The latest Intergovernmental Panel on Climate Change report warns, once again, that climate-change impacts—hazards such as bushfires, drought and flooding—are becoming more frequent and more intense, damaging nature, people and infrastructure. Yet measures to reduce carbon emissions and adapt to these climate-fuelled hazards are coming far too slow.

Looking at the Australian government’s 2023–24 budget and the midterm review of progress under the internationally agreed Sendai Framework for Disaster Risk Reduction, it’s fair to wonder whether we have given up on protecting Australia from the impacts of climate change. Are we satisfied that all we can hope for is more efficient recovery from disasters?

Even if greenhouse-gas emissions stop tomorrow, the impacts of climate change will continue to increase due to past emissions. Under a relatively optimistic low-emissions scenario, the cost of natural disasters in Australia is estimated to grow to $73 billion per year by 2060.

With every new bushfire and flood, Australia is spending more on disaster recovery. Now, we need to learn how to prepare for—and not just recover from—natural disasters.

We urgently need transformational solutions that stop disasters in their tracks. Such solutions would prevent deaths and destruction, protect biodiversity and improve air quality. They would also vastly reduce the costs of disaster management.

Last month, the UN General Assembly held a high-level meeting on the midterm review of the Sendai Framework. The framework is driving a shift from managing disasters after they occur to proactively understanding and managing disaster risks. It is the global blueprint for building the world’s resilience to disasters, aiming to substantially reduce global disaster mortality by 2030. And it’s the framework that guides Australia’s approach to disaster risk reduction.

The review found that considerable progress has been made at a global scale. Governments and stakeholders now have a better understanding of the risks with which they are confronted, putting them in a better position to reduce or manage those risks.

Nevertheless, the scale and intensity of disasters continues to increase, with more people affected by disasters in the past nine years than in the nine before that. The review found that, despite increases in the direct and indirect economic impacts of disasters, investments in reducing the risk of disaster remain inadequate.

At the opening of the review, the head of the UN Office for Disaster Risk Reduction, Mami Mizutori, warned: ‘We cannot choose a path of timidity, maintaining business as usual. To do so presents us with threats that not only jeopardise sustainable development, but also our very existence.’

She reminded us: ‘The science is clear. It is less costly to take action before a disaster devastates than to wait until destruction is done and respond after it has happened.’

Yet, in Australia, 98% of the $24.5 billion in federal funding spent on disasters between 2005 and 2022 went towards recovery and relief rather than building resilience.

Australia’s financial services regulator, the Australian Prudential Regulation Authority, says that the country must spend $3.5 billion each year to limit the damage from climate-related natural hazards. Responding to bushfires, storms and cyclones after the fact is likely to cost 11 times more.

Last year, nearly 70% of Australians were affected by storms, floods, cyclones and bushfires. The Australian government is taking notice—investing in risk reduction and coordination of all-hazard preparedness, response and recovery.

The 2023–24 budget delivers investments in emergency management, building on last year’s establishment of the National Emergency Management Agency and the $1 billion Disaster Ready Fund. The funding will go towards better emergency readiness, communication and supplies, as well as a framework for mental health care and improved wellbeing following a disaster.

These investments are important,. We will have more and worse disasters and we need to make sure that we can keep people safe. Yet, these are incremental approaches and they won’t keep up with the spiralling increase in disasters caused by climate change. Warning people about a disaster so that they can get out of the way saves lives but doesn’t prevent major damage and loss. It is not sustainable and the government cannot expect people to continue like this.

More than a year after the Lismore floods, many people still can’t return to their houses. Many who have returned don’t have electricity or water, and they still have many repairs to make. Two and a half years after the 2019 bushfire in Mallacoota, just 15 of the 120 homes that were destroyed have been rebuilt, leaving many of the town’s residents without a place to live. It is only going to get worse.

Disasters have lasting environmental as well as human impacts. The Black Summer bushfires of 2019–20 incinerated 17 million hectares of land—an area roughly the size of Belgium—killed or displaced at least 3 billion animals, doubled the country’s annual greenhouse-gas emissions and seriously damaged the ozone layer. Warning people about fires may save their lives, but it does nothing to address the devastating environmental impacts.

Australians need to take a step back and look at prioritising our nation’s research, expenditure and response. Policies should aim to prevent disasters where possible and reduce their intensity when they are inevitable. Research programs like the Australian National University’s Cyclone Intervention Initiative and the ANU–Optus Bushfire Research Centre of Excellence show that transformational solutions to disasters can be developed in our own backyard.

