The Sydney Institute

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The Hon Richard Marles MP

Deputy Prime Minister

Minister for Defence

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4 April 2024

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 and present.

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’s great to be back at the Sydney Institute, and I would like to thank Gerard and Anne Henderson for inviting me to join you today. 

When I was sworn as the Minister for Defence on 1 June 2022, I was the eighth person to have held the office over the last nine years. During the Abbott/Turnbull/Morrison Government there were six really seven – different defence ministers churning at a rate of one every eighteen months. 

Consistency in government action was absent. There was a strategic void. And chaotic, politically driven, decision making filled the space… for almost an entire decade.

During the Rudd/Gillard Government the need for a replacement submarine to the Collins Class had been identified. Work was underway. 

And then as the Coalition took over, Australia went in and then out of a submarine deal with Japan. We went in and then out of a submarine deal with France. The consequence of this indecision was that a ten-year capability gap opened up in respect of our most important and potent military platform.

For decades a tenet of Australian strategic thinking had been that if anyone meant our country harm, we would be given a ten year warning. The 2020 Defence Strategic Update rightly observed that our strategic circumstances had deteriorated to such a point that Australia now sat within this ten-year threat window. 

And yet the Coalition took no action. 

The Royal Australian Navy’s surface fleet was the oldest since the end of the Second World War.

From the time of the Defence Strategic Update until the 2022 election the number of personnel in the ADF actually shrunk. 

And programs were left to run over time and over budget such that by the time the Coalition left office 28 major projects were running a total of 97 years over time. 

In place of real funding for Defence, the Coalition adopted the habit of making large Defence announcements without the money to turn these announcements into reality: an around $35 billion Guided Weapons and Explosive Ordinance Enterprise with only $1 billion allocated towards it; an increase in the size of the ADF through to 2040 with only a fraction of the necessary funds to make it happen. 

We now know that from 2016 to 2022 the Coalition effectively cut Defence funding by almost $20 billion. This is not spin. It is detailed in black and white on page 95 of the Defence Strategic Review.

The result of this practice was that the Integrated Investment Program was massively and unsustainably overprogrammed making effective Defence planning impossible.

During the Abbott/Turnbull/Morrison years there was: a complete absence of leadership, billions of dollars were wasted, and a decade was lost; right when Australia was facing the most complex strategic circumstances since the end of World War II. 

The unavoidable fact is that the Liberals were one of the worst Defence governments in our nations history at a time when Australia could least afford it. 

In coming to office, the Albanese Government faced a volatile and complex strategic environment

Thirty years ago, the grim realities of the Cold War gave way to the optimistic assumption that ideological competition had ended, and that the world was on an irreversible trajectory toward economic integration and political liberalisation. 

That optimism now looks more like wishful thinking. 

The post-Cold War era has come to an end and in its place an an intense strategic competition - principally between the US and China - will shape the world to come. 

Our region will not be immune from this dynamic – in fact, we are at the very centre of it. 

This competition is being accompanied by even greater investments in conventional and – regrettably – non-conventional forces.

Recorded military spending in the Indo-Pacific region has increased by almost 50 per cent in the past ten years, with China engaging in the biggest conventional military build-up in the world since the Second World War.

In the year 2000, China had six nuclear-powered submarines. By the end of this decade, they will have 21. In the year 2000, China had 57 major warships. By the end of this decade, they will have 200.

These investments are shifting the balance of military power in new and uncertain ways. We are in an environment where the risk of miscalculation increases, and the consequences are more severe. 

And as China’s strategic and economic weight grows, it is seeking to shape the world around it.

For a country like Australia this represents a challenge. 

Because we are an island trading nation. We have an increasing reliance on trade for our national income. In 1990 trade represented 32 per cent of our GDP. By 2020 that had risen to 45 per cent of our GDP. 

And the physical manifestation of that trade are our sea lines of communication. 

