What the defence strategic review got right—and got wrong

The central guidance in the defence strategic review is the introduction of the concept of deterrence by denial. I and my co-author Richard Brabin-Smith argued for acceptance of this concept in May 2021 in an ASPI publication titled Deterrence through denial: a strategy for an era of reduced warning time. We maintained that deterrence was more likely to work if Australia had a more certain ability to deny an attacker its military objectives. Solid deterrence provides a hedge against surprise, raises the cost to an adversary of action against our interests and, if sufficient, makes an enemy’s attack irrational.

The bottom line for defence policy is that, as confidence in deterrence by denial goes up, our dependence on early response to warning should go down. Moreover, it would be easier and cheaper to go to a higher state of alert with this concept than with one based on deterrence through punishment, which implies attacking the adversary’s territory.

The review appears to accept this and focuses on deterring a potential adversary with long-range missiles in our area of primary strategic concern, which it defines as encompassing the northeastern Indian Ocean through maritime Southeast Asia into the Pacific, including our northern approaches. Of course, were an adversary to gain access to a military base in a place such as the Solomon Islands or Vanuatu, we would have to contemplate a threat to our heavily populated eastern approaches. We simply cannot revert to a defence force that can only defend Australia and our immediate region.

Some issues in the publicly released version of the review didn’t receive sufficient explanation. For example, why didn’t it make a recommendation about whether we should go ahead with the $50 billion Hunter-class frigate program rather than pass the parcel to yet another independent analysis? And why was the army’s bid for new Abrams tanks not cancelled?

The review says the defence organisation is facing significant workforce challenges (which Defence Minister Richard Marles acknowledges) and that’s a recurring theme across the Australian Defence Force, the defence public service and defence industry. This is an acute issue for Defence. Also, the growth in star rank levels (brigadier equivalent and above) has been astonishing over the past two decades—June 2022 figures are navy, 58; army, 86; air force, 61; and defence public service, 156. The review’s recommendation for a comprehensive review recommended of the ADF reserves, including consideration of the reintroduction of a ready reserve scheme, is a good idea.

Another important workforce issue is not mentioned. Under what conditions would we need to mobilise not only the ADF and its supporting public service, including the intelligence community, and how would nationwide mobilisation work in a real security crisis when there would be mutual competition for key staff between military, civilian, defence industry and reserve forces? The review has a chapter on force posture and preparedness, but it doesn’t address the issue of mobilisation at all, even though it’s in the terms of reference and the defence organisation has been working on such an analysis for several months.

The review strongly criticises the Defence Department’s Capability Acquisition and Sustainment Group, saying its approach to capability acquisition is not fit for purpose and ‘the system needs to abandon its pursuit of the perfect solution or process and focus on delivering timely and relevant capability’. It says Defence’s acquisition process is not suitable given Australia’s strategic circumstances and there’s a clear need for a more efficient process. The volume and complexity of projects is overwhelming Defence’s capability system, its limited workforce and its resource base, resulting in delays and ‘strategically significant capability outcomes not being achieved in a timely manner, or at all’.

The review recommended that Defence, ‘where possible, acquire more platforms and capabilities via sole-source or off-the-shelf procurement, and limit or eliminate design changes and modifications’. The review team said it had seen ‘evidence of contractors managing contractors through several layers of a project’s governance structure with inadequate Commonwealth oversight’. It stressed that mechanisms to manage risk in acquisitions ‘do not serve us well in the current strategic environment’ because they’re ‘burdensome and misguidedly risk averse’.

The review concluded that options should be developed as soon as possible to change Defence’s acquisition system ‘so that it meets requirements and is reflective of our current strategic circumstances’. But it doesn’t address the National Audit Office’s demands for suitable checks and balances on the process.

So, the review marks a significant break from most of Australia’s defence policies in the past 50 years and recognises the serious deterioration in our strategic circumstances. While reinforcing many of the changes set out in the 2020 defence strategic update, it also proposes important new directions for the ADF’s structure and posture. Because the public version omits sensitive material, some of its recommendations are more implied than explicit.