Technology that can prevent and minimise the risk of disasters is achievable, but it needs to be treated, and funded, for what it really is—defending Australia. People are fighting for their lives and homes right now. Why is it that Australia has the strategic foresight to commit $368 billion to acquiring submarines to be delivered in the 2050s but not to commit more than $1 billion over five years for disaster prevention?

Governments supported the development of the Covid-19 vaccine in record time. This was facilitated through a sense of urgency spurring strong public–private partnerships. Australia’s next budget should bring that same urgency to addressing climate-fuelled disasters and support for large, collaborative research missions to develop these technologies quickly. That will take us further down the path of contributing to achieving the goals of the Sendai Framework and truly building the world’s resilience to disasters.

In many Australian policy circles, nation-building is an archaic 1970s term—a throwback to a time when the federal government built infrastructure to encourage national prosperity. Today, cash-strapped federal, state, territory and local governments often have little choice but to adopt a just-in-time approach to capital infrastructure investment, but strains on budgets means that this looks increasingly like a whack-a-mole approach. The changing climatic, economic and national security risks Australia is facing are reason enough for governments to rethink their approach to nation-building and infrastructure, and to move beyond incrementalism.

Water security in northern Australia provides an excellent case study of why the way we think about nation-building must change.

Climate change, Covid-19 and the war in Ukraine have reinforced the importance of resilience in global food and energy supply chains. North Queensland is awash (pun intended) with opportunities for Australia to contribute solutions to these problems. Taking up these economic opportunities will promote socially and economically prosperous communities for generations to come.

Water security is the ultimate requirement for northern Australia to prosper—not only for agriculture and population growth but also for establishing new industries such as green hydrogen.

With the right water infrastructure, north Queensland can help the federal government deliver on the decarbonisation agenda. In green hydrogen production, around nine litres of water are needed for every kilogram of hydrogen.

Communities around Townsville are determined to catch and store the vast amounts of water falling yearly in the monsoonal season between December and April. This will capitalise on the region’s natural endowments—it has the nation’s best solar and wind resources, rich soil and solid rainfall.

Only around 1% of the annual rainfall in north Queensland is currently captured. With climate change, the region is set to receive the same amount of rain in a shorter period, making measures to manage the ebb and flow of concentrated periods of rain even more important.

Population pressures in the region are putting a strain on north Queensland’s water resources. In the 40 years since a dam was last built there, the region’s population has doubled, and growth is expected to continue over the coming decades. So, while north Queensland is far from the driest part of Australia, water security is becoming an impediment to both growth and long-term resilience.

The proposed Hells Gates Dam is located approximately 120 kilometres northwest of Charters Towers and 160 kilometres northwest of Townsville. It would store 2,100 gigalitres of water and open 60,000 hectares of agricultural land. It could provide a reliable and secure long-term water supply for irrigation, and high-value agricultural production for Charters Towers, Townsville and the surrounding regions. This project arguably has global significance since the water would fuel new industries like green hydrogen. North Queensland has the ingredients to lead the nation’s green energy and hydrogen revolution if water resources are secured.

Townsville Enterprise delivered a $24 million business case for the dam to the state and federal governments earlier this year. It shows that Hells Gates Dam will build the kind of infrastructure that provides jobs and positive economic returns.

That case stated that the dam has the potential to generate a $6 billion increase in gross regional product, or GRP, from agriculture projects. The water security it will provide will positively impact the supply chain, from the farm gate to export terminals in Townsville and beyond.

The federal government recently put the project on hold for 12 months, while committing to review the funding allocated to it. It is critical that the $7 billion of funding allocated to Hells Gates Dam is maintained in tonight’s budget. The previous government fully funded the dam in the last budget, subject to a business case that has now been delivered.

Current approaches to this kind of infrastructure focus on just-in-time investments. However, this slow-burn planning fails to promote growth and inhibits investment. Projects like the Snowy Mountains and Ord River schemes show what can be achieved with water when we build infrastructure focused on the future well before it is needed.

Interestingly, the Hells Gates Dam project is community driven. The idea was put forward and championed by the community to drive local economic development. Nothing focuses a northern community more than the thought of running out of water.

Australians are starting to accept that hard economic choices are needed—and that, before making those choices, the government must move away from spreading funding like economic fairy dust. It must focus on developing a strategic approach to regional development.

The federal government must reconsider how it will use future-focused infrastructure investment to promote national resilience and economic security. The science is clear that Australia will face increasingly more frequent and intense weather events. While three years of La Niña events in a row has seen the east coast struggle with too much water, that will not be the case forever. Water and water security are critical to our nation’s economic and social prosperity, and more future-focused thinking is needed.

