In Conversation, ASPI 2023 Conference

SUBJECTS: Deterrence and disruption.

JUSTIN BASSI, HOST: Deputy Prime Minister, Minister of Defence, it really is wonderful to have you here with your parliamentary commitments, rather than via a speech at a fireside chat is a great opportunity. So thank you for that. And you have kindly allowed after a few questions from me to turn to the audience. So if anyone has an interesting question to pose, we'll hopefully be able to ask a couple before I need to get the Deputy Prime Minister back out into parliament.

Deputy PM, this conference on disruption and deterrence, there'll be a lot of discussions through the next day and a half, largely around national resilience, both in terms of looking to prevent crises, of course, but also to best position ourselves to prepare and manage for the inevitable events that happen. It's not always about being able to eliminate global uncertainty, but it's being able to provide confidence for Australians to thrive despite that uncertainty. And with such a focus on deterrence here in the next couple of days, we will be looking at it from all angles. We have war in Europe, in large part because, in my view, European powers relying disproportionately on diplomacy, and not enough on defence investment. Do you think we have learned, are learning the lessons from Europe that strong and consistent defence investment is needed to actually avoid conflict?

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, thanks, Justin, it's a really good question. Firstly it's really good to be here and acknowledge the Ngunnawal people, the traditional owners of the land on which you and I meet and pay my respects to elders past and present. I think what comes from the conflict in Ukraine, in terms of a learning, is that the sense that if we are in a kind of interconnected economic world, an interconnected trading – globalisation has taken its path, and we are all trading with each other that that is a condition which will preclude war. I mean, that clearly has turned out not to be the case in Ukraine, and notwithstanding very significant trading relationships, where one might imagine that the interest associated that – the economic interest associated with that – will inevitably trump what is any kind of security concern or geostrategic ambition. It turns out that it doesn't. And so I think that is something that has kind of arrested the thinking of the world.

I mean, the question really goes to the sort of relative importance of diplomacy, but also getting the hard power equation right – making sure that we do deterrence. And I think, you know, once you get into it, it's kind of clear, you need to do both. And you cannot fail to do deterrence – well you can fail to do deterrence, and then there'll be bad consequences. But if we want to maintain peace and stability, then getting the hard power equation right is a critical component of that. And certainly, that's how we think about it in terms of our own strategic landscape now, which is very complex, and not a little threatening. And that, if we are trying to work out how we make our way in this quite difficult world, making sure that we are as capable as we can be – I mean, by that militarily capable as we can be, that we can project, that we can hold an adversary at risk further from our shores, is a critical component of the entire kind of picture of statecraft. And that, you know, it's utterly indispensable. But having said that, I think it's consistent to pursue that ambition and say at the same time that we see the front line of that engagement with the world has been frontline diplomacy and I think diplomacy matters as well. And the space for diplomacy and, I might say, the space for trade, is much greater when you get the hard power equation right. So it is an interplay between the two, and you’ve got to get both of them right.

BASSI: Both, and all the time there tends to naturally be a predilection during relative times of peace to think, well, we can do less in defence, but that consistency of both is always important.

MARLES: I was just going to say, I mean, I think that's right, too. And, I think where the world has changed a little bit also is a binary sense of war and peace, meaning, if you look at the history of Australian defence spending- since federation say- and you just look at the graph of that, it is pretty much a step graph, which kind of gives a sense, a binary sense of war and peace. You know, in times of peace, defense spending is relatively low, at times of war, it jumps. And at a time when war ends- it is a step graph. And so if you were to analyze that graph, you would say, okay, well, the dynamic here is there is war, and there is peace. And these are two things which are quite binary. It's just, this is not the world we were in now. I think the gray zone is much bigger. That is a bit of a function of globalization, I think it's a huge function of, I guess, the evolution of cyberspace, and the ability to engage in non-kinetic disruption. But, we live in a world now, where, you know, without being a war, there was a lot of contest. And so, the absence of the binary divide, also, I think, means that kind of sense of being sanguine about the fact that we are at peace, and so we don't need to worry about that- that's just not where we're at either. And so when we say, our strategic circumstances are more complex than they've ever been, I mean, we think that that's kind of a considered comment, it is genuinely complex. Old norms of how we kind of understood the world are actually really changing, powered by- or really driven by technology.

