With each passing day the impact of the coronavirus upon global supply chains is becoming painfully apparent, with Australia’s economy teetering on the edge of disaster – however, viewing the impact of the pandemic in isolation to Australia’s broader national security and national resilience further exposes the nation.
Australia is unlike virtually every other developed nation, it has enjoyed a record near three decades of economic prosperity and stability, buoyed by the immense mineral and resource wealth of the landmass and the benevolence of the post-Second World War political, economic and strategic order.
However, across the Indo-Pacific, competing economic, political and strategic interests, designs and ambitions are beginning to clash, flying in contrast to the projections of many historians at the end of the Cold War – further compounding these issues is the continued instability caused by the coronavirus and concerns about ecological collapse.
Driven by an unprecedented economic transformation, propelling once developing nations onto the world stage, the region, the globe and its established powers are having to adjust to a dramatically different global power paradigm – one committed to undermining and influencing the fabric of Australian and Western democracies.
In this era of increasing nation-state competition, driven largely by the great power competition between the US and China and the subsequent impact on nations, Australia is finding itself at the epicentre of the new global paradigm with unique economic, political and strategic implications for the nation’s national security.
Traditional nation-state competition is not the only national security challenge, as global and domestic economic headwinds, non-state actors and asymmetric challenges, including transnational criminal organisation and violent extremists, all serve as equal yet disparate challenges within the traditional rubric of national security.
Australia is not isolated from the impact of these factors, as was witnessed during the summer bushfires and more recently with the economic, political and societal impact of the coronavirus as it rapidly approaches global pandemic status, placing increased pressure on the security of nations and global supply chains around the world.
When viewed in isolation, each of these individual factors serve to provide overlapping challenges to a nation's national security, however, when combined, this perfect storm of factors challenges the long-term stability, prosperity and security of a nation-state and, in short, its national resilience.
National resilience, as opposed to national security, takes on a more diverse array of challenges for national political and strategic leaders to accommodate, directly impacting the future stability and viability of nations and populations.
Accordingly, the subject of national resilience has traditionally focused on the impact of natural disasters and similar national emergencies and the capacity of a nation to survive and thrive post-disaster.
Australia's conundrum – over dependence on China
For Australia the combination of these factors couldn't have come at a worse time, following the disastrous impact of summer bushfires impacting various sectors of the economy, combined with a decade of drought and the advent of coronavirus all serve to undermine Australia's economic miracle, while highlighting a critical factor: Australia is too dependent on China.
In particular, the economic dependence of Australia upon China, which has since the end of the 1980s been described as the "world's manufacturing hub", has been buoyed by unfettered access to cheap Australian raw resources, energy and agricultural goods leaving the nation dangerously exposed to a downturn in the world's second largest economy.
Indeed, recently amid growing concern about the impact of the coronavirus outbreak on the Chinese economy, which has sent shockwaves throughout the global economy, Australia, along with South Korea and Brazil have been recognised as the most exposed to Chinese volatility.
Michael Heath recently expanded on this for Bloomberg, articulating: "The coronavirus hit has exposed the extraordinary depth of Australia’s economic dependence on China and fuelled questions over whether the nation is too reliant on the Asian behemoth.
"Australia is the most China-reliant economy in the developed world, with about a third of its exports going there. Chinese nationals making up roughly 38 per cent of its foreign students and 15 per cent of its tourists."
This is further exacerbated by the continued shift away from China as the hub for global low-cost labour and manufacturing hub, across the breadth of the Chinese economy.
Shehzad Qazi, managing director of China Beige Book, provider of the world’s only large-scale private data on the Chinese economy, stated: "China’s economy is getting hit much harder by the coronavirus outbreak than markets currently recognise.
"Most of the economy has remained under a virtual lockdown. Our first-quarter flash survey, which has tracked over 1,400 firms in February, shows that 31 per cent of companies have remained closed since the extended Lunar New Year holiday.
"Among many of the businesses that have reopened, employees either continue to telecommute (29 per cent) or are waiting to resume work from their job sites (7 per cent). In other words, only a third of businesses have fully reopened.
"The most frightening aspect of this crisis is not the short-term economic damage it is causing, but the potential long-lasting disruption to supply chains. The ripple effects of this severe disruption will be felt through the global auto parts, electronics and pharmaceutical supply chains for months to come."
This combination of factors, combined with uncertainty about China's potential bounce back places Australia in an increasingly vulnerable and uncertain economic position, hindering national security, and by extension the nation's resilience to "survive and thrive post-disaster".
Cataloguing Australia's vulnerability
Adding fuel to the fire, Air Vice-Marshal (Ret’d) John Blackburn AO, Chair of the Institute for Integrated Economic Research – Australia, spoke with Defence Connect to explain in detail the breadth of Australia's vulnerability and most critically susceptibility to external shocks to global supply chains and global growth markets the nation is dependent upon for long-term economic stability.
