2024 ASPI Annual Defence Conference Joining Forces

SUBJECTS: Shangri-La; Defence Budget; Recruitment; America, Ukraine

JUSTIN BASSI, ASPI: Let’s get back into it after that short break. It really is now my pleasure to be joined by the Deputy Prime Minister and the Defence Minister, Richard Marles straight off the back of the Shangri‑La Dialogue, so it’s wonderful to have you here. And we really do need to get the Deputy Prime Minister back up to Parliament House reasonably quickly, so it’s a sharp stop at 11:45. So, we’re going to go straight into a couple of questions, and I’d love to be able to open the floor for a couple of questions from the room, so get your questions ready. 

But, DPM, you have literally just effectively got off the plane from Shangri‑La. Can you give the audience a bit of a reflection of how you found this year’s Shangri‑La? Was it previous to different ones that you had attended and why was it particularly significant? 

DEPUTY PRIME MINISTER, RICHARD MARLES: Well, thanks, Justin, and thank you for having me. And let me acknowledge the traditional owners of the land on which we meet and pay my respects to elders past and present. 

Shangri‑La was awesome as always. I said to Justin, I think for Defence Ministers Shangri‑La is a bit like Disneyland. It’s defence Disneyland for a defence minister at Singapore during Shangri‑La, it literally is the happiest place on earth because – [Laughter.] – and we have all the conversations that we do. So, it definitely did not disappoint

I mean, it’s a good question when you reflect on what is the tone between Shangri‑Las over the years and you do come back with different feelings and it’s probably right to not express this at any level higher than a feeling, because you go through the process of having the conversations that you do and each of them has their own narrative.

I would definitely observe that the sense of interconnectedness between the world felt very manifest. There was a lot of European Defence Ministers who were present at Shangri‑La and so there is an increasing sense, I think, amongst those in Europe that the Pacific impacts their world and helps shape or is shaping Europe just as we feel – obviously certainly feel in the context of Ukraine – events in Europe are shaping the Indo–Pacific. The world is getting smaller and much more connected. I think that was very much the sense. And obviously the presence of Zelenskyy appearing at the end of Shangri‑La, if you like, put an exclamation mark on that idea. 

I think there was also, you know, a sense of – and this is perhaps in a context where – maybe this is our perspective as Australians, but having had some incidents occurring, as we’ve been doing our work in the South China Sea with Operation Argos and we have had incidents that have been described as unsafe and unprofessional, as that work is becoming riskier, I think there was perhaps a sense of wanting to reduce the temperature or actively seeking to do that. So, I would notice that bit as well. As I say, they are very much kind of feelings. There were very specific things that were occurring and speeches that we [indistinct].

BASSI: [Indistinct] reduce the temperature perhaps come from the China question according to the Philippines leader. It was an interesting time for you to be at Shangri‑La and for that defence conference, particularly given the year that it’s been for Defence in Australia. It’s been a huge year between, obviously, the Defence Strategic Review last year and the first National Defence Strategy this year. The NDS stated that our security circumstances have continued to deteriorate consistent with the trends the DSR identified just 12 months ago. Can I ask you about the Defence budget, obviously, in the context of some analysis and judgements that ASPI has made recently? Given the strategy is so clear about those strategic circumstances, do we have a gap between those strategic circumstances and that strategic recognition and budget reality? And, if so, how does government go about addressing this? 

MARLES: I just want to make on the budget – I mean, there’s been a lot of focus on the budget and I understand it. Whatever one does in terms of analysis and strategic positioning, it’s only meaningful if you back it up with action and you can’t do it unless you fund it and that’s the point we’ve been making. We have funded. So, the $5.7 billion of additional expenditure in this budget across this four‑year cycle is, in its own terms, the biggest increase in Defence spending over a four‑year cycle that we have had in this country for decades. So, when we see analysis which says it’s not enough, okay, but measured against what Governments have been able to achieve in the past, which is the real world that we live in, the budget that we’ve done stacks up. And you can cheer for a proposition which is “Let’s have more money spent on Defence”, and I’m happy to cheer for that clearly as the Defence Minister, but an analysis needs to be against actually the decisions that people are really making. And none of the analysis talks about what money, where the money should come from. In terms of measuring the land of the real, the biggest increase in Defence spending that we have seen in decades, you probably need to be pretty careful in that moment if you’re saying that’s not enough. Okay, well, what call would you make that’s different? 

