ASPI Defence Conference, Q&A

SUBJECTS: AUKUS; AUKUS Pillar II; National Defence Strategy 2026;AI; Defence industry; Indo-Pacific; EU-Australia relationship; Critical Minerals

JUSTIN BASSI, EXECUTIVE DIRECTOR ASPI (HOST): Well, thanks, David, and thanks again for everyone being here. And Deputy Prime Minister, thank you for joining us. You're opening the conference floor.  As David set out, the theme of this year's conference is about how to go about securing Australia, securing the region, amidst an era of uncertainty. The National Defence Strategy that you published not so long ago is built on the premise that Australia's strategic circumstances are no longer just deteriorating, but the world has changed. We're living in complex and dangerous times. It was a pretty grim assessment in many ways, but a very realistic one. Instead of setting about a narrative of having regional stability, we've got regional instability, global instability. It's a matter of not retaining it, but regaining it. What do you say, Deputy Prime Minister, to those who argue that Australia isn't changing fast enough in response to all those changes and challenges? Are you confident that our region can avoid the military conflicts that we're seeing in effectively all other regions around the world.

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, it's a great opening question. So, thank you, Justin. And before I get to it, let me just acknowledge the Ngunnawal people, the traditional owners of the land on which we meet today, and pay my respects to the elders past and present. I want to thank David for his introduction. That's an unusual experience for me. We've known each other since 1988. I don't remember David introducing me before, but I do remember doing David's 21st birthday speech, so it is a long relationship. Justin, I mean, there's a couple of elements to that. Firstly, I suppose, to just reflect our world and our region: clearly, you look around the world—Ukraine, what is playing out in the Middle East—and the world is very volatile, and it is a challenging place. I would characterise a common theme as being the rules-based order under pressure. And in that sense, I think the rules-based order is under pressure in our region as well, and so I think it has certainly been a region where there is strategic contest. There's no doubt about that, and I think we are very focused, therefore, on making sure that we are playing our role in deterrence, which brings about maintaining peace and stability within our region. I certainly think that we can continue to do that, in the sense of maintaining peace and stability, but I don't take any of that for granted. That's got to be an effort that we are all constantly working on. And I think it does focus the mind, which is articulated in the National Defence Strategy, about what is our fundamental strategic risk and what it is that we are trying to do in terms of building a defence force to meet that risk. And that, I think, is really ensuring that we have the capacity to deter a potential adversary which might seek to coerce us. We have seen what's playing out in the Middle East: a sea line of communication a long way from here be turned off for a period of time, and we've seen the impact on our economy, petrol bowers, and the Strait of Hormuz having been closed for just a number of months. That is a very clear example of how reliant we are on open sea lines of communication, and I think that highlights where our most consequential strategic risks lie. So we need to build a defence force that can do that. We need a defence force which can make our contribution to that deterrence, but to the fundamental collective peace and security of the region in which we live. In terms of are we changing fast enough? Again, look, it's a good question. The honest answer to that is that we all know in this room, whether it's sort of more generally understood publicly, be that there are huge lead times in terms of building defence capability. You're talking about, at least in part, exquisite platforms, which take a long time to build. Yes, we are living in a world now where we are seeing much lower-cost platforms having massive asymmetric impacts upon those big exquisite platforms, but there is no one out there who's saying that you can do this with the low-cost smaller platforms alone. One needs to build an environment which has a balance of both, which means those big exquisite platforms still have a role, and they take time. And the best time for preparing for the mid-20s would have been 10–15 years ago. I wish that had happened back then. The fact of the matter is, it didn't. We said this a lot during the nine years of the Coalition government: we really saw a net $10 billion put into the planning decades, or the defence budget, and that was understanding largely the same set of geostrategic circumstances that we face today, compared to $120 billion over the planning decade that we have put into defence spending over the last four years. And it really does require that sort of movement. But having said that, while the best time might have been 10 years ago, the second best time is now. And I do have a feeling, a view, that we are working to build agency for our country moving forward into the late 20s and early 30s, for a more contested and potentially more difficult region. So we are moving as fast as we can, and I do have a sense of confidence that our country retains a sense of agency in the circumstances that we find.

