Mr BEAZLEY (Leader of the Opposition) (11:27 AM) —I am delighted to be able to follow the Prime Minister's statement on the Defence white paper. In this chamber it is good to be debating an issue of such fundamental national importance. I am grateful to the government for the opportunity I had to be briefed this morning. I and my shadow minister for defence, the member for Cunningham, are particularly grateful to the Minister for Defence, Mr Moore, and defence department official Hugh White, who conducted that briefing.

In the short time since the opposition has had the document and the briefing from the government this morning, we have had some opportunity to examine the defence policy framework and the proposals contained in the white paper. The opposition finds the broad policy framework enunciated in the white paper to be an appropriate basis for defence policy and military strategy in Australia. For a number of years we have been concerned about the drift in our defence policy, which has been evidenced by ambiguous statements and less than clear articulation of defence policy fundamentals.

This white paper shows the value of transferring the responsibility for defence policy articulation from the realm of politicians' musings and news journals to the realm of professional defence planning and the commonsense of the Australian people. The basis for those concerns has now been diminished, subject of course to an examination of the fine print, as would be expected. Given I have had only a few hours to ponder what is being announced today, we are supportive of the material within it.

I must say a few words, however, about the concerns that we have had over the last few years. After 1996 a new language of defence emerged in official Australian strategic thinking. There was a steady drift away from a national consensus on the primacy of defending Australia and the maritime approaches to our nation. The shift was initially done in code, starting in 1997 with the release of the strategic review. References appeared to a more outward looking defence posture, to more proactive operations, to a rejection of fortress Australia—whatever that means. Former Minister for Defence Ian McLachlan openly talked about the ADF being involved in operations on the Korean Peninsula and in defence of Taiwan. Internal defence documents reportedly began to focus on engagements further forward than the sea-air gap north of Australia. The Army began to declare the need for expeditionary forces—and, yes, in recent months reports have been doing the rounds of the Navy's unquenchable desire for aircraft carriers.

Of course, the most egregious example of this new language of defence was the articulation of the so-called Howard doctrine that appeared in an interview with the Prime Minister by the Bulletin magazine last year. The story announced that the Howard doctrine meant Australia would act `in a sort of deputy peacekeeping capacity in our region to the global policeman role of the US'. Within a week, the Prime Minister was forced to hand in the badge after howls of criticism. Unfortunately, the damage was done, as copies of the article were faxed and emailed around the world. The Prime Minister did not effectively at the time spell out the other impressions that his words left: that Australia would intervene in regional trouble spots to protect Australian values, and that Australia stood separate from the Asia-Pacific, with strength and military capability as a platform for Australia achieving and exerting regional influence. The Howard doctrine was born, as Gerard Henderson noted at the time, of `verbal imprecision out of no script.'

These views sustained for any length of time would have the capacity to undermine over 30 years of good work on both sides of this House, done by Australia in trying to build positive relationships within the region. They deny the reality of our large Asian-Australian communities and the many cultural, educational, historical and other links we have had with our neighbours for a couple of centuries. One of the worst effects of the government's loose talk would have been the ill discipline it could have engendered in our defence planning framework. If we took the Howard doctrine and the other language that emerged after 1996 literally, each of the armed services would have had a legitimate case for just about any high-tech military capability you cared to name. And, in the confusion that would have resulted, they would have got none.

The Hawke and Keating governments managed to establish a generally agreed strategy of defence self-reliance within the framework of alliances and translated it into a concrete approach to defence force planning. The theory finally became the all-embracing reality underpinning our nation's defence programs. By the time Labor left office in 1996, Australia's national security was founded on three interlocking policies—a defence strategy of self-reliance and a policy of developing the armed forces required to carry this out; an alliance strategy of security links with the US, which did not require the previously sought but unrealistic, and therefore non-credible, levels of military commitment to our direct defence by the United States; and a diplomatic strategy of engagement with Asia as a means of, among other things, ensuring our security with our regional neighbours. By 1996, Australia's defence strategy was no longer predicated on being a dependant. Our alliance with the US was no longer a proxy imperial defence arrangement and no longer the subject of vigorous dispute between the right and left of Australian politics, and our proximity to the region around us was seen for the first time as a beneficial contributor to our security, not a source of threat.

As I indicated in August in a major speech on defence policy, and reaffirmed this morning in an article in several major newspapers, Labor is firmly of the view that Australia's national defence strategy must be one of self-reliance. That is the prism through which we assess the detail of this white paper. I was heartened recently by the most important message arising from the report of the defence community consultation team, led by Andrew Peacock and including my former colleague Stephen Loosely—and I thank the Prime Minister for his kind references to him. That message was that the Australian people understand instinctively what their Defence Force is for—that the first and foremost task of the ADF is the defence of Australia, that within this framework the ability to undertake operations further afield is important and that Australia should strive for as much defence self-reliance as possible within the context of our security alliance with the US.

