Balancing speed and long-term manufacturing capability will give us the edge

Whether it is the election of Donald Trump, the COVID-19 pandemic, the Russian invasion of Ukraine or the seeming ineptitude of economists and policy makers to manage national economies, in just the past five years the world has dramatically and irrevocably changed.

This global shift has equally heralded the rise of an increasingly multipolar world, driven in large part by the rise of ancient powers, namely China and India, flanked by an equally formidable array of emerging powers including Indonesia, Vietnam, Brazil, South Africa, and a myriad of others across the globe.

In the face of this rapidly evolving — and as the government is often fond of reminding us — deteriorating strategic environment, Australia’s strategic thinkers and policymakers have been forced to improvise, adapt, and overcome in order to adjust to the new paradigm and its implications on national security.

While for many, the traditional concept of “national security” has generally been based in the “hard power” concepts of conventional economic and military power, espionage, and intelligence factors.

These quantifiable factors that can be analysed and tabulated to give an understanding of one nation’s power, relative to others. However, as the global balance of power continues to deteriorate and evolve into a multipolar system, many thinkers have called for the West to embrace a more holistic view of national security.

This push has been further reinforced by the growing prevalence of “grey zone” and hybrid operations by various adversaries which seek to undermine the social cohesion, the political unity, economic resilience, and competitiveness, effectively bringing to bare the whole scope of national and government power to bring an adversary to its knees.

However, as the COVID-19 pandemic revealed, the globally dispersed network of complex, “just in time” supply chains and the eternally forgotten about, despite the rhetoric concept of “national interest”, often leaves many nations incredibly vulnerable to shocks.

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To this end, both the COVID-19 pandemic and Russia’s invasion of Ukraine, coupled with mounting economic stagnation and deindustrialisation, in the name of globalisation, beginning in the 1980s and continuing unabated through the 1990s and into the early 2000s, have further undermined the world’s great powers and are serving to dramatically shift the global balance of power.

In response, the Albanese government’s conceptualisation of National Defence outlined in the recently released Defence Strategic Review, explains: “National Defence must be part of a broader national strategy of whole-of-government coordinated and focused statecraft and diplomacy in our region. This approach requires much more active Australian statecraft that works to support the maintenance of a regional balance of power in the Indo-Pacific.

“Key to successful outcomes in implementing National Defence will be: national leadership, statecraft and diplomatic proficiency; accelerated military preparedness; economic stewardship; scientific and technological prowess; and climate change action and domestic resilience. It will be challenging to effect ... Australian statecraft now requires a consistent and coordinated whole-of-government approach to international affairs and the harmonisation of a range of domestic and external national security portfolios, from trade and investment to education, minerals and resources, clean energy, climate, industry, infrastructure and more.”

However, in spite of this recognition, the government, in the Defence Strategic Review, is seemingly shifting away from the large-scale nation-building, reindustrialisation programs of the immediate past, in favour of expedited, seemingly foreign-built capability acquisition.

Shift towards ‘re-shoring’ to enhance the nation’s resilience

Ironically, for a government that has billed itself as government for “blue collar” workers committed to delivering the National Reconstruction Fund, a $15 billion multi-layered policy program designed to “provide finance for projects that diversify and transform Australia’s industry and economy”, the government, in the DSR, has shifted towards an expedited program of foreign acquisition.

Going further, the National Reconstruction Fund identifies a number of key areas of focus, namely:

• Renewables and low emissions technologies (up to $3 billion for renewables and low emissions technologies);
• Medical science ($1.5 billion for medical manufacturing);
• Transport ($1 billion for critical technologies and $1 billion for advanced manufacturing);
• Value-add in the agriculture, forestry and fisheries sectors ($500 million for value-adding);
• Value-add in resources ($1 billion for value-adding in resources);
• Defence capability ($1 billion for critical technologies and $1 billion for advanced manufacturing); and
• Enabling capabilities.

Despite this rather diverse list which focuses on a number of nebulous concepts, it seemingly flies in the face of the government’s emphasis on expedited capability delivery.