BASSI: You have mentioned that some lessons in those conflicts in other regions are particularly both the modern military capabilities, as well as larger platforms. I agree that it's not a shift from one type of capability to another—it’s not mutually exclusive, or is part of the flip side to the debate about whether we're moving fast enough. Is there also a challenge to ensure that sections of the public are aware that doing nothing won't be the way to avoid conflict and contention that you see throughout the world?

MARLES: Yeah, I mean, again, good question. And it kind of goes to: do I think the public's mind is in the right place in respect of the circumstances that we face? I fundamentally do, actually. I think, I mean, there's a lot of ways you can kind of analyse that. Do I think that the average member of the public is across all the kind of changes that we're seeing in terms of warfare that's playing out in the Middle East and Ukraine? No, I don't. But do I think that there is a fundamental sense of unease out there about the state of the world? I do, and that feels to me to be rational. Do I think that gives a licence to increase defence spending? I do, and as a government we have. So I actually think that— and I am about to say this as a Defence Minister—but I think increasing defence spending is something that, at least as I go around the country, is well received. So I think the public mood is about where it should be. I also think this is worth reflecting on for people in this room. I do sit here feeling we are in a deteriorating strategic environment. I think, I think a very complex one, and I think there are many aspects of that which are quite threatening. That does not mean that I sit here thinking that conflict is an inevitability. I don't feel that at all. I think we need to be in a state of preparation, but I am very hopeful that, managed correctly and managed with the right preparation, we can have deterrence in place which maintains peace and stability. And in that sense, I don't think the public mood imagines that we are on the eve of war. And again, I actually think that's right as well. I think the public is fundamentally in the right place, and I think it is enabling us to, I mean—we are making the decisions that we are making based on how we see the world and trying to lead, and making sure that we are as prepared as possible. But as I say, I think those decisions are fundamentally well received by the Australian public.

BASSI: You mentioned social licence. I might use that to answer your question about AUKUS, which obviously gets a lot of coverage. It's quite interesting. We've got bipartisanship on AUKUS: the government, the opposition, as we saw this morning—states and territories—there's broad support for the need for AUKUS and its multi-generational national endeavour should help with social licence. But we also have former prime ministers on both sides—we've got Turnbull and Keating—we've got former ministers, we've got a former head of ASPI, who will all speak very negatively about AUKUS, which presents a risk for the social licence and public discussion on AUKUS. Can I ask how it looks from your perspective as the DPM and Defence Minister with responsibility for AUKUS? Do you ever look at it as saying, well, we have an absolute national security need for this partnership, this multinational partnership, but it might just be too difficult practically?