Australia's military strategy must be based on the defence of Australia and its maritime approaches through a layered defence in depth. This strategy must form the core of our force structure planning, and it must determine with an iron discipline priorities for ADF capability development. Australia cannot and should not structure its Defence Force directly in relation to our alliance or potential diplomatic needs. Force planning must be conscious of these needs but not driven by them. We certainly should not structure the ADF on the basis of forward defence contingencies, such as conflict on the Korean Peninsula, conflict across the Taiwan Strait and conflict in the South China Sea. Australia will always have an interest in preventing regional security crises emerging in areas such as these. We need to contribute to diplomatic strategies aimed at preventing such regional tensions ever becoming real shooting wars. However, such scenarios should never be allowed to form the basis of our defence strategy or force planning considerations.

Of course, our Defence Force provides us with other national capabilities beyond the immediate defence of Australia. The ADF adds to our international relationships through bilateral and multilateral military activities. It provides a capacity to contribute militarily to international peace operations and humanitarian efforts. It supports emergency services. It supplements capabilities in the areas of coastal surveillance, rescue and counterterrorism. Through its equipment demands and activities, it adds to national industrial development and Australia's science and technology base. These are all significant defence priorities, but they should not determine in any decisive way the shape of our defence strategy or the ADF's force structure.

Against this background, what consideration should guide our defence planning and force structure decisions? The key tool that our defence planners must use and that governments must support is to analyse the abiding nature of Australia's military geography—the vast expanse of Northern Australia, our extensive maritime surrounds and the arch stretching from the Indonesian archipelago through to the South Pacific. In any approach to our nation's defence planning, Australia has long relied on the ability to apply advanced technology effectively as providing the principal way of defending ourselves. This means favouring advanced technology when it confers a cost-effective operational advantage. In future, the revolution in knowledge based military technology will become even more decisive. With these geography and technology considerations in mind, the key priorities for the layered defence of Australia emerge.

The first priority is knowing what is going on around us, meaning a premium on intelligence, surveillance and reconnaissance systems and highly responsive and flexible command arrangements and command support systems. Here, in many ways, lies the principal contribution to our defence of Australia's relationship with the United States. It is of major and material value to us to be able to sign up to a nation with the most comprehensive surveillance capabilities of any on earth—and to do so on a continuing basis of access to the most intimate details of those capabilities because we are a trusted partner. At least since the 1960s this has given Australia a strong advantage in defence planning and has been a major cost saver for Australian defence budgets.

When we talk about defence self-reliance within the context of alliances, we must always remember that it is not primarily the thought that troops will rush to our defence that is the key aspect of that alliance but the day-to-day value of access to high technology in terms of the weapons systems that we acquire, access to the codes that make that high technology work effectively—that is, the best practice elements, not necessarily the basis on which it is sold elsewhere—and, finally, access to the intelligence capability that would cost us simply billions if we were to attempt to emulate it.

Secondly, we must be able to counter threats in the maritime approaches to Australia, meaning a premium on defeating seaborne threats and achieving air superiority over the maritime approaches. Our Navy and Air Force must have the capacity to deny any aggressor the unfettered use of sea and air space in the approaches to Australia. The defence of Australia will be primarily a maritime defence, and maritime capabilities are important in that regard. Therefore, we welcome the government's announcements about airborne early warning and control and its announcements in relation to upgrading activities associated with in-flight support of our air strike and defence capabilities.

One of the benefits of establishing a coastguard—a policy that I announced in January—to deal with the increasingly serious transnational security threat being posed at our borders, particularly in terms of crime, quarantine and illegal people movement, would be the supplementary capability that it would bring to our maritime defence task in times of war or national emergency. It is time for a coastguard. When we considered this issue in the early 1980s our circumstances were very different. We have seen a surge in illicit drug imports into Australia in the course of the last five or six years and we have seen a resumption of the threat of substantial illegal migration, which had largely petered out during the 1980s. Quarantine and health problems are developing exponentially in the regions around us. We can no longer afford to have multidivided responses to these activities. We need a coherent constabulary effort that, in wartime, would be ancillary to the defence forces and, in peacetime, would provide opportunities for young naval officers, in particular, to receive excellent command training.

Thirdly, we need to be able to strike at the focal points of threats to Australia, meaning a premium on aerial strike, submarines and special forces. While our strategy must be essentially defensive in nature, it cannot simply be reactive and must allow for the use of tactical strike capabilities. Fourthly, we must be able to defend Northern Australia, meaning a premium on mobile land forces to operate at the Top End and in Northern Queensland and northern WA.

