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'Globalisation, national security and the national interest: speech to the Royal United Services Institute of Victoria, Melbourne.

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SPEECH The Hon. Peter Reith, MP Minister for Defence


26 Jul 2001 MIN 70801/01





Leader of the House of Representatives














26 JULY 2001


Good afternoon.

It is a very great pleasure to be here today to address you as the Minister for Defence.

As Shadow Minister for Defence back in 1993 I was an interested party to the work of the Institute, and it is pleasing to again assist in encouraging debate about important strategic and defence issues.

Strategic Implications

Today I have been asked to talk on the topic "Globalisation, National Security and the National Interest".

As popularised in the media, ‘globalisation’ is generally used to describe the merging of economies, and the breaking down of barriers to communication and transport systems across international borders.

It is, of course, nothing new. The word "globalisation" is in vogue but the trend has been with us for a long time.

And of course, much is made in the media of the demonstrations at international gatherings by those who see the challenge of globalisation but fail to appreciate the many benefits. The demonstrations may march under a new banner but many are pushing old causes.

As a Defence Minister, focussed on defending Australia and its national interests, I also see the

religious, political, cultural and ethnic effects of globalisation shaping Australia’s national security.

Accordingly, I think of globalisation in the broadest sense - that is, as the relationship between nations and societies such that events in one part of the world more and more have effects on people and societies far away.

Simply consider the impact of illegal fishing, refugee flows and environmental concerns, as well as drug trafficking, terrorism and cyber warfare on international and Australian systems of governance.

So when the Defence White Paper talks about defending Australia and its national interests, the Australian Government is squarely contemplating the impact of globalisation on Australia’s strategic circumstances.

In fact, we identified globalisation as a defining driver that will underpin the future of the global strategic environment - US primacy being the other.

Both these factors will help strengthen global security, and promote economic, social and political developments that align with Australia's interests and values.

Globalisation has also been accompanied by changing international behaviour.

Increasingly, the United Nations has been responding to a growing sense in the international community that crises causing avoidable human suffering cannot be ignored just because they happen within the borders of a sovereign state.

The Australian-led INTERFET coalition is an example of global concern influencing Australia’s immediate strategic environment - at least one nation from every inhabited continent on the globe joined this multinational force.

To my mind, this kind of globalisation is a positive trend because it strengthens the resolve of governments to pursue an effective international system.

Increased international linkages amplify the benefits of a stable international environment and, more importantly, multiply the costs of any disruption.

Notwithstanding my recognition of globalisation as the cement that helps hold the international system together, I recognise that there are several countervailing pressures.

Firstly, the importance of nation-states to global security cannot be underestimated.

They remain the most important strategic actors in the world today.

It is the nation state that is the fundamental building block of the international system.

It is the nation state that negotiates the standards and norms of behaviour, and applies them where necessary.

This will not change.

Moreover, it is the nation state that develops military capabilities and decides if and when to

use them.

Although many will argue that major inter-state violence is a thing of the past, few nations act as if they believe this.

On the contrary, the area where our strategic interests primarily lie - the Asia Pacific, has seen rising defence budgets and force modernisation, a trend that was only recently slowed by the 1997 Asian Economic Crisis.

Secondly, globalism is paradoxically being accompanied by growing regionalism, especially in the field of security, where the end of the Cold War has moved attention from the global power balance to a series of regional strategic systems.

During the nineties, we have seen a number of conflicts break out that concerned regional rivalries, ethnic hatred and other localised causes.

Thirdly, the effects of globalisation are uneven.

There are winners and losers.

This is changing the relativities of power and influence in ways that will require careful management.

The final countervailing pressure is that the integrative trends of globalisation themselves are not irreversible and could be especially vulnerable to a deteriorating security environment.

All of these changes have significant implications for the nature of warfare.

Although relations between states continue to define today’s global order, the nation-state itself can be a fragile institution in which allegiances to family, clan or ethnic groups are often much stronger than allegiance to country.

Globalisation is reducing the autonomy and effective sovereignty of nation-states as well as the authority of central governments, with power being shared with multinational business, international organisations and sub-state social groups.

This vulnerability and lack of control has, in some cases, stimulated the outbreak of internal instability.

Conflict is likely to be based on some combination of ethnicity, race, regionalism, economics, religion and/or ideology.

Combat is likely to be close and bloody; guerilla warfare, particularly in urban settings, is likely.

Combatants will be interspersed with civilians, using them as shields, cannon fodder and bargaining chips, as we saw in Bosnia and Kosovo, to name just two recent examples.

We don’t have to look far to view the destabilising effects of disaffected internal actors and the tendency for the international community to become involved.

