Minister for Defence - Australian Member Committee of the Council for Security Cooperation in the Asia Pacific (Aus-CSCAP), Sofitel, 25 Collins Streeet, Melbourne

• It’s a pleasure to be asked to speak at today’s Australian Member Committee of the Council for Security Cooperation in the Asia Pacific meeting. The topic for today’s discussions, ‘Agreeing a rules-based order in the Asia Pacific’, speaks to the changes we are experiencing in regional security.
• The national security decisions Australia makes today will have important repercussions for decades into the future, and these decisions must be based on a sound strategic foundation. The Defence White Paper, which will be released later this year, will form such a foundation.
• Today I will outline some of the considerations and assessments about our future security underlying this landmark document.
• Global Power Shifts to the Indo-Pacific
• The single most significant trend in the world today is the continued shift of strategic and economic power to the Indo?Pacific region, the security and prosperity of which is vital to Australia’s own security and prosperity.
• The shift of power to the Indo-Pacific is leading to increased growth, wealth and prosperity among regional states. By 2050, almost half of the world’s economic output is expected to come from the Indo?Pacific, and the region will be home to four of the world’s top ten economies.
• As a trading nation, secure and open maritime trade routes in both the Indian and PacificOceans are particularly important to Australia’s economic well-being. Our top five trade partners are all in the Indo-Pacific and approximately 98% of our international trade by volume travels by sea – more than half of that through the South China Sea.
• The shift to the Indo-Pacific region is driving economic, energy and trade interdependence in which regional states’ economic wellbeing and prosperity depends on free and open trade.
• Greater interdependence between states is an encouraging development as it reduces the likelihood of destabilising actions or conflicts. But interdependence will not remove these risks altogether.
• We assess that the future of the Indo-Pacific will see major and emerging powers in our region compete in some areas, but also cooperate in others, as they seek to advance their own interests.
• Tensions persist in the Indo-Pacific and are in some cases becoming more acute. Territorial disputes in the South and East China Seas, as well as North Korea’s destabilising actions on the KoreanPeninsula, continue to risk regional stability and create uncertainty.
• Globally, state?on?state conventional military coercion and conflict can and will still be used to resolve disputes and achieve strategic interests. We have been reminded of this by Russia’s actions in Ukraine.
• The Government remains concerned by such developments.
• Australia has a legitimate interest in the maintenance of peace and stability both in our region and further afield. This includes the preservation of respect for international law, unimpeded trade and freedom of navigation.
• We strongly oppose the use of intimidation, aggression or coercion to advance any country’s claims. Such actions threaten the global rules-based order which underpins international peace and security.
• It is Australia’s view that international disputes must be resolved peacefully, and we urge parties to exercise restraint, take steps to ease tensions and refrain from provocative actions.
• Australia has made clear its opposition to any coercive or unilateral actions to change the status quo in the South or East China Seas. These include China’s unilateral declaration of an air defence identification zone in the East China Sea in November 2013, and large?scale reclamation activity by claimants in the South China Sea. We are particularly concerned at the prospect of militarisation of artificial structures.
• It is important that ASEAN members and China agree on a substantive Code of Conduct for the South China Sea, and that they do so as soon as possible.
• Regional Military Modernisation
• The imperative to use peaceful means to solve regional disputes is particularly salient in light of regional military modernisation.
• Across the Indo-Pacific, states are modernising their military forces, in line with their economic prosperity.
• China’s economic growth has been matched by more than two decades of growth in defence spending, and the country is now the world’s second largest military spender. Recent estimates are that China’s total military expenditure in 2014 was 216 billion US dollars, an increase of more than 160 per cent since 2005.^[1]
• In the decades ahead, many other key regional states will also be more powerful militarily than they are today as they acquire more capable and technologically advanced platforms.
• International arms transfers show the scale of this trend.
• Arms imports to the Indo-Pacific between 2010 and 2014 were 37 percent greater than in the previous five years, and now represent 48 percent of the world’s total. Among the top five global importers of weaponry are three regional states – India, China and Pakistan.^[2]
• Military modernisation is a natural part of any state’s development. Indeed, it can be seen as a largely positive development as modernising states are more able to manage security challenges they face.
• It also represents a great opportunity for Australia to work with more capable partners to support our shared interests in regional security and stability.
• Yet accelerating military modernisation also has the potential to increase strategic competition in the region as states seek military advantages over their neighbours. Australia continues to encourage all countries in the region to be open about their defence policies and transparent in their long-term strategic intentions.
• Transnational Security Challenges
• While traditional state-based threats remain, and it could be argued are increasing in our region, transnational security threats will also continue to pose challenges to security and stability in the Indo-Pacific and will continue to do so.
• Notwithstanding gains from regional and domestic counter-terrorism activities over the last ten years, the threat posed by global Islamist terrorism is increasing – again.
