In Conversation, Asia Briefing Live 2023, Melbourne

SUBJECTS: Hamas-Israel conflict; US Alliance; Australia-China relationship; Defence Strategic Review; Surface Fleet analysis.

HAIDI STROUD-WATTS, HOST: I know there's quite a lot going on, and quite a lot going on domestically this week as well for you. But the backdrop to this conversation, I know the word unprecedented gets bandied around quite a bit, but, you know, we're dealing with the ongoing war in Ukraine, we are dealing with the very real prospect of a ground invasion in Gaza in the coming days. Taiwan remains a flashpoint in this part of the region. Some have said this is the most difficult set of external circumstances for Australia since the end of the Second World War. So with so much of the international order under pressure just about everywhere, how well placed strategically (inaudible)?

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, it's a very good question. So firstly, thank you, Haidi, thank you for your kind introduction. Let me also to start by acknowledging the Wurundjeri people the traditional owners of the land on which we meet today. It is, well, obviously, it's the question which has kind of seized every moment of my working day. And I think, firstly, the assessment that we face the most complex strategic circumstances, since the end of the Second World War is right. By which I mean, the way forward for Australia is not obvious. There are a lot of choices. There are many, many decisions to make. So you might argue that the height of the Cold War, there was a kind of a greater existential threat for the globe and that's probably true. But you know, what that presented for Australia at that point in time in terms of the decisions that we needed to make was nowhere near as complex, I think as what we need to make now. We're not engaged in a conflict, such as we were in Vietnam, say, which has happened since the Second World War, Korea. But, again, if you think about the steps that we need to take in a strategic sense, and the decisions that that presents us, both in terms of the development of our future hard power, military capability, but also the way in which we engage our diplomacy, and indeed, our trade, you know, all of those questions, I think, are more complex even than if you've looked at the big engagements that we've had sustained in Civil War, say, Vietnam or Korea. And yet, it's not the same existential threat as the height of the Cold War. But, I think the decisions before us are more complex. That didn’t answer the question but – how well placed are we? I mean, it’s glass half full, glass half empty, and you can make the case for both. The glass is not completely empty by any means. I could spend quite a bit of time telling you about how well placed we are in many respects. I think Australia is well regarded internationally, I think we are good at diplomacy. I think we actually have a Defence Force, which has a balanced set of capabilities, which brings something to the table. And we’ve seen that in the way in which we've engaged with significant contribution and effect in Iraq, Afghanistan, but also in kind of regional missions, such as Solomon Islands and East Timor. So it's not like we are in a position where there is nothing, that wouldn't be right to say that at all. What we there is the glass is half full. But having said that, there are challenges for that. We really do need to be thinking much more carefully about what military capability we have. We need to have capability which enables us to project, project in a way which understands that our national security interest is not really, I think, defined by our border in the sense of the Australian coastline, I actually think our national security lies well beyond that. I think we face under any scenario really a circumstance where a country seeking to invade Australia, because if anyone ever wanted to do us harm you can do a whole lot of harm to us to put a foot on our shores. And what that implies is that where our national security actually lies is well beyond Australia. It really does lie in the collective security of the region in which we live. I would say that Australia's security doesn't mean much unless we are living in a secure region. But if that is the case, like if that's how we analyse it, well then what we need is a Defence Force that has the capability to project into that and help contribute to the peace and security of the region in which we live. And in building that Defence Force, we've got a way to go. So there are definitely challenges

STROUD-WATTS: Can we build that with 2 per cent defence spending? As Anthony spoke about, (inaudible).

