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The Hon Richard Marles MP

Deputy Prime Minister

Minister for Defence

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02 6277 7800

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22 May 2023

Acknowledgements omitted.

One year ago tomorrow the Albanese Government took office. And it has been a transformational 12 months.

This time last year it was all very different.

Our country was drifting in a sea of broken relationships: with major powers; with countries which should be our friends, and with those in our region.

For decades Australian strategic thought reckoned that we would be given 10 years’ warning of any adversary seeking to do us harm. In 2020 the Defence Strategic Update rightly observed that we now sit within that 10 year threat window. But despite making this profound observation there was no response in our strategic posture.

There was a culture of making grand defence announcements without any allocation of resources to back them up. $42 billion in new programs without a cent behind them. Year by year, the problem was getting worse. Based on the former government’s plans there was not a dollar for almost one quarter of what Defence sought to purchase in the years ahead.

When money was being spent the government’s hand was completely off the tiller: 28 different defence programs running a combined 97 years over time.

And perhaps most significantly, Defence was leaking people. From the time the former government observed that we sat within the 10 year threat window the size of our Defence Force went backward by 1,400 people.

Australia was in the midst of a shrill and fundamentalist debate about China. A debate which seemed to be about a short-term electoral interest at the expense of the national interest.

From the highest office in the land we saw the most gratuitous and inflammatory comments aimed at obtaining the best run in the newspapers without any regard to what mattered for the Australian people.

These actions made our already deeply complex relationship with China much harder. Indeed it is hard to imagine a relationship less suited to simplistic platitudes.

Human rights is a case in point. There are significant human rights issues in China; for example in the way the Uyghur and Tibetan populations are treated, or in respect of democratic rights in Hong Kong. All of us have been vigilant in raising these issues at every occasion.

By the same token China’s growth story has played a crucial role in the single biggest alleviation of poverty in human history. For those wanting a simple argument this is an inconvenient truth. But never mentioning it doesn’t mean that it didn’t happen.

China is our largest trading partner and that trade has been at the heart of our economic growth over a number of decades. All of us have been a beneficiary of it.

China is however a significant source of anxiety in respect of our national security. The artificial islands which China is building in the South China Sea seek to assert an idea of sovereignty over that body of water which is inconsistent with the UN Convention on the Law of the Sea. This was affirmed by The Hague in 2016 when an Arbitral Tribunal rejected China’s expansive South China Sea maritime claims as having no basis in international law.

And this engages Australia’s national interest. Most of our trade goes through that body of water, including all of our trade to Japan and Korea, two of our top five trading partners.

This is an example of how China has, over the last decade, sought to shape the world around it in a way it has not done before.

And this has been accompanied by the biggest conventional military build-up we have seen by any country since the end of World War Two. In the year 2000 China had six nuclear-powered submarines, by the end of this decade they will have more than 20. In the year 2000 China had 57 capital surface ships, by the end of this decade they are expected to have around 200.

This is a massive expansion of the Chinese military and it is happening without any transparent explanation to the region or the world about its purpose.

So when the entirety of the story around China is examined, it is complex. Managing the relationship is difficult. It cannot be done on fundamentalist terms. And it must be possible to say that we value a productive relationship with China. Because quite obviously China matters.

Today this is an uncontroversial statement to make. But a year ago it was a statement that brought populist condemnation.

The Albanese Government will work with China when we can and we will disagree with China where we must. And this is the only rational way that a sensible government can approach our relationship with China.

Just under a year ago I met with my Chinese counterpart Minister Wei Fenghe. It was the first meeting between our two countries at the ministerial level in more than three years. Since then our Foreign Minister has met with her counterpart on four occasions. In December that meeting occurred in Beijing. In the last few weeks our Trade Minister has met his counterpart in Beijing. And last November our Prime Minister met President Xi.

The Defence dialogue between our two countries has resumed. Trade is being put back in place. We are stabilising the relationship with China, without compromising our national interest and our sovereignty. And in the process we are being treated far more seriously as a country.

Great power competition in our region and in the world has made the global environment a far more complex place.

At the same time our economic connection with the world is vastly different today than it was 30 years ago. In 1990 trade represented 32 per cent of our national income. Immediately prior to the pandemic it had risen to 45 per cent of our national income.

Just one example of this shift lies in the way Australia obtains its liquid fuels.

