“This requires serious money for sure, but it also requires the power of imagination and innovation. If Australia doesn’t try to forge its own strategic destiny than others will surely do it for us, perhaps sooner than we think,” he said.
 
Professor O’Neil was joined by Federal Department of Defence Deputy Secretary Estate and Infrastructure, Steve Grzeskowiak, and Cardno International Development Regional Manager, Physical Infrastructure, Alison McKechnie, for a discussion of the long-term strategic priorities of the Australian defence sector and its implications for business.
 
Professor O’Neil opened by highlighting the difficulties in assessing where money should be invested to build Australia’s defence capabilities.
 
“Deciding on the capabilities to achieve the defence mission is not as straightforward as it might appear,” he said.
 
“Capability encompasses everything required to conduct military operations: equipment, trained personnel, munitions, bases and support facilities, servicing and repair capacity, spare parts and fuel supplies, command and control and communications systems, and the doctrine of procedures necessary to knit them together.”
 
Professor O’Neil suggested that to make those decisions we need to “assess the nature of Australia’s strategic environment both now and in the future” but admitted that this came with its own difficulties.
 
“When it comes to the international strategic environment, what we see on the surface isn’t necessarily a reliable indicator of what is going on underneath. Choppy waters don’t necessarily portend transformative change, and calm waters don’t always foreshadow stability. In strategic analysis, what we see isn’t always what there is,” he said.
 
Professor O’Neil discussed changing norms in the international relations landscape.
 
“The rules based international order is under increasing challenge from major powers who seek to circumvent prevailing international law, establish treaties and agreements and other global governance arrangements.
 
In particular, Professor O’Neil highlighted the important implications of the changing relationship between China and the US for Australia.
 
“Strategic rivalry between the US and China has quickly morphed into an adversarial relationship,” he said.
 
“Many US allies including Australia are enmeshed in China’s economy, through intimate trading and investment relations. But these same countries craft defence policies with an underlying assumption that supporting US forces in a war against China remains very plausible.
 
Professor O’Neil suggested that these changes should prompt a rethink of Australia’s strategic relationships.
 
“The high-level political credibility of US security assurances to allies is increasingly in doubt. Military to military and intelligence cooperation in US alliances remains strong but serious doubts have emerged about the long-term commitment of Washington to defend its allies in Asia.

“While Australia’s security alliance with the US is the single most important plank in our strategic policy, our relationship with Beijing is far more nuanced than the US-China relationship, simply because of our size trade flows and our location in Asia.

“Australia’s continued economic growth is highly contingent on assuring access to key trades routes and investment destinations. More than half our exports are bound for Southeast Asia alone. Free trade and a rules-based international order aren’t just policy preferences for Canberra, they are prerequisites for national prosperity going forward.

Professor O’Neil discussed the major strategic implications of this rethink.
 
“Australian governments must accept the premise that capability investment decisions should be decoupled from an assumption the US will be there for us if our security is directly threatened.

“Secondly, Australian governments must be more focused on capability investments that are designed to defend core national interests including national territory against coercion or attack.

“Third, Canberra needs to work to wean Australia off the dependence on the US in crucial capabilities such as munitions, equipment, servicing and repair capacities and spares.

Professor O’Neil said that while these decisions all involve serious tradeoffs, “if we are serious about genuinely sovereign defense capability investments the long term, tough questions like these need to be addressed.”

Mr Grzeskowiak built on these ideas in his speech, which focused on the more tactical dimensions of Australian defence policy.

“While I have an eye on the future and an eye on where defence is going strategically, I am also very deeply into the here and now and asking how we are going with delivering essential services to ensure that the Australian defence force can be as effective as it can be,” he said.

Mr Grzeskowiak drew attention to the over 10,000 staff providing services and building infrastructure on Australian defence bases and the Estate and Infrastructure Group’s annual budget of $5.3 billion.

“I have often wondered where we would be if we were listed on the ASX but it would be somewhere in the top half quite easily,” he said.

Mr Grzeskowiak emphasised the importance of the Estate and Infrastructure Group.

“Defence capability is intrinsically linked to the defence estate. Without effective bases, effective training areas, air fields, wharves and the like, you cannot train an Australian defence force to be effective,” he said.

“Defence capability is not just about the latest vehicle, plane or ship – that’s the bit people see. It really is about an integrated system of fundamental inputs to capability that come together, one of which is the defence estate.”

Mr Grzeskowiak highlighted the issues facing the defence estate

“The defence estate is degrading. Between 2001 to 2015, we can see that the remaining useful life of the defence estate reduced. You cannot keep investing at the level that you are investing at if the remaining useful life of your asset base is deteriorating,” he said.

Mr Grzeskowiak said that the 2016 white paper on investment in this area has seen a significant uptick in funding.

“The subsequent recapitalisation process helped us get the estate properly funded. There have been at least 20 to 30 years of underinvestment in the fundamentals of our defence estate.”

Mr Grezskowiak highlighted the significant of the 2011 United State Force Posture Initiatives and the Australia-Singapore Military Training Initiative. He also highlighted the way that Australia is focusing funding to benefit communities.

“We are really moving into making sure that the investments we are making around the country in infrastructure are spent as much as they can be at companies that are local to the places at which we are making those investments.

“We are now averaging about 80 per cent local content thanks to this initiative and in some places much higher.

“We are also pushing really hard to spend money with companies that are owned by Indigenous people. I am pleased to say that we have just passed the $1 billion mark in the past four years of spending with Indigenous-owned companies from defence contracts and it is something that we are very keen on.”

Event presentations