You could also then say, “Well, what about gaps and the like?” Yes, it is true, I wish we had inherited a different circumstance. The best time to be preparing for the next couple of years would have been a decade ago. That needs to be part of the analysis as well and often it is not. But the second‑best time to prepare is now, so again all we can do is make the decisions against the set of facts, if you like, the hand that we have been dealt.

I think the final point to make in respect of this is to get a sense of what is the strategic cap that we’re trying to skim here. You will get commentary which is about worse‑case contingency in the near term, somehow we need to be – it is about that. Obviously, we are not trying to make ourselves a peer of the United States or of China. I mean, that’s not a credible thing to propose. There is no country in the world that is a real power that is capable of doing that, no matter what kind of budget you might imagine. It is not the strategic cap we are trying to skim. What we are saying – which is not to say that if we find that there’s some or that in the context of great power of contest we are not relevant now. We are highly relevant by virtue of our plain state geography. 

But the strategic problem we’re trying to solve is all of the analysis, including in the DSR, backed up by the NDS, talks about a world which is far less predictable in the future, far less certain. In a far less certain world, do we have an ability to be able to resist coercion from any adversary and to make our way? And in that context, we are making a decision to preference new technologies which will come online in the medium term, rather than extending existing technologies over the next one, two, three years. Because that is fundamentally the choice you have. It is a little bit like when you – for those who follow professional sport, which I obviously do, when AFL teams are thinking about their list, you extend the contracts of the older players to maximise your position next year or do you invest in the future? What is the balance? We are investing in the future. That is the strategic call that we’re making because it is in a much less certain future that we need to make sure that we have the capabilities at our disposal and so that is, unashamedly, the calls that we are making in terms of putting together the choices we do in making the spend that we’re making.

BASSI: Excellent. If in Defence we can be as [indistinct] as your Cats have been over decades, we would all be okay!

In the context of challenges beyond funding – as you say, funding isn’t everything – and beyond capabilities themselves, recruitment is one of those challenges. What can do with the funding and capability? We’re not the only ones to be grappling with recruitment issues – Japan and the UK. We have seen recently in the UK that the Prime Minister proposed that if he’s re‑elected, he would reintroduce conscription. We heard today from the Swedish Defence Minister a really excellent summary and description of the national service in Sweden that is [indistinct] military service and national service, a recruitment benefit, an advantage. What – and obviously we can’t just deal with a one‑size‑fits‑all approach, but what do you think Australia will learn from others to meet the military personnel partners that [indistinct] really challenging?

MARLES: Sure. I think we’re catching up a bit later, but we have a lot to learn from the rest of the world, but I think the starting point is we really do have a challenge here around recruitment and retention. So, let’s put some numbers on this. In the financial year 2024–25, the ADF is funded to a streak of 63,500 people in terms of full‑time personnel. Right now I think we are sitting at about 58,200, something in that order of magnitude. But we talk about being roughly about 4,400 below strength. That speaks to the challenge that we’ve got around recruitment and retention. When I ask advice as to, “What’s going on here? Why do we have [indistinct]?”, we get the advice which is the correct advice, which is at times of low unemployment, it has historically been difficult to recruit to the Australian Defence Force and that’s certainly what is going on now. In a sense that’s not wrong, that advice, but I feel like it doesn’t answer the question about why can’t we encourage more people to put their hand up? 

