# AustraliaÕs National Security

## A Defence Update 2005


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© Commonwealth of Australia 2005
ISBN 0642296340


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## Table of Contents

### Foreword V

 Introduction 1

 The Strategic Environment 3
The Impact of Globalisation 3
The Growth of Regional Military Capabilities 5

The United States 6

North and East Asia 6
South East Asia 7

South Asia 8
The Middle East 8

The South West Pacific 9

### Whole of Government Responses 10

 Defence Policy 12
Introduction 12
Key Relationships 13
The United States 13
South East Asia 14
North and South Asia 16
New Zealand and the South West Pacific 16
The Middle East 17

### Capability And Resources 19
Army 21
Navy 23
Air Force 23
A Joint ADF 24
People 24
Resources 25
Departmental and Industry Support 25

### Conclusion 26


III


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IV


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## Foreword

This is the second Defence Update

undertaken by the Government since
the release of the _2000 Defence White_
_Paper. This statement demonstrates_
that the Government’s management of
strategic policy remains sound and wellgrounded. It describes the key features
of Australia’s contemporary strategic
environment and outlines the Department
of Defence’s contribution to Australia’s
whole-of-government national security
policy. It provides the context in which the
Government will continue to develop and
direct Australia’s military capability into the
future.

The review reflects the challenge of

maintaining and developing capability at
a time when the Defence Organisation is
heavily committed to operations around
the world. No other national institution is
required to be able to do so wide a range
of tasks or to respond and deploy at such
short notice.

Australian forces are serving in countries

as diverse as Afghanistan, Iraq, Sudan,
Pakistan and the Solomon Islands. Our


troops are committed to counter-terrorism,
counter-insurgency, peacekeeping and
humanitarian operations. Our intelligence
organisations are making a significant
contribution to the global war on terrorism
and to combating the proliferation of
weapons of mass destruction. And our
international engagement with other
defence forces promotes security and
understanding throughout the world.

Providing the capability to defend

Australia and Australian interests is the first
responsibility of government. The Government
continues to make the substantial investment
necessary in equipment and personnel to
ensure that we can provide leadership in
our region, contribute to coalitions further
afield and more broadly defend Australia and
Australia’s interests.

This update was completed in a year in

which a number of young Australians died
on operations — training for combat and
providing humanitarian assistance in the
aftermath of the tsunami. It is a sobering
reminder that the principles spelt out in this
statement are not just theory but have real
consequences. The Australian Defence
Force is a great national asset and we
should all be proud and appreciative of the
professionalism, courage and commitment
of the men and women of our armed
forces. Their service is the cornerstone of
our national security.

Senator the Hon Robert Hill
Minister for Defence





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VI


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## Introduction

The first duty of the Australian

Government is to provide for the security
and defence of Australia and Australian
interests. Government must ensure that
we have defence capabilities to respond
to a range of contingencies as well as a
robust capacity to deal with military threats
of a conventional kind should they arise.
The Government must also ensure that it
has defence capabilities that give credible
options for the pursuit of international
security policies necessary to support
Australia’s interests.

Anticipating and meeting challenges to

Australia’s security remains a demanding
task. The war on terrorism continues
unabated on many fronts. The threat
of proliferation of weapons of mass
destruction has yet to be defeated as
some states still seek to acquire a nuclear
weapons capability. Longstanding issues,
including those relating to the Middle East,
North Korea, Iran and Taiwan, remain the
subject of international tension. Many
countries, including in the Asia-Pacific
region, continue to struggle to create the
conditions they need for stable economic
and political development.

In the Asia-Pacific region relationships

are changing. Countries inevitably
experience different levels and rates of
economic development and modernisation.
These differences influence strategic
relationships, both between major powers
and between major powers and smaller
countries. The United States is adapting
its posture in response to changes in


the global strategic environment. The
strategic and economic importance of
China and India is growing. Japan is
demonstrating a willingness to play a more
active role in global security issues.

The Defence White Paper, _Defence_

_2000: Our Future Defence Force,_
addressed an emerging imbalance
between the capabilities that Defence
would need for the future and available
resources. The White Paper laid out a
plan for the development of a defence
capability that would meet the demands
of security in the twenty-first century in
an uncertain strategic environment and
it provided funding assurances to meet
the cost.

Successive terrorist attacks in New

York, Washington, Jakarta, Bali, Madrid,
London and elsewhere since 2001
have demonstrated that no country is


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immune from experiencing the horrors
of international terrorism. In 2003 the
Government released Australia’s National
_Security: A Defence Update 2003, which_
emphasised the challenge to Australia’s
security presented by global terrorism, the
proliferation of WMD and the risks posed
by failed or failing states.

The Government’s strategic judgments

in both the 2000 White Paper and the 2003
_Defence Update have, to a considerable_
extent, been substantiated and confirmed
by subsequent events. For the foreseeable
future, it remains unlikely that Australia will
face conventional military threats, but there
is a continuing need to address current
international security issues such as those
in Iraq and Afghanistan. Defence planning
must provide for both the needs of the
present and the possibilities of the future.

Defeating the threat of terrorism,

countering the proliferation of WMD and
supporting regional states in difficulty
remain of the highest priority. Australia
continues to confront terrorism head on.
The renewal of our commitment to the
security of Afghanistan demonstrates
our resolve to combat terrorist forces.
Australian forces went to Iraq to uphold
Australia’s commitment to enforcing longstanding United Nations sanctions against
Iraq relating to the proliferation of WMD.
They remain in Iraq to support an evolving
democracy threatened by insurgency and
terrorism. Domestically, we have created
new capabilities and established new
relationships to enhance the Australian
Defence Force’s contribution to whole-ofgovernment efforts to prepare, prevent,


respond to and recover from terrorism
within Australia.

The Government has called upon

the ADF for a broad range of tasks, both
internationally and domestically, ranging
from high-end warfighting to humanitarian
assistance and disaster relief. Since 1999
the ADF has had to operate at a higher
tempo than at any time in the previous
twenty-five years. These demands have
required high levels of preparedness
and have placed pressure on sustaining
deployed forces. At the same time, the
Government has also had to build defence
capabilities that will enable Australia to
meet future challenges.