In 1990 almost all of our domestic liquid fuel demands were met from crude oil emanating from Australian oilfields which was refined onshore by the eight refineries that existed at that time. Today we import almost all of our refined liquid fuels, most from one country – Singapore. The two refineries that still exist refine a lot of their product from crude oil which is also imported from overseas.

This single example of critical trade highlights the degree to which Australia is invested in our economic connection with the world. The global rules-based order which provides for freedom of navigation, now more than ever, is central to our national interest.

Accordingly, a far more difficult world and a much greater Australian connection to that world has significantly increased the complexity of our strategic circumstances. Indeed we live with the most threatening and complex strategic circumstances that Australia has faced since the end of the Second World War.

The strategic posture that our government has inherited dates back to work done by Paul Dibb in his review in the mid-1980s. It has served our country well for many decades. In its simplest terms it involved having a defence force capable of defending our continent, allowing Australia to be a significant player within our region, and a good global citizen: three concentric circles. We have had a balanced force, with a mix of capabilities, able to operate across these three circles: be it to defend Australia; lead a mission in Solomon Islands; or play a part in multinational forces in Iraq, Afghanistan or Somalia.

While this posture has served us well it is clearly not fit for purpose for the future.

The Defence Strategic Review – commissioned within the first hundred days of our Government – and the Government’s response to it has provided the first re-tasking of our Defence Force in more than 35 years.

We have now clearly articulated five tasks for our Defence Force:

  • first, defend our continent and our neighbourhood;
  • second, deter through denial any adversaries’ attempt to project power against Australia or our interests through our northern approaches;
  • third, protect our economic connection with the world;
  • fourth, with our partners provide for the collective security of our region – the Indo-Pacific; and
  • fifth, with our partners provide for the maintenance of the global rules-based order.

Our Defence Force will now be a focussed force dedicated to achieving these tasks. As most of these tasks involve activity beyond our shores, what underpins them is a need to have a Defence Force with the capacity to engage in impactful projection through the full spectrum of proportionate response.

All of this is at the heart of the six initial priorities which the Government has identified in response to the Defence Strategic Review:

  • developing a conventionally-armed, nuclear-powered submarine capability;
  • increasing our long-range strike capability including through the manufacture of missiles and ordnance in Australia;
  • increasing the capability of our northern bases allowing them to be a platform for our projection;
  • translating innovative new technologies into operational service rapidly;
  • investing in our Defence Force personnel so that we can retain and ultimately grow our Defence Force; and
  • building our defence relationships with our nearest neighbours, particularly those countries in the Pacific.

The Defence Strategic Review and the Government’s response to it is providing our Defence Force with clear direction for a new strategic posture.

The most significant of these priorities is Australia acquiring a conventionally-armed, nuclear-powered submarine capability under the banner of AUKUS.

The AUKUS partnership was put in place by the former government and it is to their credit.

But in coming to office a year ago there was no pathway in place to achieve this capability. Today the pathway now exists.

It is realistic and steady and achievable. It will see Australia grow a capacity to operate nuclear-powered submarines out of HMAS Stirling in Western Australia. And it will see us develop the industrial capacity to build nuclear-powered submarines at the Osborne naval shipyard in Adelaide.

Australia will acquire the first of our own flagged submarines in the early 2030s, a full decade earlier than the expectation this time last year.  

And all of this will be affordable, costing our country about 0.15 per cent of GDP in the context of a defence budget which is currently just over 2 per cent of GDP and growing.

Acquiring nuclear-powered submarines will represent the single biggest leap in Australia’s military capability since the end of the Second World War. It will mean that we become just one of seven countries with the ability to operate nuclear-powered submarines. We have never before existed in such elite company when it comes to military capability.

This will transform the potency of the Australian Defence Force. This advanced technology, and the unmatched stealth and operational capability that comes with it will enable us to hold any adversary at risk further from our shores, and in the process give pause for thought for any adversary seeking to disrupt our national interests.

At last year’s election Labor committed to defence spending on the same trajectory of growth as that which had been established by the former government. Within that spending envelope, we reserved the right to reprioritise programs according to need.

This has involved making very difficult decisions to ensure a much greater quality in our defence spend. And over the next four years this will enable us to fund the six priorities within the Defence Strategic Review as a result of a reprioritisation of $7.8 billion.

