2020

DEFENCESTRATEGICUPDATE© Commonwealth of Australia 2020
ISBN: 978-1-925890-26-6
This work is copyright. Apart from any use as permitted under the
Copyright Act 1968 (Cwth), no part may be reproduced by any process
without prior written permission from the Department of Defence.

1` Table of Contents
Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
Chapter One: Australia’s changing strategic environment. . . . . . . . . . . . . . .  11
Chapter Two: Defence policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Shape Australia’s strategic environment. . . . . . . . . . . . . . . . . . . . . . . . . 25
Deter actions against Australia’s interests . . . . . . . . . . . . . . . . . . . . . . . 27
Respond with credible military force. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Implications for force structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Chapter Three: Capability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
Capability priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Information and Cyber capabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Maritime capabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Air capabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Space capabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Land capabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
The Defence enterprise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Information and communications technology . . . . . . . . . . . . . . . . . . . . . 41
Estate and infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Chapter Four: Industry and Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Australian Industry Capability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Sovereign Industrial Capability Priorities . . . . . . . . . . . . . . . . . . . . . . . . 46
Skilling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Chapter Five: Resourcing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
The Government’s Defence funding model. . . . . . . . . . . . . . . . . . . . . . . 53
How will Defence funding be spent? . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Alignment of strategy, capability and resources . . . . . . . . . . . . . . . . . . . 55
Chapter Six: Reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59

2020 DEFENCE STRATEGIC UPDATE

3` Foreword
The Government’s firm commitment to the Australian people remains that wewill keep our nation safe and protect our way of life for future generations.
It is clear, however, that Australia’s strategic environment has deteriorated more
rapidly than anticipated when we made this commitment in the 2016 Defence
White Paper. This deterioration means that adjustments should be made by theGovernment to our defence policy, capability and force structure.
This 2020 Defence Strategic Update sets out the challenges in Australia’s
strategic environment and their implications for Defence planning.
Our region is in the midst of the most consequential strategic realignment
since the Second World War, and trends including military modernisation,technological disruption and the risk of state-on-state conflict are further
complicating our nation’s strategic circumstances.
The Indo-Pacific is at the centre of greater strategic competition, making theregion more contested and apprehensive. These trends are continuing and will
potentially sharpen as a result of the coronavirus (COVID-19) pandemic.
As a result of the decisions taken by the Government in the 2016 Defence
White Paper, substantial progress has been made in transforming the Australian
Defence Force into a more capable, agile and potent force. This has been
underpinned by investment in Australia’s military capabilities and industries,
a focus on strengthened international engagement, particularly with theUnited States, Japan, India, ASEAN and other allies and partners in our region,and successful implementation of the 2015 First Principles Review by the
Department of Defence.
The Government has directed Defence to implement a new strategic policy
framework that signals Australia’s ability – and willingness – to project military
power and deter actions against us. Under this new framework, Defence’s

2020 DEFENCE STRATEGIC UPDATE

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strategic objectives are to deploy military power to shape Australia’s strategic
environment, deter actions against our interests and, when required, respondwith credible military force.
These objectives require new military capabilities and demonstrated resolve.
The Government will invest approximately $270 billion over the coming
decade in new and upgraded Defence capabilities, including more potent
and longer-range combat systems and more secure supply chains. The
Government will also continue deepening our alliance with the United Statesand strengthening our regional engagement across the Indo-Pacific, including
through the Pacific Step-Up, and increase the Australian Defence Force’s ability
to respond to natural disasters, including within Australia.
As a nation – and as an important regional leader in the global community –Australia is experiencing significant changes to our strategic environment. The
2020 Defence Strategic Update ensures Australia has the strategic defence
policy to deal with these challenges.
The Hon Scott Morrison MP
Prime Minister

Senator the Hon Linda Reynolds CSC
Minister for Defence

5` Executive SummaryiAustralia is at the centre of a dynamic strategic environment. In
response, Australia’s defence policy must be agile and adaptive. In linewith the Government’s intent that defence strategy be subject to regularreview, the Department of Defence commenced a Strategic Policy
Review in 2019 to re-assess the strategic underpinnings of the 2016
Defence White Paper.

ii

While the drivers shaping the development of Australia’s future strategic
environment identified in that white paper remain relevant, some haveaccelerated in ways that were not anticipated in 2016.