‘Tonight, as we gather, war rages in Europe. The global pandemic is not over. Devastating floods have battered our communities. We live in uncertain times.’

— Treasurer Josh Frydenberg, budget speech, 29 March 2022

The federal budget is the starter’s flag for the race to Australia’s May election.

Cash splash is prelude to campaign dash.

Or—less slang, more formality—the national accounts are presented as the government prepares to account to the voters.

As prefigured by the budget, the election race is a deeply domestic affair with those well-tried horses Costa Living, Jobs ’N’ Growth and Pet-Roll Prices dominating the form guides.

This year, though, the Four Horsemen of the Apocalypse round the bend close on the heels of the domestic nags.

Before turning to Costa and Pet-Roll, Josh Frydenberg started his budget speech with that nod to war, conquest and disaster, and ‘the biggest economic shock since the Great Depression’.

The introductory thought to the government’s ‘vision and plan for a stronger future’ was the need to be ‘realistic about the growing threats we face’. The section on national security began with rumination on the reality of a ‘world less stable’, confronting ‘aggression’ and ‘coercion’.

The election race will gallop across domestic terrain with a constant eye over the shoulder at the (geo)politics and (geo)economics.

Russia’s war on Ukraine, the budget predicts, will cut global growth by three-quarters of a percentage point in 2022 and increase global inflation by about 1.5%. Treasury is relatively sanguine about what Ukraine will mean for the Oz economy:

As an energy and food exporter with very limited direct trade exposure to Russia, Australia is better placed than most countries to absorb the economic effects of the conflict and associated disruptions. Higher fuel and other prices will negatively affect consumers and dampen consumption growth, but higher commodity prices will provide a positive boost to national income through higher export earnings.

The state-of-the-world survey offered by the Department of Foreign Affairs and Trade gives a flavour of the ‘incoming government brief’ DFAT will offer after the May election. The added benefit with the portfolio budget papers is that swathes of pages aren’t ‘redacted’ in the way that the government brief is cut when it dribbles out through freedom of information requests.

A ‘deteriorating strategic environment’ confronts Australia, DFAT reports: ‘Many Indo-Pacific countries remain vulnerable following the COVID-19 pandemic, while great power strategic competition is intensifying. The rules, norms and institutions that support Australia’s prosperity and security are under persistent pressure.’

The linking of China and Russia—what Prime Minister Scott Morrison calls ‘a new arc of autocracy’—gets this DFAT judgement: ‘Growing alignment between Russia and China, with its increasing military capability and growing assertiveness, has significant geo-strategic implications and underlines the importance of established rules and norms instead of a “might is right” approach.’

For the Department of Defence, the money keeps rolling in, as promised. See ASPI’s Marcus Hellyer on the 2022–23 defence budget: ‘In key ways it acknowledges and responds to a changing world, but in others it is a relic of an earlier time.’

In the cyber domain, Australia is going to spice it up with REDSPICE, which stands for Resilience – Effects – Defence – Space – Intelligence – Cyber – Enablers. The promise is $9.9 billion over the next decade for new cyber and intelligence capabilities and 1,900 new people at the Australian Signals Directorate. The supernerds of Defence’s cyberworld think it ‘the most significant single investment’ in ASD’s 75 years.

The celebration of ASD’s 75th birthday was why Jeremy Fleming, head of Britain’s signals and cyber intelligence agency, GCHQ, was in Canberra to give a speech on ‘a period of generational upheaval’—pandemic, the ‘dominance of technology and cyber’, the rise of China, the end of the Afghanistan campaign, and Russia’s invasion.

From deep inside the secret world, Fleming emphasised ‘a remarkable feature’ of the Ukraine conflict—how much Western intelligence has been so quickly declassified to get ahead of Russian President Vladimir Putin’s actions:

From the warnings of the war. To the intelligence on false flag operations designed to provide a fake premise to the invasion. And more recently, to the Russian plans to falsely claim Ukrainian use of banned chemical weapons.

On this and many other subjects, deeply secret intelligence is being released to make sure the truth is heard. At this pace and scale, it really is unprecedented.

Fleming said Putin’s massive miscalculation produced exactly what Russia didn’t want, galvanising NATO and triggering ‘an unprecedented international response’.

Russia’s choices narrow, while China has big choices to make, Fleming noted:

We know both Presidents Xi and Putin place great value on their personal relationships. But Xi’s calculus is more nuanced. He’s not publicly condemned the invasion, presumably calculating that it helps him oppose the US. And, with an eye on retaking Taiwan, China doesn’t want to do anything which may constrain its ability to move in the future …

But there are risks to them both (and arguably more for China) in being too closely aligned. Russia understands that long term, China will become increasingly strong militarily and economically. Some of their interests conflict; Russia could be squeezed out of the equation.

