells a tale of shifting relativities. Under the purchasing power parity metric, China overtook the US to become the world’s top economy in 2014. The US is still number one when measuring nominal GDP in US dollars. Which indicator you pick can depend on the argument you want to make about power.

In the region that matters to Australia, a rich new era of Asian commerce arrives, yet US protectionism means it will have ‘fewer economic carrots to offer’ and US ‘economic and political sway will be diminished’, as The Economist notes. ‘America will retain influence over Asian security, but its economic importance will decline.’

Many indices track power. It’s more complex to measure the ‘great’ bit of the totem. How a great nation uses its power can be a matter of character and politics as much as policy interest. What Gates fears about an ‘erratic and unreliable’ Washington echoes a view Menzies put in a 1959 letter to his deputy prime minister after a US visit: ‘There are, from our point of view, some crazy things done in Washington.’

Menzies would have embraced the lines Lord Carrington used as NATO secretary-general: the allies ‘sing in harmony, not in unison’ and whatever the frustrating discordant notes, ‘they’re the only Americans we have’.

Menzies believed in the US as a great power because ‘predominant power means predominant responsibility’. In the opening stages of the Cold War in 1950, Menzies observed that ‘any enlightened American’ would see that ‘domination of Europe by the common enemy would lead to an American isolation which would be for the American people not merely ominous, but disastrous’.

The canny realist’s view was that the US had an abiding interest in maintaining the global balance. And these days, the global balance is set in the Indo-Pacific (even Europe quietly adjusts). Australia’s defence strategic review mentioned it as a simple statement of fact: ‘The Indo-Pacific is the most important geostrategic region in the world.’ The new geography of power adds extra value to the ‘friend’ dimension of the totem. What the Indo-Pacific demands of the US becomes the broad frame for the ANZUS friendship.

Reading the ANZUS Treaty as a lawyer inspects a contract, Menzies noted that nothing is automatic or required, but between ‘contracting parties of good faith it renders common action against a common danger substantially inevitable’. Savour the shades and weighting of that phrase: substantially inevitable.

Menzies claimed ANZUS as one of his greatest achievements and turned it into a formidable political weapon against Labor. Yet he was a sceptical participant in the creation of ANZUS, with the key Australian role played by the external affairs minister, Percy Spender.

In Spender’s words, Menzies was ‘unenthusiastic’ and ‘poured cold water’ on the efforts to create a Pacific pact. The Menzies view was that Australia didn’t need a formal alliance because the US was ‘already overwhelmingly friendly to us and Australia could rely on her’. He described the idea of a Pacific pact as ‘a superstructure on a foundation of jelly’. There’s quite a distance from ‘jelly’ to ‘substantially inevitable’, but a canny politician executes such swivels with nary a blush.

Menzies thought American interests and the nature of America would drive US actions, whatever the terms of the alliance contract. Indeed, he was happy to bandwagon on US military spending; in the choice between guns and butter, Menzies’s budget choice was butter.

In his book on the Menzies era, one of the few negative notes struck by former prime minister John Howard is the comment that defence spending was low in the 1950s and into the 1960s: ‘In a sense, one of the benefits of ANZUS was that, in financial terms, Australia’s defence came cheaply.’

Today’s lift in Australia’s defence budget—in our era of disruption, deterrence and dollars—is partly about contributing to the alliance. But it’s also a response to the questions raised by another big ‘d’ issue—the dysfunction of Washington.

Albanese heads to take a close-up look at the great and powerful ally, and make some quiet soundings about the future of the friendship.

Reading between the lines at AUSMIN 2023: preparedness is key

The lead-up to Saturday’s meeting between Australia’s defence and foreign affairs ministers and their US counterparts was low key, as were the expectations. But optics and substance are not always perfectly matched with AUSMIN meetings, and of course it’s never entirely clear what goes on behind closed doors.

On a close read, there’s an underlying theme in the four principals’ joint communiqué to which the Australian public should be alive, and that is one of preparedness. It is a difficult conversation, clearly, and one that is easier to avoid in the short term. But the agreements in the communiqué focus squarely on the theme—even if the term itself isn’t used—that we need to be prepared should strategic competition escalate to crisis or conflict.

As part of this theme of preparedness, the importance of the US–Australia force posture initiatives were re-enforced. Signed in 2014, the five initiatives under the force posture agreement all received a mention, with new areas of coordination highlighted. A sixth element was added under space coordination.

The communiqué highlighted an intent to ‘operationalise the alliance’, a theme that threaded through the majority of the defence cooperation areas announced. But operationalise to what end? Clearly, the aim is to be prepared for what might occur in our region.

A key element of the focus on ‘operationalising the alliance’ was the agreement to rotate US Navy maritime patrol and reconnaissance aircraft through Australia to enhance regional maritime domain awareness. The US aircraft in question will be the P-8 Poseidon, a capable intelligence, surveillance and reconnaissance and anti-submarine-warfare platform of which Australia operates 12.

While US P-8s already operate in the region from Okinawa and Guam, this move not only provides depth in operations in Southeast Asia and the Western Pacific, but also allows for increased interoperability, or arguably interchangeability, with the Royal Australian Air Force fleet. Under the enhanced air cooperation program, there were also mentions of the already agreed upgrades of RAAF bases Darwin and Tindal. And there were commitments to scope additional upgrades to two bare bases—RAAF Base Scherger in Queensland, approximately 470 kilometres south of Cape York, and RAAF Base Curtin in Western Australia, approximately 200 kilometres from Broome.

This agreement is consistent with the messaging of the Australian government in both the 2020 force structure plan and the recent defence strategic review. Given that the government almost certainly had work planned for these bases, the mention in the AUSMIN communiqué is telling in itself. There is always a decision at AUSMIN on what parts of the discussions to include in the public-facing document and what to keep behind closed doors. In some ways, every aspect of the communiqué should be considered through this lens. The continued focus on joint US–Australian efforts to upgrade bare bases is sending a public message that in a crisis or conflict US assets will operate from dispersed bases in northern Australia to mitigate the risk that Chinese military capabilities pose to US bases on Okinawa and Guam. And on the theme of preparedness, an underlying message is that, while not inevitable, the likelihood of a crisis or conflict is not remote.

