Stephen Smith MP
Minister for Defence
Third Plenary Session
12th International Institute for Strategic Studies’
and Strategic Transparency
***Check against delivery***
Thank you Dr Chipman for your warm welcome.
Fellow Plenary Session panel members, Indonesian Minister for Defence Purnomo and United Kingdom Secretary of State for Defence Hammond.
Ladies and gentlemen.
Thank you very much for inviting me to the 12th International Institute for Strategic Studies’ Shangri-La Dialogue and to present to this Plenary Session on ‘Military Modernisation and Strategic Transparency’.
I am pleased to attend my third Shangri-La Dialogue and, more importantly, pleased to maintain successive Australian Defence Ministers’ record of attending every Shangri-La Dialogue since its inception in 2002.
Australia’s recent Defence White Paper, launched on 3 May this year, made the following key judgement:
a new Indo-Pacific strategic arc is beginning to emerge, connecting the Indian and Pacific Oceans through Southeast Asia. This new strategic construct … is being forged by a range of factors.
Notably, India is emerging as an important strategic, diplomatic and economic actor, ‘looking East’, and becoming more engaged in regional frameworks.
Growing trade, investment and energy flows across this broader region are strengthening economic and security interdependencies.
These two factors combined are also increasingly attracting international attention to the Indian Ocean, through which some of the world’s busiest and most strategically significant trade routes pass.
The ongoing shift in influence to the Indo-Pacific is, however, not just about economics.
Economic growth has underpinned military modernisation and military capability growth across the Indo-Pacific.
The Indo-Pacific is home to four of the world’s major powers and five of the world’s largest militaries – China, India, Russia, the United States and North Korea.
As well, the region has its fair share of potential flashpoints, in the Taiwan Straits, the East China and South China Seas, the Korean Peninsula, and Kashmir.
It is also home to non-traditional threats such as international terrorism, energy security, particularly susceptible to the adverse consequences of climate change and in regular need of humanitarian assistance and disaster relief.
The Indo-Pacific is predominantly a maritime environment with Southeast Asia at its geographic centre.
Australia’s 2013 Defence White Paper (“the White Paper”) observed that while overall defence spending is growing in Southeast Asia, most states are spending a similar proportion of Gross Domestic Product on defence as they did prior to the Asian Financial Crisis of 1997.
The White Paper also made the important distinction that while “much of the procurement of Southeast Asian countries is aimed at consolidating existing capabilities and upgrading professional standards, some countries – particularly Singapore, Indonesia, Malaysia and Vietnam – are introducing advanced platforms”.
These advanced platforms include beyond-visual-range air-to-air missiles, air-to-air refuelling, modern surveillance radars, digital data-links, highly capable airborne early warning and control platforms and electronic warfare systems.
Together, these advanced capabilities can provide a significant increase in combat capability through improved situational awareness, better command and control and improved integration of defence networks.
It is not surprising that in this maritime domain, some Southeast Asian countries are introducing advanced submarines that have highly capable systems, such as Malaysia’s diesel-electric SCORPENE Class equipped with the Blackshark torpedo.
The Indonesian Navy is seeking to introduce advanced corvettes, submarines and anti-ship guided missiles over the next 20 years.
More broadly in the Indo-Pacific, the size of China’s economy, combined with its domestic defence industry and military planning, has enabled its official defence spending to deliver significant capabilities, including modern submarines, and the continuing development of anti-ship ballistic missiles, fifth-generation fighter aircraft, carrier-based air power, anti-submarine warfare capabilities and counter-space systems.
India is also pursuing modernisation across its military forces, strengthening its capacity for maritime operations in the Indian Ocean and the Bay of Bengal through new classes of frigates and destroyers, new conventional and nuclear submarines, a submarine-based nuclear deterrent, its own designed aircraft carrier, advanced fourth and fifth generation fighter aircraft and maritime surveillance aircraft.
The need for strategic transparency
Australia acknowledges that its future prosperity is tied to the stability and security of our diverse and dynamic region, a region emerging as the world’s economic, political and strategic centre of gravity, but which also faces a range of security challenges.
Australia recognises military modernisation is a natural part of any country’s economic development.
The countries of the Indo-Pacific are no different in this respect. Australia both expects and accepts that the countries of the region will continue to modernise their defence forces, as Australia will.
At the same time, however, Australia will continue to encourage all countries to be open about their defence policies, procurement plans, military planning and transparent about strategic intentions.
Sometimes commentary around transparency seems often to focus exclusively on China.
The requirement for strategic transparency is not unique to any one country. It applies to all in the Indo-Pacific.
Australia encourages all countries to be open and transparent about their military capabilities and strategic intentions, as this will help to increase understanding and mutual confidence within the region.
Military modernisation, coupled with long standing maritime and territorial disputes and continuing potential flashpoints raise the risk of strategic misjudgement or miscalculation.
This underlines the need for strategic transparency.
Transparency of strategic intentions, defence policy, force posture, capability and modernisation builds confidence and reduces potential or perceived insecurity.