MARLES: A really good question. Again this is a question I am obviously constantly wrestling with. Defence spending needs to grow and it is our plan to grow it. I think the answer to that, in a rational world defence spending is a function of strategic complexity and strategic threat. We are rational people in this Government and there is strategic complexity and strategic threat, and so that implies a greater spend on defence. We came together for inheriting a growing defence budget, and we committed at the last election to maintaining that envelope, the program of growth, if you like that had been established by the former government. What we have now done is not only done that, but taken that further. And so whereas to put numbers on it, whereas under the former government, defence spending in the course of the decade was expected to rise to 2.1 per cent of GDP, we intend to take it to 2.3. So that is a significant increase on what we inherited and even what we committed to at the next election. Part of what makes the strategic environment complex is that it's really hard to see the future. It's volatile out there. And so if you take what I said before, that defence spending is a function of strategic threat and strategic complexity, clearly that can all change – like the landscape could change, it is very hard to predict. So I think in thinking of defence spending going forward in the way I've described, we also need to have an open mind to the idea that this is also a pretty volatile landscape and we will definitely need constant reevaluation and reassessment as we move forward.

STROUD-WATTS: And beyond security and defence there’s a myriad of challenges, right? Australian internal demographic, climate, energy transition, our relationship with China, some of them are on the level of existential crises. So when you take a look at how Australia addresses these challenges through the risk of losing global regional clout in our economy, say for instance?

MARLES: Well, clearly that risk is there. And again, we're very mindful of that. I think if we go beyond defence, I think our great kind of economic challenge, in a sense, what I would describe as the biggest micro economic reform challenge for the country, is to infuse our economy with science and technology. It’s to apply the technology we have (inaudible). And so I talk a bit about this, that there's a measure that some of you may be familiar with, which is the Harvard Index of Economic Complexity, that does change from time to time so I’m out of date with exactly where we sit, but the point here is, we have been falling down. And if you're not familiar with that index, it is essentially trying to measure – well, it's a spectrum, which at the one end would have the most basic subsistence economy, and at the other the most high-tech manufacturing and complex services economy, which I think right now is Japan. And in some ways, it is an index of modernity – not quite but in some ways. And if you think that where lies modernity lies prosperity, that statement is very much true. Where we sit in all of this, which I think right now is in the 90s, the last time I looked at it we were kind of sandwiched between countries like Libya and Paraguay. You know, that is a real marker in terms of where our economy is going, what kind of prosperity our grandkids are going to enjoy in this country. Now it wouldn't be right to say that that's where we sit on a modernity index, what in fact that number reflects in terms of our economy is that we are increasingly primary industry dependent. That is not a criticism of primary industry, in fact, quite the reverse – primary industry is the hope and the sign right now. But we have to have an economy which is more than mining and agriculture as important as those are. We need to be involved in high-tech manufacturing, we need to be involved in complex services. And to do that we have to climb the technological ladder, and I actually think to kind of change our cultural relationship to science, I mean it’s invaluable. Now, I think that is our greatest domestic challenge. We are very focused on that, as a Government. And none of that turns around overnight – what we're dealing with here is trends that have been in place for decades. But if we don't deal with it, and the National Reconstruction Fund is very much at the heart of the kind of policy agenda to try and change this. But that's where we actually need to go in terms of building a human capital based economy, which takes us more on the cutting edge of modernity and gives us a better assurance that in the middle of this century, our grandkids will enjoy the same prosperity that we enjoy, and that will be central to us having the kind of geostrategic standing that we have today.  

STROUD-WATTS: We saw in the Defence Strategic Review, really talking about this idea that America, the United States, is no longer seen as a unipolar influence across the region. How does Australia navigate that changing of the tide? And do you think Washington has come to terms with this demise of Pax Americana, and that is sort of one of the themes that we're observing with the most recent events in Israel?