The theme of operationalising the alliance was also evident in the discussion of both the land and logistics elements of the force posture initiatives. The intent to rotate US Army watercraft through Australia appears new, and is timely given the defence strategic review’s focus on accelerating Australian Army littoral capability. The rationale behind this decision isn’t entirely evident; however, there are obvious benefits in mitigating the capability gap until the Australian Army acquires or upgrades its capabilities in this space. On the land domain front, there was also agreement to conduct a ‘proof of principle’ prepositioning of US Army stores in Bandiana, Victoria.

The defence-related themes also explored areas of collaboration on integrated air and missile defence, guided weapons and explosive ordnance, and intelligence. The relationship with Japan warranted a strong mention that indicated a desire to increase trilateral cooperation on exercises and training-related activities, including activities directly related to the RAAF F-35 joint strike fighter.

There was a lot in the joint communiqué for defence and foreign policy pundits to be intrigued by. But the document isn’t just important to those with a specific interest in defence and foreign policy. It contains an important message for all Australians that deserves attention. The likelihood of a crisis or conflict in our region is not remote, and our preparedness to confront this fact deserves attention.

An American view on US investment in critical-mineral mining in Australia

In May, the United States and Australia signed a climate, critical minerals and clean energy transformation compact that establishes a framework for collaboration on climate issues, clean-energy technology and critical-mineral supply chains. It mainly discusses critical minerals in the context of their necessity in manufacturing clean-energy technologies.

The intent of the framework is to ‘coordinate policies and investments to support the expansion and diversification of responsible clean energy and critical minerals supply chains’. In this case, diversification basically equates to reducing dependence on China, in which various links in the critical-mineral supply chain are heavily concentrated. While the compact establishes a new ministerial dialogue, the Forum on Clean Energy Industrial Transformation, and an Australia–US taskforce on critical minerals, the most vital component of strengthening critical-mineral supply chains is investment in critical-mineral projects.

The critical minerals industry often cites a lack of capital as a barrier to stronger and more diverse supply chains. Mines are capital-intensive projects that can cost tens of billions of dollars. Therefore, any compact that seeks ‘an unprecedented expansion’ in critical mineral supplies must provide capital for mines. The need for government capital is further heightened given the lack of private-sector funding for mining.

The compact commits to using ‘domestic financial instruments and incentives to foster greater integration of responsible clean energy supply chains’, which includes critical-mineral supply chains. It also says the US and Australia will seek industry input on financial incentives, and it lists the US Export–Import Bank as a possible financing agency. Notably, in a joint statement with Australian Prime Minister Anthony Albanese, US President Joe Biden said that he would ask Congress to add Australia as a ‘domestic source’ under Title III of the Defense Production Act, enabling Australian projects to access significant US government funds.

Beyond those measures, the compact doesn’t offer funding specifics—but that was always going to come next, with industry input. To ensure the compact’s success, the US should consider a range of policies for funding mines in Australia.

First, the US should fund Australian mines under the compact, not refineries, which it should invest in domestically to diversify the critical-mineral supply chain. Mining is geographically constrained by the location of mineral deposits, but refining is largely determined by capital and regulations. For example, China has only 3% of global cobalt reserves and produces just 1% of global cobalt ore, yet it controls 77% of global cobalt refining capacity. Similarly, the US could fund enough refining capacity to satisfy domestic demand even without comparably large mineral reserves—especially with Australia on board. By funding Australian mines and the minimum level of crude refining required to economically ship critical minerals to the US to be refined, the US could effectively diversify the critical-mineral supply chain.

That said, the US should only fund Australian mines that produce minerals that are lacking in the United States and Canada. US critical-mineral supply chains are most secure when they are in or near the US and under friendly control. US taxpayer dollars should not be expended on distant mines when nearby mines are available and can meet demand. Importantly, this provision could make the proposal for funding Australian mines more palatable to Congress.

Second, the US should allow companies to partner in a US-funded mine only if they are not owned in any way by foreign entities of concern, including all Chinese entities. The US should not fund Australian mines where Chinese entities can benefit financially or influence the project at the expense of US taxpayers. To protect US national security, if an Australian company is seeking to participate in a US-funded mine in Australia, it should have to first divest any shares held by entities of concern.

American companies should have a controlling interest in US-funded mines, so that the US government can enforce compliance with US regulations, such as blocking Chinese companies’ involvement or investment in the mine. Partnering with experienced Australian partners will also enable less experienced US companies to build valuable mining skills, effectuating two of the compact’s goals: ‘to encourage stronger industrial collaboration’ and ‘to support workforce development in critical minerals’.

Lastly, the US should require that mined materials from Australia be refined by American companies in the US because diversifying the critical mineral supply chain is the primary reason for funding mines in Australia. That requirement will grow the country’s refining capacity and downstream processing for applications like the production of alloys for permanent magnets and cathode material for electric vehicle batteries. The US should also require that the mined material have an end use in a strategic US sector like aerospace or transportation, not consumer electronics like televisions and mobile phones.

The US should also require all companies participating in the mine to stop operating in China and selling their products to Chinese entities. Nor should the US allow companies to use earnings from a US-funded mine to support their operations in China or sales to Chinese entities. The US should not effectively subsidise companies that operate in China or sell products to Chinese mineral companies, which are beholden to the Chinese government.

The compact is a satisfactory starting framework for strengthening critical-mineral supply chains between the US and Australia. How the two countries deploy capital to mineral projects will determine the compact’s success, and US funding for mines in Australia could help achieve the compact’s goals. The stipulations attached to such an arrangement would help to ensure that US–Australia supply chains are diversified, protected from Chinese influence, and forged by a workforce in both countries.

