There will be much celebration of the Royal Australian Navy’s achievements at this week’s Indo-Pacific Sea Power Conference and maritime exposition. They are significant. Five years of Indo-Pacific Endeavour activities have demonstrated the navy’s ability to generate a robust taskforce and sustain it on extended deployments, and the upgrades to the Anzac-class frigates have provided a welcome boost to their capability.

But there are very dark clouds on the capability horizon. We are facing the strategic risk of both of the navy’s core combat fleets ageing out before replacements arrive.

Even before the Attack-class submarine program was cancelled many observers raised concerns about the viability of a transition that would see each of the Collins-class boats well into their 40s before they were replaced. Short of schedule miracles, the transition to a nuclear-powered submarine only exacerbates the risk. How will the navy generate many more submariners with a fleet of ageing conventional submarines?

Even if the Collins fleet can reliably get to sea, it’s hard to see it providing a robust deterrent into the 2040s. If the Attack was going to be obsolete when it was launched in the mid-2030s, as Scott Morrison has stated, how can a design that’s 40 years older do better?

The frigate situation is nearly as serious. The Anzacs might not be quite as old as the Collins when they are eventually replaced by the Hunter-class frigates, but they will always be limited by their small number of missile cells. A ship with eight launch cells coming up against ships with 64 or 96 is taking a knife to a gunfight. Unfortunately, the Hunter will only have 32 once it starts to enter service in the mid-2030s despite an acquisition cost of $45 billion, making it extremely poor value for money.

To embark on a highly risky transition with one of your combat fleets is dangerous; to do it with both simultaneously is careless.

While the government has delivered the increased funding it promised in the 2016 defence white paper, it is not being turned into capability. If you want to understand what’s going on with its delivery, follow the money; if you’re not spending money, you’re not getting capability.

The navy’s acquisition spending should have ramped up dramatically as the submarine and frigate programs matured. That was indeed the plan in 2020–21 defence budget, but it will fall dramatically short.

For the four years from 2020–21 to 2023–24, the navy’s acquisition spending will be $5.3 billion less than the $17.8 billion it was aiming to spend across those years.

In addition to the dollars not spent, there are the dollars spent for no capability return, most notably the $3.2 billion outlaid on the Attack program, with more to come once the financial settlement with Naval Group is finalised. It’s not just the wasted dollars, it’s the wasted time—something we can’t afford when, by the government’s own admission, our warning time has evaporated.

Certainly, the navy is acquiring new systems such as more modern missiles and drones, but there’s only so much it can do with the same ships.

Proposals to put Tomahawk land-attack missiles on the Hobart-class destroyers and Collins submarines have an air of desperation; the number of missiles that could be installed wouldn’t deliver a meaningful military effect and would take away weapons from the vessels’ other roles. It’s astounding that despite the government’s planned investment of $575 billion on defence this decade, the navy’s plan is not getting a single additional missile launcher to sea, let alone a new warship.

So, what’s to be done? Whoever wins the election will face tough decisions. The government will need to consider a wide range of options, many of which should come from outside the Department of Defence, which is clearly incapable of generating fundamentally new ideas.

A first step is to build on success. The one domestic shipbuilding program going well is the 1,800-tonne Arafura-class offshore patrol vessel. Unfortunately, it brings virtually no lethality to the fight as it’s currently configured. Nevertheless, the navy has steadfastly resisted calls to explore putting anti-ship missiles or towed-array sonars on them. But as we can see from the Ukraine war, when you are in a desperate fight, every little bit of capability helps. It’s also shown how a small number of anti-ship missiles can have a dramatic effect.

There are tough conversations to be had about the frigate program where we need to implement a Plan B. That may involve cancelling the Hunter and acquiring a different vessel, or continuing with the Hunter but also pursuing additional vessels, such as more Hobart-class destroyers.

These solutions may require significant parts of the work to be done overseas to get capability quickly, but another lesson from Ukraine is that in a crisis you accept help from wherever it may come.

There are similar conversations to be had about submarines. Again, pursuing additional capability quickly doesn’t necessarily mean abandoning the future nuclear-powered attack submarines enterprise. But as potential threats get closer to Australia, smaller, affordable conventional submarines that can operate stealthily in the archipelagos to our near north look increasingly attractive as a gap filler.

Other solutions involve relying less on large, complex warships that take decades to design and build and involve major cost, technical and schedule risk.

Exploring ‘mosaics’ of smaller, less complex systems requires different thinking and appetite for risk. The recent announcement that Anduril has been funded to rapidly develop an extra-large autonomous undersea vehicles suggests that this approach is starting to take hold in Defence (likely with some forceful prompting from Defence Minister Peter Dutton).

There are no easy solutions. The first step is to acknowledge we have a serious problem that will only get worse. It’s not tenable to simply repeat the mantra of holding course and managing the (hopefully) graceful degradation of the Anzac and Collins fleets until their replacement is complete in the late 2040s.

Potential adversaries are not going to wait 25 years.

Labor has long held the view that a significant defence industry not only provides high end manufacturing jobs to Australians but also adds to our nation’s sovereign capability. It serves a strategic purpose.

During the Second World War the idea of sovereign capability saw Australia manufacture an aircraft: the Wirraway. In a contemporary sense, with complex global supply chains which make it impractical for Australia to totally manufacture much of the equipment our armed forces require, the idea of sovereign capability was set out in the 1987 Defence White Paper:

‘The capacity to maintain, repair, modify and adapt defence equipment to the Australian environment, independently of overseas sources, is of fundamental importance for our combat effectiveness in all levels of conflict.’