MARLES: Again, good question. So we are watching great power competition. And there has – great power competition in my lifetime has waxed and waned, been more or less intense. But what's different now is that it is very much, I think, located in our region, in a way that it wasn't say, in the same way during the Cold War. Another way of putting that is I think we are more relevant to great power competition today than we have perhaps been, at any point in our history. And by its nature, the outcome of that great power competition is uncertain. I think the Alliance with the United States is hugely important. And I think it's as important as it has ever been. We do share values with the United States, democracy, the rule of law, but importantly, the maintenance and supporting of a global rules-based system. And so in that sense the Alliance remains very relevant, and I actually think that our interest lies in encouraging America to play a role in supporting the global rules-based order globally, to continue to play that role. And that's where our diplomacy is focused. In saying that, I also think it's really important that we start thinking about our own capability, and how we would have that on our – fundamentally, I think we need to be a much more capable country. And what I'm talking about there is capable in a range of senses but definitely more militarily capable. We need to have an ability to project, we need to have an ability to play on our own terms and in our own right, a meaningful contribution to providing for the collective security of the region in which we live. And we need would be able to project in a way, which would mean that any adversary who was seeking to act against our interest has pause for thought. Now it's really in that context that we are moving down the pathway of making sure that we have, in the decades to come, a highly capable submarine capability, which in turn necessarily means that we move down a path of having a nuclear-powered submarine capability. We need more projection in terms of the ability to have a more mobile army, longer range strike, be that from land or from sea, or indeed air. And so all of those are about a general proposition, which says that simply seeing our strategic circumstances as paying whatever the entry ticket is to get kind of an American security guarantee is – whether that was ever right in the past, that certainly isn't the analysis going forward. We need to actually bring to bear capability in our own right, and that's what we're seeking to do. And that’s in a military sense, but that is not then saying that we're moving beyond or past the Alliance, the Alliance as I said is critically important. And I think our interest lies in having America continue to be engaged – and I might just say that we are really pleased with the Biden Administration's engagement in the region, not just in terms of its presence, in a military sense, but in both diplomacy, what I think has been really excellent in terms of its presence in our region. And that's very much to be welcomed. And we will continue to advocate that with all future US administrations. But in doing that, clearly, our view is we need to walk down a more capable path and that's what we seek to do.

STROUD-WATTS: We’re going get some more on what that future engagement from a future US administration might look like past end of 2024. But interesting, I'm looking at these poll numbers at the moment. So Australia's Alliance for the US is essential to Australia's security, that's coming in and just about 33 per cent, 53 per cent saying that it's somewhat important, I find it compelling looking at that almost 10 per cent that says, Australia's Alliance with the US, endangers Australian security.

MARLES: This is the room?

STROUD-WATTS: That’s this room, yes.

MARLES: I mean, well what that is – if my math is right, 86 per cent of the room think that the US Alliance is important, that’s what I see there and that’s pretty consistent with what I've just said.

STROUD-WATTS: Politician’s approach to polling, I like it. But you know, in terms of this deep and traditional Alliance with the US, I wanted to get your thoughts on Australia's positioning and strategy and interests when it comes to the Middle East, because so much of that has traditionally been characterized alongside our Alliance with the US. You may disagree with that. But I wonder in light of recent horrible developments, and I know you've been very vocal and unequivocal about supporting Israel and supporting their right to defend – how far does that go? Because Anthony spoke about this idea of finite bandwidth for American leaders who are now indirectly engaged in two wars. Is that a case for Australia as well, I do wonder what our bandwidth is like that?