In exchange for its minerals, Australia would get investment and a diversified supply chain, and in exchange for its capital, the US would get access to those minerals and its own diversified supply chain. Such an arrangement would serve the needs of both countries and help achieve the compact’s goal of promoting a ‘responsible, sustainable, and stable supply of critical minerals.’

The US’s antipathy towards free trade could leave Australia in the lurch

Speeches by top trade officials last month highlight the rift that has opened up between the US and Australia on trade policy, and the implications for national security. The US is turning its back on globalisation and the principles of free trade that underwrite it, while Australia continues to see trade and open markets as the source of its prosperity.

Describing globalisation as ‘unsustainable’, US Trade Representative Katherine Tai argued that the rules set out by the World Trade Organization and bilateral free-trade agreements have benefited only the biggest corporations and the wealthy:

Trusting markets to allocate capital efficiently, we designed trade rules to liberalize as much as possible, under the theory that we were facilitating the creation of a free global marketplace. We thought a rising tide would lift all boats, believing that this approach could lead to a gradual improvement in labour standards and environmental protection as countries grew wealthier from increased trade flows.

We did not include guardrails to ensure that it would be the case. The system itself, then, created an incentive for countries to compete by maintaining lower standards, or by lowering their standards even further, as companies sought to minimize costs in pursuit of maximizing efficiency. This is the race to the bottom, where exploitation is rewarded and high standards are abandoned in order to compete and survive …

The traditional trade policy approach historically focused on providing benefits for our biggest companies, on the theory that those benefits would necessarily trickle down to our workers, small businesses and communities. But over time, what we have seen is that these benefits do not trickle very far down.

Australian Trade Minister Don Farrell’s address to the National Press Club, by contrast, included a strong defence of the existing trade framework:

[W]e’re committed to free, fair and open trade, where the rules of the game are known and respected …

On balance, trade is a force for good. It is a key lever of the Australian economy. Its benefits flow to all aspects of everyday life. More trade means more well-paying jobs, more national income, and more opportunities for business and workers.

In an evolving and often challenging global environment, trade helps enable the economic strength and resilience that is central to our national power, alongside defence and diplomacy.

Farrell underlined the importance of restoring the WTO’s ability to resolve trade disputes, which has been stymied by the US’s refusal to approve new judges to its appeals panel. ‘We need organisations like the WTO to be functional. WTO rules underpin the global trading system, a system that is absolutely fundamental to Australia’s prosperity and security. A system vital to our region’s economic progress and stability,’ he said.

The importance of agreed international rules, including those covering freedom of navigation and overflight, has also been emphasised by Australia’s defence minister, Richard Marles. ‘Trade is a much bigger proportion of our economy and our national wealth [than for other countries] … and what that means is our national security is … defined by the maintenance of the rules of the road and by the collective security of the region,’ he told the Sydney Morning Herald after the AUKUS announcement in March.

US officials, by contrast, believe that the ‘rules-based order’ has been a chimera. In an important speech on economic policy in April, US National Security Adviser Jake Sullivan said:

Much of the international economic policy of the last few decades had relied upon the premise that economic integration would make nations more responsible and open, and that the global order would be more peaceful and cooperative—that bringing countries into the rules-based order would incentivize them to adhere to its rules.

It didn’t turn out that way.

Sullivan argued that the decades of liberalisation had allowed the build-up of ‘perilous’ supply-chain vulnerabilities that could be exploited.

The value of bilateral and regional trade agreements is a point of particularly sharp difference. The Australian government recently concluded trade agreements with India and the UK and is closing in on a potentially important deal with the EU. The ASEAN–Australia–New Zealand trade agreement has also been upgraded, with new chapters on government procurement, small business and sustainable development. This continues the approach of the previous government, which signed agreements with principal trade partners, including China, as well as regional free-trade agreements.

‘Those agreements mean that Australians can choose from more products at better prices,’ Farrell says.

However, in a break with the economic policy that has governed the US since Ronald Reagan’s administration in the 1980s, Tai says it is a mistake to prioritise consumers in both trade and competition policy:

Our trade policy places workers at its centre to reflect the reality that the consumer who enjoys the low prices of imported goods is also a worker who must withstand the downward pressures that come from competing with workers in other parts of the world toiling under exploitative conditions.

Similarly, prioritizing and pursuing the consumer welfare standard in competition policy has led to consolidation and unchecked dominance in our domestic market, which has stifled competition and diminished economic liberty for our citizens and workers.

Explaining the administration’s rejection of both bilateral and regional trade agreements, Tai said:

[I]f we look at what those agreements did, we see the ways in which they contributed to the very problems we are now trying to address.

The industrial supply chain rules in our traditional free trade agreements were based on that same premise of efficiency and low cost.

Because of it, they allow significant content to come from countries that are not even parties to the agreement—free riders, who have not signed up to any of the other obligations in the agreement, such as labour and environmental standards. That means these rules benefit the very countries that have used unfair competition to become production hubs.

The difference in approach partly reflects the fact that the US is an economic superpower that believes it should be able to dictate the terms of its international engagement. Australia, by contrast, ranks 12th among world economies and depends on international institutions and agreements to secure its markets.

Australia has arguably profited more from globalisation than almost any other country, because of the appetite it unleashed for Australian resources. In recent years, Australia’s terms of trade—export prices compared with import prices—have been at the highest level in the nation’s history.

Australia has seen a more dramatic decline in its manufacturing, which has slid from 11% to just 5% of GDP over the past two decades. In the US, the drop has only been from 13% to 11%. The growth of resources, as well as services exports such as education and tourism, has delivered a boost to prosperity that could not be won from internationally uncompetitive manufacturing in Australia. The US, on the other hand, struggles with the notion that its manufacturing could be anything but the world’s best.