The rules of the road at sea are everything for us. We are deeply invested in the existing global rules-based order such as the UN Convention on the Law of the Sea and ideas like freedom of navigation. When this rules-based order is placed under pressure our national interest is deeply engaged.

Of course, Australia values the most constructive and productive relationship we can have with China. This has underpinned the steps to stabilise our relationship with China that the Albanese Government has taken since coming to government. And we are now seeing this reflected in the removal of trade impediments between our countries.

Yet the way this era of great power contest will unfold is unclear. And the outcome of the contest is uncertain. 

What is manifestly clear is that Australia and all countries in the Indo-Pacific have a vital interest in maintaining a region where state sovereignty is protected, international law is followed, the global rules-based order is respected, and nations can make decisions free from coercion.

The mess our Government inherited combined with the serious challenge of the moment demanded that at the outset of our government we engage in foundational thinking. 

Simply moving forward, in accordance with a passive assumption that ‘this is how things have always been done’, was a recipe for continued failure. 

To remedy the past and to properly plan for the future we had to ask the fundamental questions about what sort of a defence force Australia needed to enable us to maximise our agency over our destiny. 

In a sense we needed to undertake a root and branch review of Defence. And while this has drawn criticism from some, we make no apology for it.

In coming to government almost two years ago, the Albanese Government has sought to bring a quiet sense of determination to our assessment and response to our strategic environment.

At the time of the election in May 2022, AUKUS was an important idea by which Australia would acquire a conventionally-armed, nuclear-powered submarine capability in partnership with the UK and the US. 

But it was not much more than an idea. How it would happen was unclear. The capability gap in our submarines remained unresolved. 

Less than a year later, our Government had announced the pathway by which our nuclear-powered submarine capability would become a reality. In reaching an agreement with the US for acquiring three Virginia class submarines a decade earlier than planned, our submarine capability gap had been closed. 

In reaching an agreement with the UK that both countries would construct the same class of future submarines, we ensured that the risk of this huge endeavour was genuinely shared.  

AUKUS was now real. 

And in the year since this AUKUS announcement progress has been happening at a pace. 

The Australian Submarine Agency has been established. 

The first tranche of AUKUS legislation has passed the Parliament. 

Land swaps with South Australia have occurred enabling work to begin at the Osborne Naval Shipyard in Adelaide for the establishment of the future submarine production line and the future training academy.

Infrastructure work is underway at HMAS Stirling in Perth in preparation for the establishment of the Submarine Rotational Force – West later this decade.

While many said it would never happen, the US has delivered the legislation to enable the transfer to Australia of both nuclear-powered submarines and importantly know-how. 

Around 20 sailors and officers are well advanced in their specialised nuclear-powered submarine training in the US and UK.

Over 50 workers have been placed, or are currently placed, in the US and the UK building up their skills. 

And last month we announced Australia’s selection of our sovereign submarine build and sustainment partners, a critical step in an endeavour that will provide around 20,000 highly skilled jobs for Australians for decades to come.

In our first 100 days we commissioned the Defence Strategic Review – the most significant review of Australia’s Defence strategy, capability, planning and resourcing in more than 35 years. And less than twelve months ago, alongside the Prime Minister, we released our Government’s response to that Review.

At its heart is an assessment that we needed a more lethal, integrated, and focused defence force to respond to Australia’s complex strategic circumstances. The Review was unambiguous in saying to achieve this we needed to move away from a business-as-usual approach.

We started delivering the Review’s recommendations immediately, with six initial priorities of action including: advancing our nuclear-powered submarine capability; enhancing our long-range strike capabilities; hardening our northern bases; investing in our personnel; boosting our innovation; and driving our partnerships in the region.

As a consequence of the DSR, the Government commissioned an independent analysis of Navy’s surface combatant fleet capability. And in response to that we have released a blueprint for a larger and more lethal surface combatant fleet for the Navy.

This includes an additional $11.1 billion over the next decade to modernise and more than double the size of our future surface combatant fleet.

