 Welcome to Why Australia Needs a Radically New Defence Policy. My name is Tony Erskine and I'm the still relatively new Director of the Coral Bell School of Asia-Pacific Affairs. Now to begin, I would like to acknowledge and celebrate the first Australians on whose traditional lands we meet and pay my respect to the elders of the Ngunnawal people past and present. I'd also like to note that this event including the Q&A session will be recorded and available online in the coming days. We have three very distinguished speakers here tonight. Emeritus Professor Paul Deeb, Honorary Professor Richard Braben-Smith and Honorary Professor Brinton Sargent. I want to say a few words about our speakers tonight, although I realize that for most of you they require very little in the way of introduction. Paul Deeb, who will speak first, is Emeritus Professor of Strategic Studies in the Bell School Strategic and Defense Studies Centre here at ANU. He was head of the Strategic and Defense Studies Centre from 1991 until 2003. His previous positions include Deputy Secretary for Strategy and Intelligence in the Department of Defense, Director of the Defense Intelligence Organization and head of the National Assessment Staff in the National Intelligence Committee. Tonight he will talk to us about Australia's deteriorating strategic outlook, how China is threatening our strategic space, why the US is becoming a less reliable ally and why we need to become more self-reliant. Richard Braben-Smith is an Honorary Professor at the Bell Schools Strategic and Defense Studies Centre where he follows his interests in Australian and regional security. Previously he held a wide variety of senior policy and corporate management positions in the Department of Defense. He has included Deputy Secretary for Strategic Policy and Chief Defense Scientist. He will focus on why defense warning time has now dramatically shortened because of the potential threat from China's military capabilities, and he will examine the consequent implications for the ADF. Brendan Sargent is also an Honorary Professor in the Bell Schools Strategic and Defense Studies Centre. He's held many senior positions in defense in other government departments. From 2013 until 2017 he was the Associate Secretary of Defense and from May to September of last year he was acting Secretary of Defense. He will explain the crucial need for a much more imaginative strategic policy that strengthens Australia's ability to handle defense crises and he will argue for a significantly increased defense budget. Paul Dib told me yesterday that together these three speakers have worked in defense for more than 70 years and I thought I should check that claim before repeating it tonight. Based on my own calculations these three gentlemen have worked in defense for a combined total of 80 years, 8-0. So tonight we have the opportunity to listen to analyses with 80 years experience behind them. Each of our distinguished speakers will speak for about 15 minutes, leaving ample time for questions. So please do have your questions ready. Let's begin. I'd like to invite Emeritus Professor Dib to the lectern please. Well thank you Professor Erskine, so you've now got the age in troika of professors and I didn't serve the longest in defense. Brad 33 years, Brendan 29, me only 18. Okay, Australia's international security outlook is starting to look very unpredictable and potentially threatening. Australian defense planners must now deal with a world which is very different from any they have known before. America is undermining the international order. It has started what looks like a trade war and it is threatening the unity of NATO. At the same time China and Russia are becoming increasingly assertive militarily and aligned in their anti-Western attitudes. All this is taking place at the same time as a crisis of democracy in the West is distracting it from wielding national power. America's new national defense strategy, launched by Defense Secretary Mattis in January this year, proclaims that interstate strategic competition and not terrorism is now the primary concern for US national security. The central challenge to US prosperity and security, he says, is the reemergence of long-term strategic competition by the revisionist powers of China and Russia, which want to shape a world consistent with their authoritarian models. Long-term strategic competition with China and Russia is now the principal priority for the US and requires increased military investment because of the magnitude of the threat they pose to US security. Mattis identifies the Indo-Pacific, Europe and the Middle East as the three key regions prioritized for US preparedness for war. We should note here that he wrecks the Indo-Pacific first before Europe. These key US judgments should be a wake-up call for Australia's defense planners. We now live in a threatening world and it is no good pretending that China and Russia are not becoming serious military threats to the West and its values, as Julie Bishop did on one occasion a few weeks ago. The former Director General of the Office of National Assessments, Alan Gingel, has recently stated that the international order we have known for the past 70 years has now ended. He says, it's not being challenged, it's not changing, it's over. That statement