Defence Industry and net assessment: How much is enough?

By Mark Jeffries

November 14, 2023

Source: Department of Defence

In a 1979 interview with Ray Bradbury, the acclaimed science-fiction author lamented that he was often asked to play the role of futurist:

“People ask me to predict the future when all I want to do is prevent it. Better yet, build it. Predicting the future is much too easy, anyway. You look at the people around you, the street you stand on, the visible air you breathe, and predict more of the same. To hell with more. I want better.”

While the Defence Strategic Review (DSR) can’t predict the future, it does nonetheless chart a course for better. Unfortunately, efforts to navigate the terrain and achieve the DSR’s objectives are stymied by a fundamental misalignment of our domestic industry and policy settings.

If the DSR implies that the current ADF is not fit for purpose – and it does so fairly clearly – then it stands to reason that the industrial base that supports it isn’t either. The truth of the matter – the uncomfortable truth – is that we are behind where we need to be because our entire national support base, including the processes for what decisions are made and how they are made, is currently hardwired for peacetime.

Getting to better means more than just doing the same things, getting the same results, and hoping for a different outcome.

Since 2020 Defence has been clear that the assumption of a ten-year strategic warning time is no longer an appropriate basis for Defence planning. The DSR simply reaffirmed what everyone already knew: high-intensity conflict, while still unlikely, was less remote than only a few years earlier.

In the face of such a low-probability, high-consequence scenario, a logical assumption is that Australia’s defence sector (and conversely Government priorities) would have been galvanised around investing in the capabilities we may be required to field now, as opposed to what we might need in the next two or three decades.

But our actual behaviours around how Defence is funded, how it engages our defence sector, and how it prioritises decision for action, seems to be rooted stubbornly in a worldview that assumes that we have the luxury to decide how, when and if we respond to a crisis, rather than a crisis imposing its own exigencies on us.

There are both economic and cultural factors at play.

On the first, public exhortations around our increasingly unstable region are simply not backed up by real dollars. On the Government side, Defence spending will not only stall but actually drop in the years out to 2025-26. New money probably won’t hit Defence’s coffers until 2027 at the earliest: five years after the DSR warned about the loss of a decade’s strategic warning time.

One hopes a potential adversary has the decency to wait until at least then.

And this is not all on the Government, either. Australia’s defence industry is vibrant, innovative and passionate about protecting our national interests. It is also comparatively small on the global scale, vulnerable to pressures such as supply chain constraints, engages in internecine competition over a limited domestic workforce, and lacks a single clear voice in talking to Government.

Right now, should we need to scale quickly to provide Defence with the capability to deter at distance – we will probably not be up to the task. Not through lack of effort or will, but simply because the framework for scaling at the national level isn’t there.

A question that the defence sector should ask itself is: how prepared are we now, and how prepared do we need to be, over the next five years? Do we have the capacity and capability to move quickly? Can we move quickly at the speed of strategic relevance? Can we do it at a national scale?

The answer to this question is not a simple one. It is also not a comfortable one either. It forces decision makers to reflect on a defence policy that over the decades has simply assumed we could choose the time and place of its employment. This plays no small part over why our force structure since the 1980s has had less to do with emergent threats and more to do with domestic politics (the exhausting debate over our submarine force for the past fifteen years is a case in point).

It also asks them to consider how successive governments have (or rather, have not) invested in the critical enablers of an effective and relevant defence sector: a robust and sustainable national support base, a long-term plan for building a sustainable workforce, and a commitment to invest in research and development as a national priority.

But there is a way to at least address the question: there is a way to get to better.

Ironically, the DSR itself provides a partial answer. In moving from a notion of Defence of Australia to National Defence, the DSR argues that a more focused approach to planning should be based on net assessment. This approach is one that takes a comprehensive and long-range perspective on the relative capabilities and outlook of different countries.

A net assessment approach can be defined broadly as a framework employing a multi-disciplinary methodology to understand the comparative strengths and weaknesses of competitors and adversaries. It takes a long-term view and is informed by political, social, economic, environmental and technological factors – to name but a few.

Done right, a net assessment approach should take a holistic view of our own relative capabilities and identify areas of competitive advantage. As a corollary, it should also be brutally honest about our weaknesses, and why this is the case. A net assessment that tries to equivocate or sugar coat bad news is less than useless – it is dangerous.

It would, perhaps most importantly, help ensure a high degree of synthesis between Defence’s strategic objectives and broader national objectives. Working out how to leverage our resource sector and manufacturing to develop and expand Defence’s presence in the North and West, for example, would reap benefits not only for Defence but for the nation. Likewise, a net assessment could also accommodate environmental factors and help inform long-term strategies around Net Zero, among others.

Like everything though, hazards abound in this approach. A net assessment capability is not a fad that can be developed quickly and cheaply. It is a discipline that requires significant resources, patience and frankness: three things that are often in short supply when talking or planning about Defence.

However, a mature net assessment approach that includes a scrupulous analysis of Australia’s defence sector could be a game changer. It could show in very clear terms where our sources of strategic advantage lie, and where we come up short. This can give us a degree of confidence that with applied effort, we can address shortcomings before they become a critical vulnerability. For our defence sector, it could be a potent catalyst for changing mindsets and behaviours out of synch with our strategic environment.

This is not the most we can do, but it is the least we can do.

The final word on this should belong to John Curtin, who at the end of 1941 – only mere weeks before the bombing of Darwin – prognosticated about what the next year had in store.

Curtin opined that the war against Imperial Japan was not just a phase in the struggle against the Axis powers but was “a new war”. It was a war not about redrawing boundaries on a map but an existential one that pitted totalitarianism against democracy, imperfect as it was.

We now find ourselves in a similar place, if not a similar time.

Curtin noted that in this new war there were two lines of action: the first of course being the direction of our external policy with our Allies and the war in the Pacific.

Curtin’s second line of action is more telling:

“The second is the reshaping, in fact the revolutionising, of the Australian way of life until a war footing is attained quickly, efficiently and without question”.

What do we need to do to attain a similar footing?

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