This foundational thinking has also underpinned our defence industry policy, enshrined in the Defence Industry Development Strategy which my colleague Pat Conroy, released earlier this year. 

The DIDS articulates for the first time the defence industrial base Australia needs in order to meet the changing strategic circumstances outlined in the DSR.

Translating the recommendations of the DSR into a new direction for our Defence Force has required thoughtful, necessary, and difficult change. 

Not only have we needed to re-cast the way we think about our capability, posture and preparedness, but importantly we have had to work out how to pay for it.

A key recommendation of the DSR was to do away with intermittent Defence White Papers and replace them with a biennial strategic update: the National Defence Strategy. Accompanying this would be a ground up rebuild of Defence’s ten-year procurement schedule: the Integrated Investment Program. The DSR called for the first National Defence Strategy to be released this year, and that will happen in the coming weeks. 

While the 2024 National Defence Strategy will largely reflect the DSR, the 2024 IIP will outline for the first time the Government’s capability plan to shift the ADF to an integrated, focused force consistent with the DSR.

A signature of the first term of the Albanese Government has been a determined effort to revitalise our regional engagement and strengthen our bilateral relationships. 

Australia seeks security in our region, and we aim to support the security of our region – through our defence cooperation, our regional presence, and our deterrence capabilities.

In the Pacific, we have invested in enabling Pacific-led responses to Pacific security challenges. We seek to be the Pacific’s partner of choice.

We are elevating our security partnerships, signing a Bilateral Security Agreement with Papua New Guinea, a Status of Forces Agreement with Fiji and the Australia-Tuvalu Falepili Union.

Australia’s partnerships in Southeast Asia also remain critical to our shared security interests, as the recent Australia-ASEAN Summit underscored.

We will soon finalise a Defence Cooperation Agreement with Indonesia which will deepen our relationship in a transformational way. 

We are increasingly ambitious in our engagement with the Philippines and South Korea.

In October 2022, we signed the updated Australia-Japan Joint Declaration on Security Cooperation. This has taken our relationship with Japan to a new level. And it is being given expression in practical ways. After our ground-breaking Reciprocal Access Agreement came into force last year, Australian F-35 aircraft have deployed to Japan and Japan’s F-35s have deployed to Australia.

Defence cooperation with India saw 2023 be a ‘year of firsts’ – Australia’s hosting of Exercise MALABAR; the first visit to Australia by an Indian submarine; India’s first maritime patrol aircraft deployment to Cocos and Keeling Islands; and the first trilateral sail between Australia, India and Indonesia.

Our unique defence relationship with Singapore has gone from strength to strength. We are facilitating increased military training by Singapore in Australia. In the process our relationship continues to be characterised by a deepening trust.

And beyond our immediate region, we are doing more with France and have modernised our defence partnership with the UK by establishing for the first time a Status of Forces Agreement.

Central to all our work is our alliance with the United States. 

We continue to expand, evolve, and innovate in our defence cooperation with the US in areas like maritime patrol, logistics and sustainment.

Just last week, the 13th rotation of United States Marines arrived in Darwin. And at AUSMIN last year, we agreed to progress significant infrastructure upgrades in Australia’s north to support this growing force posture cooperation. 

Our cooperation with the US, including trilaterally with the UK, is increasingly paying dividends in terms of an enhanced industrial base and technology collaboration. 

This has seen a greater focus on rapidly building the industrial foundations and infrastructure needed to underpin a domestic Guided Weapons and Explosive Ordnance industry. 

Proof of this was evident when we signed a $37.4 million contract last year with Lockheed Martin Australia to begin local manufacturing of Guided Multiple Launch Rocket System missiles from 2025. 

The Government is also implementing a program of advanced technology cooperation under AUKUS Pillar II that will provide greater access to the very best solutions across three highly advanced industrial bases.

And, crucially, just last week the Australian Parliament passed legislation to strengthen our already robust export control framework in support of the establishment of an export licence-free environment between AUKUS partners. 