effectively undermines important judgments of the 2016 Defense White Paper. With its utterances on more than 50 occasions of the importance of the rules-based international order to Australia's security. Gingel observes that the two previous international systems ended in war. This one, he says, seems to be draining away as its core components led by the US lose confidence in its purpose and emerging powers see opportunities to assert their interests. An American belief in the West's international security system and willingness to invest in it with an effective network of alliances are now in doubt. Each of the three elements that have characterized Australian foreign policies since 1945, the alliance, the region and the rules-based order now look very different. The Trump administration is pursuing interests and values in a number of areas which differ more clearly from Australia's than any we have seen before. At the same time, we are dealing with a China which is more confident, more powerful and more assertive. The speed and direction of change are challenging all previous comfortable assumptions about stability and peace in our region. The 2017 Foreign Policy White Paper argues that without American political, economic and security engagement, power in our region is likely to shift even more quickly. The central question now is where will the leadership come from, if it is not to come from America, to sustain a stable new international order without conflict and it certainly will not come from China. And we all know how an unstable international order ended in the interwar years as rising new powers were appeased. Russia wants to see the end of NATO and a weak and divided Europe, which in my view is increasingly in prospect given Trump's undermining of the alliance. Trump sees Russia as merely a competitor, not a potential enemy. That is not the view of key European members of NATO. In contrast, Trump describes the EU as a foe that he claims was invented to take advantage of the US economically. Trump's meeting in Helsinki with Putin on 16 July was an utter disaster in my view. He described Putin as, I quote, extremely strong and powerful, unquote, and accepted Putin's advice over that of the US intelligence community that Russia had not interfered with US elections. Trump's meeting with Putin has boosted Russia's image of itself as a great power, or in Russian Velikaya Dejava. China wants to be acknowledged as a natural hegemony of Asia and to see an end to America's alliance system in the region, including Anzac. On current trajectories, it would not be surprising if much of the Indo-Pacific region in 2030 is substantially shaped by China. The status quo is not likely to continue. These, I put it to you, are central strategic challenges for Australia as China increasingly asserts power into our strategic space, not only in Southeast Asia, but also in the South Pacific. At the same time, we are experiencing an increasingly unpredictable presence of the United States. He is boasting of having a trade war, not only with China, but also the EU and Canada. If a fully-blown trade war results, the world will stumble into a moment of great political uncertainty. When this happened in the world in the 1930s, the results were disastrous. Only this week, Francis President Macron has warned that the rise of nationalist forces is plunging the system of international cooperation into crisis. By comparison, in his speech yesterday at the United Nations, President Trump asserted that, and I quote, we reject the ideology of globalism and we embrace the doctrine of patriotism, end of quote. And so we are witnessing a potentially dangerous global shift away from internationalism towards extreme nationalism. And we can take no joy in supposing that Trump will be gone in a little over two years. In my view, there are enduring popular grievances in America about the impact of globalization and foreign trade on employment that support his populist stance of America first. We are thus in a period of unpredictable strategic transition in which the comfortable assumptions of the past are over. I am not one of those who believe that America is about to pull out of Asia, but I do think we need to give serious thought to what Australia should do if the US made it clear that it expects us to do a lot more for our own defence. I suggest we need to focus on the following key challenges to deliberately develop a more self-reliant Australian defence policy. First, we need to focus more on our own region of primary strategic concern, which includes Southeast Asia, including the South China Sea, the Eastern Indian Ocean and the South Pacific. We should get out of Afghanistan and the Middle East and reassert our influence in our own region, as China moves increasingly to challenge our strategic space and constrain the projection of our national power. Second, while aiming for greater defence self-reliance, it is vital that we continue to have access to highly advanced American military equipment, combat systems and weapons, defence science, intelligence and surveillance, to ensure that we maintain a clear margin of military advantage in our own region. The simple fact is that we have no credible defence future without access to the military advantages the US Alliance provides in this way. Increased