China’s growth is credited as getting Australia through the GFC, however for many the rising power’s preference for debt diplomacy and state power to coerce potential adversaries, including Australia, is now becoming apparent, with ASPI executive director Peter Jennings warning of the consequences.
Across the globe, the post-Second World War economic, political and strategic order appears to be in tatters, the impact of COVID-19 exposing over dependence on global supply chains, asymmetric security threats, political warfare combined with myriad challenges are all serving to impact the security and sovereignty of many nations, including Australia.
Further compounding these challenges is a growing sense of societal unrest and upheaval across many of the West's leading nations, from the US and UK to France and even in the streets of Australia's own capital cities.
Each of these factors have served to demonstrate the limitations of traditional state craft and, concerningly, have shaken the Australian public's confidence in the public policy status quo.
While we are far from the end of Australia's first recession in nearly three decades, the impacts are beginning to be felt and despite the best efforts of both state, territory and Commonwealth governments, the impact will force a major restructuring of the national economy and Australia's relationships with both the broader global community and, more critically, our Indo-Pacific partners.
All of this combines to form one absolute realisation: Australia's record period of economic stability and prosperity, buoyed by the immense mineral and resource wealth, combined with the benevolence of the post-Second World War political, economic and strategic order, is at an end – it's time to adjust accordingly.
For Peter Jennings, executive director of the Australian Strategic Policy Institute (ASPI), responding to this challenging predicament is important, but responding to the growing level of state-based coercion and 'grey zone' tactics increasingly turned against Australia needs to take priority.
In a piece for The Australian titled 'Time we saw China's entrapments for what they are', Jennings articulates growing concerns about the nation's capacity to act independently without foreign influence and coercion.
"It is a strange time indeed when the Australian government must strengthen its powers to stop state, territory and local council governments, and even universities, from undermining the national interest," Jennings said.
Pursuing easy money isn't the best idea
The last time Australia's public policy community was called upon to respond to such a predicament was the combined challenges of the Great Depression and the Second World War, both of which had a dramatic impact on the national psyche and the post-war period of rebuilding and expansion.
However, unlike the Second World War, Australia now confronts an adversary that is directly targeting the fundamental weaknesses within our system of government – namely, the vulnerable state and territory governments and of course the openness of an economy that is heavily dependent upon foreign direct investment.
This dependence upon direct investment, with seemingly little in the way of adequate screening and accountability for the national interest, at least until recent changes were made to the Foreign Investment Review Board (FIRB) has also left Australia dangerously open to experiencing similar debt diplomacy to developing nations across the south Pacific, central Asia and Africa
"Xi Jinping’s Belt and Road strategy is not a benign plan to create jobs in Victoria. It is a plan to strengthen China’s exclusive control over resources and infrastructure from Asia to Europe," Jennings says.
"Global outcomes have not been good. Developing countries run the risk of debt entrapment while the reality of investment and wealth creation falls short of the promises."
Australia's state and territory governments are not the only ones who have taken the easy way out of pursuing the abundance of Chinese money, with the real estate markets of the nation's major cities and the tertiary education sectors equally exposed to the lure of 'easy money'.
"For Victoria, or any other state or territory, building dependence on a single market is economically irresponsible and strategically dangerous. A smarter state approach would be to spread risk, not concentrate it, and to do nothing that transfers a security risk to Canberra," Jennings explains.
Adding to this, Jennings expands further, "Our universities have gone down the same track of building dependency on China.
"According to peak body Universities Australia, in 2018 there were 10,392 international agreements with our 39 tertiary institutions. The source of most agreements was – surprise, surprise – China with 1741 agreements – almost a fourfold increase in a decade.
"The US was a distant second with 1110 agreements.
"Some of this collaborative research with China will be mutually valuable, but some of it will be directed towards Beijing’s military and security purposes. The failure of our universities to do appropriate due diligence about the purposes and ﬁnal use of joint research with China is scandalous."
While much has been made of Victorian Premier Daniel Andrews' plan to sign Victoria up to Beijing's Belt and Road Initiative (BRI), NSW is not to be outdone as it has been revealed that a Chinese owned company responsible for shipping Australian medical supplies back to China during the height of COVID-19 is close to securing tenders to construct pumped hydroelectricity generation facilities in the north of the state.
It has been revealed by Clare Armstrong of The Daily Telegraph that the Beijing-linked Goldwind Australia is expected to be selected to build WaterNSW's Glennies Creek and Glenbawn Dam hydroelectricity projects in the NSW Hunter region at a time when Australian companies like AGL and Meridian dropped out of the race due to concerns about the commercial viability of the programs.
This revelation has drawn the attention of Labor senator for NSW Deb O'Neill, who expressed these concerns to the Senate: "I am deeply, deeply troubled by these rumours and the prospect of a major utility with access to critical NSW energy assets owned and managed by a company with major ties to a foreign power.
"What is even more troubling to me is Goldwind’s desire to hide their ties with the ruling Chinese Party."
It has been revealed that the projects will still need to be reviewed and approved by the FIRB. Despite this, it raises critical questions about the power of state and territory government's to make deals that have long-term national security and resilience implications.
In response, Armstrong quotes a spokeswoman for the NSW Water Minister, Melinda Pavey, who resolutely stated that NSW would "remain the owner and operator of the dams".
Minister Pavey's spokeswoman added, "WaterNSW is yet to finalise the tender process, however should it be required, oversight of matters involving foreign investment can be looked at the by the FIRB."
Building on this, it is believed that several Australian companies did not progress tenders as conditions imposed by WaterNSW made their involvement in the programs economically and financially unviable – raising the question, why the Chinese interest?
An integrated response and the end result is ‘national security’
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.
Air Vice-Marshal (Ret’d) John Blackburn, AO, explained the importance of a cohesive, integrated response to national resilience and by extension, national security:
“We have our departments doing great work in their respective fields. We have organisations like the CSIRO doing great work in terms of the hydrogen economy, energy security and the like, but the problem is each of these organs is siloed.
“One would expect that there would be a co-ordinating authority within the organs of government, which can support the development and implementation of a national resilience policy framework. Unfortunately, that isn’t the case, and we are seeing the affects of that today, so the only way to address this is with a co-ordinated, integrated response.”
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 into a single, cohesive strategy.
Jennings explains a similar thought, "Hopefully before parliament votes on the legislation there will have been time to reﬁne some thinking. For example, international agreements should be subject to a national interest test rather than their consistency with Australian foreign policy, which is a more variable measure.
"While it is ﬁne for this new piece of bureaucratic machinery to sit in the Department of Foreign Affairs and Trade, the task at hand goes well beyond what our diplomats can do. It will be necessary to involve intelligence, the Department of Defence and other agencies," he states.
"Ministers also will need to keep an eagle eye on what the bureaucrats are doing to make sure they don’t become captive advocates of the organisations they are overseeing.
"That said, this is a bold and welcome step, pushing back against attempts to undermine our security. Implementation will be complex, but the outcome should be universities and state governments able to go about their business with assurance that they are strengthening the nation and not undermining core strategic purposes."
In order to maximise the nation’s position, prosperity and security, is it time to introduce a role of a Minister for National Security or special envoy role to support the Prime Minister and respective ministers, both within the traditional confines of national security or national resilience like Defence and Foreign Affairs, to include infrastructure, energy, industry, health, agriculture and the like?
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.