iii

Military modernisation in the Indo-Pacific has accelerated fasterthan envisaged. Regional force modernisation has resulted in thedevelopment and deployment of new weapons that challenge Australia’s
military capability edge. Expanding cyber capabilities – and thewillingness of some countries and non-state actors to use them – arefurther complicating Australia’s strategic environment.

iv

Confidence in the rules-based global order is being undermined bydisruptions from a widening range of sources. Major power competition
has intensified and the prospect of high-intensity conflict in the
Indo-Pacific, while still unlikely, is less remote than in the past.

v

The conduct of ‘grey-zone’ activities has also expanded in the Indo-Pacific.
These activities involve military and non-military forms of assertivenessand coercion aimed at achieving strategic goals without provoking conflict.
In the Indo-Pacific, these activities have ranged from militarisation of
the South China Sea to active interference, disinformation campaigns
and economic coercion. Defence must be better prepared to respond tothese activities, including by working more closely with other elements ofAustralia’s national power.

2020 DEFENCE STRATEGIC UPDATE6
vi

This security environment is markedly different from the relatively morebenign one of even four years ago, with greater potential for military
miscalculation. This could conceivably include state-on-state conflictthat could engage the Australian Defence Force (ADF) where Australia’sinterests are threatened. Accordingly, Defence must be better prepared
for the prospect of high-intensity conflict.

vii

Although the long-term impacts of the coronavirus (COVID-19)
pandemic are not yet clear, it has altered the economic trajectory of
the region and the world with implications for Australia’s prosperity andsecurity. The trend towards a more competitive and contested region
will not be fundamentally altered by the effects of the pandemic, but
it is sharpening some aspects of strategic competition between the
United States and China. Some countries are using the situation toseek greater influence, while countries that were expected to become
more prosperous and stable may experience economic hardship andinstability. The pandemic has also highlighted the importance of securesupply chains for Defence and defence industry, including sovereignindustrial capability in some areas.

viii

This 2020 Defence Strategic Update sets out the challenges inAustralia’s strategic environment and their implications for defence
planning. It provides a new strategic policy framework to ensure
Australia is able – and is understood as willing – to deploy military
power to shape our environment, deter actions against our interests and,
when required, respond with military force.

ix

The Government has decided that under this new framework,
defence planning will focus on our immediate region: ranging from thenorth-eastern Indian Ocean, through maritime and mainland South
East Asia to Papua New Guinea and the South West Pacific. This newframework will provide a tight focus for defence planning and alignment
with broader initiatives such as the Pacific Step-up.

7xThis will have implications for Defence capability and force structure. It
will mean adjustments to the plans set out in the 2016 Defence White
Paper so that we are prepared for the challenges we are most likely
to face. These adjustments focus on ensuring the ADF can shape
Australia’s strategic environment, deliver credible deterrence andrespond to challenges to our interests. More detail on the Government’s
capability plans is set out in the 2020 Force Structure Plan.

xi

Defence will continue to strengthen its engagement with Australia’sinternational partners in support of shared regional security interests andwill continue to deepen Australia’s alliance with the United States.

xii

The Government’s plans for Defence capability are underpinned byits policies of developing a strong, sustainable and secure Australian
defence industry and supporting leading edge national innovation. The
Government is committed to maximising opportunities for Australianindustry, including in regional areas, in Defence projects.

xiii

The Government’s plans for future ADF capability are also underpinned
by its ongoing commitment to providing funding certainty for Defence.
This includes a commitment to a Defence Budget of $42.2 billion in
2020-21 (including the Australian Signals Directorate). The Defence
Budget will grow over the next ten years to $73.7 billion in 2029-30
with total funding over the decade of $575 billion. This total includes
approximately $270 billion of investment in Defence capability, comparedwith approximately $195 billion for the decade to 2025-26 when the2016 Defence White Paper was released.

xiv

Continuous transformational reform within Defence is essential to
implement the strategy set out in this document and to build Defence’s
capacity to respond to a more uncertain external environment. Reform
cannot be a one-off process – improvement is continual – and it mustbe purposeful. Defence will continue to evolve and adapt to meet
Australia’s changing strategic environment and maintain alignment ofstrategy, capability and resources.

2020 DEFENCE STRATEGIC UPDATEIntentionally blank

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` Chapter One: Australia’schanging strategic environment
1.1

The 2016 Defence White Paper set out six drivers that would shape
Australia’s strategic environment: the roles of the United States andChina; challenges to the stability of the rules-based global order;
the enduring threat of terrorism; state fragility; the pace of militarymodernisation in our region; and the emergence of new, complex
non-geographic threats. These drivers will remain relevant over the
next two decades. However, several have accelerated since 2016, andin some cases their impacts are posing new challenges. Additional
factors that will shape Australia’s environment and impact defence
planning have also emerged, in particular the economic and strategic
consequences of the COVID-19 pandemic.