And over the next 10 years our defence spending will need to grow even more. In the Budget, we provided for additional funding that will see Defence spending grow 0.2 per cent of GDP higher by the end of the decade beyond the growth trajectory that we inherited. This is a significant increase in Australia’s defence budget being delivered by a Labor government.

A key part of the complex world in which we live today is that it is one which no longer has a binary divide between war and peace. The grey zone of contest is much larger today than at any point in history. And this makes the decision around the size of defence spending far more complicated than in the past.

To navigate this decision requires an excellent conversation between Finance and Treasury on the one hand, and the national security portfolios on the other. This needs to happen at a political level. But it also needs to happen at a bureaucratic level.

Finance and Treasury scrutinise the Federal Budget to ensure that public money is spent in the highest quality way. Defence needs this as much as any other area of government. So, in stark contrast to the former government we have unashamedly exposed Defence to all the fiscal disciplines which apply to all other areas of government spending.

At the same time it is essential that Finance and Treasury are exposed to all the dimensions of our strategic circumstances. As the guardians of our national purse they need to be aware of all the strategic threats our nation faces.

Under our Government this conversation is now properly happening. We have meetings which see both the Expenditure Review Committee and the National Security Committee gather together. And this approach will be at the centre of rebuilding Defence’s program of procurement.

In a rational world defence spending is a function of strategic threat and complexity. We face both of these in full measure. And we are rational people operating a rational government.

National security policy is the custodian of our nation’s sovereignty. And earlier this year, I provided a comprehensive statement on Australia’s sovereignty to the Parliament.

Sovereignty is the ability of a people to determine its own future by its own decisions.

Military capability is a key factor in sovereignty. It does not define it. There are sovereign nations with little or no military capability. And military capability which is not operated at the complete discretion of a country does not add to its sovereignty. However military capability is a significant part of any country’s ability to determine its own circumstances.

There are those who argue that because we are acquiring a nuclear-powered submarine capability from the United States and the United Kingdom, this gives rise to a notion of dependence.

But at the heart of our partnership with the United Kingdom and the United States is the idea that as soon as a submarine carries an Australian flag it will be under the complete sovereign control of the Australian Government.

In truth much of the technology we use in our Defence Force comes from other countries. It is essential that we are able to access this technology and capability in order to enhance our own capacity. Australian military capability would be severely constrained if we were limited to technology that had been developed solely in Australia.

Acquiring technology and capability from our international partners is essential to building our own sovereign capacity. But we will never trade capability for sovereignty.

Our partnerships, particularly with the United States, make us a more capable nation, and increase our sovereignty.

Australia today is very clearly enhancing its military. But we are doing this in a transparent way with a very clear message to our friends and neighbours about our strategic motives.

Central to the tasking of our defence force is the provision of the collective security of our region and the maintenance of the global-rules based order. Because we understand that the defence of Australia doesn’t mean that much unless we have the collective security of our region.

The Prime Minister, the Foreign Minister and myself have all been engaged extensively in diplomatic efforts with the countries of our region and the world to explain this strategic intent. And we have been encouraged by the reaction that we have received from our neighbours. The reaction to the announcement of the optimal pathway for Australia acquiring nuclear-powered submarines in March has been dramatically different to the reaction to the original announcement of AUKUS in October of 2021.

The frontline of our engagement with the world is our diplomacy. We seek to use our diplomacy to find pathways for peace. And our standing in the world is central to our diplomacy and our trade. But underlying that diplomacy is a hard power equation which we are getting right. And explaining that to the world means that as a nation we are now being taken far more seriously.

In our first year in office the Albanese Government has put in place a new strategic posture for our nation and re-tasked our Defence Force.

We have established the optimal pathway for Australia acquiring a nuclear-powered submarine capability: the single biggest leap in our military capability since the Second World War.

We have reaffirmed the principles which underpin our sovereignty and the way in which we work with our partners and our friends – operationally and in the sharing of information and technology.

And we have rebuilt our relationships with the countries of our region and the world by being transparent, respectful and engaging meaningfully.

The combined result of all of this is a complete transformation of Australia’s standing within the world. We have stabilised our relationships on a basis of being taken seriously as a nation. And this enables us to pursue our national interests – economic and diplomatic – knowing that in our national security policy we will keep Australians safe.

Thank you.

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