MARLES: AUKUS is happening. I definitely do think that we have a national need for this partnership. And actually, it’s pretty simple. I mean, I accept everything you've said—there are AUKUS critics and AUKUS sceptics, and that's fine. I mean, it's a big thing that we're doing, and public debate is part of what it is to live in our society, so I'm completely comfortable with that. But our job is to get on with it, and we are getting on with it. And it's not just now that it has bipartisan support—not just in Australia, but in the UK and the United States. And a really important milestone that we can add in respect of AUKUS—in regards to all three countries—we have now seen changes of government in terms of political persuasion in all three, whilst the commitment to AUKUS has been maintained in all three. I mean, that says something. But we've also got runs on the board now. I mean, a lot of water has gone under the bridge. There are 1,000 people in Australia today who are employed under the banner of AUKUS, whose jobs are about this program. All of them are making an investment of their professional lives in AUKUS. You can go down to the Osborne Naval Shipyard in Adelaide, and you will see a whole lot of things coming out of the ground—a Skills and Training Academy, for example—which, in just a few years' time, is going to be producing 1,000 apprentices a year. I mean, AUKUS is happening, and the milestones are being met. We need to be engaging in the public debate, but I'm here to tell you this thing is actually happening. And I think, in terms of the strategic rationale, it is happening because the rationale is so clear—and so clear for all three countries. From an Australian point of view, for all the words that you'll hear spoken by those who are sceptics of AUKUS, none actually engage, in my humble opinion, in the fundamental granular proposition—which is that we're a three ocean nation. The idea that we would not have a long-range capable submarine is preposterous. If we were to not have a long range submarine, we would be a country much more dependent on the United States. These are obvious statements I am making here. This is not grand analysis. These are points that people understand. And to have a long-range capable submarine in the 2030s and 40s, it will need to have nuclear propulsion. And the one avenue which gives us the greatest sovereignty to achieve that is through technology transfer from the United Kingdom and the US to Australia. It’s as simple as that. So if people want to make an argument about this—if they want to suggest that AUKUS is something else, or walk a whole different path—they are not engaging on the fundamental, which is us not walking down this path, is really for us to not have or to let go of a long-range submarine capability. And that would have an enormous sovereignty impact on the country. If you're not engaging in that, you're not really engaging in the substance of the debate. If you're not engaging in that, you're not really engaging in the substance of the fact, and to me, I think there are a couple of areas where probably more, how I see it nowadays, where inflection points have come down the path towards Australia, which is to say there are decisions that we have had to make, where either we pursue something or we don't, and the consequence is that we will rise in terms of our sovereignty or we will not be staying at the same level. Submarines are an example of it. The fact of the matter is, it's just going to be harder to operate submarines in the 2030s and 40s than it was in the year 2000. In order for them to be protected, they will need to be so much more capable. It's just a harder capability to engage in, and so we have a choice, which is: are we going to try to get on the horse of engaging in that capability, as hard as it will be in the future? And that will mean that we will be part of a smaller group of countries which do it, with more sovereignty as a result. Or do we let it go, in which case we are operating at a capability less than what we had in the year 2000? That's the fundamental choice. I think AI is actually that as well. I mean, AI might be a bigger kind of inflection point. Do we take steps which enable us to have greater agency in respect of AI and will see us climb the sovereignty ladder, or not, in which case we will find ourselves falling down? And to me, that's how I think about this. And I frankly don't think that under AUKUS, you engage in a whole lot of other conversations which are not about that. It's not about what is actually the fundamental point of issue here. And when you think about it. it's totally obvious, which is why any government in this country is going to be pursuing this program. I've given you Australia's strategic rationale, but there are equally persuasive arguments. From the UK's point of view: to be able to share the success of their Astute-class submarine with another country—and the sharing of strategic risk that goes with that—is so advantageous for them. I can't imagine a UK government not walking down that path. They will need to have a successor to this Astute-class. It's hugely advantageous for them to be doing it jointly with us. For the United States, to ultimately have a place of operation much closer to the critical theatre in the fulcrum of the Indo-Pacific, which is Perth, is again so important. There is massive strategic rationale for all three countries, which is why this thing is proceeding at pace and why it's going to happen. There'll be public debate, there'll be scepticism. I will still get a million views where people are going to be asking me: is AUKUS on its deathbed? I mean, AUKUS is on time, on budget, and happening—to answer those questions.

BASSI: You mentioned the importance of the tech transfer—what Australia and all three countries are getting out of it. You mentioned the need to get shorter and new development rather than the stuff in the past, and you also mentioned AI. So we've seen in recent days the export controls from the US put on AI models with Australia. Do you have concerns that that shows any vulnerability in the great alliance that we have with the US? Or do you think it's just some teething issues that should be expected from a new technology like this? And is there's more made out of it than there really should be?

MARLES: I certainly don't have any concern about what this implies in terms of our alliance with the United States. Actually, if you look at what we've been doing with export controls between ourselves and the United States, the last few years have been characterised by a reduction in those export controls and the building of a more seamless industrial base between Australia and the US. So I think we've made enormous progress. I know there is a commitment in the US—in Congress and in the Administration, Department of War—to keep that process going. So I feel very good about where we sit in a bilateral sense. I think teething problems is not a bad way to describe this. It is a new technology, so I'm pretty confident that we'll work our way through it. But I also think it highlights how important it is for though to build some agency in relation to this. AI has been a technology, issue, that has been looming for a couple of years, but it's now really manifesting. I almost feel that in the last couple of months. I'm finding myself going to meetings where it's in the talking points that's been prepared for me as kind of the last thing on the agenda when we head to the meeting, it's actually the only thing I will say. It has rocketed up the charts and writing, so the AI - I'm talking about this in a defence and national security sense, but actually you can talk about this more economy-wide. AI is a dramatic technology, is perhaps the way to put it. The offers incredible opportunities for humanity, but it is moving so fast, and it will have profound implications in terms of how human context plays out, and therefore profound consequences in terms of how we think about building, it will be laced throughout a defence force, so from an F35 to a submarine to an infantry soldier wearing an AI-enabled battle management system under the cover of an AI-enabled drone, AI will be present in respect of every aspect of how we fight, and so having agency in respect of that technology is going to be really important us as a defence force, and we are thinking a lot about this, and why don't really have any particular concerns about what's played out the last couple of weeks, and I think teething problems is actually a good way to describe it. It is, though, just a little bit of a reminder we must gain some agency here. 