1.2

Strategic competition, primarily between the United States and China,
will be the principal driver of strategic dynamics in our region. This
competition is playing out across the Indo-Pacific and increasingly in our
immediate region: the area ranging from the north-eastern Indian Ocean
through maritime and mainland South East Asia to Papua New Guinea
and the South West Pacific.

1.3

Since 2016, major powers have become more assertive in advancing
their strategic preferences and seeking to exert influence, including
China’s active pursuit of greater influence in the Indo-Pacific. Australia
is concerned by the potential for actions, such as the establishment ofmilitary bases, which could undermine stability in the Indo-Pacific andour immediate region. It is essential that countries pursue their interests
in ways that are mutually respectful and supportive of stability, prosperity
and security.

2020 DEFENCE STRATEGIC UPDATE

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1.4

Some countries will continue to pursue their strategic interests througha combination of coercive activities, including espionage, interference
and economic levers. Tensions over territorial claims and theestablishment of new military facilities are rising and are involving theuse of military or para-military forces more frequently than in the past,
including coercive para-military activities in the South China Sea.

1.5

Grey-zone activities are being adopted and integrated into statecraft
and are being applied in ways that challenge sovereignty and habitsof cooperation. This includes challenges to the long established andmutually beneficial security partnerships Australia has with many
countries, including in the Indo-Pacific.

Box 1 The grey zone
‘Grey zone’ is one of a range of terms used to describe activities
designed to coerce countries in ways that seek to avoid military
conflict. Examples include using para-military forces, militarisationof disputed features, exploiting influence, interference operations andthe coercive use of trade and economic levers. These tactics are notnew. But they are now being used in our immediate region against
shared interests in security and stability. They are facilitated bytechnological developments including cyber warfare.
1.6

The rules, norms and institutions that help maintain peace andsecurity and guide global cooperation are under strain. Pressures on
governance in the global commons, and in domains such as space andcyberspace, will open up potential sources of friction. The thresholds
for activities that could trigger a military response are unclear in spaceand cyberspace as they lack the more clearly defined boundaries ofnational borders and geography. The undermining of norms or treaty
arrangements will complicate efforts to manage these pressures ascountries seek to impose systems that will support their own approach,while undermining the interests of other countries.

13
1.7

At the same time, many countries in the Indo-Pacific are accelerating
their military modernisation, enabled by a long period of economic
growth. The rapid spread of technology will both support and challenge
Defence’s requirement to maintain a regional capability edge inadvanced warfighting and enabling capabilities.

1.8

Regional military modernisation includes the introduction of advanced
strike, maritime surveillance and anti-access and area denial
technologies, which have implications for Australian operations in theregion. New weapons being introduced into the region have increased
range, speed, precision and lethality, placing Australian military forcesat greater risk over longer distances. North Korea’s missile and nuclear
programs risk provoking significant shifts in the strategic system inNorth Asia.

1.9

Emerging and disruptive technologies will be rapidly translated
into weapons systems – such as sophisticated sensors, autonomous
systems and long-range and high-speed weapons – reducing decisiontimes and improving weapon precision and lethality. This will befacilitated by more highly educated, qualified and mobile workforces,
the rapid dissemination of scientific knowledge via the internet as well
as expanded commercial and research collaboration. In some countries
this will be further boosted by higher government priority and funding.
Non-state actors such as terrorists have also demonstrated their ability
to adapt new technologies for their purposes.

1.10 Expanding cyber capabilities and willingness by some countries
and non-state actors to use cyber capabilities maliciously are further
complicating Australia’s environment. Cyber-attacks can directly
compromise military capability and operations. Cyber-enabledactivities can also drive disinformation and destabilising interferencein economies, political and social systems and infrastructure. These
activities are often conducted in ways designed to facilitate deniability
and complicate attribution.