This Update, _Australia’s National_

_Security: A Defence Update 2005, builds_
on successive reviews of global and
regional security. It describes Australia’s
strategic environment, the challenges we
face, and the measures the Government
has taken to respond. It outlines the way
the Government has shaped the ADF to
increase Australia’s capacity to meet heavy
demands of the kind we have experienced
over the last few years, and the measures
being taken to ensure that the ADF is a
force capable of meeting future military
challenges. This Update also addresses
efforts to strengthen the ADF’s capacity to
contribute to domestic security.


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## The Strategic Environment

### The Impact of Globalisation

The world is experiencing profound

and rapid change. While the international
system is never static, globalisation is
accelerating the movement of ideas and
technologies. It has increased the interdependency between countries and made
borders more porous. It has increased
the potency of the terrorist threat, and the
potential danger of WMD proliferation.
Failing states are a significant concern
because the insecurity they face can easily
move beyond their borders.

Nation-states remain the fundamental

basis of the international community. At
the same time, the political and economic
structures that have developed alongside
traditional nation-states exist in uneasy
tension with globalising pressures. The
failure of existing international institutions


to provide confidence in collective security
arrangements has prompted an increasing
resort to coalitions-of-the-willing to resolve
issues of common concern.

Globalisation has accelerated trends

that are having a significant impact on
security policy and defence capability
decision-making.

   - _Increased unpredictability and_
_uncertainty mean that Australia’s_
interests can be challenged
with little warning. This requires
that the ADF have high levels
of readiness, flexibility and
sustainability.

   - _The technology revolution has_
led to a diffusion of technology,
particularly in the areas of
information and communications.
Maintaining technological
superiority is increasingly difficult
and expensive. The proliferation
of military technologies,
including to non-state groups, is


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particularly relevant for Australia
which has relied on maintaining a
technological edge in its defence
capabilities.

- _Asymmetric threats such as_
terrorism or WMD have reduced
the value of defences built
around geographic advantage.
This also affects Australia, which
has historically benefited from its
strategic geography. Asymmetric
threats reduce the advantage of
states that have concentrated
on building capability to meet
conventional threats alone.

- _Non-state players can, in some_
circumstances, constitute a
strategic threat. Transnational
terrorist organisations, with no
state allegiance and new types
of weapons and tactics, have
stunned the world. Terrorist
attacks since 2001 have taken
advantage of the complexity and
interdependencies of modern
society to destructive effect.
They have applied low-cost
means to wreak high-cost
damage.

- _Borders as security barriers_
are now much less effective.
National borders offer little
protection from terrorism or the
consequences of WMD and their
proliferation. While as an island
continent Australia enjoys some
natural protection, we cannot
be assured that our borders will
remain inviolate.


Globalisation can add to the potential

fallout from failing states in those situations
where economic development, governance
and the rule of law break down. Failing
states may provide the opportunity for
recruiting, training and deploying terrorists.
A vacuum of governance and law and
order creates an environment within which
these groups can flourish. Due to the
easy movement of people and goods, the
consequences arising from failing states
are often transported beyond their borders.
The security of the global community is
best served by effective governance, the
rule of law and economic development at
national, regional and international levels.
The risk of convergence between failing
states, terrorism and the proliferation of
WMD remains a major and continuing
threat to international security.

The world in the years ahead may

well face strategic shocks that cannot
be anticipated today. The timing of such
events is unpredictable and their cumulative
effects hard to gauge: within the past two


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decades we have seen the end of the Cold
War, the 1997 Asian financial crisis and the
terrorist attacks of 11 September 2001.
The range of possible discontinuities is
wide. Although globalisation itself might
not be the immediate cause of such
shocks – for example a pandemic, a state
failure, a catastrophic terrorist attack, or
perhaps a military confrontation involving
major powers – the interconnectedness
globalisation brings would widen and
intensify their impacts.

### The Growth of Regional Military Capabilities

Military capabilities in the Asia-Pacific

region are growing. This trend is more
pronounced in North East and South
Asia than in South East Asia. It varies
considerably from country to country.
Some disparities in military power among
South East Asian nations are likely to grow.
Generally, however, middle-level powers
will seek to extend their capacity to project
power and to gain further advantage from
networking and the fusion of intelligence,
surveillance and reconnaissance systems.
Existing conventional capabilities will
increase in magnitude. This may occur
through the proliferation of submarines,
new advanced multi-role fighters, ground
forces with greater mobility and better
armoured systems, increased firepower,
and precision in targeting systems. There
are likely to be more land-attack missiles,
and improved air defence, including on
ships.

Regional military forces are likely to also

acquire innovative capabilities. Equipment


and platforms will benefit from greater use
of advanced materials and technology.
Unmanned aerial vehicles for surveillance
and to deliver weapons and ever more
capable fighter aircraft may be increasingly
evident in our region.

The smaller, technologically advanced

nations will continue to acquire advanced
technology systems to reduce manpower
liabilities and to maintain their capability
advantage. The less technologically
advanced nations will seek to at least
maintain their current levels of capability.
Many countries will experience budgetary
pressures. There remains the possibility
that some countries may be tempted to
resort to asymmetric solutions, such as
WMD or terrorist methods, to bridge their
capability gaps.


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### The United States

US engagement in the Asia-Pacific

region has been the foundation of the
region’s strategic stability and security
since World War II, and is no less relevant
sixty years on. Engagement in the AsiaPacific region remains a key goal of US
strategic policy, but US armed forces are
undergoing a strategic and operational
transformation as a consequence of the
changed global strategic environment.
This shift reflects the desire of the United
States to find new solutions to emerging
and enduring threats, as well as the need
for more modern and less labour intensive
US forces, and a desire for more flexible
options for using those forces. The change
also reflects a maturing of US regional
relationships and a desire to see countries
contribute a greater share of the cost of
their own and the region’s security. US
allies such as Japan, South Korea and
Australia, may be expected to take on
more prominent roles in support of shared
strategic interests.