In some respects, it’s a pity that the review dropped the expression ‘defence of Australia’, for there remains much continuity in the new era with the earlier policies. The key change is that the notion of the ‘core force and expansion base’ is no longer valid. Instead, the central idea for today’s circumstances, when extended warning time no longer applies, is the need for a contingency force with a surge capacity. The review goes a long way towards recognising that, although its lack of discussion of mobilisation is a weakness.

Under the old policy regime, Australia was able to get away with a small peacetime defence force, at peacetime levels of preparedness, capable of little more than routine peacetime operations and training, supported by peacetime intelligence and policy communities and a peacetime industry base. Clearly, this is no longer appropriate.

The review indicates that readiness and sustainability are now major concerns, saying in effect that a platform without a crew or weapons is a waste of time and money. Its call for an increase in aircrew numbers is a serious indictment of current Defence culture. The review doesn’t indicate the costs involved but implies they’ll prove significant.

The review gives welcome support for the acquisition of uncrewed platforms (submarines and the Ghost Bat autonomous aircraft are mentioned) and for a program to build highly capable precision guided weapons in Australia. This will enable us to move quickly to implement deterrence by denial, especially through long-range precision missiles. And it offers a more convincing mode for timely force expansion than the previous, largely implicit assumption that force expansion would be through the acquisition of additional, complex and costly major platforms. It’s perhaps significant that the review doesn’t propose acquiring further major platforms beyond those already planned, although the recommended independent analysis of the Navy’s surface fleet could well propose such changes.

In many respects, the army will undergo the most significant change, entailing a refocusing of priorities. Why hadn’t Defence itself realised that the direction in which the army was moving wasn’t well matched to Australia’s emerging strategic circumstances? There’s an echo here of the factors that led to the need for the 1986 Review of Australia’s defence capabilities: issues even then concerning planning priorities for the army had been much more contentious than those for the navy or the air force, and they had been left unaddressed.

Nevertheless, the new and rearticulated responsibilities for the army will increase its importance and relevance. Land-based long-range anti-ship missiles will have a vital part to play in deterrence by denial. Handling the technological complexities of precision targeting will be made easier by the transition to the review’s culture of an integrated force. It will be important for army’s anti-ship missile units to be well supported by the navy and other defence elements. And the strengthened focus on littoral operations is clearly relevant to Australian priorities. It’s important that the limits to what is intended are spelled out, because if it’s taken to the extremes the resource demands would be unrealistic, and the priority doubtful.

Explicit in earlier policies was the expectation that intelligence analysis would warn that Australia’s strategic environment was deteriorating, and that government would act on that advice. We have been concerned for some years that the machinery of government was slow to recognise strategic change and even slower to act. The review reinforces this concern. Throughout, for example, it emphasises the need for urgency. And there are many other examples of its concerns about out-dated policies and priorities for resources.

These are issues of governance, not necessarily only within the Department of Defence. The review emphasises the importance of taking an integrated, whole-of-government approach to national defence—as in the review’s title. We are entitled to ask what’s been going on for this statement of the obvious to require such prominence.

Looking at past governance issues is useful because it’s important not to repeat past mistakes. But concerns go beyond this. The most recent review of the Australian intelligence community was in 2017, well before today’s security perspectives developed. It would be timely to be reassured that our intelligence community is well placed to meet today’s demands, including through having a surge capacity to deal with 24/7 contingencies.

For Defence, there’s no unique approach to governance, and practice has tended to reflect the issues and priorities of the day, going back to the reforms of the early 1970s under Defence Minister Arthur Tange. The most recent examination was the first principles review conducted in 2015, long before today’s strategic anxieties developed. These observations, together with the review’s telling criticisms of current practice and explanation of the difficulties that lie ahead in implementing its recommendations, reinforce the need for a thorough examination of governance, both within Defence and within the machinery of government more generally, to ensure that it’s fit for purpose in today’s changed circumstances.

The review is a major step along the road of much-needed reform and the key will be in implementing its findings. The government must avoid past failures of not following through on the program.

And as always there’s finding the money. Defence will have to ruthlessly weed out lower priority proposals. It is reassuring that Prime Minister Anthony Albanese, when launching the review, acknowledged that increased defence spending would be required beyond the forward estimates. We must hope he keeps his word. History tells us that too often Defence has been a convenient milch cow when there are strong budgetary pressures elsewhere.

(A version of this article has appeared in The Australian.)