The Government’s Defence White Paper noted this trend, and the growing tendency for armed forces to become engaged in such activities as humanitarian relief, evacuations, peacekeeping

and peace enforcement.

The Government has directed that the ADF give such operations a more prominent place in our defence planning than in the past.

And we have approved a range of enhancements for the ADF, in the light of our East Timor experience, to prepare better for such operations.

The increasingly global availability of defence equipment and dual-use technology has also diminished the need for indigenous technological development.

In a competitive market, and with ready access to credit, it is easier to acquire sophisticated capability that will exceed the capacity of the domestic technology base to generate.

In particular, ‘off-the-shelf’ military capabilities heighten ADF concerns about advanced conventional weaponry entering the region.

The proliferation of weapons of mass destruction and their means of delivery remains a concern, and compels the Government to maintain a key interest in the development and sale of military technology world-wide.

Another trend of concern has been the globalisation of evil.

Terrorism is a telling example of this type of threat to peace and security.

Terrorism is particularly difficult to manage because its perpetrators are often willing to die for their cause and because its affiliation is not limited to one country.

It is truly global.

Cyber warfare is another growing threat.

Admiral Chris Barrie discussed this at a conference last month, and noted that highly computerised societies, such as those of the United States and Australia, are extremely vulnerable to this sort of threat.

It is a cheap and very effective way to attack extremely valuable defence and non-defence assets.

Finally, globalisation has stimulated a variety of non-military concerns, including illegal immigration, the drug trade, illegal fishing, piracy, and quarantine infringements.

Such threats are symptoms of our increasingly borderless world, and have become more important to our security.

The Government takes these problems seriously, and the ADF will continue to have a major part to play in our civilian-led responses to these activities.

The Government also places a high degree of importance onto Defence industry and its ability to support and augment the ADF.

Globalisation poses significant challenges for the evolving Australian Defence industry base

and its future business relationship to Defence.

Globalisation provides a number of challenges for Defence industry in Australia.

These include

- a reduction in choice through the consolidation of Defence firms worldwide,

- foreign ownership and a concomitant reliance on overseas technology,

- a global reduction in Research and Development funding; and

- a shortage of qualified technical personnel.

All these trends have implications for Australia’s policy of defence self-reliance.

These challenges also offer a range of opportunities.

The Government can help Australian industry meet the challenges and seize the opportunities.

Specifically, Defence’s current industry and procurement policies will need to be reviewed and, where necessary, changed in order to address the impact of globalisation on the Australian defence industry base.

Earlier this year, I asked my Department to undertake a review of Defence industry policy.

The review highlights the need for a more strategic approach to Defence industry policy in which Defence’s long-term capability requirements are linked to the sustainability of clearly defined, key Australian defence industry capabilities.

With respect to the Defence market place, I am yet to be convinced that competition for the sake of competition always produces the best outcomes for both Government and industry.

In some instances, competition can be counter productive, does little to sustain key Australian industry capabilities, and may end up costing Government more than it saves.

But if we do head down a new path, new accountability and transparency measures, such as open book accounting, benchmarking and properly structured incentives and penalties, would need to be implemented.

The trend towards foreign ownership of much of defence industry in Australia is another feature of globalisation and is not likely to be reversed.

Much of our defence industry will continue to comprise the Australian based elements of overseas multi-nationals.

This can be to Australia’s advantage as it can facilitate access to the intellectual property and high-technology products of these companies.

This international presence should be viewed as a strength in many ways, as it provides access to these companies’ wider intellectual property, skills and expertise.

Of course, in acquiring overseas solutions it is important to facilitate the involvement and highly

innovative potential of Australian industry.

Australian industry assistance in the development of new capabilities is also important, and can often be best achieved through Australian industry involvement in international collaboration programs.

This is not to say that there is no room for innovative and uniquely Australian solutions.

Where the circumstance warrant it, namely where Australia’s needs are significantly different from those of other countries or our allies’ technologies are not available to us, indigenous Australian industry solutions must and will be sought.

What is ultimately required is a more strategic approach to capability management in which our procurement decisions specifically target our vulnerabilities and the sustainability of our critical defence industry capabilities.

I am confident that the Defence Industry Policy Review will provide the policy framework for achieving this. We are spending $50 billion over the next decade and beyond. By accident or design we will impact/shape industry capability.

When we talk about globalisation we tend to think of communications.

Competitive pricing for telecommunications. Cheaper airline tickets. Greater choice in cable TV viewing. Multiple means of accessing information.

Before I conclude I would like to give you a feel for the challenges facing the Defence communications field in an age of globalisation.

The last 10 years has seen a dramatic change in the telecommunications environment in Australia.