### North and East Asia

The key factors shaping North and East

Asia are globalisation, economic growth,
the formation of new regional consultative
forums and the increasing economic and
diplomatic influence of China. The major
strategic relationships in North Asia are
complex and evolving.

In large part China’s emergence as a

major market and its increasing demand
for resources is driving the expansion of
economic activity in the Asia-Pacific region.
China is also emerging as a significant


centre for technological development. The
size, competitiveness and pace of growth
of the Chinese economy will continue to
be a dynamic influence on other AsiaPacific economies. Barring any economic
disruptions, these factors combined with
China’s rich history and regional diaspora
mean that its strategic influence will
continue to grow.

China’s interests lie in a secure, stable

flow of resources to support its economic
modernisation, and the development
of markets for its goods and services.
The global community needs China to
pursue these interests within a framework
of integration into the global economic
system. China’s growing economy should
benefit from stability in the Asia-Pacific
region. But at the same time, the path
of China’s economic modernisation and
growth will provide significant challenge.

The pace and scale of China’s defence

modernisation may create the potential for
misunderstandings, particularly with the
development of new military capabilities
that extend the strike capability and
sustainability of its forces. It is important
that the development of China’s military
capability is transparent and that its
capability decisions remain consistent with
its legitimate security needs.

The developing relationship between

the United States and China affects the
entire Asia-Pacific region. The relationship
is both competitive and cooperative. The
economic interdependencies between
China and the United States are significant
and will increase. But with China’s growth
will come increasing competition with


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the United States for strategic influence.
This will shape future regional security
arrangements as countries seek to balance
the demands that will accrue from their
relationships with both countries. How
China and the United States manage
their relationship in all its dimensions will
be important for the future security of the
region as a whole.

China and Japan have substantial

economic and security interdependencies,
as well as elements of competition, that are
unlikely to diminish. How these factors are
managed will affect the region’s economic
and political development, and the ability of
China to focus on its own economic growth
and development.

The Japanese Government is taking

a more active role in regional and global
security. It remains active in the war on
terrorism. Japan increased its commitment
to Iraq, both financially and through the
deployment of elements of the Japanese
Self-Defence Force in non-combat roles.
The Japanese Self-Defence Force assisted
in tsunami relief operations and has
continued and reinforced other distinguished
contributions to peacekeeping. The
strategic relationship with the United
States is developing through increased
interoperability, harmonisation of Japanese
and US capabilities and cooperation in
missile defence.

The status of Taiwan continues to be

a defining issue and a source of friction in
the relationship between China and the
United States. It is important that any
issues concerning relations across the
Taiwan Straits be resolved peacefully. While


miscalculation could spark an escalation in
tensions, all parties are aware that military
conflict over Taiwan could have disastrous
consequences for the whole region.

The Democratic People’s Republic of

Korea (DPRK) remains a major security
concern for all countries. Its pursuit of a
nuclear weapons capability, highlighted
by its claim in 2005 that it had produced
nuclear weapons and its record of
proliferation, constitute a potential threat
to Asia-Pacific security. For the DPRK, its
future will be made more, not less, secure
by abandoning nuclear weapons. Australia
continues to support the six-party talks as
the best mechanism for finding a peaceful
and lasting solution to the DPRK nuclear
issue. Security on the Korean Peninsula
is important for the security of the AsiaPacific region.

### South East Asia

South East Asian security has been

strengthened by the development of
democracy in Indonesia, continuing
economic development, and the
effectiveness of ASEAN as a force for
change and the resolution of regional
issues. Governments are increasing their
capacity to deal effectively with challenges
to security. At the same time parts of this
region are still characterised by porous
borders, weak governance, inequities in
the distribution of resources, problems
of law enforcement, insurgencies, drug
trafficking and transnational crime.

An important element of security in

South East Asia is the capacity of countries,
bilaterally and under the auspices of


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ASEAN, to work together to manage the
broader security environment. There are
greater levels of multilateral cooperation
in areas such as counter-terrorism and
maritime surveillance.

As a country of 230 million people,

Indonesia’s importance to the AsiaPacific region and to Australia should not
be underestimated. Its size, historical
legacy and economic potential give it a
strategic importance undiminished by the
significant domestic economic and political
challenges of recent years. Indonesia has
a pivotal role to play in counter-terrorism
in the region.

Terrorism is a major security issue for

all countries of South East Asia. Efforts
by the Armed Forces of the Philippines to
eradicate terrorist groups in the southern
Philippines are important for South East
Asian security as a whole. In recent
years there has also been an upsurge in
political violence and terrorism in southern
Thailand. Border control between Malaysia,
Indonesia and the Philippines continues to
be a security issue for the region. The littoral
and archipelagic environment to our north
poses significant challenges if regional
states are to interdict covert movements
of people and other cargos.

### South Asia

India is enjoying substantial economic

growth as it continues to modernise its
economy. India has become a centre for
technology development. India is improving
its relationship with China, and its level
of trade and defence engagement with
South East Asia. The development of a


new framework for defence relations with
the United States will facilitate increased
Indian access to US military technology
and provide a blueprint for improved
cooperation. The United States has also
agreed to help India develop its civilian
nuclear power program in return for Indian
non-proliferation commitments.

Pakistan remains vulnerable to Islamic

extremism and to exploitation by extremist
groups. A stable and secure Pakistan
strengthens the ability of Afghanistan
to secure its future and resist terrorists.
President Musharraf’s Government, and
its relationship with India and the United
States, are vital to the stability of the
region.

An Afghanistan that can resist terrorists

is far from assured. Establishing good
governance and national order will reduce
the opportunity for the return of Taliban
forces and their terrorist associates. It
will ensure that Afghanistan is no longer a
safe haven for terrorists to plan, organise
and train, and demonstrate that states
sanctioning terrorism can be turned from
that path.