This is legislative reform of profound significance, enabling unprecedented levels of scientific, technological, and industrial cooperation between Australia, the US and the UK.

These types of industry and technology initiatives underscore a shared commitment to combining strengths, and pooling resources across sovereign borders, in support of our shared security goals. 

Our ability to co-innovate, co-invest, and co-produce today with key partners will determine who wins the battle for military advantage tomorrow.

This latticework of partnerships is critical to Australia’s security, the collective security of the region in which we live, and our ability to deter conflict.

We have engaged in the foundational thinking, taken the first critical steps to put this thinking into action and deepened our relationships with partners. But all of this has been in pursuit of a strategic goal: transforming our future capability to survive in a much less certain world.

In pursuing this goal, we need to ensure that great power competition does not tip over into confrontation.

Some commentators have been fixated on the precise level of Australia’s defence capability in the short term, in the event of a worst-case contingency. This analysis lacks wit. It misses the point that no middle power in the Indo-Pacific is solely capable of developing or deploying the scale or breadth of military forces that powers like China and the US can. 

This is obviously not the strategic cat that we are trying to skin.

Australia’s challenge lies in the future beyond this. And here we must invest in the next-generation capabilities the ADF needs to address the nation’s most significant military risks in the cyber, space and missile age.

In simple terms, this means building a more potent defence force capable of deterring any potential adversary from taking actions against Australia or our interests. 

It involves being able to signal a credible ability to hold a potential adversary at risk further from our shores. It means having the capability to engage in impactful projection through the full spectrum of proportionate response.

It means Australia being more self-reliant as our strategic circumstances continue to become more complicated and our region becomes less predictable. 

It also means Australia contributing, with partners, to collective efforts to deter broader regional contingencies that would be disastrous for us and the region. 

Russia’s brutal invasion of Ukraine gives us an example of what it looks like when the global rules-based order is directly challenged. 

We cannot afford a similar outcome in our region. 

To be crystal clear, effective regional deterrence is not a synonym for military or economic containment. 

This is neither possible nor desirable. 

Instead, we seek, with our partners, a favourable regional strategic balance that ensures no country might ever conclude the benefits of conflict outweigh the costs. 

But this balance won’t happen on its own. 

As the DSR made clear, defending Australia in the future will require an integrated, focused force with the ability to deter a potential adversary from projecting force against Australia, including by being able to hold its assets at risk at greater distance from our shores. 

But getting the hard power equation right is only part of the picture. 

For Australia, deterring conflict in the strategic environment we face requires a new approach – one that harnesses all elements of our national power. 

That is why the concept of National Defence will underpin the inaugural National Defence Strategy.

First articulated in the DSR, National Defence is a coordinated, holistic approach to defending Australia. 

It encompasses a broad set of initiatives ranging from hard power defence capability to industry resilience and supply chain security. 

But most importantly it comprehends that our nation’s front line is diplomacy. And that our future security can be found in continuing to invest in an inclusive regional order in which trade and investment integration expands – not shrinks.

Ultimately, however, our strategy will only be as effective as our ability to deliver it. History will judge us not by what we say, but by what we do. 

And you can only do, if you properly fund.

In last year’s budget the Government committed an additional $30 billon in Defence spending over the next ten years. This is real money that has been determined through all the cabinet processes and allocated to Defence. The first part of that additional funding will be reflected over the forward estimates in this year’s budget.

Earlier this year the Government announced a further increase in Defence spending of $11.1 billion in connection with Navy’s surface fleet. This included $1.7 billion of additional spending over the forward estimates.

The result of these decisions is that Defence’s funding will now reach around 2.4 per cent of GDP by 2033-34.

The Defence budget we inherited from the Liberals was on track to be around 2.1 per cent of GDP over a similar timeframe. 

This increase in Defence spending is of historic proportions. It represents tens of billions of real additional dollars being directed to Defence.  