BASSI: And part of that complexity is also around the balance between transparency and secrecy, and sort of deterrence apart from actually having the capability, you also need credibility. So there needs to be a messaging of your defense capability. We tend to also in open societies be open about where we might have gaps, which can impact credibility. Do you think that there is a risk in transparently messaging that the next defense funding boost will be beyond the forward estimates? That that could impact deterrence in the short term?

MARLES: Well that’s not how I would characterise it, but there a few parts to that question. Firstly, I think we live in an open, transparent society with freedom of speech, and it's obviously critically important that that continue to be the case. I think that creates challenges but I think it is a strength. During the Civil War, the North conducted an election. That was, I think, a critical part of the story of its success, actually. And so I think transparent, democratic societies are strong societies. We have to believe that and I genuinely do believe in that and the kind of awkwardness of transparency that goes with that, is actually part of the strength.

In terms of funding. I mean, we've come back to that question before. In a rational world, defence spending is a function of strategic threat. And we aspire to be a rational government. And that's why you're seeing an increase in defence spending. What we inherited when we came to government was an increase, and that increase is maintained through the forwards. And so we actually went to the election saying we would honour, or we would commit to precisely the same funding envelope that the former government had established, and that's what we are doing, and that's what we are doing over the forward estimates. We've actually now increased that, we've gone taken a step further and said, so we'll stay on the same pathway of increase over the next four years. Through the next 10, we're actually going to increase the trajectory. So to put numbers on that, basically, defence spending was somewhere below 2 per cent. It's at about 2 now, under the trajectory that we inherited from the former government it would have been 2.1 within a decade. We are taking it to 2.3. Because of the strategic threat that we perceive. And I guess the question is, given what I've just said, given the strategic threat, if you seek to be rational, is 2.3 the right answer? We think it is, but it's it's obviously an issue, which is there for debate. And that's obviously an issue which will be constantly considered based on where the strategic threat goes. And I think this is the other point – I don't sit here thinking that we are on the eve of a conflict. I sit here thinking that we are in the midst of uncertainty, that predicting the next 10 years is very difficult. I can completely imagine a peaceful trajectory over the next decade and beyond. I think that's entirely within the realm of possibility and that's obviously what we should all be seeking. The difficulty is I can imagine something else. And it's the uncertainty of that, which gives rise to the fact that we are seeing an upswing in our defence spending with an eye to (inaudible) greater capability.

BASSI: And with that debate quickly turned to AUKUS. It's clear in Australia, that there's bipartisanship on AUKUS, there’s broad public support for AUKUS. Do you have confidence that there's that broad political and community support with our AUKUS partners particularly heading into their elections? And specifically, do you think there is sufficient political will in the US to be resilient to whatever might happen in the election, for example, a second, President Trump term?

MARLES: So the answer to those questions is yes. But again, I mean, they're the questions we think a lot about, as we do in terms of our, you know, our own polity. And so, you know, we'd put a lot of work into not just seeing at the highest political level that there is bipartisanship, but really making the arguments at the deepest levels we can and this was a pretty big issue at our most recent ALP National Conference, which is a part of a broader gathering of the Labor movement. And I was very heartened by the fact that when we took this issue to a debate it was overwhelmingly endorsed by the broader Labor Party, which includes trade unions, branch members and the like. I think, in the conversations I've had, not just with the UK Government but with the UK opposition, it seems to me that there is bipartisanship there. Amongst UK Labour, I mean, obviously, amongst the Conservative Party but in the UK, Labour is supportive of AUKUS as well. In the US, across the political spectrum, we talk to people on the Hill. But I think also, we'll be talking to the potential presidential candidates, the importance of the alliance with Australia, the importance of the AUKUS arrangements is accepted. We’ll look at America very closely and minutely because it's our strategic partner in terms of being our alliance partner, and obviously its role as a global power. I think you can pick up different kinds of tendencies within the US political system about the willingness to continue to play a global role. From where I sit, I think the relevant point to make, having said that, is that our advocacy across the board, within the US political spectrum, has to be about encouraging the US to continue to play its global role, to say that to the US that isolationism, which has been a tendency in US politics over a long period of time, is actually not the dominant theme of the American story. And it is not the place that, really, the American founders believed America should be playing in the world. And that the current role, the place of America, needs to be upholding its values across the globe. And that's where our interest lies in terms of American political thought. And they're not particularly controversial proposition and they’re propositions that would be picked up by both sides of politics in the US. But I think it is a time where it's really important that friends and allies of the United States are reminding – not reminding, that’s that wrong word, encouraging – America to continue to play its role and fulfil the American project.