We have gone from a single quasi-government telecommunications provider to around 80 carriers and 800 service providers with widely varying scope of business and services.

Ownership also varies widely including many multinationals and some with foreign government ownership.

As you would no doubt appreciate, Defence communications are fundamental to national security.

Defence communications systems provide command and control to military forces, distribute intelligence and surveillance product, and coordinate assets.

Real-time, continuous and networked communications and uninterrupted access to data could provide the winning edge on the future battlefield.

Defence communications is big business, with a current investment of some $3 billion, and new investment planned of some $2.2 billion over the next 10 years.

Despite this, Defence is not big enough to justify its own dedicated telecommunications infrastructure.

Defence communications systems are based on services provided by commercial carriers and other service providers.

Defence cannot afford to establish its own dedicated national infrastructure nor can it afford dedicated military satellites.

Defence does build its own communications networks but makes substantial use of components from the commercial carriers and service providers.

Securing Defence communications in the rapidly changing environment is a challenge.

Diversity and redundancy of communications circuits ensure that critical communications gets through.

Redundant backup circuits, switches and network control centres add to communication system network survivability.

Operation of Defence communications from compartmented enclaves in Australia staffed by Australians can help to address the risks to communications and equipment.

Defence contracts for the supply and operation of these communications networks oblige contractors to deliver requested levels of service and maintain export licences for any sensitive technology employed.

Competition in the market place strengthens these contractual arrangements to ensure there are viable alternative sources of supply.

The changing environment demands ongoing adaptation of mechanisms to protect defence communications security as well as our investment.

Contracts provide remedies for breach of contract through civil action and may extract monetary compensation.

They define required performance but cannot guarantee it.

In response, Defence is pursuing a program of short term and longer term measures.

For example, Defence recently signed up SingTel and Optus to protect its satellite communications in a deed of agreement that is backed with substantial corporate guarantees.

It provides step-in rights, compartmented operations, information security, technology licensing, Australian membership of company boards of management and financial guarantees, as well as undertakings to maintain and expand the satellite business in Australia.

Globalisation of the market and opening up entry into the Australian telecommunications market carries obligations on participants through licensing.

Those that behave contrary to national security and the national interest can be prevented from participating.

Market forces too will soon force out of business suppliers that act contrary to their customer’s interests by being negligent about protecting the customer’s communications.

Market forces require diversity, and diversity provides choice, economy, a stronger customer focus and protection.

Various pieces of Commonwealth legislation provide measures that can also be applied in the short term such as a response to a national emergency and an obligation to provide designated services to Defence.

And while the Defence Act gives the Federal Government broad powers to defend the Commonwealth and the States, its reference to infrastructure is slightly anachronistic, as it only provides for taking control of the railways.

This was clearly the only major piece of infrastructure worthy of consideration back in 1903!

Clearly this needs to be brought up to date to reflect the reality of rapidly changing technology in the 21st century.

Like any large business, Defence is dependent on the national infrastructure for its business systems, which were proved indispensable to our forces during the East Timor operation.

In the last Budget, the Government approved over $100 million for the E-Defence project, which will provide a new level of infrastructure through smart cards, electronic directories and secure e-mail.

Every Defence employee will be provided with a digital certificate that will enable him or her to uniquely sign and encrypt their electronic correspondence.

Globalisation of the telecommunications industry affects the national security infrastructure as well as business and commerce infrastructure.

In each, the national interest is affected.

Defence can protect its key networks, but protection of the broader national infrastructure presents its own problems.

These are national security issues that affect the national interest, and Defence is working with other Federal and State Government agencies to identify measures that will protect and enhance this infrastructure.

Security of the national infrastructure is important for Defence.

Security of the national infrastructure is also important for national security.

Security of content and security of service in the national infrastructure is essential to Australian business.

All of which, I think, demonstrates that as an organisation we need to be capable of understanding the changes in technology, understanding the changing nature of these interrelationships - business, social, political and the like. And then put in place this capability within the Australian Defence Force to ensure that we maintain our effectiveness as an organisation.


I want to conclude by proceeding further to amplify the importance of maintaining resources to Defence.

We have seen in the last 12 or 18 months, I think, a very important process in Australia when it comes to Defence policy. Preceding its release with a very extensive process of public consultation the Government, I think, established a benchmark for the development of Defence policy.

It went further with the actual release of the White Paper. The reason I say that is because whilst there have been white papers or strategic assessments in the past this particular document I have no doubt did set a new benchmark.

Why is it important? It’s important because it does three things. First of all, it sets out a strategic assessment of Australia’s circumstances as I say that’s not new but it’s important to do so on a regular basis depending on our strategic circumstances. The second thing that we have done though is that we have said well if these are our strategic circumstnaces what are our capability requirements to meet these circumstances. A simple question not so easily answered but an important question for any country to answer.

