By all means buy off the shelf, but build sovereign industry as well

There can be no doubt that the upcoming Defence Strategic Review will precipitate the most consequential, planned realignment of Australia’s defence and national security posture in living memory — this fundamental restructuring of Defence capability is widely expected to leave some major winners and losers in the capability acquisition, delivery, and sustainment pipeline across the Army, Navy and Air Force. 

Like much of the defence and strategic policy community, I’m sure the wider services are waiting with bated breath to see the capabilities and the plans that they will keep, that will evolve and adapt and those are destined for the scrapheap alongside Australia’s other well-documented history of defence acquisition failures (cough Attack Class cough). 

Equally on the chopping block is the now, nearly seven-year policy of local Australian sovereign industrial capability first identified in the 2016 Defence white paper, than formalised in the 2018 Defence Industrial Capability Plan, which outlined the previous government’s “long-term vision to build and develop a robust, resilient, and internationally competitive Australian defence industry base that is able to help meet defence capability requirements”.

As part of this, the previous government acknowledged “that as Australia builds its defence capability, we must also grow our defence industrial capability. By 2028, Australia will require a larger, more capable, and prepared Australian defence industry that has the resident skills, expertise, technology, intellectual property and infrastructure to:

• Enable the conduct of ADF operations today;
• Support the acquisition, operation and sustainment of future defence capability; and
• Provide the national support base for Defence to meet current needs and to surge if Australia’s strategic circumstances require it”.

At the foundation of the 2018 Defence Industrial Capability Plan and the ensuing 2020 Defence Strategic Update was a series of “local build” plans for the $45 billion Hunter Class frigate program, the $5.2 billion Boxer CRV program, and the multi-billion dollar LAND 400 Phase 3 program to name a few, each of which are billed as major nation-building programs that will prove fundamental to the development and sustainment of a competitive Australian defence industrial base and supporting workforce. 

However, recent commentary and speculation has revealed a growing number of potential “strategic redirection” of funding from several programs to shift funding to speed up the acquisition of key capabilities: including advanced suites of guided weapons and uncrewed platforms, potentially an expanded fleet of Hobart Class air warfare destroyers and potentially a new fleet of armed corvette-sized vessels to supplement the Arafura Class vessel, to name a few.

But what if these strategic redirections are simply robbing Peter to pay Paul and will, ultimately, leave the nation fundamentally weaker in the event of conflict? 

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By all means, buy quickly but not at the expense of long-term capacity

There is no way around it, Australia’s strategic circumstances are dire, indeed, they could be worse, but thankfully, they aren’t, yet. Nevertheless, Australia needs to rapidly accelerate its acquisition of significant military capabilities that will provide us with much needed firepower, deterrence and “impactful projection” necessary to help avoid conflict in the Indo-Pacific and to defend Australia’s long-term national strategic and economic security. 

Take Navantia’s unsolicited proposal to government to build the Royal Australian Navy a new batch of Hobart Class air warfare destroyers worth an estimated AU$6 billion and as yet, undetermined corvette-style vessel to replace the hilariously lightly armed Arafura Class offshore patrol vessels — while we don’t have any idea as to the cost for these corvettes, the significantly cheaper cost for new, highly capable surface warships in the Hobart Class has raised significant questions about the viability of the Hunter Class program. 

I will be clear, I am not calling for, nor advocating for the cancellation of the BAE Systems contract — on the contrary, to ensure that Australia has the requisite skills, experience, and industrial capacity, combined with the necessary anti-submarine capabilities and missile cells at sea, does it not make sense to pursue both options? 

As an island nation, with one of, if not the largest maritime boundaries in the world, Australia’s Navy is hopelessly undermanned and under equipped with major surface combatants, something highlighted by Vice Admiral (ret’d) and former Chief of Navy David Shackleton, who said: “By 2006, when the RAN’s final Anzac frigate, HMAS Perth, was commissioned, the class had 64 cells, but the ESSMs they contained were to be used for self-defence. In the interim, two of six older Perry Class ships were decommissioned to provide funds to upgrade the remaining four, including adding eight VLS cells. That gave each ship 48 cells, and an improved capability with the longer-range SM-2. After modernisation, the Perry Class went from six ships to four, but the total number of cells went from 240 to 192.”

In the land domain, many a pundit has taken aim at the nation’s relatively modest AU$3.5 billion acquisition of 75 M1A2 SEPv3 main battle tanks and their supporting 29 M1150 assault breacher vehicles (ABVs), 17 M1074 Joint Assault Bridges (JABs), six M88A2 Hercules combat recovery vehicles, and 122 AGT1500 gas turbine engines as part of LAND 8160 Phase 1 — but let’s be realistic, despite the billion figure, the cost benefit for the capability these new Abrams will deliver is without question. 