It remains unclear where the Opposition stand on increasing Defence funding. But we would welcome their commitment and bipartisan support, to give Defence the certainty it needs to plan for our strategic circumstances.

But not only will we be growing the Defence budget, we will also ensure a greater quality of spend. This includes through our commitment to a Minimum Viable Capability approach to acquisition and establishing processes that minimise the burden of working with Defence.

It also means bringing the management of the Defence budget back into order.

Our Government inherited a Defence budget that was at historically high levels of over-programming. This included $42 billion in additional Defence spending without any additional allocation in the Commonwealth Budget.

In some years in the forward estimates that overprogramming reached 30-40 per cent. That means that for every $100 Defence had to spend it was planning to spend $140. Or in other words, more than a quarter of what Defence had planned to buy or deliver, it had no money for.

Over-programming the budget to some degree makes sense. It involves the principle of managing a queue.

A doctor’s practice, for example, will book two patients at the beginning of each day to create a small queue. This means that if a patient is late or doesn’t turn up, the doctor will always have another patient to see. It means that when you turn up for your 3 o’clock appointment you invariably have to wait. But it also means the doctor’s time is fully occupied and provided the queue is not too long everyone is ultimately seen. 

Similarly with complex Defence projects, there will inevitably be delays in some and overruns in others. A small queue of projects ensures that Defence procurement can keep happening despite these delays.

History has shown the sweet spot is about 20 per cent overprogramming. That is to say, if you plan to spend $120 in Defence then you will end up spending $100.

But at 30 to 40 per cent overprogramming – which is where the Liberals took us – the numbers stop adding up. It is the equivalent of turning up for your 3 o’clock doctor’s appointment and not being seen at all.

In a defence context the consequences and cost of unsustainable overprogramming are profound. 

Every time a future program is announced, even if the required money is not allocated, the Defence Department establishes a team to manage the program and industry starts employing people in prospect of the program. 

That’s fine if the project will eventually happen even if it is a little late. But when everyone knows that the numbers don’t add up, that not all the projects can happen, then everyone is just waiting for the eventual train-wreck. And in this train-wreck no one knows which projects will survive and whether sunk costs will ever be recovered. 

It is costly for industry and ultimately dishonest. It is devastating for Defence morale. And it makes clear future planning impossible.

The practice must stop, and our Government intends to stop it. But to do so means making hard decisions even in the context of a rapidly growing Defence budget.

The 2024 IIP will continue to prioritise the capability investments needed to develop an integrated, focused force. 

But the IIP will also include tough, but necessary, decisions to divest, delay, or re-scope projects that do not support this integrated and focused force. 

These decisions will be in addition to the tough choices already made by this Government, for example reducing the number of Infantry Fighting Vehicles from 450 to 129.

This reprioritisation will enable the Government to accelerate projects that will have the greatest impact on our strategic objectives to deter any potential adversaries from actions against our interests. 

And most importantly, our Government is committed to establishing a glide-path over the next few years by which we return overprogramming back towards 20 per cent.

By greatly increasing Defence spending and greatly improving the quality of the Defence spend we will greatly enhance our nation’s capability to determine our own future.

In the coming weeks the National Defence Strategy will outline fundamental reforms to our approach and planning; force generation, posture, structure, and preparedness; and international engagement.

It will outline Defence’s contribution to the concept of National Defence, which recognises Australia will deploy all levers of national power to make Australia more stable, secure, and resilient. 

The 2024 National Defence Strategy and the Integrated Investment Program will represent the next step in this Government’s commitment to building a coherent Defence policy agenda, one marked by strong foundations and hard decisions. 

It will provide a clear-eyed and prioritised approach to protecting against military threats to Australia and our immediate region. 

It will provide a disciplined, responsible, and credible approach to funding Defence. And it will represent a comprehensive end to the business-as-usual approach to Defence that we inherited from the previous government.

With consistent and clear leadership articulating a consistent and clear vision with the determination to follow it through, together we can secure Australia.


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