### The Middle East

The security and stability of the Middle

East is fundamental to global security.
The Middle East’s role as a major supplier
of energy and its position astride major
trade routes makes it central to the global
economic system.  The trade and energy
interests of many of our trading partners,
including those of North Asia, depend
upon a stable Middle East. Australia’s
vital interests are inextricably linked to the


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achievement of peace and security in the
Middle East.

Developments in Iraq will be a focus

of international attention for some time
to come. Allowing the insurgents and
former regime elements a victory would
be a huge setback for the region. It
could lead to the break up of Iraq, gross
instability and potential threat to Iraq’s
neighbours. Because it would have been a
victory achieved through terrorism, it could
encourage terrorists not just in the Middle
East but across the world.

Since the end of the Cold War, no region

has been more consistently confronted
with the security challenges of WMD.
The cause of security in the Middle East
can be advanced by the elimination of
threats associated with WMD. In this


environment, Iran’s nuclear and missile
programs represent a long-term threat to
the region’s strategic balance.

### The South West Pacific

Many countries in the South West Pacific

remain challenged by internal conflict, the
need for stable governance, and the need
to develop sustainable economies and
deliver services to their populations. The
ability to manage and enforce sovereignty
is an abiding concern. In the absence of
long-term solutions to these issues, these
countries remain vulnerable. The nature
of existing and emerging threats such as
terrorism, drug trafficking and international
crime is such that a problem for one state
is likely to be a problem for many others.
The security needs of Papua New Guinea
are of particular concern.


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## Whole of Government Responses

Current threats to security require

a whole-of-government approach. The
Australian Government has developed
and implemented strategies to coordinate
response capabilities across government.
These have been set out in _Protecting_
_Australia Against Terrorism: Australia’s_
_National Counter-Terrorism Arrangements_
(2004), and Weapons of Mass Destruction,
_Australia’s Role in Fighting Proliferation:_
_Practical Responses to New Challenges_
(2005). There is a place for military
force in combating these threats and
Australia has been prepared to accept that
responsibility.

Defence has committed resources,

beyond those of military capability, in the
national effort to respond to challenges
to Australian security. Of particular
note has been the increasing role of


Defence’s intelligence agencies, which
have been at the forefront of national
efforts against terrorism through the
identification of potential threats and which
now work more closely than ever with other
national and international organisations.
The Government has recognised this
and increased funding of intelligence to
strengthen its contribution to the whole-ofgovernment response to terrorism.

Whether it is the whole-of-government

response to terrorism, WMD, fisheries
and resource protection, or in meeting
the needs of neighbouring states, the
contribution of Defence is expected to go
far beyond warfighting.

The establishment of the Joint Offshore

Protection Command in March 2005 is a
contemporary example of the Australian
approach to these security issues. This
Command ensures that Australia has
the capability to respond immediately to
an emerging offshore maritime terrorism
incident and to otherwise protect our


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borders and critical infrastructure. Defence,
the Australian Customs Service and the
Australian Federal Police working together
provide Australia with the highest level of
border protection.

As part of its counter-proliferation

efforts, Australia helped establish the
Proliferation Security Initiative and continues
to participate vigorously. The Proliferation
Security Initiative is aimed at increasing the
capacity of countries to work together in
innovative ways to counter the proliferation
of technologies and materials that might
lead to the development of WMD by
states, terrorist or criminal organisations.
A number of agencies – Defence, Foreign
Affairs and Trade, Attorney-General’s and
the Australian Customs Service – work
together to maximise the effectiveness of
the Australian contribution. Further, the
Government has tightened Defence export
controls intended to ensure that certain
materials and technology do not contribute
to WMD proliferation. Yet again this is a
multi-agency responsibility.

Defence, through the Defence Science

and Technology Organisation, has also
joined other agencies in an increased focus
on science and technology to counter
terrorism. Defence’s contributions include
innovative new solutions to dealing with
improvised explosive devices, capabilities to
deal with chemical, biological, radiological
and nuclear events, the development of
advanced counter-measures technology,
and other means of prevention, identification
and investigation of a forensic nature.

Defence has had to focus more on

domestic security and bring to bear its


capabilities in this less traditional area
of service. Our domestic response
encompasses secure facilities, command,
control and communication systems,
integrated intelligence, surveillance and
reconnaissance systems, dedicated lift
and medical evacuation capabilities,
bomb disposal and response capabilities
for chemical, biological, radiological and
nuclear attacks. The Government is
amending the Defence Act to ensure that
the ADF can be deployed effectively and
easily to support law enforcement agencies
in responding to terrorist incidents.

The Government has directed the

ADF to further develop active reserves
with specific roles and tasks to support
Australia’s domestic security effort. These
reserve forces will augment the current
domestic security capacity and undertake
additional roles and tasks involving either
niche skills or specific tasks appropriate
for trained and disciplined small teams
and sub-units. Army experience with the
current Reserve Response Forces will
provide a basis for further work on this
approach.


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## Defence Policy
### Introduction

A country’s effectiveness and influence

in international affairs is determined by a
combination of tangible and intangible
factors including its reputation, its
geographic size and population, the size
and success of its economy, its strategic
culture and its defence capability.

Defence capability makes an

important contribution to Australia’s weight
internationally. It expresses our commitment
to security and our willingness and capacity
to act in support of our interests. In
developing future capability the Government
seeks to shape a security environment
favourable to Australia’s interests. This
means ensuring that we have the ability
to work with partners that share our
interests, including the United States. It
means retaining a technological edge. It
also means ensuring that the government
has the widest range of options available to
respond to possible threats.

Threats to national and international

security are increasingly interrelated.
Failure to deal with a particular threat,
such as terrorism or WMD proliferation,
can create a cascade of adverse effects
out of proportion to the original problem.
Decisions about the use and development
of defence capability are concerned as
much with forestalling future threats and
shaping the strategic choices of potential
adversaries, as they are with responding
to specific contingencies.