I do think talking about – to go back to the Cats, it’s a recurring theme, it is one of the fun things I get to do as the member for Corio is to hang out with the Geelong Football Club. They are a team but their business is being a team, when you think about it. If you’re running a professional team, you think a lot about what it is to engage in teamwork and how you make humans gel, particularly in a competitive environment. But the highest expression of team that I have witnessed is in the Australian Defence Force. It is superb and invariably when I learn from people who are wearing our uniform and you talk to them about their experience and what it is like, they do have great experiences. They are learning fantastic skills. But it comes back to that idea of team. They love being part of that team. I really feel that there is something in telling that story. We’re doing more in relation to the offering in terms and conditions. We’ve improved Defence housing. We’ve put in place retention bonuses. 

But today we have announced what does represent a crossing of the Rubicon for Australia, and that is opening the door to non‑Australian citizens serving in the Defence Force. Now it’s relative to how other country might do this, it’s still pretty confined. We’re talking about permanent residents who have had at least a year of permanent residency. We’re requiring people to take up Australian citizenship within 90 days of joining the ADF. We’re opening the door initially to Kiwis from 1 July and then beyond that from 1 January, we’re looking at countries like Five Eyes countries and the Pacific. Britain have Nepalese, the Gurkhas have Fijians serving in their Defence Force. The US have Micronesians serving in theirs and they never become [indistinct] Americans. So, other countries do this. But I think we do need to be crossing this Rubicon of opening ourselves up to us a bit if we not only want to retain our Defence Force, get to the funded level of it, but more significantly grow the Defence Force as it is planned to grow through to the 2040s. Today is actually quite a big step that we’ve taken. I’d describe it as a dipping of our toe in the water, but this is a pretty significant body of water that we’re dipping our toe into today. 

BASSI: [Indistinct] looking forward to potentially in the Pacific and elsewhere. So, thank you. Just a final question from me before going to the floor, returning to the Shangri‑La Dialogue, your speech which I thought was a bit of a clarion call for promotion and advocacy of international laws over our [indistinct]. In that speech you did talk about trust in Chinese intent, to quote from you, “The single most important ingredient to the maintenance of the global rules‑based order.” It seemed to be a really strong signalling to the Chinese leadership does have options and it can choose to be a more responsible international player and leader as opposed to a view that trust is already broken and that we need to be imposing constraints. Can you tell us why you think that there is that option still available and the importance of that kind of strategic message for the public to hear? 

MARLES: Well, I mean, there are options. There’s options for every country and there is options for China as there are options for others. But, you know, part of the underlying thesis, I suppose, in saying it in that way, China is a great power. China in that sense is a significant part of the definition of the world in which we live. And the point I also made in the speech is that as a great power, what comes with becoming that is a greater scrutiny, a greater observation of the strategic choices that are made. And in our region, what will be defining is the extent to which there is trust in Chinese strategic intent and that is, clearly, what, you know, I think the world is looking for. So, that is the point that I was making. 

Also, what I was really trying to say is we talk about the rules‑based order a lot. I worry now it’s becoming a phrase which people are tired with and we’ll move beyond that, but we can’t. It is the fundamental platform, I reckon, of our national interest, prosperity and [indistinct] it is because of who we are as a trading nation and an island, where we are highly reliant on sea lines of communication principally, but also air lines of communication in order to get on with our business, and because of that, because of what that presents in terms of the ability [indistinct] Australia, and this is all articulated in the DSR and the NDS, we are particularly, as a nation, and deeply invested in the rules‑based order. It’s not a concept that people can get tired with. It needs to be something which is still thought of as being utterly foundational in the world. And it does. Trying to describe a world as the idealists had in the aftermath of Second World War where we’re resolving issues not by reference to power but by reference to a set of norms, rules, international law. And actually that’s more relevant going forward than it’s ever been before. It can’t be something which is eroded. 

I think what we have seen with Russia’s invasion of Ukraine is an overt attempt to try and – I wouldn’t even say rewrite it. I would say just actually undermine it and take us back to a world of spheres of influence where there are great powers and it’s only great powers who can enjoy full sovereignty. The global rules‑based order, international law, actually enables a little power like Australia, and obviously much smaller countries as well, to enjoy full sovereignty. And it’s really trying to give expression to that notion and that voice which I was trying to do in that speech.

