Address to the Sydney Institute Annual Dinner Lecture

Thank you to Telstra for the introduction and Gerard Henderson and the Sydney Institute for inviting me to speak this evening.

And to my parliamentary colleagues in the room tonight, it is good to see you here.

Let me begin by acknowledging the traditional owners of the land on which we gather today, the Gadigal people of the Eora Nation, and pay my respects to their Elders, past, present and emerging.

I also pay my respects to Aboriginal and Torres Strait Islander men and women who have served our nation in the past and continue to do so today.

It is a pleasure to be back here at the Sydney Institute this evening, as Acting Prime Minister and Minister for Defence.

Less than six months ago, the Australian people voted for change.

They voted for a government which wouldn’t go missing in action;

That would take responsibility;

And one that had a plan for the future;

Especially to address the challenges Australian families are facing today:

The soaring cost of living;

A skills crisis; and

Flat-lining wage growth.

And we are delivering.

We have already made sure Australians can access cheaper medicines, provided 180,000 fee-free TAFE and vocational education places – coupled with 20,000 new university places. We are making child care affordable, and progressively expanding Paid Parental Leave – all key measures delivered in our first Budget, just three weeks ago. And, we have wages moving again.

Over the last decade our economy has not been delivering for Australians as we need it to and the Albanese Government is committed to doing what it takes to build a more resilient and more modern economy.

A precondition for economic prosperity is national security.

The world around us has become more uncertain and more precarious than at any time since the end of the Second World War.  

The war in Ukraine is a warning: it tells us that conflict is threatening the very fabric of the rules-based order that is so essential to our prosperity and security. Conflict is no longer a hypothetical risk. It is happening now.

Vladimir Putin’s unprovoked and illegal invasion of Ukraine completely subverts the principle and reality of sovereignty enshrined in the UN Charter. It cannot be allowed to stand.

Putin’s threats of nuclear escalation have only underlined that Russia poses a risk that no country, Australia included, can ignore.

And all this is occurring as the demand for international cooperation is becoming more acute: the challenges of climate change, pandemics, terrorism, food and resource security make clear the risks of a disintegrating global consensus.

We now live in a less safe and less stable world that will demand more of Australia, our people and our Defence force.

In 1985, when Kim Beazley was Defence Minister, he commissioned Paul Dibb to do a review of our strategic circumstances and our strategic response to those circumstances.

The Dibb Review led to the 1987 White Paper, which has underpinned Australian defence strategy for over three decades.

A fundamental assumption of that strategy was warning time: that any military threat to Australia would take at least ten years to emerge.

In 2020 the Defence Strategic Update, released by the former government, rightly observed that for the first time we are sitting within that ten-year threat window.

But the huge question this has left hanging is; what on earth do we do now?

The Defence Strategic Review, announced in our first 100 days in government by Prime Minister Albanese and myself, seeks to answer that question.

When commissioning this work, I made clear we must adapt to the world as it is, not as we would wish it to be.

A world where post-Cold War optimism has been replaced by the reality of renewed major-power competition.

A competition in which Australia is more relevant now than at any time in our history.

Because its centre of gravity is in our region, the Indo-Pacific, where it is driving the biggest military build-up we have seen anywhere in the world over the last 70 years.

The risk that this competition becomes confrontation, with all the destructive power of modern weapons, is a threat that we recognise and want to avoid.

That’s why sober, responsible, and clear-eyed statecraft has never been more important.

This is what you will see from the Albanese Government. An approach anchored in a resolve to safeguard our national interest while supporting regional security and stability founded on the global rules based order and international law.  

This approach includes the willingness to stabilise Australia’s relations with China.

We will be steady and consistent with China. We look for avenues of cooperation where they exist, and we are prepared to disagree where we must.

Australia values a productive relationship with China. And we expect China will play a more prominent role consistent with its economic and strategic weight. We seek that China’s increasing influence is exercised in a manner which reinforces the global rules-based order and promotes habits of cooperation that benefit the interests of all countries.

This is the only credible basis for a durable security order in the Indo-Pacific.

For all these reasons dialogue is important. It was important to meet with my Chinese counterpart in June this year and I look forward to PM Albanese’s meeting with President Xi Jinping tomorrow.

But a commitment to stabilising our relationship with China does not mean we won’t also maintain a clear-eyed focus on our security.

The idea that Australia has to choose between diplomacy and defence – or, as some critics would have it, between cooperation and confrontation – is a furphy, and a dangerous one at that.

Speaking frankly about what we see in our region isn’t confrontation, it’s common sense.

Improving our national security isn’t provocation, it’s prudence.

And deterrence isn’t an alternative to cooperation – together, they are mutually reinforcing.