While Australia naturally takes a close

interest in its neighbourhood, Australian
security interests are not defined by
geography alone. Australia’s position in the
global community is extensive and complex.
Australia has many economic, political,
trade, financial and cultural links around
the world. As a major trading nation we
have a significant stake in the maintenance
of a global order that underpins our ability
to participate and trade within a global
community. Some five per cent of our
population is overseas at any one time.
Some 23 per cent of Australians were
born overseas. Many Australians are the
children of migrants. By virtue of its effective
integration into the global community,
Australia has security interests far distant
from its shores.

Australia’s defence policy response to

this environment has two major elements.
The first is to shape and build a defence
capability that is versatile and adaptable,
and which links easily with other arms of
the Australian Government. Australia has
and will continue to build a force that is
joint, balanced, networked and deployable.
Such a force provides options for a credible
response wherever Australia’s security
interests are engaged.

The second is to build strong security

relationships both regionally and globally.
Australia must have the capacity to lead
or contribute to coalitions in our region,
while at the same time providing capacity
to contribute to coalitions in areas further
afield where our interests might be at stake.
To this end, the ADF has to be adaptable
and versatile in meeting and sustaining


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the demands of diverse operations and
coalitions.

### Key Relationships

The Australia–US Alliance forged

during the Cold War remains as relevant
and as important as ever. It is based on
shared values and interests and remains
the cornerstone of our national security.
The continued evolution of the Alliance
to meet new strategic challenges is an
enduring strength of the relationship.

Similarly, deep and historical

relationships such as those with the
United Kingdom and New Zealand remain
of vital importance. However as Australia
has matured as a nation and grown in
capability, it has also sought to develop a
broader range of defence relations – both
regionally and globally. These relationships
include new partners such as Japan and
security institutions such as NATO, which
we are supporting in Afghanistan. The
Government recognises that our security
interests are global and that consequently
we need to work with other countries and
major international organisations.

Common threats such as terrorism and

WMD proliferation have also drawn states
into coalitions, recognising that meeting
these threats requires cooperation and
joint response. These experiences will
strengthen defence bonds between the
partners beyond the specific motivation
of the coalition.

Within the Asia-Pacific region,

Australia will continue to develop defence
relations and seek to build confidence and


understanding through such arrangements
as the ASEAN Regional Forum and the
Shangri La Dialogue.

### The United States

Australia’s strategic alliance with the

world’s single global power is a national
asset. Our shared interests are expressed
in our continuing engagement in security
and defence areas, including through
participation as a member of coalition
forces in Iraq and Afghanistan.

The alliance with the United States

confers major strategic, political and
economic benefits on Australia. The
defence relationship is a substantial force
multiplier for Australia’s defence and
intelligence capabilities, including in relation
to terrorism. Both countries have worked
hard to remove barriers to interoperability
and to ensure that Australian and US forces
can work together ever more effectively.


13


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Intelligence is a core part of the

relationship. Technological change and
emerging capabilities have provided
valuable new opportunities for engaging with
each other. Developments in intelligence,
surveillance and reconnaissance are
enabling increasing levels of sensor
integration and extraordinary enhancement
to current capabilities. While the
engagement is expensive, and will be more
so in the future, the benefits far outweigh
the cost. Similarly, new technologies
are opening up greater opportunities for
cooperation in exercises and training.
Recent initiatives such as the Joint
Combined Training Centre will enable
advanced training and exercising between
Australian and US forces, particularly in the
area of network-centric operations.

Australia will continue to look for ways

to support the United States in the AsiaPacific region. Australia’s participation
in the US Missile Defense Program,
in practical ways proportionate to our
capacity and interests, reflects our shared
strategic interests.


### South East Asia

Australia’s security interests are best

served by a regional strategic environment
that promotes economic and political
wellbeing. Australia is working with
regional governments to help shape such
an environment. We have helped to build
national and regional defence capabilities
to enhance security and to deal with
possible contingencies. We have put a
particular emphasis on helping regional
states improve maritime security and build
their counter-terrorism capabilities.

Regional states will continue to look

to Australia for help because of our
robust democracy, strong economy and
operational effectiveness. They will seek
help in building capacity to meet their
security needs and to respond to events
beyond the ability of individual states to
resolve. Australia can offer both human
and technical resources. The value of
these partnerships was evident after the
tragedy of the Indian Ocean tsunami on
26 December 2004, when the ADF was
able to join quickly and effectively with host
governments and other regional forces to
provide support for disaster relief.

Australia attaches high priority to

working with Indonesia on common
security issues, particularly terrorism
and border security. We have rebuilt the
defence relationship after the stresses of
East Timor. Our focus is on developing
activities, at a pace comfortable to
both countries, that will confer practical
benefits. Developing mutual confidence
and awareness between our forces will be
an asset for both countries.


14


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We are working with countries in

the region to develop counter-terrorism
capabilities. This activity includes counterhijack and hostage recovery exercises, as
well as intelligence exchanges, training
and information sharing. We are also
seeking to increase our assistance to the
Armed Forces of the Philippines in the
form of training, maritime surveillance,
exercises and counter-terrorism capability
development. These efforts complement
assistance provided by other Australian
Government agencies.

The Five Power Defence Arrangements

were established in 1971 to support
the defence of Malaysia and Singapore.
It is a partnership between Malaysia,
Singapore, the United Kingdom, New
Zealand and Australia. FPDA has been
a force for strategic stability. It remains


relevant, though in a changed context. It
has facilitated training and exercises and
proven a robust and flexible vehicle for
developing defence capabilities in Malaysia
and Singapore. It has established a strong
foundation for cooperation between
member nations and interoperability
between their defence forces. In response
to the current security environment,
and particularly the need to ensure the
security of the South East Asian maritime
environment, Australia has given strong
support to the FPDA’s evolving focus
on area defence, maritime surveillance
and counter-proliferation. Recent FPDA
exercises in relation to asymmetric threats
have demonstrated its potential in this
contemporary role.