BASSl: Australia has a role to play. I’m conscious of your time and there might be a couple of questions from the audience. Does anyone have a question? 

SPEAKER: I'm an academic from the Philippines. I will be one of the speakers later about middle powers. Well, you referred about the instability and uncertainty generated by wars that are happening outside of the region, but of course the real danger to the international order is happening within our region in a form of a regional power, of course, that's moving and expanding from its coast to what we call the first island chain. So you are now having what we call grey zone operations being conducted against my country, against Japan, and also against Taiwan. And of course the long-term goal of this regional power is to push our common ally, the United States, as the strategic offshore balancer that had maintained balance in the Indo-Pacific region. So, again, why the reference to conflicts that are happening outside the region? Why not focus on, of course, what is very apparent in our part of the world?

MARLES: Well, a very, very pertinent question and let me say, we are very focussed on the Indo‑Pacific. And really I think that the fundamental thesis of the Defence Strategic Review back in 2023, which is reiterated in both NDS 24 and NDS 26 is a need, for Australia, a focussed Defence Force. Not how we would have gone about in the past, which is to have what we might have described as a Defence Force which is capable of doing a number of things in a number of different parts of the world, but having a focussed Defence Force that can focus on our region, and that is absolutely what we are seeking to do. And so to be completely clear, we are laser-like focussed on our region. The bulk of our activity, overwhelmingly the bulk of our activity is about what's happening in our region. And even in respect of how we would conceive of what's going on in Ukraine is about the way in which it might feed into the Indo-Pacific. We see Ukraine as relevant because the moment China and Russia signed a no‑limits agreement on the eve of Russia's invasion of Ukraine became a moment that what happened in Ukraine would see lessons learned that would be applied in the Indo-Pacific. And so that's why I think, as Indo-Pacific countries, we've got a stake in what's going on there. But to be clear, we are very focussed. 

Our relationship with the Philippines now is at a high water mark. Gilberto Teodoro, the Secretary of National Defense, I speak with frequently. He'll– I don’t know if it’s public, but he is going to be in Australia in the next month or so, and I’m very much looking forward to catching up with him then. We – to give you a sense of it – every second year Exercise Alon, which is the main bilateral exercise that we do with the Philippines, is the largest exercise that we do outside of Australia in that year. Exercise Balikatan, which is the main Filipino‑American exercise, we've had a bigger contingent at Balikatan this year than we've ever had before. We're doing more in the Philippines, we've got a more enduring and persistent presence in the Philippines today than we've ever had. But we're doing more in the Philippines with others, meaning we engage more with the Philippines, the US, and Japan than we’ve ever before. Perhaps, actually ourselves, the Philippines and Japan. So the relationships– we want to see America maintain its place in our region. We consistently articulate that. And we would, for all the commentary that goes on there, we would kind of consistently observe that America's footprint in the Indo-Pacific remains the same, if not growing. But we are really focussed on building our relationships with the Philippines, but with Japan, with Indonesia, Singapore, Malaysia, and I could keep going. All of our relationships with all of these countries are at high water mark, and it is very much about our sense of the significance of what's playing out in our region. 

BASSI: I might take, with your blessing, a couple of questions at the same time to allow you to answer–

SPEAKER: My question is related to the European Union and the recently finalised European Security and Defence Agreement and my question, it's more like a broad framework, something perhaps a platform to start with – where do you see the priorities in the relationship with the European Union concerning security and defence? And is the instrument of SAFE, which could provide tangible results, and perhaps also opportunities, something that was also in negotiations? 

SPEAKER: I noticed, Sir, your comments used AUKUS and essentially made that interchangeable with AUKUS Pillar One, and really didn't hear much about the Pillar Two aspect. And given the focus that we've heard about Pillar Two being focussed on autonomous undersea warfare, is there some potential more ability to bring focus to Pillar Two to support Pillar One and have some synergy there? Very interested in your thoughts on Pillar Two. 

