iscover
The world we once knew is now well and truly a thing of the past and Australia has been slow in responding to the myriad of economic, political, security and social challenges we face. Once again, we are being warned to prepare and respond with a comprehensive strategy – the question is, will we?
It is no secret that Australia is confronting a rapidly shifting strategic environment, marked by intensifying geoeconomic threats and growing uncertainty in the global order. As a mid-sized power with deep trade links, an open economy and a reliance on a narrow set of export commodities, Australia is particularly exposed to external shocks and coercive economic behaviour.
The most immediate concern stems from our well-documented economic over-reliance on China, simultaneously both our largest trading partner and our greatest strategic challenge, leaving Australia vulnerable to strategic manipulation and trade disruption in times of political and geostrategic tension.
At the same time, traditional assumptions underpinning Australia’s security, particularly its alliance with the United States, are being tested. Shifting US domestic priorities and the increasing complexity of regional and global power dynamics raise questions about long-term strategic reliability.
Compounding these geopolitical concerns is Australia’s laughably low levels of economic complexity and industrial capacity, coupled with sluggish productivity growth, especially in non-market sectors such as health and education, with these baked in structural issues ultimately serving to reduce national resilience and the ability to adapt to emerging threats.
Australia’s position is further challenged by under-utilised, unrealised and often overlooked potential in areas critical to future security, such as the supply and processing of strategic minerals. Despite having vast reserves of key resources, insufficient domestic industrial capacity has left the nation vulnerable to global and regional supply chain disruptions in times of crisis.
Together, these factors underscore the urgency for a coherent national geoeconomic strategy, one that can strengthen Australia’s sovereignty, build resilience and ensure continued prosperity in an increasingly contested Indo-Pacific region.
Highlighting the urgency for such a shift in Australia’s policy making is Australian Strategic Policy Institute senior fellow Marc Ablong in a piece titled The gathering storm: urgent geoeconomic threats and Australia’s national security crisis, in which he articulated the nation’s growing need to accept that the post-World War Two economic, political and strategic order no longer exists.
Ablong began his thesis saying, “Australia in 2025 stands at a perilous crossroads. Once-clear boundaries between economic prosperity and national security have blurred. The collision of severe geoeconomic headwinds with escalating military tensions and rapid and diffused technological advancement demands immediate, unwavering, and bold action.”
“To do so, Australia must create a strategy focused on building economic independence. This will involve diversifying its economic engagement away from China, forging new partnerships and strengthening existing ones. It must build resilience against crises, secure its supply chains and improve self-reliance, while also introducing economic reforms,” Ablong added
Yet another call to arms
Ablong certainly is the first person to call for Australia’s policymakers to embrace the opportunity and possibilities presented by the development of a cohesive, all-encompassing national strategy focused on building economic independence, national resilience and enhanced security.
This call to action very clearly echoes the continued and unheeded calls by the late senator for NSW Major General (Ret’d) Jim Molan who used his position and status to advocate for the development and implementation of a National Security Strategy. This advocacy was matched by similar efforts by Griffith Asia Institute’s Dr Peter Layton and his calls for the formalisation of a national “grand strategy” to address our very clear shortfalls.
Ablong articulated the growing challenges facing Australia, beginning with the central pillar of national security, the economy, saying, “The dominant geoeconomic threat is the intensifying trade war between the United States and China. Australia’s over-reliance on China for trade has become a sword of Damocles over our national life. Any severe economic slowdown in China will devastate Australian prosperity overnight, slashing demand for critical exports, such as iron ore and coal.”
“The sheer size of our economic dependence inhibits both word and deed lest the largesse be revoked. The shadow of protectionism and unpredictable economic coercion hangs ominously over our open, trade-dependent economy, threatening to unravel decades of growth and reshape our national interests,” he added.
This only gets further complex and troublesome as the prevailing economic order established following the end of the Second World War accelerated in the decades immediately following the collapse of the Soviet Union, driven in large part by the continuing trade wars driven by US President Donald Trump’s “America First” push to reshape and redefine the global order.
Ablong detailed this reality, saying, “Worse still, the current trade war risks giving way to real war. Australia’s dependence on the US strategic alliance for national security is increasingly fragile. The Trump administration’s foreign policy shifts have shaken the foundations and reduced national trust in the US. Growing Australian doubts about the US’ security guarantees coincide dangerously with rising nationalist sentiment in our region, leaving us exposed and vulnerable.”
Compounding these challenges further is the now well-documented state of Australia’s economic and industrial base, which has been steadily hollowed out and atrophied since the mid-1990s as the world and Australia, in particular, was seduced by the promise of cheap consumer goods, skyrocketing profits and “just in time” supply chains trading security for expediency.