The risk for Australia is that the rules of trade cease to hold and that international trade becomes a more hostile environment in which might makes right. Australia has already experienced the negligible sway of written agreements in international trade with China’s defiance of both the WTO and the China–Australia Free Trade Agreement in its campaign of economic coercion. The US approach also foreshadows a rise in protectionism and trade barriers.

There is also a risk for the US that its reluctance to enter trade agreements will leave nations, particularly in Asia, leaning more towards China.

US the critical ‘top cover’ for the defence of Australia

On page 27 of National defence, the report of the defence strategic review, is a map of Australia’s strategic geography. It superbly situates us and perfectly explains why a power in the distant reaches of the Indo-Pacific wanting to play a major role would consider Australia to be critical. Australia points straight into the archipelago that connects the Indian and Pacific oceans. Our land mass is immense, even alongside Asia. It suggests that Australia is a potent piece of real estate and a valuable US ally. It suggests other things as well.

Source: Australian government, National defence: defence strategic review, page 27.

Influential in my time as defence minister was a Royal Australian Air Force planning map focused on Darwin with semicircles spreading north, deep into our area of direct military interest. In essence, that ‘defence of Australia’ map underpinned a defence-in-depth strategy. When he departed my office, Hugh White took it (with my permission) and he used it well in his subsequent defence career.

The new map reorients us, turning the continent on its side and making Western Australia the front line for us and our ally. Our past geographic perspective had southeastern and southwestern Australia, our population centre and our defence depth a long way from harm’s way. On the new map, the southeast is our defence in depth. The west is where we and our ally project.

In the 1987 defence white paper (pages 100 and 101) there are two graphs. The first deals with the percentage of GDP devoted to defence between 1964 and 1986. The second shows the percentage of the budget allocated to defence over the same period compared with education, health and social security. A peak of 4.5% of GDP was spent on defence during the Vietnam War—about the same as was spent on social security—and that was down to a little below 3% by 1987. By 1987, defence had 10% of the budget, just pipped by health, but ahead of education, and it was dwarfed by social security at close to 30%. Now defence has about 6% of the budget.

This tale is integral to our dependence on the US. In the 2023–24 budget, defence received more than $50 billion for the first time. That’s just above 2% of GDP—what the US encourages allies to spend. When I was Australia’s ambassador to the US in the 2010s, that was constantly raised with me. Apart from Britain and France, NATO allies fall below 2%. The 2023–24 budget shows how difficult it is to keep a focus on defence. Overwhelmingly, the government prioritised cost-of-living relief, wages for aged care workers, and increases in the National Disability Insurance Scheme and for those on unemployment benefits. Increasingly louder than defence are the states, many of which are facing financial challenges.

With only minor increases in defence outlays over the four years of the forward estimates, anything essential will have to be funded by savings elsewhere in the portfolio. This means that the ambitious review is likely to see ambition constrained for some time. Given an absence of more resources, Australia’s defence function will remain heavily dependent on the US.

The 1987 defence white paper stated:

This Government’s policy of defence self-reliance gives priority to the ability to defend ourselves with our own resources. Australia must have the military capability to prevent an enemy from attacking us successfully in our sea and air approaches, gaining a foothold on our territory, or extracting political concessions from us through the use of military force. These are uniquely Australian interests and Australia must have the independent military capability to defend them.

The US alliance has provided us with excellent intelligence, training and access to essential weapons. Also, ANZUS hovering in the background was a further deterrent to any local power contemplating interference with Australia. As the 1987 white paper put it: ‘These arrangements emphasise Australia’s membership of the Western strategic community, and they enhance regional stability. The interests of Australia’s allies and regional associates are advanced by Australia’s ability to provide for its own defence.’

Australia wouldn’t be a drag on the Americans because our region was a strategic backwater for them. And we would help keep it that way. We understood that the joint facilities in Australia were critical to the US in the global strategic balance. The white paper indicated that in a global conflagration, these facilities would be nuclear targets. At the time, we negotiated Australian participation in all the joint facilities.

Particularly in intelligence and early warning, they were very useful to us directly and could be included in our order of battle. Uniquely among US allies, nothing that threatened Australia was likely to force the US to contemplate its own devastation if it came to our aid. Other allies effectively absorbed American security. In our case, the advantage lay with the US, and we wanted the US to comprehend that. The US provided useful diplomatic and military cover for our involvement in the East Timor crisis without Washington paying a heavy price.

All that is changed now. Australia no longer in a strategic backwater. China’s emergence as a military power and the South China Sea being contested paint a very different picture. Our redefined area of military interest incorporates that zone. We see it as vital.

China’s rise has completely changed the concept of warning time and it’s of no value in calculating the emergence of a major threat to our interests and approaches. That can be mounted now from capabilities within the region.

As the strategic review notes, our long engagement in the Middle East has frayed the force structure that was essential for the old defence of Australia. As we transition to the notion of national defence, an enhanced and expanded alliance with the US, including key force posture initiatives in Australia, is seen as a top priority. The US is no longer the unipolar leader of the Indo-Pacific and the region is now the centre of intense major-power strategic competition.

The 1987’s layered approach to defending the continent has shifted to deterrence and denial at distance from Australia. ‘As most of these objectives [for our strategic posture] lie well beyond our borders,’ the review says, ‘the ADF must have the capacity to engage in impactful projection across the full spectrum of proportionate response. The ADF must be able to hold an adversary at risk further from our shores.’

This requires a heavy emphasis on long-range precision-guided missiles in all three services, including on nuclear-powered submarines (SSNs), which are long in the future. In the meantime comes infrastructure for the rotation of US and UK submarines through HMAS Stirling, then acquisition of US submarines before the arrival of Australian- and British-made SSNs almost two decades from now.

The budget makes a start on all this by allocating $1.2 billion, or 15% of the overall new equipment budget, for US precision munitions. Likewise, there’s a commitment to making our northern bases—Scherger, Tindal, Curtin, Learmonth and Cocos Islands—fit for warfighting.