A commitment to an Australian defence industry has never been a part of the Coalition’s DNA. They’ve never had a preference for Australian-made equipment. The first term of the Abbott–Turnbull Government showed this blind spot remains. They were open to the submarines being built in Japan. They sent the supply ships off to Spain.

Under this Government, Australia has lost manufacturing jobs on a scale we hadn’t seen before. Before this government, Australia made cars. Now we don’t. The industry simply doesn’t exist here any more. Ideology prevented the Government from intervening when it mattered, and as a result the Government faced a jobs crisis, particularly in Victoria and South Australia.

That’s when the government latched onto defence industry as a political solution. Government intervention could not be as easily criticised by conservative thinkers because government is the only client in the sector. Intervention could not be avoided. A defence industry push would give the government a way to claim action on manufacturing job losses.

Accordingly a commitment was made to build the submarines in South Australia. And post election the Industry Minister became the Defence Industry Minister, which gives us the clearest insight into the fact that defence industry now represents the totality of the Government’s broader industry policy.

The Coalition’s conversion on the road to Damascus about defence industry is shallow and expedient, but we will take it. It is hard to know how long-lived this commitment to Australian industry will be, but at least for now they have belatedly arrived at place that Labor has occupied for generations.

Combined with both parties’ election commitments to spending 2% of GDP on defence, defence industry policy is now bi-partisan, and that is good, because it should offer the opportunity to rise above partisan politics and give the ADF and the broader defence community a sense of long-term direction about defence industry policy.

For the first term of the Abbott-Turnbull government Australia’s defence industry was simply a card to be played in the Government’s pursuit of Free Trade Agreements. They put Korean construction of the Supply Ships on the table to try and close the Korean Free Trade Agreement. They used the same ploy with submarines and the Japanese.

While neither of these eventuated, these ideas were in play at points along the road, which belied any genuine and considered commitment on the part of the Coalition to use the opportunity of these acquisitions to help build an Australian defence industry, particularly in the maritime space.

In February 2015 the country was exposed to the full cynicism of the Government’s thinking on defence industry when Senator Sean Edwards of South Australia revealed his support for besieged Prime Minister Abbott had been assured by the Prime Minister committing to build the future submarines in Adelaide.

Whatever the ultimate merits of this decision, what became clear was that the single biggest procurement in the history of the Commonwealth and the lion’s share of Australia’s defence industry was being tossed around the Government party room as part of a power play in a leadership challenge.

These actions treated the Navy, Australian shipbuilders and the Australian public with a profound contempt. I welcome the Government’s decision to pursue Australian jobs with a local submarine build, but not for a second do I believe this is the result of deep thought. It’s politics, not policy, which drives this Government.

I’m not a prude when it comes to partisan politics. When real ideological differences exist between political parties, it is crucially important it gets argued out. The contest determines elections, and to be sure I really want to win the next one.

But if we are operating in a space where the difference is small and the political environment is not volatile, then we must all meet the challenge of rising above our political habits and reflexes and seek a different discussion. Such a discussion does not preclude us from holding the Government to account or pursuing areas of real difference, but it does offer a more thoughtful, deeper discussion which is in the interests of our defence community and our nation, and also provides certainty and policy stability.

In my opinion we desperately need a discussion like that in the field of defence industry, because it is not clear to me that a fully conceptualised rationale around Australia’s defence industry is currently being articulated. We all agree that as we acquire significant military equipment, the more of it we can build in Australia then the better for the Australian economy and jobs. Labor also knows there’s a strategic benefit in improving our sovereign capability.

But I believe we need to make a deeper argument if we are going to take developing a national defence industry beyond the realm of political rhetoric and make it a true national mission. Because right now it feels to me like we are half pregnant on our defence industry.

While our military leaders support the Australian defence industry, an honest assessment would suggest it is not their first priority. And let me be crystal clear—this is not a criticism. In the absence of a bigger, consistent argument at the political level their interest is rightly in acquiring the best equipment that will keep our soldiers, sailors and aviators safe while giving them ascendancy on the battlefield. Who could argue with that priority? And who could argue that with this as the priority, where equipment is built is a secondary issue.

Yet the problem is that developing an indigenous defence industry is a big endeavour. Without unanimous effort and buy-in from our political leadership, our senior military, our foreign service and our treasury totally committed to this as a national endeavour, I fear it won’t be sustainable, particularly under a future conservative government which is not reacting to the loss of the car industry.

We need a sustained national discussion to answer the fundamental question about why we want this industry as distinct from any other industry. This discussion needs to identify the realistic opportunity our current military acquisitions provide to leverage an indigenous defence industry for the future.

I believe the answer to this question lies in the way we answer the question about the need for a defence force in the first place. Of course we need a defence force to defend our home, but we also want one that will play a part in the way we project into the world.

The current naval shipbuilding program in Australia is a once in a lifetime opportunity to create an exporting Australian shipbuilding industry. We do some exporting now but if we get it right we can do more. Combined with some excellent niche technologies we’ve developed in Australia, there is an indigenous defence industry to be had.

But to do so we must reject petty partisanship. We must explore all the possible policy options available to us in a way that transcends the party politics of the day.

Naval navel gazing (part one here) is a complex endeavour with many participants: experts both civil and military mingle with ministers and manufacturers and even the odd puzzled taxpayer. Drawing on the previous column gazing back to Australia’s naval arguments in the early 1900s, this second effort will seek some rules that can stretch across a century of Oz saltdom to illuminate the debates of the early 2000s.

The simple expression of the rules takes heart and guidance from the jest that the Defence Secretary, Dennis Richardson, offered at the start of his recent ASPI speech: ‘One disclaimer, I am not a Defence theologian and the words I use should be understood in their plain English meaning’. So, consider the navel gazing rules with the first two commandments as paramount:

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