And then thirdly, accepting the reality about resources. Given our wish list as it were we hten made decisions about what we could afford and set out a plan for the organisation for 10 years ahead. I challenge anybody to point to a similar circumstance where this has been done in the same way. But I also put to you that this is a very important development in Defence policy. In fact it’s something that ought to be seen as a benchmark and it should be retained as a means of dealing with Defence policy in the future. I genuinely believe that the process that we have put in place is at risk.

In a democracy I suppose it’s fair enough that we should have a debate about Defence. And I don’t believe in bipartisanship for the sake of bipartisanship. I think it’s more important to get it right than for the politicians to agree amongst themselves. The most important thing is that we make good decisions, that we make right decisions and when we have a good process that we fight for that process and see if we can keep it in place.

Well, ladies and gentlemen, with the Defence White Paper we have committed additional funds, made available I’d have to say by the better management of the Australian economy, but a set of resources which will make a reality the White Paper and the Capability Plan which is central to it.

That incorporates and increase in Defence spending of three per cent a year. That is over and above the additional funding that was provided for East Timor. That is the biggest shot in the arm for Defence in 30 years if not longer.

I say it’s a subject of threat because the fact of the matter is as we go into the next election Mr Beazley has other policy priorities. I don’t deny his interest in Defence as a former Defence Minister but I also know that you can’t promise to increase spending and increase the surplus at the same time and promise not to increase taxes and expect to be able to deliver on all those promises. The fact of the matter is that that package does not add up.

His rollback policy is probably the most unpopular policy ever announced by any federal political leader but that’s not my concern. My concern is how is he going to pay for it. And if he’s got a policy, one, I think he ought to tell us what it is but secondly he ought to tell us how he’s going to pay for it and on behalf of Defence I say well however you are going to pay for it tell us if it’s going to impact on the White Paper. Because Labor’s policy today is that they support the White Paper. Well, it’s all very well to say that you support the White Paper but if you then make statements as Mr Beazley did this week, he said, oh well he’s not sure that actually we did get the balance between, for example, personnel and capital equipment right. Well, actually the Shadow Minister had only said a month or so ago that in fact we did get it right. Well, who are we to look to for an expression of the Labor Party’s policy. Do they think the White Paper balance is right or don’t they.

Now, I mentioned the Coast Guard. He’s got a proposition for a Coast Guard which on his own funding is another $2 billion a year. Well, that’s fine if that’s what he is going to do, that’s his policy prescription. I don’t agree with it because personally I think the Royal Australian Navy does a great job in the part of the Coastwatch and I think we’d be crazy as a country to suddenly take the Royal Australian Navy out of one of the basic tasks that is patrolling Australia’s shores which they do. But Kim Beazley wants to have the Coast Guard, well, that’s a matter for him. But I ask a simple question if it’s going to cost $2 billion is it going to come out of the Australian Defence Force Budget and if so who is going to have to pay for it because we have set out a list of capabilities which we think are important.

He basically wants to have two extra submarines and I am sure the submariners think eight would be better than six. Kim Beazley and submarines is not in my view a sort of happy combination given our experience. But I simply say again if your plan is to have an extra couple of subs well we will have fixed the ones that we got from you by then so that’s something. But if you are going to have an extra couple of subs and if it’s going to come out of Defence’s Budget well the fact of the matter is that also would knock off Navy’s capability plan for the next decade. If it’s going to come out of Navy well I think you ought to say so because the Navy has expectations based on the plan which we have put out in the White Paper which the Labor Party says they support. If there is to be a change to that plan can we now be told before the election not after.

In fact, when we press some of these issues we were told that the Labor Party’s capability plan would be announced after the next election.

Well, ladies and gentlemen, I don’t think that is good enough. The people are entitled to know what basic changes to force structure the Labor Party intends to make.

We think that the force structure that we have got in the White Paper is about right and we think that the funding that we have put to it is justified by the country’s national interest. If there is to be a debate about Defence matters which personally I welcome, I think an informed debate about Defence is always in the national interest. If you are going to maintain public support for Defence which at the moment is very high then you will continue to maintain that support if people understand about Defence, if they are interested in it and if they see a public debate about it.

So I am all in favour of a debate about Defence policy. That is a very healthy thing for us in the Defence community as a whole.

This Government aims to provide the Defence organisation with a sense of security, a sense of direction, a sense of purpose. And given our strategic assessment that is terribly important for the future of this country and therefore the Government’s priority to Defence is of the highest order. Thank you very much.



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