Most of the equipment requires substantial resources and, absent that, time. Much in the review depends on our ally’s support for the new capabilities and its open presence.

Given that the government and the Australian people demand resources for other purposes, it’s difficult to dramatically fund the increased capabilities we need to get the Americans here. They have indicated clearly their willingness to help develop our northern bases. We should prioritise them, along with facilities for SSNs at HMAS Stirling.

The urgency of our times is such that if anything does go wrong, the US military’s ability to use properly hardened and logistically prepared bases is critical for deterrence now.

As the map shows, the Americans can see that Australian geography advantages them. From a hitherto intense east–west perspective on the Indo-Pacific, they are rapidly absorbing for themselves the longstanding Australian north–south perspective in addition. They find themselves in support of their best placed ally in the region.

The budget demonstrates that we can’t resource a massively expanded ADF now, an uncomfortable position that’s a product of decades of under-resourcing and misdirection. Our ally, like ourselves, is desperate for deterrence to succeed. It doesn’t want war, but it has much more to deter than we have.

Our view of the capacity of the US is constantly caught up in the cacophony of its domestic politics and foreign policy errors, leading some of our commentators to constantly question American ability. That misses the underlying capacity of the US military, the inventiveness of its research community and its massive resources. We are deeply embedded in US military, national security agencies and weapons acquisition programs. They have a resilience that the day-to-day politics might not reflect. It’s important that they’re prepared to engage in our region. We have nothing else to rely on.

Moving away from the US as uncertainties mount in our region accrue would be extraordinarily risky. If other powers in the region decide that access to our resources or land would solve their problems, we wouldn’t have the means to handle it.

If a gutted US does emerge, prepare for a defence outlay massively north of 2% of GDP.

Impactful mateship: strengthening the US–Australia defence relationship

The Pentagon’s 2022 national defence strategy defines allies as the US’s ‘greatest strategic advantage’ and ‘a center of gravity’ for the strategy. As a result, it is critical for the US to understand its allies to maximise that advantage, reduce misunderstanding and improve outcomes towards regional security—especially in the Indo-Pacific, a theatre threatened by the military forces of China, Russia and North Korea.

Naturally, the US Department of Defense invests significant resources to understand its adversaries; however, it should also invest in understanding its key allies.

The first nation it should focus on is Australia.

Australia has been a steadfast US ally for more than 70 years and is a nation with a forward-leaning approach to foreign affairs, increasingly important strategic geography and a capable defence force. It is also a critical member of AUKUS and the longstanding Five Eyes partnership. For historical, strategic and cultural reasons, Australia is an important ally to truly understand, especially before cooperation between the US DoD and Australia’s defence establishment (the Defence Department and the Australian Defence Force) expands in coming years.

Considering Australia’s recently released defence strategic review (DSR), it is imperative that the US DoD have a complete understanding to continue to build on the bilateral defence relationship. The US–Australia defence relationship is on a trajectory of increased growth and complexity and the two partners must set the conditions now to strengthen it.

That is why, today, ASPI is releasing its latest report, ‘Impactful mateship’: strengthening the US–Australia defence relationship through enhanced mutual understanding. The report considers a novel approach to understanding potential gaps in US DoD’s understanding of Australia and its defence organisation and gets at the heart of the matter in areas that can be strengthened in light of the DSR’s release and in preparation for growth in the relationship.

The report captures and analyses the perspectives of US DoD personnel in their own words and uses that new data to assist with building a pathway to help deepen and strengthen the US–Australia defence relationship. Those interviewed for this research in early 2023 are representative of a cross-section of the US DoD personnel in Australia. They served as exchange officers or liaisons at various levels of the Australian defence structure, both strategic and operational. Despite their different positions, and being spread across the country, they highlight similar gaps in the US DoD’s understanding of the Australian defence establishment.

This qualitative research identified five trends among participant responses: the US DoD broadly lacks understanding of the scale and capacity of the Australian defence system; US DoD staff officers are prone to ‘mirror-imaging’ with Australian defence; the importance of sovereignty to Australian defence isn’t well understood by US DoD staff officers; many US DoD personnel lack understanding of Australia’s internal geography; and the US DoD lacks sufficient internal coordination when engaging with Australian defence.

Fortunately, there are real opportunities to be grasped from these findings, and the report puts forward practical, low-cost, high-impact actions that the US DoD as well as Australian defence can take quickly in order to improve US understanding.

For example, the report recommends investing more in education for US DoD personnel who are assigned to work Australia or who have Australia-facing portfolios in the US. It also suggests that funding for official travel be provided to US DoD personnel who have Australia-facing portfolios so they can meet in person with their Australian counterparts and improve their understanding of Australia’s defence landscape.

A larger recommendation in the report is to establish a US Forces Australia headquarters to synergise US DoD efforts with Australian defence. The coordination structure for the US–Australia defence relationship was implemented decades ago, and it needs to be modernised and uplifted.

This new mechanism, much like US Forces headquarters that serve as coordination nodes in Japan and Korea, would be the single point of coordination for the US DoD to ensure US internal coordination is synchronised and maximised with Australia. It would be established, in close coordination with Australian defence, with a lean staff and would synchronise, track and have overall visibility of DoD efforts to provide local direction and the best military advice to the US embassy in Canberra, to the Australian defence establishment, and then back to US-based seniors and headquarters. This would provide continuity between the US embassy in Canberra, the Marine Rotational Force—Darwin, AUKUS planning efforts, enhanced single-service activities, and new relationships that could emerge due to the DSR.

The US–Australia defence relationship, and the alliance more broadly, has never been closer, as highlighted by the AUKUS partnership, but the changing strategic circumstances make it imperative that the two partners continue to improve their mutual understanding of each other, build greater resilience and better leverage each other’s strengths.

The purpose of the report is not to dwell on the areas of misunderstanding but recognise that there are opportunities to improve mutual understanding, take stock, make change and move forward stronger. An alliance must be shaped that is fit for purpose—one that continues to evolve and grow over the coming decades. The insights provided in the report include recommendations that have been designed specifically to support the evolution and growth of this vital alliance.