It allows countries to understand better the perspectives of others, filling what could otherwise entertain suspicion and concern.
If countries do not offer transparency, we are all collectively faced with a risk of miscalculation.
White papers are an opportunity presented to Government to make declaratory statements on their defence policies and postures and, present opportunities to provide more detailed assessments of their security environment and proposed policies to address security challenges.
They can describe current military capabilities, force structure, budgets, and outline future modernisation proposals.
They can provide information on why certain procurement and modernisation paths are being pursued, and the policy position that is supported by those capabilities.
This transparency can help to reassure the region that there is trust in defence planning and procurement, and that acquisition of capabilities do not need to bring about a sense of threat.
It can for example be difficult for others to understand the logic or rationale behind another country’s military activities, without first having the opportunity to gain a clear understanding of that country’s strategic intent through transparent public statements or direct dialogue.
Providing others with an understanding of intentions and perspectives does provide a basis upon which to build cooperation.
Sharing perspectives helps identify common interests and challenges, expanding the opportunity in which to pursue deeper cooperative defence engagement.
Shared renewed interest in growing maritime trade, for example, has provided a basis for regional cooperation at multiple defence and military levels to address piracy.
Transparency, of course, is not achieved through a single event or document.
Transparency is a continuous process. Ongoing dialogue and engagement builds habits of mutual trust, cooperation and understanding.
Regional security architecture can both enhance this understanding and help the region to keep pace with strategic change.
The ASEAN Defence Ministers’ Meeting Plus has made rapid progress, providing opportunities for such cooperative engagement. It will conduct its first Humanitarian Assistance and Disaster Relief exercise later this month, involving all 18 Member countries.
Future training, exercises and familiarisation visits under this framework offers a key way through which to develop military to military and defence to defence linkages.
Practical military-to-military activities help foster regional partnerships and themselves build transparency, openness and interoperability.
As well, activities which enhance interoperability will also help us respond more effectively to the contingencies the region will continue to face, particularly:
- humanitarian assistance and disaster relief;
- stabilisation and peacekeeping operations;
- detering illegal fishing and piracy;
- and counter terrorism.
Australia’s military modernisation
In the interests of strategic transparency, I now outline key judgements and decisions from Australia’s 2013 Defence White Paper.
The White Paper judged that “Over the next three decades, Australia’s relative strategic weight will be challenged as the major Asian states continue to grow their economies and modernise their military forces.”
The White Paper also made the commitment that “Australia will, however, maintain the capacity for effective self-defence and for an active regional posture.”
The White Paper sets out a framework to continue to defend Australia’s national security interests, to have an effective and capable Australian Defence Force (ADF), and to have four priority tasks for the ADF.
The first priority task is for the ADF to be capable of the defence of Australia.
The second is to be capable of operating and taking lead responsibility in Australia’s immediate region, the South Pacific and Timor-Leste.
Third, to be capable of operating with our partners in the Indo-Pacific, in particular, South East Asia.
And fourth, to be in a position to make a contribution where our national security interest warrants it, to a broader or a global operation, of which Afghanistan is a current example.
The White Paper outlines key joint force and service specific capabilities the ADF requires to meet these tasks including:
- Enhanced air combat capability: it has long been Australian policy to maintain an air combat capability advantage in the maritime approaches to Australia. That has in the past seen the purchase of the F-111 and F/A-18F Super Hornets. It is also the strategic thinking behind the Australian Government’s announcement of the purchase of 12 new F/A-18G Growler electronic attack aircraft and confirmation of the Government’s commitment to acquire Joint Strike Fighter aircraft with the first of three squadrons arriving in 2020.
- 12 Future Submarines: the Government has narrowed consideration of this key capability to two options, an evolved Collins Class Submarine or a wholly new design. We have determined that the combat system will be a United States system. This decision reflects that an off the shelf submarine is not capable of giving Australia the operational requirement and capacity we need for a maritime country and maritime continent.
- The ongoing reorientation and reorganisation of the Australian Army under Plan BEERSHEBA, giving us three multi-role battalions based in the north and the north east of Australia: Darwin, Townsville, and Brisbane.
The White Paper outlines key areas for ongoing investment in capabilities which support the ADF more generally: an enhanced amphibious capability based on the introduction of two new Canberra Class Landing Helicopter Dock ships and three Air Warfare Destroyers, and cyber, intelligence, communications, Space Situational Awareness, Command and Control and simulation capabilities.
Australia will also further analyse investment in unmanned aircraft for maritime and land area intelligence, surveillance and reconnaissance, including a potential for these assets to have a combat role.
Consideration of the Australian domestic and the international legal position and Australia’s public policy framework will be important preconditional elements of any future Australian consideration of the use of armed unmanned aircraft.
Enhanced Regional, Alliance, and Global Defence Engagement
Australia’s January 2013 National Security Strategy and the November 2012 Australia in the Asian Century White Paper make clear that for prosperity reasons alone Australia must take advantage of the opportunities and minimise the risks of the Indo-Pacific.