Australia is increasing its cooperation

with regional states in the area of intelligence


15


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and surveillance. This cooperation can
build on current activity and include, where
possible, the development of shared maritime
situational awareness and other information
exchanges. For the future it may also include
the development of combined operational
concepts, and exercising. This work will
be directed to capability development in
counter-terrorism, maritime surveillance,
search and rescue, counter-proliferation,
counter-narcotics and anti-piracy.

### North and South Asia

Australia’s stake in strategic stability

in North Asia is very high. Our trade with
Japan has been one of the foundations
of Australia’s economic development
since the end of the World War II, but our
strategic and defence relationships have
been more limited. Opportunities for
greater security cooperation are now set to
increase. Working together in Al Muthanna
Province in Iraq and with other coalition
partners has been a positive experience


and an indicator of an evolving defence
relationship. Australia also strongly
supports the Japan–US Defence Alliance,
an essential element of stability and peace
in the Asia-Pacific region.

In the context of a growing economic

and trade relationship, we have begun to
develop a modest defence relationship
with China aimed at increasing the level
of mutual understanding on security and
defence issues. This engagement has
included high-level visits and discussions
at ministerial and senior defence levels.

We expect increased opportunities for

security cooperation with India to develop
over time. It will be in our national interest
to take advantage of these opportunities:
India’s defence relationship with South
East Asia is developing, and we share an
interest in the security of South East Asian
waterways.

### New Zealand and the South West Pacific

Australia and New Zealand share

many strategic goals, particularly
that of maintaining the security and
stability of the South West Pacific. The
Closer Defence Relationship provides
a framework for continuing to increase
levels of interoperability and to explore
opportunities for cooperative development
of capability. Our recent work together
with other members of the Pacific Island
Forum in Bougainville and the Solomon
Islands demonstrates the continued value
of the defence relationship. Australia will
continue to work with New Zealand to
increase our capacity to work together.


16


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Australia has a leadership role in the

South West Pacific. In support of this,
Australia will continue to work with countries
in the South West Pacific challenged by
internal conflict. The Australian-led Regional
Assistance Mission to the Solomon Islands
highlighted the ADF’s role in contributing
to security in the South West Pacific by
supporting a state facing serious issues
of internal instability and insecurity. The
mission was a major success and the ADF
continues to play a role in consolidating the
gains and in nation-building in the Solomon
Islands.

Defence is working with the PNG Defence

Force to enhance its professionalism and
effectiveness. This includes supporting
a reduction in the size of the force while
improving its overall capability. Our goal is
to help PNG achieve a defence capability
consistent with its needs and commensurate
with the level of available resources.

Security in the region is strengthened

when countries of the South West Pacific
recognise that they share a common
environment with common challenges that
can be dealt with more effectively through
coordinated responses. Australia uses the
Defence Cooperation Program to support
this agenda by emphasising activities
that promote a shared perspective.
The program provides assistance and
expertise in governance, administration and
security studies to support the training and
education of defence and other security and
government personnel from Pacific Island
countries. We intend to further increase
our focus on dealing with the unique
governance and security challenges faced


by the island states of the Pacific. Australia
will also provide support for infrastructure
development and humanitarian assistance
when necessary.

Australia will work with these states to

extend maritime surveillance cooperation
to support control of their Exclusive
Economic Zones, advance counterproliferation efforts, enhance maritime
security, and protect from or take action
against transnational crime. We will build
on the relationships and successes of the
Pacific Patrol Boat Program.

### The Middle East

Australian forces have deployed to

the Middle East to support our interests
in peace and stability many times since
1915. We have played significant roles


17


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in two world wars, in the Gulf from 1991,
and in Iraq since 2003. Our contribution
to the United Nations Truce Supervision
Organization since 1948 continues.

We continue to contribute to the

Multinational Force in the Sinai and are
supporting the roadmap between Israel
and the Palestinian Authority. The ADF
plays an ongoing role in encouraging and
supporting progress towards peace and
accommodation in this critically important
region.


Iraq will need substantial support from the

international community to win its struggle
against insurgency and terrorism. Australia
has made a large investment in helping secure
a stable and positive future for Iraq and will
remain committed until that job is done.

We continue to work with like-minded

nations to persuade Iran that its interests
and those of the region are better served
through the dismantlement of programs
which may be aimed at developing a
nuclear weapons capability.


18


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## Capability And Resources

Defence capability is the most potent of

the range of instruments Australia employs
to promote and support its security
interests. But it is only one of a broader
range of tools available for that task. The
ADF rarely acts alone. It may at times take
the lead. At other times it may act in support
of other Australian Government agencies,
such as in Regional Assistance Mission
in the Solomon Islands internationally or
in support of domestic security within
Australia. On other occasions, it will
contribute to international coalitions as an
ally or member of the UN.

To meet all these policy and

strategic needs, the ADF must be able
to operate as a networked, joint force
across information, air, land and maritime
domains. It must be able to operate
in environments that are complex and
ambiguous, and where adversaries,
including non-state adversaries, have
increasingly lethal capabilities. Through
continuing modernisation, it needs to retain
a capability edge over potential rivals. At
all times it must maintain high levels of
preparedness.

The ADF has demonstrated its value as

an essential instrument in supporting and
defending Australia’s interests in a wide
range of situations since 1999. In these
six years a cumulative total of some 68,000
ADF personnel have been deployed in many
operations, including those in East Timor,
Bougainville, Afghanistan, the Middle East


and Iraq, the Solomon Islands, and the
Sudan. Several of these operations have
been concurrent. As well, there have been
continuing border security tasks, natural
disaster relief operations and contributions
to long-running UN peacekeeping or
peace-monitoring operations in the Sinai
and elsewhere in the Middle East. The
ADF has also supported domestic security
operations such as those for the Olympic
Games and the Commonwealth Heads of
Government Meeting. For the ADF and
Defence generally, the tempo has been
demanding.