Time for a more honest conversation about foreign basing in Australia

Australia needs to have a more honest conversation, with itself and its main ally, about the b-word.

As a straight-talking country that prides itself on its closeness to the United States, Australia finds it curiously difficult to talk in plain terms about foreign military basing on its territory, at least in public. It’s an interesting kink in the country’s strategic psyche—and one that needs straightening out sooner rather than later.

Earlier this month, the ABC reported that ‘America’s next-generation B-21 bomber could be sent to Australia to “accelerate” national security’. Such convoluted framing is symptomatic of an impoverished public debate that lacks the requisite vocabulary to articulate potential changes to the US force posture in Australia, and perhaps sufficient understanding that basing is a feature common to most US military alliances and the mutual bargaining that sustains them. This matters because a significant expansion to the US forward force posture appears to be underway, and the Australian public needs to be ready for it.

Australia faces a potential capability shortfall before its nuclear-powered attack submarines come online under the AUKUS arrangement and is worried about maintaining deterrence against China in the meantime. Washington wants to forward-base more of its strike assets in the Western Pacific to maintain US deterrent credibility in Beijing’s eyes as the Chinese military modernises. Australia presents a favourable location, being closer than Hawaii or the continental US to potential flashpoints like Taiwan and the South China Sea, yet remote enough to be beyond the range of most of China’s missiles. It’s relatively secure as well as politically reliable and imbued with strategic depth.

In a distant but poignant echo of the early 1940s, Australia is once again being considered as a potential springboard to project American naval and air power well into the first island chain and the eastern Indian Ocean. It’s an obvious choice for the US to disperse its forces away from more vulnerable bases in Japan and South Korea, and to position reinforcements in the region in case of a protracted conflict. Developing detailed plans among allies for such contingencies is the best way to ensure that they never have to be activated in wartime. That’s the essence of deterrence.

Sensitivity about foreign military bases is by no means unique to Australia, since it rubs up against two universal concerns for US allies: maintaining sovereignty and avoiding ‘entrapment’ in Washington’s global strategy. Augmentations to the US forward force posture can stir up controversy in the host country even for the closest of allies, including the UK. Basing issues on Okinawa have become a running sore in the US–Japan alliance. In the Philippines, domestic opposition to US bases resulted in American forces leaving in 1992, although the alliance survived in an attenuated form and looks set to be strengthened.

However, in Germany, South Korea, Japan and the UK, a sizeable American military footprint has been continuously part of the fabric of their alliances with the US. Not so in Australia, where there is a neuralgia towards a resident US military presence that extends well beyond the anti-base protest movement. This sits oddly with Canberra’s consistent and sometimes insistent claims to be the most loyal of America’s treaty allies.

The US military has exerted a comparatively light footprint on Australian soil since World War II. Even at the height of the Cold War, US forces and facilities in Australia were minuscule compared with Europe and elsewhere in the western Pacific. Now, the most significant US presence in Australia is the Joint Defence Facility at Pine Gap, near Alice Springs.

A euphemistic approach towards US military basing in Australia is evident in the official parlance of both countries. The US Marine Corps has maintained a ‘rotational’ detachment in Darwin since 2011. Fair enough, one might think, since they’re only there for half the year, an operational limitation imposed in large part by the Top End monsoon. Yet it took nearly a decade of painstaking bilateral negotiations to build up to the modest target of a 2,500-strong US Marine task group.

The US Air Force similarly abjures the b-word despite having the most developed service profile in Australia via the US force posture initiatives, which have seen regular visits to Australia by B-1B Lancers, B-2 Spirits, B-52 Stratofortress bombers and F-22 Raptor fighters. Australia is extending runways and building new facilities at several air bases to accommodate temporary US combat aircraft deployments, and presumably to store US weaponry, fuel and spare parts. This is a form of basing, even if it’s not permanent.

The US military’s promotion of the ‘places not bases’ slogan makes political sense as a tactic to maintain global military access in as low key and flexible a fashion as possible. Technological advances, moreover, have done much to make the US military less dependent on fixed infrastructure. But only up to a point. Bases still matter. And forward deployment is about more than just obtaining access to secure operating locations. It bodes for deeper strategic interaction within alliances. Consigning a taboo status to basing access inhibits US allies from approaching it as a legitimate form of reciprocity for an external defence guarantee from Washington—and communicating that to the public.

None of this has mattered much for Australia in recent decades because there’s been no strategic imperative from Washington’s perspective to base military assets and personnel on Australian soil. Rather than offering access for US forces to operate from its territory, Australia has elected to pay the premium for alliance protection by fighting alongside US forces in most of its military conflicts, even when they were well outside Australia’s area of direct interest. This has become the Australian way of alliance, as well as its way of war.

Washington’s interest in forward-basing more of its strike assets in Australia has been steadily rising up the alliance agenda over the past decade and is likely to become more obvious in the years ahead. Forward basing of US submarines and bombers appears to be on the cards in the not-too-distant future. The US Navy is arguably overdue for a ‘force posture initiative’ of its own.

But this isn’t simply a reflection of a US strategic interest in counterbalancing against China. Rather than being entrapped, Australia has a pressing interest in hosting US combat forces and the infrastructure to support them, to maintain the framework of deterrence in the Western Pacific. That is because Australia lacks sufficient mass and firepower to deter aggression on its own, a situation that has arisen in large part because of underinvestment in defence, in particular the woefully delayed Collins-class submarine replacement, for which blame can amply be shared on a bipartisan basis.

This logic underpins Australia’s decision to give access for US and possibly UK nuclear-powered submarines to operate out of HMAS Stirling, near Perth, and probably a second submarine base planned for the eastern seaboard. Stirling may be further developed as a submarine maintenance centre, easing the logistics burden on the US at a time when its submarine force is chronically overstretched.