For more than 70 years, central to our view of the world and our national security, has been our Alliance with the United States.

The Alliance is a unique and thriving project: driven not only by our nations’ geopolitical interests, but also by our profound commitment to democracy, open economies, and free societies.

It is not just the fact of our alliances that gives us an advantage; it’s our ability to operationalise them in ways that transcend sovereign boundaries that’s truly unique. In a more contested world, those countries that are able to pool their resources and combine their strengths will have a competitive advantage, making them far less vulnerable to coercive statecraft.

That’s why I’m never persuaded by critics of alliances who argue countries like Australia would be better served going it alone. And why I think any attempt to do so would in fact constrain national sovereignty rather than improve it. In reality, the Alliance with the United States affords Australia capability, technology, and intelligence advantages we could not acquire or develop on our own. That enhances Australia’s sovereignty. It does not diminish it.

Nor am I persuaded by those who seek to promote a contest in the priority of our relationships between the United States on the one hand and the countries of our region on the other. This is a false dichotomy. Both sets of relationships are important. Clearly Australia must place an emphasis on our relations with the region, which the Albanese Government is doing.

Australia is pursuing much deeper defence partnerships with Japan and India – my first two bilateral visits upon taking office – with our South East Asian partners and with the Pacific.

The Albanese Government campaigned on an Australia that is a more engaged and responsive partner to our Pacific neighbours, that revitalises our historically deep engagement with South East Asia, and that treats climate change like the security challenge it is.

We will always seek to work within the regional structures which have done so much to deliver security and prosperity to our region and to the world. 

South East Asian countries are at the heart of both our security and economic interests. And we want to see a regional order with ASEAN at its centre. 

Australia will prioritise cooperation in areas of shared interest – like combatting climate change, building health security and advancing the ASEAN Outlook on the Indo-Pacific.

The view from the Pacific, as I heard it at the South Pacific Defence Ministers Meeting recently, is a warm welcome to an Australia that treats the Pacific with respect.

We’ve long been the Pacific’s defence partner of choice. Now they are seeing Australia choosing to be the best possible defence partner, by listening and leaning in to their understanding of the risks they face.

In Papua New Guinea, there is real openness to making our defence forces even closer. We are looking at ways in which we can work on the PNG Defence Force’s capability gaps – such as in aviation – and provide solutions which build PNG’s capabilities and provide more opportunity for Australian and PNG defence personnel to work alongside each other.

In October, we signed a new reciprocal Status of Forces Agreement with Fiji.

And, across the board, our capability investments address the problems of climate change and transnational crime, which have been identified by Pacific Islands Forum members as the greatest security threat of our time.  

And even with New Zealand – where our relationship is as close as with any country in the world – we are looking at ways in which we can do more: such as a larger number of officer exchanges and pursuing a greater degree of joint training and exercising.

In meeting my counterparts in the Pacific and South East Asia, I have been open about why and how we are investing in new defence capability. This is part of Australia’s longstanding commitment to transparency that I’m proud of.

Of course our relationships in our region enhance our role within the US Alliance. And in the face of arguments about the relationship between the Alliance and Australia’s sovereignty, or the Alliance and our place in the region, the answer is the same.

The Alliance builds our sovereignty and reinforces our place in the region – provided Australia is an active rather than a passive participant in the Alliance. And this distinction is so important.

Because as an active participant in the Alliance, Australia’s expertise about our region that we bring to the table helps shape far better American engagement in the Indo-Pacific. And as an active and willing participant in a mutual Alliance, the support the US provides us, reinforces the support we can provide them, bolstering the capability and sovereignty of both our countries.  

And to be sure, the Albanese Government is completely committed to making Australia the most active participant in the Alliance that we can be.

Earlier this month, I received the interim advice on the Defence Strategic Review from Professor Stephen Smith and Sir Angus Houston.

The reality is that a tougher environment will require a more hardnosed Australian approach to the defence of our interests: the ability to project power to shape outcomes and deter threats. We must marshal and integrate all arms of national power to achieve Australia’s strategic objectives.

Australia has done this in rare periods of crisis. But in the future we will need to do so systematically. It will require building new and different partnerships. We will have to prioritise, to better manage risk.  

Gone are the days of simply paying the entry price to obtain our security guarantee from our security guarantor. The world and our region is far too precarious for that. We will have to be willing – and capable – to act on our own terms, when we have to.

Crucially, for my portfolio, this will mean ensuring that the military arm of national power is match fit.

Australia’s defence capabilities cannot meet those of major powers. Australian statecraft is only viable if it is underpinned by the ability to project force and power: to deter military threats, and defend Australia’s national interests within our immediate region.

