Avoid the mistakes of the past and build what we need, we can sort out the rest later

Since the release of the 2016 Defence White Paper and supporting 2018 Defence Industry Capability Plan, sovereign defence industrial capability and meaningful manufacturing capability has firmed as one of the core priorities for Australian governments of both political persuasion. 

The advent of the COVID-19 pandemic and the startling recognition by many both within the strategic and national security policy communities and the broader Australian public have highlighted the startling vulnerability of the nation as a result of mounting deindustrialisation and deskilling, leaving us nothing more than a glorified mine and farm for the established and emerging industrial powers of the Indo-Pacific and around the globe. 

Russia’s invasion of Ukraine and combined with mounting economic stagnation and deindustrialisation, concerns about climate change that have hindered many Western nation’s capacity to rebuild industrial capacity due to the unreliability of renewable energy to support heavy industry, among others, have further undermined the world’s great powers and are serving to dramatically shift the global balance of power. 

This push, summarised by the concept of “reshoring”, has emerged as a powerful policy mechanism for enhancing national security, limiting a nation’s dependence on easily contested or constrained global supply chains. 

Former US Defense Department official Jerry McGinn, who is now the executive director of the government contracting centre in the School of Business at George Mason University, in a Defense News piece around the time of COVID-19, unpacked just how the model can be best used by the US and Australia to fast track economic growth, boost employment, and secure national interests. 

McGinn explained, “US government officials have called for the ‘reshoring’ of domestic industrial capacity in several areas in recent weeks. Whether it is the production of pharmaceuticals and personal protective equipment, or the development of microelectronics, specialty chemicals and materials, calls for a significant increase in US manufacturing capabilities are coming through loud and clear. This makes complete sense, but how do we do this reshoring?

“The solution is not an autarkic ‘Buy America’-only approach that would be counterproductive to our long-term economic health. Instead, we need to have a laser focus on getting out of the China business with respect to industrial capabilities critical to national security and, in many cases, doing that with a little help from our friends.”

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We have a history of cutting our nose off to spite our face

Where the United States has in some capacity bought what it needs based on strategic assessments, Australia has, for much of the post-Cold War era, often failed to acquire platforms and capabilities needed to secure our national interests, largely as a result of the “peace dividend” and the elated period of hubris which swept through the Western world. 

Look no further than the nation’s local build of three Hobart Class destroyers, which had an original option for four vessels to replace a fleet of three Perth Class destroyers and four Adelaide Class frigates — this short-term thinking had a detrimental impact on the nation’s naval shipbuilding capability, let alone our naval capability, something highlighted by former Chief of Navy, David Shackleton, who said: “By 2006, when the RAN’s final Anzac frigate, HMAS Perth, was commissioned, the class had 64 cells, but the ESSMs they contained were to be used for self-defence. In the interim, two of six older Perry Class ships were decommissioned to provide funds to upgrade the remaining four, including adding eight VLS cells. That gave each ship 48 cells, and an improved capability with the longer-range SM-2. After modernisation, the Perry Class went from six ships to four, but the total number of cells went from 240 to 192.”

But Navy isn’t alone in presenting these challenges to the nation’s strategic planning and defence industrial capability, particularly as the geostrategic situation continues to devolve across the Indo-Pacific. 

Army has been at the forefront of much of the speculation around the release of the Defence Strategic Review, with expectations that a number of programs across the joint force would face some cuts to reallocate funding to speed up and beef up the firepower available to the Australian Defence Force. 

Front and centre of this has been Army’s push to recapitalise and modernise its Vietnam-era M113 armoured personnel carriers with a variant of either the Rheintmetall Lynx or Hanwha Redback series of vehicles to be locally built in Queensland or Victoria as part of the multi-billion dollar LAND 400 Phase 3 program. 

Cutting the order will only increase the cost, schedule slippage, and delays

As part of the planning process, Army has conducted detailed tactical and strategic assessments which has identified it needs a core armoured fighting vehicle force of 450 vehicles to replace the now hilariously obsolete M113 vehicles still in the Army’s inventory. 

With current estimates for the program being valued at anywhere between AU$18–27 billion, no one can quibble with the amount of money being invested to build the vehicles locally, however, that is the key point, we’re not simply buying the vehicles off an existing production line, we’re establishing an in-country capability that provides the nation with tactical and strategic depth that few countries have. 

Cutting the planned order of 450 vehicles would absolutely drive the per-unit cost of the vehicle up, due to diminished economies of scale, would have a significant impact on the security of the workforce, unless, despite the deteriorating strategic environment, we slowed the tempo of delivery (again, causing other issues), while also impregnating the production process and supply chain with inefficiencies that would have significant impacts on the quality of the vehicles. 

The solution? Build to the original order of 450 vehicles Army has identified that it needs, should the Defence Strategic Review call for a reassessment of the Army’s armoured fighting vehicle requirements, the surplus can be put into storage to provide for attrition loss, or, better yet, as has been established through the recent announcement that Germany would acquire more than 100 Australian-built Boxer Combat Reconnaissance Vehicles for the German Army. 

Defence Industry Minister Pat Conroy highlighted the importance of this milestone in his statement, stating, “We are excited about the prospect of Boxers for the German Army being built in Brisbane, using suppliers across Australia to assist in the production. This export opportunity would secure well-paid secure jobs in Queensland and across the country, helping to build Australia’s defence industry and boost our economy.”

This establishes a precedent for Australian industry to advocate for and of critical importance, demonstrate that Australian industry, when given the opportunity can indeed compete with the rest of the world, they just need to be given the opportunity, the environment and, the certainty by government that Australia will now be buying what we need, rather than what is the minimum “nice to have” capabilities. 

Lessons for Australia’s future strategic planning

There is no doubt that Australia’s position and responsibilities in the Indo-Pacific region will depend on the nation’s ability to sustain itself economically, strategically and politically in the face of rising regional and global competition.

Despite the nation’s virtually unrivalled wealth of natural resources, agricultural and industrial potential, there is a lack of a cohesive national security strategy integrating the development of individual, yet complementary public policy strategies to support a more robust Australian role in the region.

While contemporary Australia has been far removed from the harsh realities of conflict, with many generations never enduring the reality of rationing for food, energy, medical supplies or luxury goods, and even fewer within modern Australia understanding the socio-political and economic impact such rationing would have on the now world-leading Australian standard of living.  

Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia, this is particularly well explained by Peter Zeihan, who explains:

"A deglobalised world doesn’t simply have a different economic geography, it has thousands of different and separate geographies. Economically speaking, the whole was stronger for the inclusion of all its parts. It is where we have gotten our wealth and pace of improvement and speed. Now the parts will be weaker for their separation."

Accordingly, shifting the public discussion and debate away from the default Australian position of "it is all a little too difficult, so let’s not bother" will provide unprecedented economic, diplomatic, political and strategic opportunities for the nation.

As events continue to unfold throughout the region and China continues to throw its economic, political and strategic weight around, can Australia afford to remain a secondary power, or does it need to embrace a larger, more independent role in an era of increasing great power competition?

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch This email address is being protected from spambots. You need JavaScript enabled to view it., This email address is being protected from spambots. You need JavaScript enabled to view it., or at This email address is being protected from spambots. You need JavaScript enabled to view it.. 

Stephen Kuper

Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.

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