defence self-reliance for Australia can never mean defence self-sufficiency. Third, we need to undertake a fundamental review of our relationship with Beijing and determine where its limits should be. We have become far too dependent on China for our economic well-being. We need to consciously diversify our trade, investment, tourism and international student businesses with other countries. These should include Japan, South Korea, India, Vietnam and Indonesia, as well as Europe, which is experiencing its own problems with China. Fourth, the time has come for some serious long-term defence planning for Australia's strategic future. It should include considering crisis situations in which the US may look to Australia to join it in military contingencies such as the South China Sea, the Korean Peninsula, the Indian Ocean and the South Pacific and perhaps even Taiwan. Ministers and defence planners must avoid being caught by surprise by such events and seriously consider what our responses might or might not be. Fifth, we need to re-examine our core assumptions and messages about the Alliance and how it may function during future crises in the Indo-Pacific. In emerging conditions of uncertainty, Allies need to focus harder on understanding each other's interests and calculations of risk. Allies cannot take each other for granted or make assumptions about one another's future decisions, including mutual expectations about future contingencies and the use of military force. American actions and signalling will have a decisive effect on the choices we face as a US ally. We need to be alert to the gaps between promise and delivery in today's American defence and foreign policies. Sixth, the Anzac Alliance has its best and most realistic chance to shape the long-term future regional order over the next few years. It will be much harder to influence and limit Chinese defence decision-making and the strategic mindsets of other regional countries like India and Indonesia in subsequent decades. Passivity on the part of the US and its allies will give China the initiative and increase the prospect that future crises will lead either to over-correction or a back-down by the United States. Chinese expansion in the South China Sea is a good example of Western passivity in the face of China's political system which can rapidly mobilise a coordinated effort to single-mindedly pursue its strategic interests. We may be seeing such Chinese behaviour being replicated now in the Indian Ocean and the South Pacific. Canberra and Washington need to be more direct with one another and our polities about this looming strategic challenge. Profound and corrosive change could occur because of the US and its allies being passive or distractive as China expands its dominance. In this regard, Southeast Asia is likely to be a focus of Chinese power and coercion and become a zone for incremental steps towards Chinese hegemony and a sphere of influence. This would have severe strategic implications for Australia. China's projection of military power in the South China Sea is already threatening to constrain our ability to defend our maritime approaches. So the next few years are critical to shape the perception of the willingness of US allies to incur risks and costs in limiting China's ability to dominate the region. The United States and Australia, amongst others, should clearly identify what aspects of Chinese strategic behaviour they find unacceptable. This will require greater willingness to signal to China where its behaviour will be resisted. Finally, and let me stress above all else, we must recognise that we now face the prospect for the first time since the Second World War of a potential major power adversary with whom we do not share fundamental values operating in our neighbourhood and capable of threatening us with high intensity conflict. To counter this eventuality we must develop a stronger defence force capable of denying our approaches to a well armed adversary. The key issue here is whether we are now entering strategic warning time regarding future conflict and whether our capabilities are sufficient to sustain a credible defence posture in a deteriorating strategic environment. Events could now become more serious much more quickly. Therefore, more thought should be given to planning for the expansion of the ADF and its capacity to engage in sustained high intensity conflict in our own defence in a way that we haven't previously had to consider for several generations. Thank you. As this is a university, let me start by saying, Temporar Mutantor, Nost et Mutamos in Ilis. For the few of you who need a translation, let me offer, the strategic bus is leaving town and if we don't get on board it will be all too late and it will all end in tears. It is difficult to overstate the significance of these strategic changes we are now experiencing. Specifically, increases in the capacity of armed forces in the Indo-Pacific serve to undermine one of the critical foundations of what has been defence policy since the 1970s. For one nation to contemplate the use of force, military force against another, it needs to have the motive, the intent and, importantly, the capability to conduct operations. So what is it that we are changing from? In the 1970s and for the next three plus decades, no one in our