The recent high demand on Defence is

likely to continue. Accordingly, our force
must continue to develop and retain the
ability to provide response options across
the range of potential domestic, regional
and global strategic scenarios. It must be
versatile, robust, joint and integrated.

_Versatility represents the capacity to_

perform a range of different roles, often
concurrently, and will remain an important
capability requirement. Different potential


19


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threats to Australia’s security require quite
distinct, tailored responses. Operations
in Iraq have required different skills,
capabilities and operating processes to
those required in the Solomon Islands,
and different again from those needed in
Sumatra following the tsunami. While the
ADF has performed equally well in all three
theatres, the challenge to remain versatile
continues.

_Robustness is indicated by depth_

in resources and personnel and is an
essential quality if the ADF is to retain the
ability to sustain operations for lengthy
periods, such as in Iraq and East Timor. To
support its ability to undertake concurrent
operations, the ADF will need to build its
capacity in key operational support areas,
including health, communications, logistics
and some specialist trades.


_Jointness responds to the challenge of_

ensuring that all service elements operate
together in ways that make a truly joint
force. Jointness ensures that the ADF is
able to deliver outcomes benefiting from
the force multiplier effects of working
together. In a joint force, the sum of
the whole effort is much more than the
capability of its parts working alone. To
maintain this priority for the development of
the ADF, capability decisions will continue
to emphasise the importance of joint
warfighting and of the ADF developing as
a fully networked force.

_Integration represents the ability to_

network weapons platforms and capabilities
to strengthen their effectiveness as part
of a whole force. It is of fundamental
importance to the ADF’s operational
effectiveness. This necessity goes beyond


20


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simple information exchange between
ADF capabilities. It also relates to the level
of interoperability the ADF has with other
agencies of the Australian Government
and the forces and capabilities of our
allies, friends and coalition partners. The
Government will continue to give priority to
the development of the ADF as a networkenabled force.

An ADF which is versatile, robust, joint

and integrated will be able to contribute
with increasing effectiveness to global,
regional and domestic security. Such
contributions, and the decisions that
underpin the development of the ADF’s
force structure, will always be tempered
by the realities of Australia’s size and
resource constraints and will take into
account Australia’s responsibilities in its
immediate region.

Australia has, and is seen to have,

particular responsibilities in the Pacific
Islands area and must have a capability to
act in a manner commensurate with these
responsibilities. Australia will also retain


the capability to contribute to coalitions
elsewhere when our interests are at stake,
as they have been in Iraq and Afghanistan.
There are other circumstances in which
the ADF commitment may be small,
even down to individuals with unique and
specialist skills, such as the small but
highly focussed ADF contingent currently
in the Sudan supporting UN peacekeeping
activities.

In providing ADF support to coalitions, the

Government recognises the need to make
a meaningful contribution to the coalition’s
capability. At the same time, Australia’s
regional security interests require that we
have the ability to respond comprehensively
to contingencies that might arise with little
warning. Balancing these imperatives will
continue to shape decisions about the
deployment of the ADF.

To ensure that Australia is a credible

contributor to global and regional security,
the Government has taken capability
decisions that increase the ADF’s combat
weight, its mobility and its sustainability.

### Army

Over recent years there have been

major Army deployments in diverse roles
and situations. The Army has had to
operate at a high tempo and maintain
high levels of readiness. Increasingly, the
trend in modern operations has been that
they take place in environments of great
complexity that may include urban areas
or places where it is difficult to identify the
enemy. A single Army unit may have to
change roles substantially over the course
of one operation or conduct several tasks


21


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at once. Due to the technology and
weapons available to them, adversaries,
including terrorists, are becoming more
lethal.

Recognising this challenge, the

Government is taking steps to harden and
network the Army providing greater mobility
and fire support and maximising its network
capabilities. These measures include the
purchase of a number of new platforms
including the M1 Abrams tank, Tiger
armed reconnaissance helicopter, MRH90
helicopters and upgrading and increasing
the number of light armoured vehicles.
The Army is also introducing battlefield
unmanned aerial vehicle technology to
increase situational awareness at the
tactical level.

The Government recognises the need

for a new phase in the development of the


Army to create greater combat weight.
This new phase will increase the size of the
force, its weight and mobility, and provide
a new force structure of combined army
battle groups.

The Government has also accepted

that the role of the Army Reserve needs
to be refined to provide a focus on high
readiness individuals and small teams to
contribute to operational deployments.
These capabilities will increase the level of
force protection, provide greater options
for how and where the ADF might be
deployed, and strengthen the Army’s
capacity to operate as part of a joint,
networked force.

These reforms will help build an Army

that can continue to perform in diverse
roles and environments. This will in
turn increase the flexibility and range


22


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of response options available to the
Government, from expeditionary forces to
domestic security.

### Navy

The acquisition of new amphibious

ships will extend the assured reach of the
ADF and allow for the deployment of larger
and heavier forces, as well as providing
an additional capability for humanitarian
assistance. New air warfare destroyers
will help protect those forces during a
deployment. The Collins class submarines
with a new combat system and new heavy
torpedos will add to that protection. So too
will the ever more capable ANZAC frigates
and FFGs with SM2 missiles. These will
be complemented by the best maritime


surveillance aircraft in the world. Border
patrol will be significantly enhanced by the
new fleet of Armidale patrol boats.

Maritime force capabilities are being

further enhanced by upgrades to the
Seahawk helicopters and introduction
of the Super Sea Sprite helicopter
fleet. Importantly, communications
enhancements will provide the Fleet with a
more robust capability for network-centric
warfare.

This program to grow naval capability

will increase the ADF’s capacity to conduct
operations in a wide range of possible
regional or coalition contingencies.

### Air Force

Over the next decade the ADF’s air

combat capability will be significantly
enhanced by the upgrade of our existing
F/A-18 fleet, the expected transition to
the Joint Strike Fighter and by significant
improvements to survivability and precision
weapon capability.