From these four priorities, it is clear that the Navy and the Air Force have the principal forward role in the sea-air gap, supported by mobile land forces on the mainland. I said earlier that fashioning the ADF in this way to deal with the defence of Australia is not a straitjacket on our ability to act further afield in pursuit of our national interests. The four defence priorities that I have outlined ensure the spread of capabilities for both. As I said at the outset, it is absolutely crucial that all our thinking about defence policy takes place within the context of the character of our relationship with the region around us. No more important foreign policy issue faces us than advancing our engagement with Asia. Building positive engagement with Asia is, amongst other things, a critical element in the task of securing Australia. The government has conspicuously failed to carry forward the formerly bipartisan objective of expanding and deepening Australia's engagement with our East Asian neighbours. As Paul Kelly notes in today's Australian newspaper:

strategic in the broadest sense of the term. He says that Australia is:

This government has deliberately and repeatedly stressed our separateness from Asia and put a heavy emphasis on the importance of military capability as a foundation for regional influence. This is particularly clear in the government's dealings with Indonesia. The Prime Minister has squandered a historic opportunity to build a new relationship with the new Indonesia under democratically elected Abdurrahman Wahid. We do not know what the future holds for Indonesia, but President Wahid's election offered Australia and Indonesia a great opportunity to start afresh. The opportunity and challenge presented to us was not about rebuilding the old relationship but about a new beginning.

As I put it in May, we were given the opportunity to put our bilateral relationship on a new level—to reframe it in terms of neighbourliness, of nations living side by side, of neighbours in geography and neighbours in democracy. The government has not seized this opportunity, and the price comes not just in terms of our bilateral relationship; it comes in terms of our Asian relations generally. Australia is being excluded from important regional fora. We are in real danger of being marginalised in Asia, to the considerable detriment of our national interests and prosperity. If we can get our defence policy approach broadly right, we should now be able to get our foreign policy approach broadly right. The opposition will not hold its breath, though: this will probably be a task for the next government. Turning to the question of defence resources—

Government members interjecting—

Mr BEAZLEY —Don't take a bet on that! One resource Australia is short of is people. Defending around 10 per cent of the earth's surface with 50,000 full-time personnel is a tough assignment. But remember that ours is a ageing population, so the task will get tougher with a declining population base fit for military service. The opposition understands that the only basis on which we can have a credible and sustainable defence force is by recruiting and retaining sufficient numbers of skilled and motivated personnel, be they full-time or reservists. We see personnel as the key defence asset, whereas the coalition sees them as a cost to the budget. We are worried by the current shortfalls in such key personnel areas as doctors, fast jet pilots and seagoing personnel.

The government inherited 58,000 full-time personnel and consciously cut this back to 50,000 in the name of efficiency. Today it says it wants to reverse direction and go back to 54,000—without being able to specify a recruitment and retention strategy that makes this feasible. I must say that, when I was defence minister, the numbers of full-time personnel were 72,000. As was bluntly acknowledged in the Peacock report, these personnel problems have been very much exacerbated by the impact of excessive outsourcing by the government. This has reduced our capacity to provide logistics support to deployments and has adversely impacted on morale, skills development opportunities, career structures and posting stability for personnel. More than any other single issue, the imposition of the FBT reporting system on ADF personnel symbolised the coalition's disregard for the special position of serving personnel and has had a serious impact on morale.

The white paper talks of a greater role for the reserves in providing the follow-on troops to sustain long-term deployments, yet the coalition has actually reduced the functional capacity of the reserves by the ill-considered decision to abolish Labor's Ready Reserves, the removal of defence leave as an allowable award matter and the introduction of common induction training for the Army. In all other respects, it completely ignored the reserves until the East Timor deployment was imminent and the true position could not be ignored any longer. In the meantime, recruitment to the reserves is at its lowest level in living memory, and retention rates are poor. As a result, the number of active reservists continues to fall, while the government talks about growing the reserves and giving them an increased role. To achieve the more demanding but more rewarding role for the reserves that the government talks about will require it to pay greater attention to the real position of the Army Reserve than we have seen to date from current ministers.

The other problematic defence resource is, of course, funding. We need to start planning for the obsolescence that will impact most in the second decade of this century. But it is no good just throwing money at defence purchases. It demands more innovative solutions than simple new-for-old replacement. Above all, it requires the re-establishment of a correct national strategy of self-reliance. Let me say this about the government's funding announcement this morning: one of the things I fear from it is a triumphalist argument around the place about massive new injections of resources into defence. That will, over time, start to raise queries in the public mind, unless it is properly understood and placed against a proper background of whether this is an appropriate expenditure as against education needs, science needs and health needs—because all sectors of public investment in this country now are dramatically run down.