The 2013 Defence White Paper describes how the Government plans to enhance our defence relationships across the region as a critical element of the Government’s strategy to so do by helping strengthen regional security.
As countries in the region modernise their defence forces, there is also scope to implement deeper strategic and security partnerships.
Australia sees opportunities to broaden and deepen these partnerships.
We want to take these partnerships forward at a pace and with a focus that meets the mutual interests of Australia and our partners.
Our longstanding partnership with Indonesia is of particular priority. We will also work hard to strengthen other relationships across the region including China, India, Japan, the Republic of Korea, and Vietnam.
Our partnership with New Zealand remains critical to our security responsibility in our immediate region: Australia and New Zealand will continue to work together across the spectrum of strategic planning, operations, capability development, and institutional cooperation.
We will also strengthen our support for regional multilateral security frameworks, including the East Asian Summit and the
ASEAN Defence Ministers Meeting Plus.
The White Paper recognises that our Alliance with the United States remains our most important military relationship and the ongoing pillar of Australia’s strategic security and defence arrangements.
In its 62nd year, the Australia-United States Alliance is an indispensable, enduring feature of these arrangements. Both countries are committed to working closely in the Indo-Pacific to promote peace and security, investment and prosperity.
The Alliance has never been stronger, as reflected by the expansion of practical cooperation to areas such as cyber and space. The Alliance continues to adapt and remain relevant to contemporary security challenges.
These enhanced arrangements include rotations of US Marines to northern Australia.
The initial rotation of around 200 Marines occurred between April and September 2012, and a second company-sized rotation of around 200 Marines arrived in Darwin on 21 April 2013 for six months.
Our stated intention is to grow this to a 2,500 strong Marine Air Ground Task Force over the next few years.
The Australian Government is currently considering the detailed arrangements for a future six month rotation of 1100 United States Marines to start in 2014.
We are also starting to discuss enhanced aerial cooperation, which will result in increased rotations of US aircraft through northern Australia, and the potential for additional naval cooperation at a range of locations, including HMAS Stirling near Perth, our Indian Ocean naval port.
Transparency of defence funding and investment in military modernisation is an important part of strategic transparency.
According to figures released on 15 April by the Stockholm International Peace Research Institute (SIPRI), world military expenditure totalled $1.75 trillion in 2012, a fall of 0.5 per cent in real terms since 2011.
SIPRI found that military expenditure in Asia and Oceania rose by 3.3 per cent in 2012. China, the second largest spender in 2012, increased its expenditure by 7.8 per cent ($11.5 billion). Russia, the third largest spender, increased its expenditure by 16 per cent ($12.3 billion).
Large increases were also seen in Vietnam and in Indonesia. Spending in India decreased by 2.8 per cent.
The Australian Defence funding model will now be based on a four-year Forward Estimates Budget cycle, with that determined on an annual basis taking into account contemporary strategic economic and fiscal circumstances and a subsequent six-year general guidance for Defence planning purposes.
In the recent 2013-14 May Budget, the Australian Government has provided $113 billion to Defence over the Forward Estimates period 2013-14 to 2016-17, with the Annual Budget growing from $25 billion in 2013-14 to $30 billion in 2016-17. This compares to $103 billion in the 2012-13 the Budget Four Year Forward Estimates period.
For general guidance for Defence planning purposes, the Government has provided funding guidance of around $220 billion for the subsequent six years from 2017-18 to 2022-23.
The Government has also committed to increasing Defence funding towards a target of two per cent of GDP. This is a long-term objective that will be implemented in an economically responsible manner as and when fiscal circumstances allow.
The Indo-Pacific is undergoing significant economic and strategic change. The changes in our region present strategic challenges but also enormous opportunities for prosperity in the decades ahead.
We have all greatly benefited from the Indo-Pacific region’s long period of peace, security, stability and prosperity.
We owe this in great part to a long period of substantial adherence to international norms and the creation and growth of regional institutions which continue to build habits of dialogue and cooperation in the region.
Our regional institutions continue to develop under the East Asia Summit and the ASEAN Defence Ministers’ Meeting Plus. We now see Presidents and Prime Ministers, Foreign Ministers and Defence Ministers from all key countries in the region meeting to discuss both issues of prosperity and investment and peace and security.
We must continue to invest our effort, energy and resources into our regional institutions to ensure that we are best equipped to manage the challenges that lie ahead.
Practical Defence to Defence and Military to Military cooperation – in humanitarian assistance and disaster relief, peacekeeping training and operations and maritime security – will help build transparency and habits of mutual respect, trust and cooperation between our militaries and our nations.
This building of mutual respect, trust, confidence and adherence to international norms will minimise the prospect of tension and the risk of miscalculation.
Continuing to build support for our regional institutions and habits of dialogue will help us withstand and resolve tensions if and when they arise.
This is the best collective transparent approach to deter conflict, enhance regional security and maximise prosperity for the people of our region and our nations.