BASSI: I am pretty sure most of the people in this room, given their interests, have read it, but if you haven’t, I very much encourage you to read the speech and why international rules‑based law matters today and will in the future. Right, questions from the floor, wherever the roving mics are. 

ANDREW PROBYN: Thanks, Justin. Richard Marles, Andrew Probyn from Nine News. Can I take you back to the incident last month, the flares being dropped by China’s fighter jet. Now, without wanting you to reveal exactly what Dong Jun told you in recent days at the Shangri‑La Dialogue, is it fair to assume that the Chinese are still insisting or accuse Australia of spying on China? And we are hearing from inside Australia the view that an Australian ship and helicopter could be 35 to 45 nautical miles off the coast of China that that being in China’s exclusive economic zone is an act of provocation. Do you reject that? 

Because we are in ASPI, I’m going to ask a second question. The elephant‑in‑the‑room question: do you believe that advice to government that contests Defence advice is of great value and, of course, I’m referring to the [indistinct] review? 

MARLES: There are range of [indistinct] reviews. Let me deal with the second first. Frankly, fearless advice is always welcome. That’s probably the way I would sidestep that question! [Laughter.]

To go to your first question, look, I’m obviously not going to go into the conversation I had with Minister Dong, other than to say, we raised it, as you would imagine. I think the point I make is this: to be completely clear, what Australia was doing in that exercise and all Australia was doing in that exercise was applying UN Security Council sanctions in respect of North Korea. That’s what Operation Argos is. That’s what HMAS Hobart was doing and the Seahawk helicopter, which formed part of HMAS Hobart on that occasion. But the point that we make beyond that is: however one regards the international law, I am completely confident that we are acting entirely within international law and the UNCLOS freedom of navigation international law, which is utterly settled on this, backs up everything we were doing and we were entirely consistent with it. But whatever one’s view it, interactions with militaries need to be safe and professional. They just have to be safe and professional. 

And I also made the point in the speech publicly that the vast bulk of the interactions that the PLA’s Navy and Air Force have with us are safe and professional. So, it’s not like we can’t do this. We know how to engage – and there was a lot of engagement. We know how to engage with each other on bases which are safe and professional. And also, it’s not one way. We need to be safe and professional as well and we are. 

But the fundamental point is that those interactions must be – and it’s not – it is good that it happens in the vast bulk of occasions, but it’s not enough that it happens only in the vast bulk of occasions. It needs to happen on every occasion, and that’s why we make it public when it happens. Clearly, that’s why we raised this issue when we had this meeting with Minister Dong. That was a good meeting. It was longer than was anticipated. It was very frank. And, you know, I appreciate the ability to be able to do that and to be able to have a frank dialogue with my Chinese counterpart. It’s much better to be able to have that dialogue than to not have it. I’m not going to go into any more detail than I have said but we clearly raised it. 

BASSI: [Indistinct] let you go. I saw three hands and Jim Baker, Pentagon [indistinct], three questions as one, firstly, you can answer [indistinct] three.

QUESTION: Thank you. Minister, thank you for coming. I worked for several Secretaries of Defense, including Secretary Austin. [Indistinct]. One thing Secretary Mattis told me is that we should pay particular care to ask our allies for counsel and advice. My question for you is: What is the myth that America tells itself that is increasingly not true? 

QUESTION: Mine might be much more straightforward. Can we talk about the relationship between industry and government? There’s a view that government tries to transfer the risk and hold responsibility when in my experience the opposite is true. Government always holds all the risk and needs to transfer responsibility. With all this new money that’s come through for Defence [indistinct] increases, can you talk a little bit about partnerships and new commercial relationships that might allow that to take place, where you transfer, outsource the responsibility for delivery to industry in order to decrease the risk? 

BASSI: The DPM will need to give some short answers and scoot away. 