BASSI: That’s well said and I agree I also think the institution is strong enough. Institutionally the alliance is strong enough that who happens to be president (inaudible). And I think we’ve got time, Deputy PM, can I ask for David Wroe and team, there is a question or two from the audience. I think we've got some microphones on both sides.

QUESTION: Thank you minister, Jennifer Parker from ASPI. Really fascinated by discussion about funding the defence force and how funding is actually a key element of deterrence. You mentioned that when (inaudible) you agree to continue the funding profile. But that funding profile was mooted in the 2016 white paper and a lot has changed since then. There was the 2020 DSU and the DSR talked about acceleration. There seems to be a little bit of a disconnect there between the words in the DSR and the funding. Do you think with the national defence strategy being reviewed and coming out in 2024, there is an opportunity to rethink that funding profile?

MARLES: Firstly you are right, funding is fundamentally important to capability and there is no capability unless there's money put behind it. And strategy without money, it's just hot air. So, and money is, in truth, hard fought. Now we're talking about a 10% increase on what was intended to be committed just 17 months ago, over the course of the next decade, instead of 2.1 now 2.3 per cent of GDP. I think that that is a very significant step. And it is a very significant step taken in historic terms. I mean, if you look at the graph. Now, I'd also be the first to say, we were critical of the former government for engaging in an awful lot of announcements without any funding allocation behind them. And there are a range, Guided Weapons and Explosive Ordnance enterprise as an example of that, where the program, estimated to be $35 billion, had $1 billion allocated to it. So there was an announcement of increasing our defence force at a cost of $38 billion, there was no new money announced for it. I mean, that's what was going on, before the election, and there wasn't really a holding account of the government. So the fact it was engaging in that process, and that kind of gap between announcement and no allocation, in some instances, has really created a pretty significant dilemma in terms of getting the books back into order and that is what we are seeking to do. I don't seek to be judged on what I've announced. The right judgement is 10 years from now, when we actually have taken it to 2.3, we're going to, and if we do that, that is a very big step forward, like a real step forward, not the kind of announcements [inaudible] it’s actually real if we do it. And that's my focus. Is there the possibility for change? Well I come back to the first point, you know, in a rational world, defence spending is a function of strategic threat and, clearly, strategic threat could alter in both directions over the course of the next decade. And we need to be nimble enough to make our decisions in a way which alters with it.

BASSI: I think we've got time for one very quick question today. A yes or no answer, DPM, in time. I see a couple of hands up.

QUESTION: One of the elements in the SPL that hasn't been released publicly I understand is mobilisation plans. Was there a framework or a timeframe where Defence will be talking to the private sector that allows potentially (inaudible)?

MARLES: Good question. I mean, how to answer that because you're right, there is a discussion about that in the classified DSR which is not in the public domain so obviously I’m a little limited in terms of what I can say. I think the first thing to say is it's really the first discussion of that kind of issue in a Defence document – well it wasn’t produced by Defence but it’s a document that Defence has embraced – probably since the end of the Second World War. So it’s a hugely significant analysis, I think, in that part of the DSR and (inaudible).

BASSI: Very good, thank you Deputy PM. I really want to thank you for your time. It’s the final sitting day for a little while, good luck with it.

ENDS