“Australia’s economic fragility is laid bare by our narrow export base, too heavily reliant on mining and agriculture. Now ranked 105 out of 132 countries on the Economic Complexity Index – lowest among OECD nations – our economy is shockingly unprepared for global volatility. Since 1995, we have plummeted from 55th place, due to the trap we placed ourselves in through our commodity-dependent economy and its vulnerability to price shocks. Our OECD peers have long since escaped that trap,” Ablong said.
The reality and true costs came home to roost during the COVID-19 pandemic when Beijing set its sights firmly on Australia for daring to question the official narratives around the origins of the COVID-19 pandemic, with Beijing targeting the “softer” side of our exports, namely agricultural exports like barley, rock lobster and wine, but conveniently, not our coal or iron ore.
All of this comes before the significant structural challenges increasingly baked into the national economy, ranging from stagnating, if not collapsing productivity, plummeting per capita gross domestic product, all of which is only further compounded by the mounting and accelerating capital shallowing outside of investing into our “holes” and “houses” banana republic economy.
Ablong detailed this, saying, “Furthermore, there’s been a lack of capital deepening, investment in capital and technology that equips workers to be more productive. High population growth, driven by immigration, hasn’t always been matched by sufficient investment in infrastructure, housing and business capital, leading to a lower capital-to-labour ratio. A decline in business dynamism, slower adoption of digital technologies by firms beyond the frontier and, in some cases, lingering effects of global economic shocks and domestic disruptions have compounded this challenge.
“At the same time, Australia’s innovation strategy has been hindered by several persistent challenges including, for example, a focus on adopting existing technologies rather than developing new ones, and underinvestment in research and commercialisation (government research and development expenditure as a percentage of GDP has declined from 0.56 percent in 2007–2008 to 0.52 per cent in 2024–2025).”
As with previous attempts and advocacy efforts to develop a cohesive national strategy, Ablong reinforced the necessity of developing such a strategy while also articulating the central pillars that are essential to moving forward, saying, “Australia’s sovereignty and survival demand an immediate, comprehensive strategy founded on nine pillars ... Crucially, Australia’s national policy frameworks remain fragmented, treating economic and security issues as separate silos. This dangerous disconnect leaves the nation blind to the complex, intertwined forces reshaping global power and commerce.
“The absence of a clear, unified national geoeconomic strategy, bound to a national security strategy of equal urgency and importance, is a strategic blind spot that exposes Australia to catastrophic disruptions and squanders our economic and security strengths.”
Identifying the core pillars of our national strategy
At the core of Ablong’s push is a nine-pillar strategy to secure Australia’s sovereignty and future amid rising global risks. At its core, the strategy calls for urgent diversification of Australia’s trade and industrial base to reduce overdependence on China and commodities, while expanding ties with partners such as India, Indonesia and the EU.
It urges major investment in advanced manufacturing, biotechnology and digital industries to build a resilient domestic economy, Ablong articulated this shift, saying, “It [Australia] must end the perilous overdependence on China and a narrow commodity base. This doesn’t mean foregoing trade with China completely, but it does mean aggressively expanding trade ties with Indonesia, India, the European Union and other likeminded nations. We must truly (and massively) invest in advanced manufacturing, biotechnology and digital industries to build a resilient, complex domestic economy capable of withstanding global shocks.”
A central component critical to the success of this diversification is the need for Australia to forge strong strategic and economic alliances, deepening ties with the US, Japan, South Korea, Indonesia and Pacific nations. Economic statecraft, maximised through trade deals, aid and investment policy should be used to bolster national interests.
Ablong added, “Australia must wield its economic and diplomatic tools aggressively to defend its interests and shield itself against the increasing economic and security dominance of authoritarian states such as China. We must build an ironclad coalition for economic and security resilience by maturing and deepening our alliance with the US, and developing geoeconomic and geopolitical alliances with Japan, South Korea, Indonesia and Pacific countries. We should use current trade agreements, investment policies and development aid as weapons of statecraft.”
Securing critical supply chains is paramount. This includes expanding the Critical Minerals Strategic Reserve, building strategic stockpiles and boosting domestic processing capacity in energy and essential goods. National resilience must be built through multi-use infrastructure and integrated crisis preparedness.
Australia is uniquely positioned and endowed to not only build a resilient and sustainable supply chain but also do so in a globally competitive manner thus offsetting any concerns about economic purists concerned with perceptions about “interfering in the market”.