• This is characterised by a much more significant ‘home grown’ element, one supported by the spreading of extremist ideologies online and the involvement of Australian citizens in conflicts in Iraq and Syria.
• Ominously, the number of Australians with hands-on terrorist experience is now several times larger than those who trained in Afghanistan and Pakistan.
• More broadly, the threat posed from foreign terrorist fighters returning to South East Asia with the intent and capability to conduct attacks against Australia and our neighbours is one we must address together.
• The Australian Defence Force has responded to a range of challenges in the Pacific that we should expect to continue.
• In the South Pacific, illegal maritime activity, transnational crime, and state fragility are likely to persist.
• The ADF will continue to provide humanitarian assistance and disaster relief to Pacific island countries in times of need.
• Australia will remain a highly desirable target for groups that organise, participate in and benefit from people?smuggling activities.
• While we have had great success due to the tremendous efforts of the men and women involved in Operation Sovereign Borders, including ADF elements deployed to Operation RESOLUTE, people smugglers will continue to market the dangerous voyage to Australia to any vulnerable community they can.
• In the decades ahead, Australia will also face a growing threat from non-geographically bounded technologies such as those in the cyber and space domains. We need to be particularly mindful of our increasing dependence on cyber and space capabilities for military effectiveness, capabilities which are relatively easy to disrupt.
• Implications for Australia’s Security
• What does this mean in terms of policy?
• It is clear that Australia’s security environment is becoming more challenging, and that it will continue to do so over the next 20 years.
• This does not mean we face an increased risk of armed attack, or that a major conflict in our region is likely. But we do face a broader range of possible strategic futures.
• The China-United States relationship will be a particularly important dynamic in shaping the region, and this is a key consideration for Australian planning and policy-making.
• While some tension is inevitable, both China and the United States have a clear interest in preserving regional stability and security, not least because of their close economic integration.
• More broadly, the continued growth of China’s national power – and how regional countries deal with that power – will be a major driver of the Indo-Pacific’s strategic future.
• For Australia, regional military modernisation raises the baseline for a credible and capable ADF as our historical capability and technological advantages diminish.
• The security challenges we face over the next two decades cannot be solved by any one country acting alone.
• A shared approach to such issues involving regional states themselves will be vital.
• Security architecture must evolve to support these states as they address evolving challenges in the years ahead.
• Australia’s Response
• The more uncertain future strategic environment means that our armed forces must be prepared for a diverse range of possible operational requirements.
• In the context of the forthcoming Defence White Paper, the Government’s assessment of the future strategic environment provides the basis for our most important decisions on defence matters. These include judgements regarding the ADF’s key roles, missions and engagement activities.
• Of course, the primary purpose of the ADF and Defence is to secure Australia, and to shape Australia’s strategic environment in support of our national interests.
• Over coming decades, the Government expects the ADF to be able to defend Australia and its national interests, to play an active role in contributing to regional security and stability, and to contribute to coalition operations across the world where our interests are engaged.
• Delivering on these roles will require Australia to build on its strong network of bilateral and multilateral relationships. Through regular dialogue and practical cooperation, the Government will strengthen its engagement with partners to support shared responses to shared challenges.
• United States
• Our Alliance with the United States will continue to be a central feature of Australia’s defence and security arrangements. We continue to strongly support the United States’ presence in the Indo-Pacific, and welcome its renewed focus on the region.
• The US Force Posture initiatives are a practical demonstration of this renewed focus. This year, 1150 Marines will rotate through Darwin for training and exercises with Australia and our regional partners.
• Further strengthening our cooperation with the United States – including in intelligence, capability and technology – and improving interoperability with US forces at all levels will remain key objectives for us.
• China
• Australia is committed to developing a strong and positive defence relationship with China that enhances mutual understanding, facilitates transparency and builds trust.
• The relationship has been strengthened through annual Defence Strategic Dialogues at the level of officials, for almost two decades, as well as by educational exchanges, reciprocal naval ship visits, and humanitarian assistance and disaster relief exercises.
• Japan
• Australia welcomes Japan’s increasing and positive contribution to broader regional security, which is based on the principle of international cooperation.
• We support the steps Japan is taking consistent with its right to collective self-defence, including its more active participation in United Nations peacekeeping operations, and its decision on principles for the responsible transfer of defence equipment and technology.
• The Government is committed to deepening Australia’s defence relationship with Japan through cooperation on maritime security, humanitarian assistance and disaster relief, peacekeeping and capacity building.
• We will also continue to enhance our trilateral cooperation with Japan and the United States to strengthen our collective ability to address global concerns and support regional peace, stability and prosperity.
• Indonesia
• Indonesia’s security is important to Australia by virtue of its critical position astride our northern approaches. The archipelago to our north shapes our strategic geography and thinking – it is our doorway to the region.