MARLES: Well bandwidth is relevant for sure. And, you know, we need to in terms of how we calibrate our engagement in the world, I mean look we just need to be doing it in the context of our national interests and how we pursue it. So I'll come back to Israel in a moment. But obviously an ongoing issue since we've come to power, and again just before we came to power is the war in Ukraine. I mean, the war in Ukraine –if you'd asked me five years ago, whether I fought a war in Eastern Europe would engage Australia's national interest, I would have probably said that I find that hard to imagine. And yet the war in Ukraine definitely engages our national interest. It engages our national interest because, in part what I was saying earlier that we are a country deeply invested in the global rules-based order. We are a trading island nation, the proportion of our national income based on trade is growing. There’s a visible dimension to that, you just look at your liquid fuel as one example of that. Compared to 1990, where most of our liquid fuel needs were met by crude oil that was derived from essentially Australian oil and refined in Australia. Now, most of our liquid fuel needs are provided by refined products being imported into Australia, most of that, in fact, comes from one country and that is Singapore. And indeed what we do refine onshore in our two refineries that are left, I think around half of that is crude, which is imported as well. So that's to say our sea lines of communication are completely critical, and that reflects the fact that as a trading island nation, trade is an increasing part of our economy. And therefore, you know, more than most, we are deeply invested in the global rules-based order and the maintenance of it. So when a large country seeks to impose itself on a small neighbor, not by reference to the rule of law, but rather by reference to might and power, you know, that matters, and we've got an interest in that. So how do we then balance that, to come back to the question? Well, you know, we see that whilst it’s a fair way away, because we've got a significant investment in the global rules-based order, we need to be a part of, if you'd like, the coalition of countries, which is standing for the rules-based order in supporting Ukraine in its conflict. And to that end, it is really absolutely essential, we believe, that Ukraine is able to resolve this dispute on their terms, because that will, in itself, be victory for the global rules-based order. And as a result, we make commitments. Now, they come at a cost, there's not an endless sort of well, of gear and equipment that we can provide. Every one of the decisions we've made to support Ukraine has been an important decision and we stand by it, and we're proud of it. But it's been a difficult decision, you know, because it detracts – it necessarily lowers the capabilities that we have at home. So, bandwidth is fundamentally important, and you can never escape it. I mean, to come back then to Israel, just to be clear there's not been any requests, we are in touch with Israel, clearly, there's not been any requests for support from Israel. And that's not I think, really a surprise – we're not the United States and our circumstances are different. I suppose we can’t move on without me just saying that what we've seen over the weekend has been just the most appalling act of terror, wrought upon innocents, non-combatants. It is murder. And Hamas stands condemned, and in that condemnation, I think it is really important that we stand and are seen to stand in solidarity with Israel and its people. And that's certainly how we feel as a Government, I think it's how the country feels but it's a very important statement for us to make.

STROUD-WATTS: A lot of the conversation when it comes to Australia’s Alliance and AUKUS relationship with Washington, a lot of that calculus could change if the administration changes, right? We’ve seen this elevated level of engagement diplomatically, which, you know, in other ways has also been valuable for your government across the region. Do you worry about a lack of predictability again, if there were to be another Trump presidency in 2025?

MARLES: I mean, you use the word predictable. I think one of the things that characterised the Trump administration was its unpredictability, and I suspect if Donald Trump was on the stage here, he would say that was part of how he operates. And so, you know that's not something he would shy away from. Look, I think the answer to this question is the standard answer, but there is truth to it as well. And there's truth to it in the lived experience of the previous Trump administration. The Alliance is deep. It's been in place, in effect, since the end of 1941, on New Year’s Eve, 1941. And in a formal sense since the 50s. It has transcended governments of both persuasions, both in Washington and in Canberra, and it will continue to do so. And it did during the Trump administration.

There have been periods where, you know, it's moved faster and slower. But it has always been there and it has always been deep. Our interests within the Alliance don't change and wouldn't change if there was a change of administration. And so in that sense, whoever we are dealing with in in Washington, it's really important that we are continuing to advocate our interests within the Alliance. And again, those interests as you articulate them would be articulated, really, in a bipartisan way here. So for example, you know, a very practical thing, which is not going to change now, but, you know, America's participation in the TPP, we saw as very much in Australia's interest. Their coming out with the TPP was a bipartisan position in the US. But a bipartisan position in Australia was to urge America not to do that and to continue to urge America to be engaged in trade and engage economically within the region. That's a really important piece of advocacy that we need to maintain, irrespective of who's in the chair in Washington. And again, coming back to an earlier answer, I think it is in our interest to see a more globally engaged, an ongoing globally engaged America. And it will be important that we are providing advocacy for that, irrespective of who's in the chair in Washington.

So, you know, I don't think our posture changes whatever happens in the US and I think the robustness of the Alliance over its journey gives us a sense of confidence that whatever happens in America, the Alliance and our relationship with America will be fine.

STROUD-WATTS: Some of the things that we've talked about, you know, which touches on that, but also, you've spoken about the need for more a more offensively capable Defense Force in Australia. We talked about the idea of Australia wanting, I guess, to be a bigger part of the diplomatic fabric across the Indo-Pacific and some of that takes place with the Alliance, with the use of, you know, strategic geography for Australian military bases, for example. Does that make Australia more of a target?