It’s already clear that AUKUS will require significant compromises among all three participating countries. ‘Interchangeable’ solutions may challenge accepted notions of sovereign capability, while a greater US military presence in and around Australia seems very likely. As the defence strategic review announcement and AUKUS submarine decision are pending, Canberra should develop clear, plain language that eschews euphemism when talking about the US’s forward posture and associated basing arrangements in Australia.

AUSMIN’s big stick lets Australia soften talk about China

AUSMIN 2022 in Washington was a case of nothing much to hear but more to see. In contrast to recent years, the Australian delegation said little publicly on China but, consistent with its two-track China strategy, reinforced foreign and defence policies designed to protect the national interest from Beijing’s aggressive actions. The major announcement—inviting Japan to join ‘force posture initiatives’, in which US military personnel and assets rotate through northern Australia, didn’t mention China—but was all about China.

The integration of a very close strategic partner into such a potent demonstration of regional military co-operation under the Australia–US alliance adds to the clear picture that like-minded nations are now openly looking to constrain China—including through military deterrence.

This reality sits unavoidably alongside the positive vision espoused publicly at AUSMIN—with the alliance taking a leaf out of the successful Quad playbook which aims to build an ambitious narrative of opportunity for an Indo-Pacific that remains nervous about the risks of great-power competition.

For Australia’s part, maintaining a steady path of action enables the Albanese government to temper the rhetoric towards China. Foreign Minister Penny Wong kept her public remarks low-key, even when given the opportunity to welcome US support for Australia’s resilience to Beijing’s economic coercion.

This quieter tone was no doubt noticed in capitals watching—in particular Tokyo, Delhi and Beijing. So long as there is strength through policy, Tokyo and Delhi will understand quieter diplomacy is a reasonable strategy to appeal to nations in Southeast Asia and the Pacific, focusing on opportunities more than threats.

Through an emphasis on climate, multilateralism, and regional needs such as humanitarian response, Australia and the US are encouraging Indo-Pacific countries to join a positive vision.

Defence Minister Richard Marles, notwithstanding the moderation in language on China, described the force-posture invitation to Japan as ‘providing balance within our region and involving other countries within our region’—an implicit acknowledgement that a free and open region will depend on countries working together to balance China’s ambition to be the pre-eminent power. That is the reality.

Provided there is a continuation of substantive policies to counter Beijing’s worst behaviour, this dual track of firm action and mild language should be a sound approach. The question is whether this duality is a viable long-term strategy. A measured tone cannot be inaudible in the face of aggression. Silence—even if accompanied with policy—inevitably incentivises more, not less, malice.

Getting the balance right is essential—while there is regional aversion to tension, success will rely on confidence that the US and its partners, including Australia, will be there for the region’s needs. Confidence, above all, is what the region wants and what Beijing aims to erode.

The job ahead is to continue knitting together the fabric of confidence-building partnerships. The Biden administration’s enthusiasm is evident, as we saw when Secretary of State Antony Blinken used AUSMIN to re-emphasise US priorities on alliances.

For Australia, Japan has been the standout relationship of 2022 in practical terms, with a joint declaration on security co-operation signed during Prime Minister Fumio Kishida’s visit in October, and the force posture announcement at AUSMIN which was followed up quickly by a 2+2 foreign and defence ministers’ meeting in Tokyo on Friday.

The relationship would be enhanced even further if Japan were invited to work more closely with the non-submarine pillar of AUKUS, as Marles suggested it could ‘when ready’. This fits well with Marles’ post-AUSMIN observation that like-minded countries whose defence industries have traditionally competed need to focus instead on cooperation, ‘given the strategic circumstances that the world finds itself in now’.

The late former Japanese prime minister Shinzo Abe called for Japanese involvement in AUKUS and just last month, Ambassador Shingo Yamagami said that ‘Japan stands ready to discuss with Australia, the US and the UK areas where we can cooperate bilaterally on defence technology’.

The Quad, while still a work in progress, remains the most promising action-oriented Indo-Pacific vehicle. It featured heavily in the AUSMIN communiqué, which talked about a ‘positive and practical agenda’ to ‘respond to the region’s needs’, including on maritime domain awareness, critical technology, climate and health security.

With India taking on the G20 presidency and Australia hosting the 2023 Quad leaders’ meeting, we can expect Australia to continue growing closer to India, including in defence. Notwithstanding some difference over Russia, there is strategic alignment between these four major Indo-Pacific democracies that makes the Quad indispensable.

Indeed, 2023 could be Australia’s year for India in the way that 2022 was its year for Japan. India has the potential to be the most important regional country (outside the US) to help with the strategic balancing of a rising China. Beijing would ideally like Delhi to only ever have potential while it is in Australia’s interests to support India realise it.

As a trusted US ally, a member of the Five Eyes, the Quad, AUKUS and the Pacific Islands Forum, and an ASEAN partner, Australia is uniquely placed to simultaneously project a positive regional vision and contribute to the actions necessary to deter China and maintain regional stability and sovereignty.

Learning from the past to defend Australia now

The independent leads of Australia’s defence strategic review, Stephen Smith and Angus Houston, have a tough task on their hands. It’s the first such review since Paul Dibb’s in 1986, which largely governed the 1987 white paper—and the first since consensus sees us ‘out of warning time’. The then government accepted Dibb’s thesis that we planned against capability challenges in the region amounting to an ‘escalated low level’ threat. The facilities, personnel, industry and weapons systems he recommended could deal with that from ‘the force in being’ emanating from the paper. It also assessed that an ‘expansion base’ would be developed from it should a serious threat develop—and such a threat would take 15 years to emerge. That threat has taken 30 years.

Looking back to look forward, we confronted in 1939 an existential threat, particularly after Japan entered the war in 1941. How did we handle that? What was required of us and how did we meet it? We assumed our allies would struggle, and then we would. Prime Minister John Curtin had said as opposition leader: ‘The dependence of Australia upon the competence, let alone the readiness, of British statesmen to send forces to our aid is too dangerous a hazard upon which to found Australia’s defence policy.’ The response was handicapped by the Great Depression. Defence expenditure as a percentage of GDP was about where it has been for the past 25 years.