The plan calls for greater self-reliance by investing in domestic defence, infrastructure, research commercialisation and workforce skills. Innovation should be nurtured by linking universities, industry and government, removing barriers to entrepreneurship and increasing research and development funding.
Building on this, Ablong added, “Australia must take immediate, decisive steps to guarantee access to critical minerals, energy (including gas and refined and crude petroleum) and essential goods. We should build domestic production and processing power, diversify sourcing and establish strategic reserves and stockpiles. The recently announced Critical Minerals Strategic Reserve must be rapidly expanded and fully funded to cement Australia as a reliable global supplier, and we should use it to build security partnerships that deliver on stability and security in the region.”
Artificial intelligence is seen as central to productivity and industry transformation, including developing domestic chip manufacturing. Economic dynamism must be supported by regulatory reform, small business support, improved access to finance and skills training.
Ablong detailed the growing need for Australia to promote innovation and broader economic reform as key levers for boosting the nation’s global and regional competitiveness, while providing future opportunities to enhance the nation’s resilience.
He stated, “Australia must build robust innovation hubs linking universities, industry and government. We should remove barriers to entrepreneurship, increase access to capital, and dramatically raise research and development spending. This is essential for technological breakthroughs and new industries.
Going further, he detailed and stressed the growing need to embrace wholesale macro and microeconomic reform, saying, “Australia must boost economic dynamism, competition and productivity through regulatory reforms, policy frameworks and investment funding in ways that see true multi-use infrastructure and capabilities being built. We need to implement policies that ease the cost of doing business, reduce red tape and improve access to affordable finance for small businesses.”
Ablong added, “Investing in skills training to address labour shortages among small and medium enterprises is critical, as is providing support for digital adoption and cyber security. Furthermore, promoting fair competition can create a more supportive environment for small businesses to thrive and contribute to Australia’s economic prosperity.”
Finally, the education sector needs structural reform, with more investment in STEM, vocational training, and skilled migration, alongside policies to attract educators, reduce student barriers and align training with workforce needs. Without action, Australia risks long-term decline.
But it is Ablong’s final statement that neatly encapsulates the nation’s need to start thinking big, bold and ambitious for our future, “Australia’s lack of economic complexity, national security planning and strategic foresight endangers our future. The converging and compounding global crises of the coming decade are not isolated challenges, they are an existential threat demanding a unified, resolute response. By confronting these threats head-on, Australia can not only weather the storm; it can emerge from this decade as a regional power that has secured a prosperous and independent future.”
Final thoughts
By now, many long-term readers of Defence Connect will be familiar with my own long-term advocacy for a cohesive, coherent and considered strategy for transforming Australia from an ailing, lower ranked “Middle Power” into a more consequential regional player that is capable of actively and when needed, assertively pursuing its own economic, political and strategic objectives.
Importantly, it is now time to accept that the status quo approach of “she’ll be right mate” will no longer work, nor is it fit for purpose in a world and a region that is rapidly becoming more openly competitive and hostile.
While such a reality may be anathema to the sensibilities of many contemporary Australians, the reality of the conflicts in Europe, the Middle East and the short-lived conflict between India and Pakistan demonstrate that we are once again confronted by a world where “might makes right” and this time, more than any other period since the Second World War that it is not just martial might.
Rather, it is as the government consistently reminds us, it is “whole of nation” might that will prove to be decisive in any potential kinetic conflict in our region, and Australia, like many Western nations, is dangerously unprepared to face the first, second and third-order effects of modern conflict.
Australians have lived in rare comfort, shielded from the realities of war, chaos and crisis, no rationing of food, fuel or medicine and little exposure to the economic and social turmoil that conflict can unleash. But that insulation has bred complacency.
To secure its future, Australia must step up, developing the economic, diplomatic and military muscle expected of a serious power. This isn’t just about defence; it’s about protecting our way of life and ensuring we can shape, not just survive, the region’s future.
It’s time to ditch the mindset that real change is too hard. In doing so, Australia can unlock vast economic and strategic opportunities, becoming not just a fast follower, but a strategic leader.
With tensions rising across the Indo-Pacific and China wielding its influence with increasing confidence, Australia faces a stark choice: stay small and vulnerable, or rise to the challenge of a more independent, influential role in the region. That means building true resilience diversifying our economy, boosting innovation and preparing for economic coercion so our national security isn’t held hostage by external shocks.
Only a strong, diverse, and forward-looking economy can give Australia the leverage to deter threats, drive prosperity and lead with confidence.
That, in turn, enables a defence force that’s not just reactive, but ready, willing and capable of defending our interests in a world where power is shifting and security can no longer be taken for granted.
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 at
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.
