The government has accepted sweeping recommendations in a review of Australia’s strategic position and the military capabilities it needs to defend itself, with the main focus on building deterrence through the ability to strike a potential attacker at long range.

Prime Minister Anthony Albanese and Defence Minister Richard Marles today launched the public version of the defence strategic review produced by former defence minister Stephen Smith and former chief of the Australian Defence Force, Sir Angus Houston.

Acceptance of the recommendations signals a major restructuring of ADF capability and operations, including significant changes in the Army’s role. While it loses some of its planned armoured force, it takes on a key missile defence role. Key to the changes across the services will be the urgent development of weapons such as long range and high-speed missiles and the ability to manufacture them in Australia.

The report said that while Australia had for many years faced no direct military threat, it’s strategic circumstances and the risks it faced were now radically different.

‘Intense China-United States competition is the defining feature of our region and our time. Major power competition in our regions has the potential to threaten our interests, including the potential for conflict.’

China’s military buildup was the largest and most ambitious of any country since World War II and it was also engaged in strategic competition in Australia’s near neighbourhood.

Climate change would increase the challenges for Australia including the need for increased humanitarian assistance and disaster relief at home and abroad.

The report warned that Australia did not have effective defence capabilities to deal with these higher threat levels.

‘Although invasion of the Australian continent is a remote possibility, an adversary could seek to coerce Australia through cyber attacks, incursions in our north west shelf or parts of our exclusive economic zone, or disruptions to our sea lines of communication. By developing a resilient and capable ADF that can hold forces at risk in our northern approaches, Australia could deter attacks on Australian forces or territory.

In their report, Smith and Houston defined ‘deterrence’ as compelling an actor to defer or abandon a planned strategy of activity by having in place steps and responses to change its risk assessment and decision making.  ‘Deterrence can be achieved through raising the costs or reducing the benefits to an adversary through denial, dissuasion, or punishment,’ they said.

A central component of deterrence was resilience requiring the ability to withstand, endure and recover from disruption, and Australia must harness all elements of national power to achieve that.

DFAT must be given the resources it needs to lead a nationally determined and strategically directed whole of government statecraft effort in the Indo-Pacific.

The report also said the risk of nuclear escalation must be regarded as real and Australia’s best protection from it was the United States' extended nuclear deterrence, and the pursuit of new avenues of arms control.

The review said long-range strike and other guided weapons were fundamental to the ADF’s ability to hold an adversary at risk in Australia’s northern approaches.

‘To do this, the ADF must hold sufficient stocks of guided weapons and explosives ordnance (GWEO) and have the ability to manufacture certain items.’

But the review said the GWEO Enterprise set up to provide those weapons was inhibited by the way it was established and it lacked the necessary financial resources and the required workforce. And, said the review team, ‘It is yet to produce a strategy.’

The review ‘strongly recommends’ that a senior officer or official should be appointed with sole responsibility for leading this enterprise with an appropriate underpinning organisational structure.

It said Defence must deliver a layered integrated air and missile defence capability urgently to complement the Army and Navy’s short range capabilities. This must comprise appropriate command and control systems, sensors, air defence aircraft and land- and maritime-based missile defences.

Development of medium-range advanced and high-speed missiles must be accelerated.

Smith and Houston said the existing GWEO program was not structured to deliver a minimum viable capability in the shortest possible time but was ‘pursuing a long-term near perfect solution at an unaffordable cost.’ They said in-service, off the shelf options must be explored. That process should be led by the Chief of the RAAF.

They said they had undertaken detailed discussions in Australia and the US on the B-21 Raider long range bomber as a possible option for Australia, but it concluded that: ‘In light of our strategic circumstances nd the approach to defence strategy and capability development outlined in this review we do not consider the B-21 to be a suitable option for consideration for acquisition.’

The review stressed that the ADF’s key line of forward deployment stretched across Australia’s northern maritime approaches. Integral to it was the network of bases, ports and barracks stretching in Australian territory from the Cocos (Keeling) Islands in the northwest, through RAAF bases Learmouth, Curtin, Darwin, Tindal, Scherger, and Townsville.

The review said upgrades and development of the northern bases, ports and barracks should commence immediately.

Fuel distribution in the north must be made more effective. ‘Deep Defence engagement with the fuel industry is vital in our strategic circumstances.’

This must all be done in the face of significant challenges building the necessary workforce across the ADF, the public service and industry, the review said.

As a large island country, Australia was blessed with strategic depth and that was essential in the age of long-range precision strike which had brought the nation within range of regional capabilities, Smith and Houston said. That made a network of well-established bases and facilities in the southeast, along with HMAS Stirling naval base and RAAF Pearce in WA, critical.

A review is still to be undertaken of the Navy’s surface fleet.

There had to be a new approach to Defence’s evolution to the five domains of maritime, land, air, space and cyber and the ADF must rapidly evolve into a genuine integrated force able to harness effects across all those domains. Crewed and uncrewed undersea warfare capabilities must be optimised for persistent, long-range sub-surface intelligence, surveillance and reconnaissance, and strike. There must be enhanced ability to target and strike targets in all those domains.

Acquiring the necessary capabilities would mean cancelling, delaying or re-scoping Defence plans that did not advance the attributes of the integrated force. Cuts to cover part of the cost of new capabilities include reducing the number of heavy tracked infantry fighting vehicles to be bought for the Army from 450 to 129. Instead, the land force will be increasingly equipped with medium and long-range missile systems.

The government has accepted the review’s recommendations in the public version of the review report signalling a major restructuring of Defence capability to enable it to deal with major military threats.

Albanese and Marles said the government had identified six priority areas for immediate action.

They are the acquisition of nuclear-powered submarines through the AUKUS agreement, developing the ADF’s long range strike capability to improve deterrence and manufacturing these weapons in Australia, improving the ADF’s ability to operate from its northern bases, growing and retaining a highly-skilled workforce, improving the ADF’s ability to turn disruptive new technologies into ADF capabilities in close partnership with Australian industry and deepening of diplomatic and defence partnerships with key partners in the Indo-Pacific.

Albanese and Marles said realising the review’s ambitions would require a whole-of-government effort, coupled with a significant financial commitment and major reform.

They said the government was making the hard decisions necessary to cancel or reprioritise Defence projects or activities no longer suited to Australia’s strategic circumstances.

Marles said the review, and the Government’s response to it, was about maintaining peace, security and prosperity in the region. ‘There are a lot of tough decisions which need to be made, but in doing so, we are making them in the best interest of our defence force and our nation.’

‘Work to implement the review starts today, ensuring our ADF and our Defence personnel have the capability they need to keep Australians safe.’