broad region had the military capability to do us much harm. Further, while motive and intent could change relatively quickly, it would take much longer for a potentially hostile nation to develop the necessary capability, doctrine and proficiency. These were key observations. They led to the observation, they led to the conclusion that in the context of the defence of Australia only lesser contingencies were credible in the shorter term and that more serious contingencies were credible only in the longer term. This in turn gave rise to the notion of 10 to 15 years of warning time for such more serious contingencies. There was also the policy conclusion that the size and shape of the defence force should be sufficient to handle shorter term contingencies and be the basis for expansion during warning time for more serious conflict. All this is familiar stuff. In contrast, today, higher levels of military capability in the region are changing the basis that underpinned these policies. In particular, China continues to modernise and expand its arms forces. This means that its ability to conduct operations at high levels of intensity and technological sophistication has increased and will increase further. This is not, I repeat, this is not to paint China necessarily as our adversary. Although, as Paul has pointed out, China's values and strategic ambition are already in some respects in sharp contrast to our own Australian values and interests. Rather, it is to say that because the capability exists or is planned to come into service, warning times for more serious contingencies are now potentially much shorter. Further, indicators of warning will come to depend more critically than in the past on assessments of motive and intent. Such judgments are inherently more subjective and fluid than assessments of capability. Strategic risk management, therefore, becomes much more challenging. What are the consequences for defence planning? I have five principal points. First, there is a need to reconsider the spectrum of possible contingencies, and in particular, contingencies envisaged as credible in the shorter term will need to embrace higher levels of technological sophistication and intensity than in previous years. What would be the nature of such contingencies? What would be their context? How would our Australian interests be engaged? What level of intensity and duration might be expected? How would they be conducted? How would the risk of escalation be managed? How would they be drawn to a conclusion? What might we plan to do to avoid them in the first place? And in the context of my part of this lecture, what are the implications for the force structure and its readiness and sustainability profile? Such analysis would require a more sophisticated approach than one based only on lesser contingencies in the shorter term and more serious conflict put off into the never-never second. How should we approach indicators and warnings for potential conflict? The need for clear judgement in this area would be compounded by the likely absence of an obvious warning threshold as there could be high levels of ambiguity. There could well be contestability between the intelligence assessment agencies and between them and the policy areas within the machinery of government. Third, and following from the prospect of shorter warning times, is the need to consider higher levels of readiness and sustainability. This is manifest in a wide variety of ways. Training levels, stocks of missiles and torpedoes, holdings of maintenance spares, the ability to sustain operations for weeks or months, many months, around the clock, with particular implications for surveillance, command and control, intelligence staff, cyber operators, combat pilots. What about fuel stocks and their reliability and operational bases, especially in the North? In previous years, many consumables have been held at levels not much more than those appropriate to peacetime rates of effort and low levels of preparedness. Fourth, is the matter of the size of the Defence Force and its potential for expansion. On the one hand, recent years have seen some important new capabilities, such as the Wedge Tail early warning and control aircraft, the Jinder Lee radar network, better tanker and transport aircraft and much improved command arrangements. System for system, tomorrow's Defence Force will be much more capable than yesterday's. Further, by 2040, we will have a few more frigates and by 2050 or so, which is a long way off, we will have doubled the size of the submarine force to 12 submarines. On the other hand, in many ways, the Defence Force, now planned for, is only modestly expanded from that of the benign years of the 70s and the 80s, at the height of the core force and expansion base period. In many respects, the numbers remain modest, especially against the prospect of more intense conflict. Two issues follow from this. First, whether the Defence Force would be large enough to handle the more demanding, short warning contingencies that are now becoming a real prospect. And second, what would the modes and mechanisms for timely expansion of the Defence Force be, including over a much reduced expansion period? I suggest that we should, at the very least, identify the steps that should be taken now to shorten the time that future