These capabilities will be complemented

by airborne early warning and control
aircraft and air defence surveillance system
enhancements, which will provide better
situational awareness and command
and control. New generation air-to-air
refuellers will increase both the reach and
persistence of the air combat capability.
Similarly, upgrades to the AP-3C Orion
aircraft and transition to a new manned
and unmanned maritime surveillance and
response capability will enable a broader
spectrum of operations and maritime
cooperative tasks to be undertaken.


23


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Our airlift capability remains fundamental

to mounting and sustaining the spectrum
of ADF operations and will continue
to be upgraded over the decade. The
Government will consider the option of a
heavy transport aircraft. The ADF’s airlift
capacity also remains a critical element in
support of humanitarian operations.

### A Joint ADF

Each of these capabilities contributes

substantially to the strength of the ADF
and hence Australia’s security. Working
together, these capabilities produce a
greater joint effect than the individual
platforms operating without coordination.
Consequently, the ADF can produce
strategic effects out of proportion to its
size. As these capabilities are introduced
they will be integrated and connected
within a joint operating concept to ensure
that their inherent potential is maximised
and that they build on the ADF’s existing
capacity for joint warfare and operations.


The new integrated Joint Operational

Headquarters to be built near Bungendore
in NSW and the modernisation of satellite
communications capabilities will maximise
the benefits of the joint and networked
force.

### People

The acquisition and integrated use of

platforms and systems will not alone deliver
enhanced capability. Equally important
is the need for people working with a
joint operating concept to have the right
competencies and skills to command,
operate and maintain these platforms
and systems. It is the quality, innovation,
capacity and commitment of the men and
women of our armed forces that is decisive
in ensuring the ADF’s superior capability.

This importance will increase,

particularly as regional defence forces
become more technologically proficient,
and Defence, as with all organisations,
experiences tougher competition for the
best talent.

Recruitment and retention of an ever

more technically capable force, and in a
strong and growing economy, will become
more challenging. While a sense of public
duty and responsibility will always be the
core of defence service, the Government
will ensure that conditions of service are
competitive. This includes sensitivity to
the needs and aspirations of families.
Defence personnel policies must ensure
the ADF remains a preferred employer
in the future labour market. A number of
initiatives in this area can be expected
during the next year.


24


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### Resources

There are growing cost pressures on

the defence budget. Sustained operational
tempo is depreciating ADF equipment
more quickly than planned, reducing its
life and increasing maintenance costs.
Concurrency pressures are putting strains
on logistics, communications and health
support. The rising cost of ‘state of the art’
military equipment, particularly capabilities
essential for the ADF’s capacity to develop
and operate as a superior networked force,
is putting extra pressure on the Defence
Capability Plan. Personnel and operating
costs continue to rise at rates exceeding
inflation. Since the Defence White Paper in
2000, the Government has met these cost
pressures with a three per cent real growth
inflator and by providing extra funding for
operations, logistics, infrastructure and
accommodation. Cost pressures will remain
and will demand increasing efficiencies
across the portfolio.

### Departmental and Industry Support

The capability and effectiveness of the

ADF depends on the support it receives
from the wider Defence Organisation, from
other Australian Government agencies,
and from the community. This support
ranges from intelligence to research and
development, infrastructure, services,
materiel and equipment. Reliance on
private sector support will grow in the
future. A planning partner from the private


sector is to be appointed to help develop
operational support. This will ensure
that Defence maximises private sector
capabilities consistent with operational
requirements.

Defence must also continue to pursue

internal reforms to ensure the most efficient
use of resources. Defence continues to
rationalise corporate and regional support
to achieve cost efficiencies. For the future,
this will include rationalising defence bases
and facilities.

Since the Kinnaird Review, reform

has continued in the areas of capability
development and acquisition. Establishment
of the Capability Development Group
has improved the development and
management of new capability proposals.
The Defence Materiel Organisation is
now a prescribed agency of government.
This strengthens Defence’s capacity to
better meet the demands of complex
project management, and to support
implementation of the Defence Capability
Plan. Significant progress has been made
in this regard.

Defence industry is critical to meeting the

needs of capability and sustainment. The
Government is committed to policies that will
build an internationally competitive defence
industry that is better able to support,
sustain and upgrade defence assets.
Providing opportunities for defence industry
to compete in global defence projects
remains a key aspect of this challenge.


25


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## Conclusion

Government decisions on capability

embody a coherent and logical response
to the existing and emerging strategic
environment, responding to the threats
of the present and preparing for the
challenges of tomorrow.

This Update continues the principles in

the 2000 Defence White Paper and 2003
_Defence Update. Capability decisions that_
have been taken within the framework of
these principles will ensure that the ADF is
better resourced and equipped to exercise
its significant security responsibilities in
the immediate region, make meaningful
contributions to coalition operations further
afield and more broadly defend Australia
and Australian interests.

While planning to meet the threats

of the future, the ADF has become more
capable of effectively meeting today’s
threats: terrorism, the proliferation of WMD
and the challenges arising from state
fragility. Starting with the highly skilled
and technically proficient people who
make up Defence, the Government has
committed to continue building capacity in
these areas. New and larger amphibious
ships, a bigger and more capable Army
and better troop lift capabilities will help
meet high-level threats, but they will also
help us meet today’s challenges. These
capabilities will better enable Australia
to contribute to coalitions in support of
national and global security.

Australia will continue to work to support

the Asia-Pacific region in addressing


threats of terrorism, weapons proliferation
and the challenge of failing states. In an
ever more inter-related world, threats to
our neighbours are threats to us. Whether
fighting terrorism, piracy, transnational
crime, international drug syndicates or
people smugglers, Defence remains a
key tool of the Australian Government.
Similarly, Defence’s role in meeting the
threat of proliferation of WMD within
the region and in supporting fragile and
vulnerable states will continue. Importantly
and uniquely, Defence remains the primary
instrument of the Australian Government
in building warfighting capacity to respond
to possible future threats. Defence will
therefore continue to have a central role to
play in protecting and assuring Australia’s
national goals of a peaceful, stable and
increasingly prosperous region.


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