And it is equally clear that a China that wants to set the rules of the road—the norms for a new global governance—is not well served by close alliance with a regime that willfully and illegally ignores them all.

As the flag went down in Canberra in budget week, Trade Minister Dan Tehan was in Washington to launch an annual strategic economic dialogue with US Commerce Secretary Gina Raimondo. The talks covered economic coercion, critical minerals and regional supply chains.

Australia repeats with the US what it’s doing with Japan and India in the Supply Chain Resilience Initiative, to ‘counter China’s dominance as trade and geopolitical tensions escalate across the region’.

In creating the strategic economic dialogue with the US, Canberra repurposes the title of an agreement it reached with China. The signal to Beijing is sent using China’s own codes.

Australia’s strategic economic dialogue with China was born in 2013 as part of the ‘comprehensive strategic partnership’. The strategic language was part of Beijing’s price for getting an annual leaders’ summit. These days, Beijing won’t take ministerial phone calls, much less do summits.

Morrison bid adieu to the strategic partnership with China in February 2021. In May, Beijing suspended the China–Australia Strategic Economic Dialogue (already moribund since 2017), denouncing Australia for disrupting normal exchanges and cooperation ‘out of Cold War mindset and ideological discrimination’.

Heading to Washington, Tehan’s headline was ‘Strategic Economic Dialogue’, but by the time of the joint statement, Washington codes were injected, so it became the Australia–US Strategic Commercial Dialogue; when the treasurer and treasury secretary join future meetings, expect ‘economic’ to creep back into title.

For Australia, this dialogue will be the geoeconomics complement to the geopolitics of AUSMIN, the annual meeting between Australia’s foreign and defence ministers and the US secretaries of state and defence.

For the US, the dialogue is another piece of President Joe Biden’s attempt to create a new ‘Indo-Pacific economic framework’.

The US is in the strange position of having to build a framework because it trashed its own previous creation. The Trump administration dumped the Trans-Pacific Partnership, an impressive effort to build a US version of what the Indo-Pacific trade future should look like.

Biden can’t join the replacement model Comprehensive and Progressive TPP, now in its fourth year of operation. The politics of free trade treaties is toxic in Washington; frameworks will have to do.

That’s what happens when domestic nags gallop in competition with ‘geo’ steeds.

Now off and racing towards May, Australia knows the feeling.

Once again, the Australian government has delivered exactly the funding it promised in the 2016 defence white paper and 2020 defence strategic update (DSU). If the government was willing to recommit to the white paper’s funding line in the depths of the Covid-19 recession, it was very unlikely to walk away from it now that the economy is recovering faster than expected.

As shown in ASPI’s 2021–2022 Defence budget brief, the consolidated funding line (including both the Department of Defence and the Australian Signals Directorate) is $44.6 billion, which is real growth of 4.1%. It’s the ninth straight year of real growth and, according to the DSU’s funding model, that will continue until the end of the decade.

Last year, defence funding hit 2.04% of GDP, meeting the government’s promise to restore the defence budget to 2% of GDP by 2020–2021. This year, it’s projected to reach 2.09%. Both of those numbers are smaller than predicted a year ago, as GDP has recovered faster than expected. It’s a salutary lesson on why we shouldn’t obsess too much about small changes in percentages of GDP.

Last year’s budget planned a substantial $3 billion or 27% increase to Defence’s acquisition spending. That was always going to be challenging in the middle of a pandemic that was disrupting global supply chains. During the year, the government and Defence reprioritised spending, both as a Covid-19 stimulus and to keep projects moving, but in the end the acquisition program ended up around $1 billion short, once exchange rate adjustments are taken into account.

Despite that, the military equipment, facilities and information and communications technology acquisition programs all set spending records. Overall, it was a 13% increase on the previous year. That’s quite an achievement in the middle of a pandemic. It’s a very encouraging sign that industry can meet the challenge of ‘eating the elephant’ presented by the DSU’s growing acquisition program. Australian defence industry did particularly well, according to Defence’s data. Defence’s local military equipment spend grew by a remarkable 35% to around $3.5 billion. Australian industry isn’t just growing in absolute terms: there are also signs that it’s growing in relative terms compared to the share of spending going overseas. If that continues, it’s evidence at the macro level that the government’s defence industry policy is delivering.

There’s another $3 billion increase in acquisition spending planned this year. If the recovery from Covid-19 continues, Defence and industry could come close to achieving it.