expansion would take. A related issue, as Michael Shubridge of ASPE has pointed out, is the need to consider attrition reserves, not just for peacetime accidents, but also for combat losses on operations. My fifth point is the matter of capabilities that could prove to be important additions to the Australian order of battle. Technology will bring new possibilities and imperatives anyway. Hypersonics come to mind. But some specifics for consideration include improved strike capabilities for enhanced levels of deterrence, a point on which Brendan will say more. Nuclear-powered submarines, perhaps eventually. And an Australian maritime area denial weapon, perhaps drawing on the formidable capabilities of the Jindali radar network. The other great policy challenge comes from uncertainty concerning the United States. What I have said so far assumes that the US continues with more or less its present levels of commitment towards its friends and allies in the Indo-Pacific. What might America do that would be different from this? An obvious possibility is that America would raise the threshold for its active involvement in its allies' security. It would expect its allies to become more capable to conduct operations in their own defence. A sort of Guam doctrine, Mark II. Currently, we get privileged access to US defence capabilities, intelligence, science and technology and doctrine. Provided this access continued, the consequences for us would be to increase the emphasis on what I have already mentioned. More readiness and sustainability, improvements to northern bases, attention to the expansion base, enhanced strike and so on. This would cost more, but would not in itself represent a major redirection of policy. Much more worrying would be if the United States withdrew into its shell and significantly reduced its interest in the Indo-Pacific and its allies, and for that matter in the North Atlantic too. I believe this to be unlikely, but if it were to happen, the consequences for us and for others would be severe. Alternatives to American high-tech equipment would not be as capable and probably just as expensive, probably more expensive. Reduced access to American intelligence, science and so on would be a severe disadvantage and further with American withdrawal we could expect a more assertive China to fill the vacuum. A particular concern would be the end of extended nuclear deterrence, not just for us, but for other US allies in the Pacific, Japan in particular. To say the very least, such a development and the prospect of nuclear proliferation in the Pacific would require Australia to review its own position on nuclear weapons. What I have just outlined is not a council of despair, far from it. In many ways, Australia's defence force today is in good shape and the modernisation plans are impressive and reassuring. Our relationships with such countries as Japan, Indonesia and India are already a good basis on which to build and to advance our shared interests in the security of the Indo-Pacific. While past policies cast a long shadow, defence itself recognises that changing times mean that policies themselves must change. Whether the rate and extent of change are sufficiently recognised is however a moot point. And as Brendan is about to argue, a higher level of strategic imagination would help position us better for the future. In conclusion, time is not on our side. We cannot afford complacency. Our future strategic circumstances will be much more demanding than those of the past 40 years and we need to respond to these changes now. The strategic bus is leaving and we need now to get on board. Otherwise, it will be all too late. Thank you. Good evening. It's a great pleasure to be here and to see so many familiar faces. We know that the world we have lived in is changing in profound ways. We do not know what the future will look like. Any genuine crisis is a challenge to imagination. Such a crisis will challenge who we are and who we can be. The challenges to our security in the emerging strategic order of the Indo-Pacific are first a challenge to our strategic imagination. To respond effectively, we need to reimagine our place in this order and work to shape it to our interests. So we must think radically about policy and strategy. I say radically because thinking must over time consider the fundamentals of our strategic environment, the ways in which it is changing, our place in it and the measures we need to take to ensure security and prosperity. The changes we are seeing call into question the utility of current policy frameworks as a guide to action in the future. For decades, Australian defence strategic policy has been guided by the over-rating goal of maintaining strategic stability in the Indo-Pacific in ways that support our national interests. Australia has pursued this goal in three ways. We have supported and participated in the creation of regional communities of interest. We have pursued regional capability and capacity building through bilateral and multilateral defence cooperation. We have intervened to help resolve regional crises, either in the context of natural disasters or in relation to political challenges such as Cambodia, Timor in the Solomon Islands and more recently, Marawi. This has occurred in an environment that has been stable and underpinned