Army has borne the brunt of much of the speculation, as the service grapples with its future in the aftermath of the War on Terror and highly specialised counterinsurgency operations to a new era of peer competitor challenges — bearing the brunt of these attacks, perhaps more than the maligned Abrams acquisition is the multi-billion program to replace the Army’s Vietnam-era fleet of M113 armoured personnel carriers with either the Hanwha AS-21 Redback or the Rheinmetall KF-41 Lynx. 

Simply, cutting the planned 450 program of works will only drive the unit costs up due to a dramatically reduced economy of scale, while leaving Army with an underdeveloped capability, limited number of spares, and attritional supplies to call on in the event of conflict — rather maintaining the existing program of work, even at a slower drum beat where an export market can’t be identified (although given recent revelations that Germany will purchase Australian-built Boxers or South Korea’s well-documented interest in using Australia as a secondary resupply point that seems unlikely) seems like a no brainer. 

Maintaining the industrial capability, let alone delivering the platforms to the warfighter is an invaluable strategic force multiplier that Australia can leverage in times of conflict, where our other lines of communication and access may be constrained or threatened. 

This is even more important in terms of our key war stocks, namely fuel and munitions, particularly specialised munitions, namely guided, “smart” munitions which are fundamental to the way in which Australia and its allies fight and win in a combat scenario — this is also a critical point, because in the event of any conflict in the Indo-Pacific, Australia will not be alone and we will be required to share these critical resources with our partners, where at key times, we may not be at the front of the line. 

For example, Australia, like the United Kingdom, has recently announced a plan to purchase a new batch of Javelin missiles to replenish their stocks — concerningly, we know little about the analysis that has informed this acquisition and the quantities purchased and given revelations from across the West that our war stocks are dangerously depleted, are we leveraging the opportunities presented by agreements like AUKUS to encourage local business and industry development to plug gaps and build pre-deployed war stocks in advance?

Is it time for an Australian Strategic Industries Act?

Contributing an essay to the London-based Henry Jackson Society’s Breaking the China Supply Chain: How the Five Eyes can Decouple from Strategic Dependency report, now-shadow defence minister Andrew Hastie revealed Australia’s startling dependency upon Beijing, thus exposing itself unnecessarily to economic coercion and further compromise, despite the recent period of trade tension between the two nations. 

Hastie detailed Australia’s overwhelming dependence on Beijing, highlighting startling figures that impact the overall competitiveness, security, and long-term prosperity of the Australian economy, particularly when compared to allied nations, namely: 

• Australia is strategically dependent on China for 595 categories of goods — 167 of these have applications in critical national infrastructure.
• New Zealand is strategically dependent on China for 513 categories of goods — 144 of these have applications in critical national infrastructure.
• The US is strategically dependent on China for 424 categories of goods — 114 of these have applications in critical national infrastructure.
• Canada is strategically dependent on China for 367 categories of goods — 83 of these have applications in critical national infrastructure.
• The UK is strategically dependent on China for 229 categories of goods — 57 of these have applications in critical national infrastructure.

Despite attempts by the former government and now seemingly a shifting emphasis away from “sovereign” manufacturing industries by the Albanese government to focus upon more “manageable” sustainment, maintenance, upgrading, and final assembly for key technologies and capabilities, it is clear that Australia, like the United States, needs to identify certain industries, including heavy manufacturing like steel production, shipbuilding, auto-manufacturing, aerospace and chemical engineering, resource and energy exploitation and agricultural output to serve core components of a strategic industrial base. 

Identifying these industries is the first step in building a cohesive, long-term plan as part of a broader National Strategic Industries Act — using the legislative power of government to counter-balance industry development policies of allied, yet still competitor nations like South Korea — which leverages the industrial development policies of export oriented industrialisation to develop its economy into a major economic and modern, advanced manufacturing powerhouse. 

Lessons for Australia’s future strategic planning

There is no doubt that Australia’s position and responsibilities in the Indo-Pacific region will depend on the nation’s ability to sustain itself economically, strategically and politically in the face of rising regional and global competition. Despite the nation’s virtually unrivalled wealth of natural resources, agricultural and industrial potential, there is a lack of a cohesive national security strategy integrating the development of individual, yet complementary public policy strategies to support a more robust Australian role in the region. 

While contemporary Australia has been far removed from the harsh realities of conflict, with many generations never enduring the reality of rationing for food, energy, medical supplies or luxury goods, and even fewer within modern Australia understanding the socio-political and economic impact such rationing would have on the now world-leading Australian standard of living.  

Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia, this is particularly well explained by Peter Zeihan, who explains: “A deglobalised world doesn’t simply have a different economic geography, it has thousands of different and separate geographies. Economically speaking, the whole was stronger for the inclusion of all its parts. It is where we have gotten our wealth and pace of improvement and speed. Now the parts will be weaker for their separation.”

As events continue to unfold throughout the region and China continues to throw its economic, political and strategic weight around, can Australia afford to remain a secondary power, or does it need to embrace a larger, more independent role in an era of increasing great power competition?

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