2020 DEFENCE STRATEGIC UPDATE

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1.11 The increasing connectivity of services and infrastructure to the internet
will expose vulnerabilities in global supply chains, critical infrastructureand support services. These will be key targets in grey-zone activities
and as a precursor to conventional conflict. The challenge of protecting
critical technologies from intellectual property theft will become harderand will have major security as well as economic impacts.
1.12 Major power competition, coercion and military modernisation are
increasing the potential for and consequences of miscalculation. Whilestill unlikely, the prospect of high-intensity military conflict in the
Indo-Pacific is less remote than at the time of the 2016 Defence White
Paper, including high-intensity military conflict between the United States
and China.
1.13 Previous Defence planning has assumed a ten-year strategic warning
time for a major conventional attack against Australia. This is no longer
an appropriate basis for defence planning. Coercion, competition andgrey-zone activities directly or indirectly targeting Australian interests
are occurring now. Growing regional military capabilities, and the speed
at which they can be deployed, mean Australia can no longer rely ona timely warning ahead of conflict occurring. Reduced warning times
mean defence plans can no longer assume Australia will have time togradually adjust military capability and preparedness in response to
emerging challenges. This includes the supply of specialised munitions
and logistic requirements, such as fuel, critical to military capability.

15
Box 2 Strategic warning time
Strategic warning time for conventional conflict is the time a country
estimates an adversary would need to launch a major attack against
it, once the adversary’s intent to do so has been established. This
period is determined by indications of preparation and mobilisation of
resources and capabilities. New capabilities, including longer-range
missiles, ballistic missiles and offensive cyber and space capabilities,
have reduced strategic warning times. It is also a less relevant
concept for grey-zone activities, which can have little or no warningand occur below the threshold of armed conflict.
1.14 In this era of considerable change, the COVID-19 pandemic is creatingeven more uncertainty. The precise long-term security implications of
the pandemic are not yet clear, but its impact on regional growth, tradeand societies will have lasting consequences. The enormous economic
impact of measures to contain the spread of the virus will set backdevelopment. This economic shock could undermine political and social
stability. Far-reaching measures introduced in some countries to fightthe pandemic could be used to reduce political freedoms.
1.15 It is unlikely that the pandemic will fundamentally alter either the
longer-term shift in relative global economic and strategic weight to the
Indo-Pacific or China’s more active pursuit of greater influence in the
Indo-Pacific. But it will have implications for how these trends develop.
While collaboration and cooperation is expanding in response to thepandemic, some countries are using the situation to secure greater
influence. Strategic competition between the United States and China
is unlikely to abate, and the pandemic has sharpened aspects of thiscompetition. Military modernisation could slow in some countries but
will continue to be prioritised.

2020 DEFENCE STRATEGIC UPDATE

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1.16 The pandemic has disrupted globalised supply chains, which over time
have become a critical element of many of Australia’s national economic
sectors and Defence capability planning. A new focus on independent
sovereign industrial capability has emerged. In the first instance, thishas manifested in a need to produce the equipment and supplies
required for the health response to the pandemic. Over the longer term,
the pandemic has highlighted the potential vulnerability of global supply
chains in providing critical defence supplies and equipment.
1.17 Threats to human security – such as pandemics, and growing waterand food scarcity – are likely to result in greater political instability
and friction within and between countries and reshape our security
environment, including in the Indo-Pacific. These threats will becompounded by population growth, urbanisation and extreme weather
events in which climate change plays a part. Within Australia, theintensity and frequency of disasters – such as the 2019-20 Black
Summer bushfires – will test Australia’s resilience. Disaster response
and resilience measures demand a higher priority in defence planning.
1.18 State fragility, exacerbated by governance and economic challenges,
has the potential to facilitate threats to the region including the spreadof terrorism and activities that undermine stability and sovereignty.
Increased state fragility could also potentially lead to the ADF being
called on more often for evacuation, humanitarian assistance anddisaster relief missions and potentially more demanding stabilisation
operations. It may also increase threats to Australia’s domestic security
including through irregular maritime arrivals.
1.19 While the actions of nation states, especially strategic competition,
will be the principal driver of our strategic environment, the threat
from terrorism and violent extremism will persist. The emergenceof new or renewed terrorist groups with territorial ambitions could
engage international military forces, as in Iraq and the Philippines.
Within Australia, terrorism presents an evolving challenge, including

17
the adoption by terrorists of new technologies and techniques requiring
minimal preparation.
1.20 The trends set out above signal a security environment markedly
different from the relatively more benign one of the past, with greater
potential for military miscalculation, including state-on-state conflict that
could engage the ADF.
1.21 The next chapter sets out the Government’s defence policy response tothis environment.