QUESTION: Sophia Gaston, out from London from Policy Exchange. I just wanted to ask a quick question about Ukraine. According to the latest data from the Kiel institute in Germany, Australia now ranks at 35 out of 41 donors as a proportion of GDP commitments, 30 of the 41 donors in total aid commitments. Obviously, countries must prioritise their region first, but, you know, other partners like Japan are stepping up much more than Australia with 0.17 per cent of GDP for Japan compared to 0.04 per cent for Australia. Australia is also the only major Western Power to not have [indistinct]. Given how important it is and how much we’re fighting to get Europe to keep focused on the Indo–Pacific, do you see any room for manoeuvre likelihood to change Australia increasing its fiscal commitments and [indistinct] aid support to Ukraine and reopening that embassy? 

MARLES: Okay. I might go in reverse order. So, I was obviously in Ukraine a few weeks ago announcing another package of support, which was $100 million Australian. It was very much welcomed, clearly, by Ukraine. Part of going there was really about that moment, making it clear that the world does need to stand with Ukraine for as long as it takes for Ukraine to resolve this conflict on its terms. So, we are completely committed to that and we made it clear that that commitment is far from [indistinct]. It’s not the last [indistinct]. We’ve been making commitments on a [indistinct] basis and we will continue to do so. We want to make commitments that are as impactful as they can be and again, I caught up with my Ukrainian counterpart Rustem Umerov on Sunday and, again, very grateful for what support we have been providing. Where we are in the world relative to Eastern Europe, yet we have been there. 

In respect of the embassy, that is an issue that we – we have an ambassador in the region who’s currently operating out of Warsaw. It is matter which is under review and it’s [indistinct] more than that, but it is very much being looked at. 

Look, it’s a really good question. I’m not sure I accept the paradigm completely in the way in which you put it. I do know that we need to be accepting more risk and I think as government – actually to go back to what you said. I totally agree that what we need to be doing is getting a capability into service much quicker. That is the challenge for us. You don’t get there unless you accept risk. I mean by that government accepts risk. We say a lot. We all understand it intellectually. 

But when it gets into the nitty‑gritty it’s very difficult for the department, for the bureaucracy, but also, you know, us in the political class to try and what is operationalising risk look like? I think it does mean having someone like me being prepared to talk to someone like Andrew Probyn and have more difficult press conferences. Andrew is quizzing me about money that hasn’t come to fruition because that actually is what this is about. Unless you you’re willing to stand up and say, “Look, we have [indistinct]”. You don’t get risk without failure, and so you need to be able to do the press conference when you fail if you are actually going to have more risk. It’s a scary thing to do, but I think we need to do it. Otherwise, we’re not going to get these things into operation faster. I think part of – but you used the word of partnership. To me that is really what underlines the way in which we have to procure, and I don’t just mean procure in the sense of we are choosing someone to do something for us. Having made that decision, it then needs to be an enduring partnership going forward and an ongoing partnership which underlines getting the capability into service is, I think, a critical part of it. 

There’s a longer answer to that, but I know [indistinct], which, thankfully, relieves me of having to answer questions from [indistinct]. [Laughter.] Look, I have been – I mean, you’re talking to an unashamedly yankophile. I think I have long felt that after a couple of world wars and all these many times since, America has been obviously the bastion of kind of democracy in the world, and that probably underpins the way – when we say we have shared values, that would be at the heart of what we mean when we say that. But it’s actually about the rules‑based order that was established in the aftermath of the Second World War in San Francisco and emanating from there. And it’s just absolutely imperative – and I think this administration is doing a fantastic job of doing it and the truth is administrations of different persuasions in America since 1945 and [indistinct] postwar have done it. They need to be the bastions and the guardians of the global rules‑based order. It is the idea of trying to establish a set of rules which determine how the world operates that is kind of really the driving shared interest that, you know, is why we walk hand and hand with the United States in the work that we do and the US has to be the guardian of the rules‑based order. It must be in the future and I’m completely confident that it will be.

BASSI: [Indistinct] sports nut as you are, maybe the American view of sports is their greatest myth rather than their interest in – [Laughter.] 

Deputy Prime Minister, thank you, I know it’s been busy – Shangri‑La, and you have to race back up to Parliament House. Can you all put your hands together for the Deputy Prime Minister? 

ENDS