I know how defence debates go. There is great enthusiasm when white papers are produced, great enthusiasm when the team turns up in Timor and great enthusiasm when there is the odd exercise. But that constitutes about half a paper's worth of newsprint in the course of an entire year. For the rest of the time, the focus goes elsewhere. So, if there is claimed to be a massive cornucopia where none exists, the chance is that it will be substantially threatened in subsequent budget debates. So let me put this amount of money in perspective. Ten years ago, this nation spent 2.4 per cent of its GDP on defence, and 9.4 per cent of all Commonwealth outlays. When Labor left office in 1995-96, the comparative figures were two per cent and 7.9 per cent. In this current year, defence spending has declined to 1.8 per cent, although it remains 8.1 per cent of Commonwealth outlays.

According to the government, today's announcement means that, on the basis of current expectations about economic growth over the decade, the nation in 2010 will be spending 1.9 per cent of GDP on defence and probably devoting around seven per cent of Commonwealth outlays to the task. I do not believe this is excessive, but it is important to get it in proper perspective. It is considerably less than we were spending in the course of the 1980s in terms of total national effort. Therefore, those who would argue that this is somehow or other a misplacement of priorities do need to bear that in mind. In 2000-01, the Commonwealth budget outlays on defence are $10.6 billion; on health, $25 billion. I became defence minister in 1984. In my first full budget, 1985-86, we budgeted expenditure of $6.6 billion; health was $6.9 billion. Reflect on that: $6.6 billion, defence; $6.9 billion, health. Now, in this budget, we have $10.6 billion on defence, and $25 billion on health. These things need to be contemplated to get these statistics into proper focus.

I have no essential quarrel with the funding approach that has just been announced; it appears about right. But, as I said, let us not have the government's spin doctors talking up this boost. The government is barely filling the hole in defence spending it has allowed to open up. Defence spending is as much about quality as it is about quantity. It is widely acknowledged that there are serious problems in defence and they need fixing. While the government released its revised budget figures only two weeks ago, it chose to hide the defence money, so we have been waiting to see the detail, the costs and the programs. Australia must ensure that it gets the best bang for its bucks. We also need to understand what those bucks are.

One of the reasons why I say that we are broadly committed to this is that we need to look at the underpinning of the financial arrangements associated with it. We may be wrong on this, but we believe that, in the calculations of annual growth, the defence deflator for the first time in 20 years has not been used; what is being used is the government's normal GDP deflator. The point about the defence deflator is that it takes into account movements in the Australian currency which, when it comes to equipment purchases, are extremely important. There are some sets of movements in Australian currency which can occur—and I think we have seen them over the recent period—which would wipe out the entire impact of that three per cent, plus some. So we need to know the fine detail of this before we can actually comprehensively tick off on what these funding arrangements are. As I said, in certain sets of circumstances, it can produce much less than three. I recollect that, when I was Minister for Defence, I defended that defence deflator as the basis on which we did our calculations with almost as much rigour as I defended the global budget framework that applied to defence. So we need to see more of the fine detail on this before we know what the actual reality of it is. But, as I have said, basically the government has got it about right.

The white paper indicates, however—and I am disappointed in this—that the government will continue with its Defence Reform Program. The government must recognise that the DRP is not the panacea for all inefficiencies in the defence organisation. In fact, the DRP has hollowed out many crucial areas in defence, and the savings it has achieved may be far outweighed by the long-term ramifications for our military capability. It is probably about time that the DRP was reviewed in terms of its impact upon ADF conditions and morale.

I am sorry that the Prime Minister did not devote more in his speech to Australian industry. Australian industry is absolutely critical to the effectiveness of Australian defence forces. One of the reasons why we do support a long-term approach to defence planning is that it gives industry the sort of certainty it has been deprived of over the course of the last few years. Many capable companies are considering now—and hopefully the result of this will be that they will undertake a change of mind—shifting away from Australia because they do not know what we intend with our equipment programs. Hopefully, that will now change. Hopefully, they will get certainty from this. That is an important aspect and an important attribute of the way in which a proper forward looking defence plan is worked out.

I want to indicate that this white paper has re-established a broadly appropriate framework for defence policy in Australia—one fashioned by this side of the House and one which will always guide us. We will reserve the right to reflect further on these issues following, of course, detailed examination. Finally, I would just like to say that I hope today's statements are an indication of a return of discipline and rigour to the national expression of our strategic aims. Good policy must be accompanied by sensible and careful articulation of policy for audiences both at home and abroad. This is how we create real security for our nation.

Debate (on motion by Mr Nairn) adjourned.