by US power and broadly agreed assumptions now under challenge about the nature of the strategic order and how it should work. Our strategic goals may not change that much, but we are going to have to work a lot harder to achieve it. Strong defence capability signals both the willingness and the capacity to defend our national interests with force if necessary. It ensures that we are taken seriously in our region. Australia's strong defence capability has for decades been one of the foundations of Australia's ability to build community, build regional capability and ensure Australia's influence in regional decision making. How we build capability in the future will be the key to our capacity to continue to exercise influence and support regional security. Policy is important. It is much more than words. Policy establishes how we understand the reality we are in and guides our decisions. The question for policy is not only what does it enable us to see so that we may make decisions with confidence, but what does it prevent us from seeing? What does current policy suggest are our current blind spots? The DFAT White Paper, the Central Foreign Policy Document of the Government, argues that the world is changing that we have an abiding interest in the continuation of the current rules-based order. The question that lies on the other side of the White Paper is how might we operate in a world where the rules-based order we are comfortable with is being supplanted by something with which we are less comfortable, such as a different conception of what the rules might be, or a world where we see coercion as a policy instrument used more frequently. The DFAT White Paper speaks to this with its focus on strengthening our regional relationships. A pace of an extent of change in our strategic environment raises the question of whether we are putting sufficient resources into implementation. The border has emerged as a major, indeed, perhaps the central organising idea for much of our national security thinking. Central to this is the idea of the border and the necessity of border integrity. This goes with a trend in thinking that suggests that the border embraces and mediates every aspect of our relations with the rest of the world. This gives policy and strategy development an operational focus because most threats to border integrity, real or imagined, demand a short-term operational response, strengthen policing in a hardening of the border in the context of the challenge of the changing strategic order in the Indo-Pacific is insufficient as a conceptual framework to guide policy and decisions about future engagement in that strategic system. More profoundly, it suggests a failure of strategic imagination because it turns us inwards, embodies a fear of the world and either narrows or takes us away from engagement. The 2016 Defence White Paper was in many ways a landmark document because it established a funded investment programme that will guide development of the ADF for the next decade, particularly the rebuilding of the Australian Navy. The White Paper does not establish priorities for forced structure planning but focuses on Australia's strategic defence interests and consequential strategic defence objectives. These strategic defence interests are a secure, resilient Australia with secure northern approaches and approximate sea lines of communication, a secure near-region encompassing Maritime Southeast Asia and the South Pacific, a stable Indo-Pacific region and a rules-based global order. Each of these strategic defence interests has allocated to them corresponding strategic defence objectives. The conceptual problem that the White Paper presents is that it gives equal priority to each of these interests and by extension the defence strategic objectives. The problem of having strategic defence interests of equal priority is that priorities for capability building and strategic decision-making are then conditioned by whatever the current crisis is. Short-term crises, which are visible, will often take precedence over longer-term crises which are not so visible. We are in a period of transition. A characteristic of periods of transition is that the strategic environment will be ambiguous. We see experiments and hedging. We will see countries large and small across the Indo-Pacific behaving in unexpected ways as they seek to position themselves in a potentially different strategic order. Because we don't know what the future will bring, the past can become very seductive because it is what we know. Policy therefore becomes very important because the task of policy must be to help us see the reality of our strategic environment and to guide decisions to respond. So what should we do? I have four suggestions. Another list. We need to increase presence and build integration with regional countries at the force level. In times of transition, presence matters. Presence means that you are there and that you can respond both operationally and strategically to events, both to solve problems now and to create the decision-making structures of the future. We should increase our presence in the region both in diplomacy and in defence. For defence, the guiding policy framework should be on capability building to create the capacity for forces to integrate to deal with both strategic