Senator McGAURAN (7:10 PM) —Given the disruption we are all aware of in Fiji and the Solomon Islands and the challenges to the democracy in those states and the insecurity it brings to the whole region, it is worthy to focus on Australia's readiness to meet those challenges. One of the best experiences we can focus on as a yardstick is East Timor. While we are all very impressed by the talents displayed by our forces in the field, there are nevertheless lessons to be learned for our defence forces. The truth is that Australia's defence capacities were stretched to the limit. Australia's commitment to INTERFET of 5,000 troops was so great that there were not enough trained troops available for rotation. The government has responded to that by establishing a second brigade sized group on 28 days notice to move. We have not had two brigades of troops on 28 days notice since the Vietnam war.

Another deficiency revealed by the Timor operation was the lack of control and command facilities on Australian naval units deployed. This meant we relied upon the United States supplied naval vessels which had these capacities. Clearly, Australia must have such a capability as well as heavy lift helicopters, which were necessary to deploy equipment into the mountainous interior of East Timor. Again, these were provided by two American naval vessels. In my view, Timor shows Australia needs an aircraft carrier for effective future operations in the region. It is also not well known that several of the most important operations in East Timor involved amphibious landings where troops had to be deployed directly onto the beaches. Australia had a very limited capability for such operations. The Navy's HMAS Tobruk was fully engaged together with HMAS Jervis Bay, the Navy's single troop deployment catamaran. Australia should have had the capacity with the two American amphibious naval vessels purchased in 1994, but the two ships have cost hundreds of millions of dollars in repair and refit costs and are yet to be deployed—a situation not dissimilar to the defence department's Collins class submarine contracts, again signed by the previous government. These submarines required the recent budget commitment by this government of $100 million to design changes for them.

These are criticisms of past naval purchases. The Air Force have been smarter in their choices. The FA18 Hornet fighter aircraft is Australia's primary air defence response asset. The Hornet can also contribute to strategic strike protection of shipping and land support tasks, all beneficial to the East Timor experience. When acquired in the late 1980s, the Hornet was the most capable fighter aircraft in our region. The aircraft life is up to 30 years and on current projections the Hornet fleet will have to be replaced no later than around 2012. Technology has caught up with the 1980s purchase. The options available to the ADF were to accept a declining capability until retirement in 2015, replace the aircraft now or upgrade the Hornet fleet to restore a relative capability edge. Upgrading the Hornet fleet was considered to be affordable and capable of providing the higher level of capability needed, particularly when combined with the acquisition of new missiles and airborne early warning and control aircraft.

The decision to upgrade the Hornet fleet has been essential in meeting our medium-term capabilities. On current strategic assessment, the upgrade will allow replacement of the aircraft to be deferred to 2015. It should be noted that certain failures within the defence department should be seen as a reflection on the administrative structures under which the department runs, rather than on its service personnel. So it really is crunch time for our defence forces. The East Timor incident has accentuated and accelerated the big decisions that now have to be made. Timor has added about $1 billion a year to our defence bill over the next four years. Over the next decade and a half we will need approximately $830 million to replace obsolete equipment. I stress `replace' equipment—not `increase' the force's equipment.

For example, Australia within the next decade will have to replace its F-18 aircraft and its FFG-7 frigates, its Hercules transport aircraft and its army transport vehicle fleet. But rest assured, we have a minister in charge of defence who is well aware of this mammoth task and the challenges ahead. That is why the government commissioned a defence white paper even before the Timor crisis. The white paper will determine the future shape of Australia's defence forces. The minister has also acted to install a new department secretary as a measure of his determination to bring to account the top brass in defence. To quote the minister from a recent article in the Bulletin, he says:

As there has never been a government that is not electorally sensitive—and I would venture to say that this government is no exception—it is paramount to be able to take the taxpayers with us on such future major commitments. Consider what the defence budget is competing with. Firstly, it is competing with a surplus budget. Secondly, it is competing with a debt reduction strategy. Thirdly, it is competing with a `no new government borrowings' commitment. Fourthly, and above all, it is competing with the political pull by the rural and regional areas for greater infrastructure expenditure. As an aside, is it any wonder that this government seeks to sell Telstra and liquidate its $50 billion worth of capital? But that is another story for another day.

In conclusion, the release of the defence white paper later this year will bring these decisions to a head and set the trend in expenditure for decades to come. Everyone in this parliament will be involved with the decision one way or another, a decision that is crucial to the security of this nation.

Senate adjourned at 7.18 p.m.