It should be said, that while I completely agree with emphasising the rapid delivery of expanded capabilities due to the rapidly deteriorating circumstances, as Ukraine has demonstrated, we face the prospect of a protracted conflict, no matter where it is, necessitating a broader rethink in the way we prepare.

A perfect example is the seemingly guaranteed reduction in the number of Hunter Class frigates as a cost-saving measure to “reprioritise” funding to “faster” acquisition choices to beef out the Navy’s punching power — missile capacity aside, the industrial capacity being built represents a major opportunity cost that appears to be overlooked.

This is something that can be positioned to deliver an in-country capability that will provide redundancy, national resilience, and employment opportunities that can see the nation through any potential conflict.

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.”

Certainty is fast emerging as the foundation for developing a resilient and competitive Australian economy and the industrial base is fundamental not only to enhancing Australia’s national security under the guise of “National Defence” but equally to ensuring that Defence has the workforce, the industrial base, and the capabilities it needs to effectively enforce the “hard power” elements of the nation’s new defence strategy.

We have the mandate, now deliver a whole-of-government approach

Both the Defence Strategic Review and the National Reconstruction Fund establish an important mandate that can help mold the nation’s broader resilience and sovereignty in the face of mounting domestic and international challenges.

This empowering mandate provides for the development of a true industry policy, one that goes beyond the ideological capture of both sides of Australia’s policymakers and can position the nation to truly embrace the opportunities of this next great industrial revolution.

Major General (Ret’d) Marcus Thompson explained in a piece for ParaFlare the logic behind this thinking, despite public criticism around the government’s rhetoric, not necessarily correlating with actions, particularly as it relates to a whole-of-nation and whole-of-government approach, stating: “Defence, alone, cannot build the capabilities nor the workforce required to meet these challenges head-on. This will take a significant national effort, and there is much to be done — including challenging policy and cultural changes to quickly get the required capabilities into the hands of our warfighters.”

Going further, Thompson adds, “While the review has been developed relatively quickly in contrast to previous Defence reviews, members of Defence industry must be thinking it’s about time ... The Minister for Defence Industry, the Hon Pat Conroy MP, has committed to a sovereign defence industrial base, and this must surely be the priority for government as it sets a course for a ‘Future made in Australia’. The government must not take a backward step in the pursuit of homegrown Defence assets and capabilities.”

Fundamental to building the industrial base needed to provide Australia with the economic and industrial resilience necessary to enforce the concept of “National Defence” is an environment of certainty.

Thompson explains the importance of certainty and its impact on Australia’s defence industrial base, stating, “Australian Defence suppliers have been subject to sustained uncertainty through the pre-election caretaker period, the inevitable hiatus of a new government, the requirement to await funding certainty from the supplementary FY23 budget, and then delayed acquisition decisions in anticipation of the review. For many in Australia’s defence industry, this must seem at odds with repeated calls for a sense of urgency regarding the revision of ADF capabilities and force structure.”

This emphasis on certainty is reinforced by empowering policy systems and structures which enhance Australia’s areas of natural competitive advantage, while also serving to open doors to industries of the future, in line with the government’s ambitious “Future made in Australia” agenda.

However, certainty alone can’t guarantee the development of a sustainable, competitive industrial base. We equally need a broader realignment of the nation’s industrial policy and industrial relations systems combined with a shift in Australian business’ attitude and appetite towards risk and government’s appetite for partnering with industry to deliver the desired outcomes.

Final thoughts

The rapid devolution of our strategic environment, coupled with the advent of grey zone warfare and hybrid conflict being leveled against us requires a dramatic reimagination of our concept of national security and sovereignty.

This shift is perhaps best explained by US academic Charles Maier, who unpacks the concept of national security as: “National security ... is best described as a capacity to control those domestic and foreign conditions that the public opinion of a given community believes necessary to enjoy its own self-determination or autonomy, prosperity and well-being.”

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.”

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. or at This email address is being protected from spambots. You need JavaScript enabled to view it..