And so I believe the cornerstone of future Australian strategic thought will be impactful projection. We must invest in targeted capabilities that enable us to hold potential adversaries’ forces at risk at a distance and increase the calculated cost of aggression against Australia and its interests. And we must be able to do this through the full spectrum of proportionate response.

This will require the Australian Defence Force to recalibrate its military capabilities, force structure and posture. Our approach must strengthen the lethality, resilience and readiness of the ADF. We must ensure we accord adequate priority to high-end military capabilities to do this. The ADF must augment its self-reliance to deploy and deliver combat power through impactful materiel and enhanced strike capability – including over longer distances.

The war in Ukraine has underlined that we must improve the ADF’s ability to sustain the capability and materiel required for high-end warfighting, especially ammunition. We have to draw more effectively on both domestic industry and international partners to establish more responsive and secure supply chains. This includes developing new manufacturing capabilities, better integrated with key partners, such as through Defence’s Guided Weapons and Explosive Ordnance enterprise.

At the heart of our nation having impactful projection will be the ability to operate a nuclear powered submarine capability.

In March next year the Prime Minister and I will announce, with the UK and the US, the optimal pathway for developing this capability. Nuclear powered submarines will be an essential part of Australia’s naval capability, providing an unmatched strategic advantage in terms of surveillance and protection of our maritime approaches. This capability will revolutionise the potency of the ADF and greatly enhance our sovereignty.

But AUKUS is designed to do more than deliver nuclear-powered submarines to Australia.  It forms a capability partnership that will allow our three countries to drive advantage in undersea and electronic warfare, hypersonics and counter-hypersonics, advanced cyber and quantum technologies and artificial intelligence.

All of this does involve greater co-operation and integration with the US and the UK on developing technology. But Australia having access to greater technology builds Australian capability, which means we are taken more seriously and that in turn expands our strategic space. This gives Australia more agency and sovereignty. Because at the end of the day it means we are more able to determine our future.

And importantly, these investments are not only about Australia’s security – they are about the region’s security as well. For they aim to contribute to an effective balance of military power that ensures no state will ever conclude that the benefits of conflict outweigh the risks.

Underpinning the development of a new strategic posture for our nation will be having the people and the funding to make it happen.

People are the foundation of every military capability and at the heart of every form of military advantage. And I’d like to thank all of our incredible defence personnel for their continued commitment and service to securing the nation’s interests.

Today the reality is Defence faces greater challenges to recruit, retain and grow its workforce than we have for decades. The ADF is almost 3,000 people below its allocated force strength. The Department of Defence is more than 1,000 people below its budgeted size. In part the defence establishment is simply experiencing the demand for labour which is being felt right around the country. But it also has to do with ensuring that Defence’s recruitment improves, to reflect the way young Australians approach their careers and within that context, to make the Defence offering competitive. What is completely clear is that urgent action is required if we are to respond to our more challenging strategic environment.

Because right now we have a defence personnel crisis.

That’s why I’m driving the largest workforce transformation since the late 1990s to retain and grow the people we need. Defence must act differently. We must innovate to compete and attract new skills, not just for soldiers in the field, but in intelligence, space and cyber, and advanced networking.

Defence’s budget will also need to grow. Because cost pressures, capability acquisition delays, and the need to accelerate capability delivery into the near term is resulting in a concertina effect of compression on the defence budget. New capability requirements, coupled with sustainment demand for existing capabilities and severe workforce pressures will require difficult decisions and trade-offs. There are no easy solutions.

To manage this process demands a new relationship between Defence and the rest of government, particularly the Departments of Treasury and Finance.

For the last decade, the paradigm has been to exempt Defence from budgetary disciplines, apply a growth co-efficient to the defence budget, and then set and forget. This has placed a premium on the quantity of the defence spend at the expense of the quality of the defence spend. And that in turn has been demonstrated by our government inheriting from the Coalition 28 different defence programmes running a combined total of 97 years over time.

If we are to grow the defence budget, then in the same breath we must also open up defence spending to scrutiny.

The Defence Strategic Review will inevitably foreshadow some difficult decisions. As we think about how we reconfigure our Defence Force for a very different strategic environment inevitably we will have to make some hard choices. But the very process of exposing the defence budget to scrutiny and criticism is exactly what will provide the licence for the defence budget to grow in the way it must.

Australia is no longer blessed with a benign strategic environment. Business as usual just won’t cut it. What we need is a national effort from us all to ensure Australia’s defence matches a tougher world, so that it can underpin our security and prosperity into the future as much as it has done during our past.

The Albanese Government is utterly dedicated to carrying out this national effort which we confidently know will maintain our way of life and keep Australians safe. 

Thank you