MARLES: No. We need to increase our capability and part of that is about what capabilities do we bring to the table? Do we have a submarine? Do we have a long-range strike capability that– you know, what is intrinsic to Australian Defence Force. Part of it is our ability to work with partners, including our ally, the United States, but not just the United States, working with partners around the world and in the region. And we're seeking to do that. By the nature of our size, I think we are a country whose interests lie in having relationships and partnerships, the best that we can have in the world, and that goes to Defence as well.

So, we seek to expand our Defence relationship with Japan, for example. About six or seven weeks ago, I was in the Philippine. Exercise Alon, which was an amphibious exercise that we did essentially bilaterally with the Philippines, it's the largest exercise that we will do this year outside of Australia. It’s the largest bilateral exercise we’ve ever done with the Philippines. And we've had Talisman Sabre, which is our big biennial, every two years, exercise in July-August in northern Australia. You know, a significant number of countries beyond the United States–

The United States were there, but beyond the United States were engaging in that and we want to see that grow. And the reason for that is because the more we are working with partners, I think there is a deterrence effect associated with that cooperation, but at a very practical level, we need to build our ability to work with them to build out interoperability, to build out familiarity with the methods, our doctrine, so that we can operate together. Now that's the rational play and that's the way forward. And I don't think that makes us more of a target.

And perhaps, you know, to talk about China at the moment. We’ve got the Ambassador in the room and we very much welcome you here, Ambassador. China is a complex relationship in Australia. And one of the things I would really want to say, very clearly, and I've been consistently saying it over a long period of time, not just recently, we value the most productive relationship we can have with China. China is our largest trading partner. Yeah, there are security anxieties, but China is our largest trading partner. And it matters to us to have the best relationship that we can have with China. Now, I would say that the way in which we navigate that from an Australian point of view is by having China take us as seriously as possible in every respect. So for example, I think there was a shrill debate in this country a few years ago, which I don't think helped build Australia's seriousness. I think we need to be serious in the professional, diplomatic way in which we engage with China. And we need to bring a great deal of seriousness to that. We need to be serious in terms of the military capability, getting our hard power equation right. And people often ask, well, doesn't that fly in the face of our relationship with China? I don't think so. I mean, I think every interaction I've ever had with China, there is an understanding of a country acting in its own national interest. I think us being a more capable country in terms of our hard power builds the space for diplomacy and trade. And that goes to the question of, you know, the extent to which we are able to operate with other countries in the region. All of this builds Australia's seriousness. And I think, you know, focused on that, being professional, and yes, being polite as part of that, but being professional, being very focused on our national interest, building our seriousness, including getting a higher power equation right, is how we actually maximize the space in which we engage diplomatically with China and in which we engage in a trade sense with China. So to me, that is how we, you know, this is obviously very complex and needs to be thought through. But that is, I think, for us the guiding light in terms of how we walk this path.

STROUD-WATTS: How do you maximize the momentum that's been built? The topic that we spoke about with the Ambassador was ‘beyond stabilisation’. And obviously we're all looking to the Prime Minister's visit, is it in November?

MARLES: Good try. I know when it is. I do know that if I answer that question I’m in so much trouble, so I won't. It is this year.

STROUD-WATTS: We know that it's very difficult– I had to try. We know that it's very difficult to glean into, you know, top level decision making, especially the very top, right, when it comes to Beijing. Do you think Canberra has the capability, the insight, the intelligence to go into this critical visit when it happens and come away with the deliverables that you want?