We saw ourselves as hapless and helpless, but that was not so, partly because our American ally would carry the Pacific War, and partly because our ‘expansion base’ then was our potential wartime industry. That was enhanced by BHP head Essington Lewis’s stockpiling of iron ore and steel to feed industries we’d created since federation and accelerated after 1919. As Andrew Ross wrote recently in The Strategist and in his 1994 book Armed and ready, we put in place a major scientific, technological and industrial base. By 1941 we’d been in a full war economy for 18 months and had created the capacity to equip six divisions on our way to more. Equipped to fight the Germans, ours were superior to Japanese divisions. Our field artillery outranged theirs, and our anti-tank guns outranged Japanese tanks and could penetrate their armour.

Americans, including General Douglas MacArthur, weren’t familiar with the effective performance of Australian forces in the Middle East. Some had noted their fighting performance in Malaya. Curtin was anxious to persuade the US it had a capable ally that could carry its weight. It’s worth quoting Curtin’s address to America on 20 January 1942, six weeks after Pearl Harbour, outlining the potential effectiveness maintained for the rest of the war. It should enhance our understanding of what we were capable of then and could aspire to now.

Curtin said four out of every 10 Australian men were wholly engaged in the fighting forces or making munitions and equipment. The other six, aside from feeding and clothing the whole 10 and their families, produced the food, wool and metals Britain needed. ‘We are not, of course, stopping at four out of 10,’ he said. ‘We had over three when Japan challenged our life and liberty. The proportion is now growing every day. On the one hand we are ruthlessly cutting out unessential expenditure so as to free men and women for war work, and on the other, mobilising woman-power to the utmost to supplement the men.’

With single women civilly conscripted and married women pressured to work, we were the most mobilised belligerent of World War II.

Spending on defence hit 34% of GDP in 1942–43. The percentage of all federal spending to GDP is currently 27%. Seventy percent of our federal budget was devoted to defence. It is now around 5.56%. US President Harry Truman in his report to Congress on the Lend-Lease program in 1946 spoke of his surprise to find Australian and American participation about equal. He was wrong. Australian contributions were superior, producing a debt we forgave at war’s end.

In February 1942, Japan’s army and navy debated invading Australia—army opposed, navy supported. Distance, the commitment in China and the fighting capabilities of Australian forces were cited as reasons they didn’t. The navy was asked to concentrate on movement through the South Pacific islands to cut Australia off from America. A largely Australian effort in Papua and American in Guadalcanal put an end to that. I have put to Chinese interlocuters that their diplomatic endeavours resemble a ghost of Japanese strategy.

That’s what self-reliance looked like then. What chance now of 20% of GDP devoted to defence? We have settled at around 2%. That was a figure the US administration, when I was ambassador, pressed on me. I responded that we both devoted roughly the same percentage of GDP to spending at the federal level.

In America’s case, as well as defence, spending concentrates on social security, Medicare and Medicaid. In most other areas, US federal spending leverages the states and private sector. That includes the states on unemployment benefits and that only for 12 months.

Australia funds pensions, universal health care, full unemployment benefits, supporting parent benefits, the bulk of funding of 35% of school children in the private sector, and a substantial contribution to state schools and universities. The federal government also contributes to infrastructure, childcare and an array of social spending including the national disability insurance program. When a defence minister sits in a cabinet spending review, he or she doesn’t see an array of friendly faces. In the US, they largely do.

Herein lies the review team’s problem. During World War II, Australia was still in the umbra of a united defence as a major factor in the decision to federate. Many major programs that are federal now were handled then by the states. World War II and post-war exigencies with taxation changed that, and its impact on the distribution of functions has changed the picture dramatically. With an end to warning time, that anxiety should motivate us. Lifting defence spending to 3% or the American level of 3.5% should be doable, but one suspects not. Hopefully, the review might encourage some movement.

Curtin’s spirit might encourage sympathy for the reviewers’ desire not to see a defence dollar wasted. We can’t afford expensive propositions where cancellation is likely. The services’ professionalism leaves them conscious of allies’ capabilities, but we need to look at what’s effective for us. Focusing on missiles and mines; on many areas of surveillance technologies; and on the use of artificial intelligence, advanced computing, cyber and unmanned systems needs to be priority. Australia has many inventive scientists and businesses, though enhancing legacy platforms may throw up products and requirements outside our normal deployments. Aspects of them are not necessarily popular with our force’s planners.

The burden shouldn’t fall on the defence portfolio alone. Resources, transport and industry must be engaged in national resilience. States, local governments and the private sector have roles. All levels have an interest in massively enhancing our fuel reserves. Roads in the north might contain stretches aircraft could fly from. Ports might be made navy capable. Submarines could go deep more quickly and with more channels to exit Albany and Exmouth than from Stirling. They did that in World War II. We and our allies can mine and process most of the critical minerals on US President Joe Biden’s list of 50. Rare earths are used in 3,400 American weapon systems, but 90% comes from China. Our capacity to mine and process rare earths should be a major AUKUS program.

Our readiness before World War II was industrial. We are nowhere near that now. Weapons systems are more sophisticated and expensive. But our military is in much better shape. So is our ally, which has a superb force. It is desperate to focus on the Indo-Pacific. But as a global power, the US is being taken in directions it would prefer not to go because of the Ukraine war. The situation has become very dangerous.

Curtin used to portray us to the Americans as their last bastion, certainly in the Southwest Pacific. Some of that quietly slips into the American consciousness now. They’re responding to the perception that developments could affect communications with us. We need to put back at the forefront of our thinking what we did in World War II. It’s a challenge to contemplate the price we might have to pay. The review’s reception will be put into proper perspective as we contemplate challenges we once met.