• As regional leaders, Indonesia and Australia need to work more closely to build on shared interests in regional stability, maritime security and counter-terrorism.
• India
• Australia will continue to increase its collaboration with India, including through military exercises, in the areas of counter-terrorism, intelligence and military cooperation.
• Regional Security Architecture
• Effective security architecture will be critical to the security of South East Asia and the broader Indo-Pacific. The Government will continue to emphasise the importance of ASEAN-centric frameworks such as the East Asia Summit and ASEAN Defence Ministers Meeting-Plus.
• Such forums support a rules-based approach to security in South East Asia’s dynamic environment, and help to develop regional solutions to regional challenges such as territorial disputes, maritime security and terrorism.
• Australia remains committed to supporting our neighbours in the South Pacific to address threats to their security, particularly in the maritime domain, and to respond to the all too frequent effects of natural disasters.
• In March this year I announced the tender process for the replacement of the Pacific Patrol Boat Program under the Pacific Maritime Security Program.
• The Pacific Maritime Security Program will be the centrepiece of Australia’s engagement in the South Pacific.
• Australia’s investment of almost two billion dollars over the next 30 years will assist South Pacific countries to secure their Exclusive Economic Zones.
• Developing the Future Australian Defence Force
• So Australia has an important position in this complex region, and we face a very broad range of current and potential security challenges.
• Looking out to 2035 Australia needs a credible and capable ADF able to respond to a wide range of potential contingencies.
• Australia’s armed forces already provide a sound range of capabilities.
• Over the next 20 years, Australia will acquire significant and sophisticated new platforms, including regionally superior new submarines, as well as frigates, the Joint Strike Fighter and replacements for the land vehicle fleet.
• However, success in the future operating environment will depend on more than just the best ships, planes or combat vehicles. Countries that can bring different capabilities together to operate as a coordinated joint force, as well as work effectively with the forces of allies and partners in coalition operations, will enjoy an overall capability advantage.
• There is significant scope to improve the way in which the ADF’s platforms work together to increase the combat power of the joint force. Indeed, it’s the ability to integrate and share information between platforms and systems in a timely manner that will give the ADF a distinct edge.
• This will require greater investment in enabling capabilities such as intelligence, surveillance, information dissemination, cyber, electronic warfare, infrastructure and training. At the same time, we must recognise that the ADF’s reliance on high-technology enablers to undertake modern operations is also a potential vulnerability that needs to be managed.
• To deliver a capable and sustainable future ADF, Defence must become a more integrated organisation with clear accountabilities and streamlined decision-making processes.
• In early April, I released the First Principles Review of Defence. The Review will result in an end-to-end approach to capability development, supported by a robust, tailored investment approval process.
• The Review is also a vital and necessary precursor to ensure that Defence is best placed to be able to deliver the Government’s new Defence White Paper.
• The Defence White Paper
• With a changing security environment as its context, in the second half of this year the Government will set out its vision for Australia’s defence strategy over the next two decades in the new Defence White Paper.
• The White Paper will present an affordable and long-term plan that aligns strategy, capability, and resources.
• The Government is committed to increase Defence spending to 2% of GDP by 2023-24 to provide a stable and sustainable funding growth path for future Defence spending.
• The White Paper will deliver on that promise.
• The Government is determined that this investment of taxpayer money will be spent well and wisely. The 2015 White Paper will be the first fully-costed, and externally cost assured, Defence White Paper in Australia’s modern defence history.
• This Government is prepared to make the difficult decisions to align strategy to capability and resources in a deliberate and considered way.
• The future ADF will be the most capable that Australia has ever seen. It will be able to respond to a range of contingencies, both in our region and further afield where our interests are engaged. And it will do so in an affordable and achievable way.
• Of course, delivering a capable ADF also requires a strong partnership with Australian industry. Recognising the importance of getting its approach to industry right, the Australian Government will release a new defence industry policy in conjunction with the White Paper.
• It will be particularly important to take the right approach to Australia’s future maritime acquisitions, with Australia looking to procure up to 40 naval surface ships and submarines over the next two decades.
• The Government will therefore release an enterprise-level Naval Shipbuilding Plan to provide a clear and sustainable approach path for the industry to support the strategic and capability needs of Defence and deliver value for money. The Naval Shipbuilding Plan will build commercial confidence, and promote the use of global best practice.
• Conclusion
• As I have outlined, and as you have discussed today, the future is far from certain and our region faces many security challenges.
• Through the 2015 Defence White Paper and the First Principles Review, the Government will deliver an ADF and Defence organisation capable of meeting these challenges head on and securing Australia’s interests into the future.

[1] Stockholm International Peace Research Institute (SIPRI), Trends in World Military Expenditure 2014 (April 2015)
[2] SIPRI, Trends in International Arms Transfers 2014 (March 2015)