The sustained spending is delivering capability. At the end of last year, the F-35A reached the key milestone of initial operational capability. It will reach its full capability in late 2023 after a 21-year journey. The air warfare destroyer project will also reach full capability very soon. There are substantial upgrades to Defence’s facilities occurring around the country.

The naval shipbuilding program is aiming to spend $2.5 billion this year, and its biggest element, the Attack-class submarine project, is looking to hit $1 billion for the first time. The naval shipbuilding enterprise will most likely reach $4 billion in annual spending by the time the submarine and future frigate programs are into construction. But that also means that those projects will have spent tens of billions of dollars between them by the time the first submarine and frigate are operational.

The government’s recent announcement that it will accelerate the establishment of a domestic guided weapons manufacturing capability in Australia was big news. With $100 billion in investment in guided weapons planned and the policy and industrial fundamentals for local production in place, there are good prospects for a huge leap forward for military and industrial capability and the mitigation of supply-chain risks. Getting it right is important, but Defence should also start quickly with some low-risk projects to produce existing types of weapons.

But fundamental problems remain in Defence’s capability acquisition system. Earlier this year, Defence cancelled its project to deliver the Submarine Escape Rescue and Abandonment System. After getting into contract and spending what could be close to $100 million, Defence decided that it had irreconcilable differences with its industry partner.

The army’s highest priority program, digitisation, also has been put on hold after nearly 15 years of work and almost $2 billion spent. Even if it continues, LAND 200 could take another 10 years to complete—in total, that’s longer than the F-35A. Can Defence keep running projects that take a quarter of a century to deliver?

Defence’s external workforce is now its biggest ‘service’, ahead of the army. And there’s a looming iceberg in there. Defence’s acquisition and sustainment budgets are planned to double over the decade. Local acquisition spending alone could grow from $2.6 billion to around $10 billion. Defence will need a much larger workforce to run those activities, but its own workforce is capped, so it’s increasingly having to turn to contractors. There’s very little data available on what individual contractors cost, but it could be well over twice the average cost of public servants. Collectively, it could cost $1 billion more than an equivalent number of public servants today.

While Defence’s top-level budget breakdown shows that the cost of its workforce is declining as a share of the overall budget, that’s potentially misleading; the costs of growing numbers of contractors show up not in Defence’s personnel budget but in its acquisition and sustainment budgets. It’s hard to tell, but it’s possible that over 10% of Defence’s acquisition budget is going to contractors helping to run projects. Overall, the cost of contractors could explode and eat deeply into Defence’s acquisition budget. Defence needs to fully understand the value-for-money case for using contractors—and it needs to share that with parliament.

While there are significant questions about how efficiently Defence is spending, there are even bigger questions about whether it’s spending on the right things in the first place.

We noted last year the fundamental disconnect between the strategic assessments in the DSU and the capabilities presented in the supporting force structure plan. The DSU emphasised the need for long-range strike capabilities that can impose cost on and deter a great-power adversary at distance. Yet the ADF’s strike cupboard is bare, and there’s no clear path to restock it quickly. Huge investment is also planned in capabilities that appear to have minimal deterrent effect on a great-power adversary, such as up to $40 billion on heavy armoured vehicles.

The force structure and timelines for delivery are holdovers from previous strategic planning documents developed in circumstances that bear little resemblance to our current one. Fundamental changes to concepts and force structure, such as making greater use of uncrewed and autonomous systems, are occurring only slowly. The vast bulk of investment is still going into small numbers of exquisitely capable yet extremely expensive crewed platforms that take years, even decades, to design and manufacture and are potentially too valuable to lose. Defence needs to take more risk and invest more than half of one percent of its budget in research and development, particularly in distributed, autonomous technologies.

The government has delivered the steadily increasing funding it promised at the start of 2016. That’s commendable, considering the economic impact of Covid-19. However, in the DSU, it also acknowledged that Australia’s strategic circumstances have deteriorated since 2016—yet Defence’s funding model hasn’t changed since then.

More funding is needed, but Defence will need to show that it can use it well to deliver capability rapidly. Over the decade, the government is providing $575 billion in funding to Defence, but in that time it won’t deliver a single new combat vessel. In short, Defence will need to demonstrate that it has absorbed and is acting with the sense of urgency presented in the DSU.

A final note that shows that part of the DSU’s intent is being realised. The DSU directed Defence to focus on our immediate region. As consequence, operations in the Middle East are drawing down and spending on operations is now at its lowest level since before the ADF deployed to Timor-Leste in 1999.