and operational challenges. Forces should be capable of integration to respond to contingencies at every level of potential threat. Integration must embody partnership, including acceptance of leadership from other countries when that is appropriate. With Indonesia, the country of most importance to Australia and our long-term security, we should build integrated capability to a level where we can create an operator-combined task force that can be led by either Indonesia or Australia and be capable of dealing with a major regional security challenge. The operational test for capability building should be the capacity to integrate forces. The strategic test should be the capacity to operate as an integrated force for high-intensity contingencies to either resist coercion or signal willingness and capacity to do so. Increased presence reflects a genuine partnership and a building integration requires a profound change in strategic and operational culture both for Australia and for our regional partners. We need to understand, build and use defence capability strategically. We're building use defence capability to strengthen our position in our strategic environment to make us more powerful. An ADF that possesses major strategic capability increases Australia's ability to act independently or in coalition. The primary lens for future capability development should be on the extent to which it contributes to this goal. Emerging capabilities such as the Joint Strike Fighter, the Future Frigate and the Future Submarine will change our strategic environment, increase Australia's military power and will create new opportunities for engagement and capability building in the Indo-Pacific. We need to understand what these capabilities represent strategically, how and where they can increase Australia's power and the ways in which we might continue to develop and use them to increase our ability to act independently in support of our national interests. One of the major implications of these capabilities is that in giving Australia more power, they will give Australia more capacity and opportunities for leadership. I make the point that our experience of leading in response to a major security crisis in our region is limited. In recent history, it is only the independence of East Timor-Leste that I would consider a major security crisis that directly engaged our interests and where Australia had to exercise leadership. We should build deterrence capability that is independent of alliance systems. The alliance enhances our deterrence because our deterrence capabilities are integrated into larger alliance systems. Policy should focus on strengthening our capacity to exercise deterrence without necessarily drawing on these systems. It may mean a greater focus on developing indigenous capabilities that have deterrent effects. It may also condition how we want to think about and use some of the emerging strategic capabilities such as the future frigate in the Joint Strike Fighter. We should understand that budgets drive capability which in turn determines our capacity to operate effectively in our region. We are getting smaller in relation to other economies of the Indo-Pacific. This means that if nothing changes, we will over time have less power, including military power. To offset this, we will need to increase our defence capability. This means that we will need to put more resources into defence. The defence budget, 31.2 billion in 2018-19 budget papers is significant but it is by no means the largest item of projected Commonwealth expenditure. It is less than the expenditures on health, 78 billion, education, 34 billion, social security and welfare, 176 billion. The measure of the adequacy of the defence budget does not lie in how much a proportion of GDP it represents. Nor does it lie in the share of annual budget allocations across Commonwealth expenditures. The only meaningful measure of whether the defence budget is adequate lies in how much capability it allows us to acquire or develop. It is the level of capability that determines the contribution of defence to our ability to support our national interests in the Indo-Pacific. Ultimately, how much is enough rests on a judgement about the level and nature of strategic risk and the extent to which we want to try and mitigate it through capability building. As each of us tonight has argued from different perspectives, our strategic risk is increasing. In summary, the changes to how we participate in the Indo-Pacific will be profound. We will not only have to reimagine what we do, but in some ways who we are. We need to build much greater defence integration with countries of the Indo-Pacific, particularly Indonesia. We need to build capabilities that give us more deterrence with less reliance on aligned systems. Priority for capability development should focus on increasing our capacity to support our strategic interests in the region where we live. We need to be ready for leadership in the event of a major security crisis that engages our national interests. In summary, we need a defence capability that can support our participation in a world where the rules are likely to be negotiated continually and where the capacity to exercise force will be an essential foundation of our ability to live in this world as we want. Thank you.