SPEAKER: Interested in the fundamentals, there's a great deal of talk about supply chains, a great deal of talk about critical materials, but I note that in defence where you have a priority on missiles, antimony, which is binary to the production of bullets, but also important in semiconductors, quantum computers, and we need to be working with allies, because you don't need that much of it. Would you talk a little bit about the fundamentals of these supply chains and the chemical and critical material inputs to the supply chains that are essential for domestic production?

BASSI: Thank you. I'm conscious of your time, so short bursts from you on Europe, Pillar Two and supply chains. 

MARLES: Short bursts is asking a lot, I'll do my best. That’s perfectly appropriate. Antimony is a really critical input to those capabilities that you said, and we're very much aware of that. In all that we're doing with our critical minerals MOUs – and the first of those was with the United States, but we're also doing working with the UK and others – is to try and make sure that we are building not just the extraction or the mining of the resource, but it is the processing of it so that we are able to have some sense of a secure and safe supply chain, if I could put it that way, which is feeding into those capabilities. And I think the bit of the breakthrough, actually, and we were really grateful in this sense to the Trump administration, because they've been excellent on this point, is to understand that we need to be thinking about critical minerals in the context of national security and defence. Once you start thinking about in those terms, you really do kind of get progress in a different way, and we've been very pleased with what we've been able to achieve there. 

In terms of AUKUS, you're right to ask about Pillar Two. We were really pleased at the AUKUS Defence Minters’ Meeting in Singapore a few weeks ago that we were able to announce our first marquee project, which was around having cutting edge payloads and enabling systems on autonomous undersea vessels, or vehicles. And that there is a synergy in that in respect of what we're doing in AUKUS Pillar One was very much in the front of our mind. So I mean, AUKUS Pillar Two isn't necessarily limited to the undersea domain but it is nice, if you like, and there is a synergy associated with the fact that the first marquee project of AUKUS Pillar Two is something which is very complimentary to what we're doing in AUKUS Pillar One. But fundamentally, what we want to see with AUKUS Pillar Two now is that this gives it some momentum, so we really can get our three innovation systems, is probably how I put it – defence science and those agencies which are about getting innovation into defence industry – that we are seeing a much greater level of cooperation, harmony actually, amongst those agencies, so that we can be stimulating the industrial bases of our three countries to produce those cutting edge capabilities and get them into the hands of the warfighter as quickly as possible. 

In respect of Europe, I think it was a really good question earlier from the Philippines – our focus is the Indo-Pacific, but the world is so much more connected now that one can't intelligently deal with all we need to in respect of the Indo-Pacific without comprehending the broader vision and without comprehending the importance of Europe – NATO, but very much Europe. That's why we've signed the security agreement with the European Commission. SAFE, we do see that we hope there is opportunity, because we really think what this will enable is much greater defence industrial cooperation between Europe and Australia, although there already is a lot when you start thinking about it. I mean, we've got Kongsberg who's about to open up a facility in the Hunter Valley, but you look at Thales, for example, who've been around for a long time building Bushmasters in Bendigo, and Rheinmetall, Navantia, our Navy has a very significant Navantia component. I mean, European defence industry is already playing a very significant role in our Defence Force, but we think there is enormous opportunity going forward. But it's not just that. I was in Europe a couple of weeks ago, we did a 2+2 with Germany, which says something. We haven't– this was only the second in-person 2+2 we’ve ever done with Germany. We see a lot of upside opportunity in the Australian-German bilateral relationship that you wouldn't have heard an Australian Defence Minister talk about that in quite the same way before. We did our 2+2 with the UK, which is obviously critically important. But I visited Finland, and I went there because we see that Finland is really a leader in terms of civil defence preparedness. In so many ways, and this is highlighted in the National Defence Strategy for the first time, when you look at the Nordic peninsula, a population pretty similar, actually, to Australia's, we think that there is a lot for us to learn about a kind of population of our size, dealing with the sorts of challenges that we're dealing with from the experience of those countries. And that just highlights that there is so much fertile ground in terms of our defence and security relationship with Europe. Now that, as I say, is us, we think, intelligently going about this, focussing on the Indo-Pacific, but in a much more connected world it does imply a bigger relationship with Europe.

ENDS