MARLES: Yeah, I mean, I do. I mean, it's a really good question. I think, so to not talk about government for a moment, but in a sense, to just talk about our system; DFAT, Defence, our intelligence agencies, the national think-tanks. Actually, I think the kind of the system and the landscape is, I think it's excellent. I think there is a lot of detail, thoughtful, nuanced insight at the disposal of any given government in this country, around China, around how we engage with China, about navigating the way forward. So I think we've got a kind of, a capacity issue here. Actually I think China expertise, if I can put it that way, and hopefully the Ambassador will forgive me for kind of describing it that way, but I think China expertise within Australia, I think is a strength. What matters then is what government does with it. So government then needs to have the intent. Now as I say, I frankly, and I said at the time, feel that, you know, a few years ago there was a debate that was shrill and I don’t think the intent was there and I think we saw the consequences of that. I guess all I would say is the intent that we seek to bring to this is to be taken seriously in the way in which I've described and make clear, and unashamedly make clear, we value a productive relationship with China. Just to say those words a few years ago was difficult. Well that's where we're at. And from there to seek to stabilise the relationship. And that's what we have been trying to do. And, you know, the first meeting that we had at a ministerial level was actually a meeting that I did as the Minister of Defence with my counterpart in Singapore last year. And since then we've seen, this probably answers the question, you know, we have brought the intent to the capacity that is available to us, to the expertise that’s valuable to us. What we've been able to do since then is we've had a series of ministerial level meetings with China. That's important, but it's not just been talk. Obviously, we’ve seen a lot of trade come back online, that's a good thing in terms of our economy. In terms of our national security, what we asked for in that very first meeting with my Chinese counterpart back in June of last year was the reinstatement of the Defence Dialogue. You know, that matters. Because things are complex, that's when diplomacy matters. You know, hanging out with friends, that's not complex diplomacy, that's just going to the pub. Actually diplomacy, really complex diplomacy, is where there's a lot of equities in the relationship. And defence really matters. Getting the Defence Dialogue back on track, or getting it going again was what we sought, that's now happening. That's really important in terms of understanding each other and making sure there's not miscalculation. So I think when the right intent is brought to the equation, the capacity is there. And I think we are seeing that play out in the steps that we have taken and the outcomes that have been achieved in stabilising the relationship with China.

STROUD-WATTS: There's enormous complexity when it comes to Taiwan. And I did ask this question to the Ambassador a little bit earlier. We had Scott Morrison meeting with Tsai Ing-wen in the last 24 hours. Is that, plus events in the South China Sea, do we need to be concerned about the risk of military conflict?

MARLES: I don't think it helps for a person in my situation to speculate about that. Look, in terms of the way, you know, we analyse the world and therefore structure our behavior, just goes back to what I said earlier. Our interest lies in the maintenance of the rules-based order, the expression of that global rules-based on within our region, meaning things like freedom of navigation on the high seas. That's where our interest lies. That's what we are engaged in asserting. And will be our ongoing focus, as part of providing for the collective peace and security of the region in which we live. And yeah, I mean, that's where our effort is, that's where our intent is, and I wouldn’t speculate on things like that.

STROUD-WATTS: Deputy Prime Minister, I'm aware that I am supposed to let you go but very quickly, do we have an update when it comes to the Surface Fleet review? You received that last week. Can you confirm if we're cutting down on the number of Hunter-class Frigates?

MARLES: Again, good try. What I can confirm is we did receive the Surface Fleet review. People accused me of having a sneaky out clause when I said that we would get the review by the time Geelong had won the grand final. Of course that’s not how it played out and I'm not saying that that now means we've got another year in which to get this into place. We in fact got the Review, the Review was handed to government the day before the grand final, which was really the timeframe. It's a really good piece of work, let me say that. It requires a lot of thought in terms of thinking it through. You know, I said there will be a short sharp review and that's the case. There's not a lot of time here but there is a bit of time and we should be taking that time to make sure that we get the answers to what's raised in the Surface Fleet review right. And so, we will be providing, we will be releasing it with the Government's response to it early in the New Year. And, I mean, you can be assured that it is occupying, amongst a lot of other things, is occupying a significant amount of my attention right now.

STROUD-WATTS: I tried my best but I do have to let you go. I know you've got lots of pressing things on your agenda this week. Deputy Prime Minister and Defence Minister, really great to have you with us.

ENDS