Blackburn said, "More than 90 per cent of our fuels are imported; that's a vulnerability because our Government has not done a thorough supply chain risk analysis. The last time we had a National Energy Security Assessment conducted in Australia was 2011; the world has changed a lot since then. Whilst the scale of our fuel imports is a concern, it is just one example. Australia also imports 90 per cent of its medicines and there does not appear to be any medicine supply chain risk analysis either.”
"According to a 2019 US Congressional Commission report, almost 90% of pharmaceuticals taken by Americans are generics, most of which are imported from China or India. Most US active pharmaceutical ingredients are imported from China or India, with India actually sourcing a large number of inputs from China.”
Expanding on this, Blackburn stated, "The US Commission concluded that import dependencies for medicines from China is a national security risk. India has noted the same concerns for their dependence on China.”
"If you consider the impacts of the Coronavirus on global supply chains, the risk to our critical imports, such as medicines, is a significant concern that has not been analysed. What could happen with all the other critical imports that we depend on? The western world has incrementally moved manufacturing to China because it is cheaper, without thinking about the resilience impact in the face of disasters such as pandemics or conflict. Countries like Finland have analysed their supply chain risks and as a result they stockpile medicines, fuel, and some foods. That shows a much more sophisticated approach to national resilience than ours.”
Time for a conversation with the Australian public
It is becoming abundantly clear to the Australian public that the nation is struggling to respond to the myriad economic, political, strategic, environmental and infrastructure challenges that are arrayed against it and, accordingly, the public discourse and Australia's leaders need to take a direct role in designing, implementing and communicating a coherent national response.
Blackburn explained the necessity of such an approach, telling Defence Connect, "I think the very first thing we have to have is an honest conversation with Australians about our vulnerabilities and our lack of resilience.
"We need the Government to have a mature conversation with us. Perhaps they could say that we are facing some complex risks and that our economy will probably stagnate, at best. We have a deteriorating security situation in the region. We need to discuss what realistic options exist to address these risks and to improve our resilience to future shocks."
Blackburn added, "We can keep promising jobs and growth, but that's just slogan. We will have to make some hard decisions in the next decade and as previous generations had to when faced with similar situations. The hard economic decisions taken by the Hawke, Keating and Howard Governments positioned us to be able to withstand the GFC. We do not have the same economic strength today to deal with the challenges we now face, from bushfires, to floods to a pandemic, and we do not appear to have the political will to proactively address them.
"Australia’s geographic position and the continent itself present Australian policymakers with a unique and complex series of challenges – ranging from cyclical droughts, monsoonal rains and ravaging bushfires, the geographic isolation “tyranny of distance” being replaced with a “predicament of proximity”.
Equally important factors that traditionally fall under the national security category but would be equally at home in the resilience category are factors like energy, water and resource security, infrastructure and industry development, diversity and economic diversity, competitiveness and traditional hard power concepts like defence and intelligence all serve as essential components for a nation’s resilience.
Australia has recently undergone a period of modernisation and expansion within its national security apparatus, from new white papers in Defence and Foreign Affairs through to well-articulated and resourced defence industrial capability plans, export strategies and the like in an attempt to position Australia well within the rapidly evolving geostrategic and political order of the Indo-Pacific.
Each of the strategies in and of themselves serve critical and essential roles within the broader national security and national resilience debate.
Additionally, the formation of organisations like the National Resilience Taskforce, state-based Energy Security Taskforces, and supporting organisations like Infrastructure Australia and broader government departments all serve to provide an intricate yet competing tapestry muddying the water and decision-making process for political and strategic leaders.
Each of these organs and constituencies in the form of state and territory governments have their own individual agendas and lobby accordingly for Commonwealth support and assistance, further complicating a national response, hindering both national security and national resilience in an age of traditional and asymmetric disruption.
Blackburn explained the importance of a cohesive, integrated response to national resilience and by extension, national security, “Our Government departments are doing great work in their respective fields; organisations like the CSIRO are doing great work in terms of hydrogen and energy security, but the problem is each of these entities is largely siloed.”
“We should expect that there is a co-ordinating authority within the government system which can support the development and implementation of a national resilience policy framework. Unfortunately, that is not the case and we are seeing the results of that today; we need a co-ordinated, integrated response,” Blackburn explained to Defence Connect.
The individual nature of the aforementioned respective strategies, combined with the competing interests of the respective portfolios and departments are further exacerbated by a lack of cohesive, co-ordinating authority managing the direction of the broader national interest and implementation of a resulting strategy.
It is important to recognise that this realisation does diminish the good work done by the respective ministers, assistant ministers and opposition representatives.
But recognising the limitations of siloed approaches to the increasingly holistic nature of national security in the 21st century requires a co-ordinated, cohesive effort to combine all facets of contemporary national security and national resilience policies respectively – into a single, cohesive strategy.
Australia’s position and responsibilities in the Indo-Pacific region will depend on the nation’s ability to sustain itself economically, strategically and politically.
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.
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.
However, 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?
Further complicating the nation’s calculations is the declining diversity of the national economy, the ever present challenge of climate change impacting droughts, bushfires and floods, Australia’s energy security and the infrastructure needed to ensure national resilience.