2020 DEFENCE STRATEGIC UPDATE

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19

2

2020 DEFENCE STRATEGIC UPDATE

21` Chapter Two: Defence policy
2.1

The security environment described in the previous chapter requires a
new strategy to sharpen defence planning. This Strategic Update sets
out the Government’s new strategic defence policy framework, which
provides clearly identified geographical, operational and capability
priorities. This framework is intended to provide a tight focus forplanning, and alignment with broader Government initiatives such as the
Pacific Step-up and efforts to build a secure, prosperous and inclusive
Indo-Pacific of independent, sovereign and resilient states. Defence
will continue to work closely with other Government departments andagencies to implement these broader initiatives.

2.2

The Government has decided that defence planning will focus on
Australia’s immediate region: ranging from the north-eastern Indian
Ocean, through maritime and mainland South East Asia to Papua New
Guinea and the South West Pacific.

2.3

That immediate region is Australia’s area of most direct strategicinterest. Within it, Australia must be capable of building and exercising
influence in support of shared regional security interests. Accessthrough it is critical for Australia’s security and trade. Defence has
long-established patterns of deployment and engagement in this region.
Our defence relationships with countries in this region are an essential
part of our security planning, including with the Association of Southeast
Asian Nations (ASEAN) member states, Papua New Guinea, Timor-Lesteand Pacific Island countries.

2.4

Australia is a steadfast supporter of ASEAN’s central role in facilitating
regional security dialogue and cooperation and plays an active role in
the ASEAN Defence Ministers’ Meeting Plus to drive practical defence
cooperation between regional countries.

2020 DEFENCE STRATEGIC UPDATE

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2.5

The Pacific Step-up builds on Australia’s history of sustained
engagement with countries in the Pacific and our shared and abiding
interest in the promotion of sovereignty, stability, security and prosperityin the region. In line with the Boe Declaration adopted by Pacific leaders
at the 2018 Pacific Islands Forum, Australia is enhancing its security
cooperation with Pacific countries, including through expanded ADF
training activities, infrastructure development, maritime capability andpeople-to-people links.

2.6

But habits of cooperation in the Indo-Pacific are being challenged,
leading to uncertainty and complicating security partnerships. This is
why Defence will continue to work to strengthen defence and diplomatic
ties with the countries in Australia’s immediate region, working alongside
important partners such as the United States, Japan and New Zealand.
In some countries the economic and social impacts of COVID-19 may
require an adjustment to planned activities, but we will work closely withpartners to tailor our cooperation to meet evolving needs.

2.7

Australia’s immediate region is also the area in which we should be
most capable of military cooperation with the United States. Australia
is a staunch and active ally of the United States, which continues tounderwrite the security and stability of the Indo-Pacific. We will continue
working with the United States to build defence cooperation in the region
to meet security challenges – such as the ongoing threat from terrorism– and to build common approaches to ensure stability in our region. It
also includes responding to natural disasters. Should circumstances
require it, this is also the region in which Australia needs to be capableof leading military operations.

2.8

While Australia’s immediate region will be the focus for defence
planning, Defence will continue to invest in relationships, collaborationand partnerships across the Indo-Pacific and globally. This is vital forthe development of Defence capability, intelligence sharing (including
through the Five Eyes arrangement) and cooperation in support ofshared security interests.

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2.9

Australia engages multilaterally, such as with the United Nations, andthrough bilateral partnerships such as our Special Strategic Partnershipwith Japan and our Comprehensive Strategic Partnership with India,
to support shared interests in global rules and norms. Australia also
works with smaller groups of likeminded countries, such as the Trilateral
Strategic Dialogue between Australia, Japan and the United States, toaddress common strategic issues.

2.10 Australia will continue to be an active and vocal advocate for arules-based international order designed to support economic growth,
security, prosperity and our values. This includes support for laws andtreaties, such as the United Nations Convention on the Law of the Sea,and international institutions that help constrain the exercise of coercive
power and support collective responses to challenges such as terrorism
and the proliferation of weapons of mass destruction.
2.11 Defence must also remain prepared to make military contributions
outside of our immediate region where our interests are sufficiently
engaged, including in support of US-led coalitions and counter
terrorism actions such as in the Middle East. Therefore, the ADF’s
ability to deploy forces globally, where the Government chooses to doso, must be maintained. This includes contributions across the wider
Indo-Pacific, including in North Asia. North Asia is a region of global
strategic and economic significance and Australia has important tradeand broader partnership-based interests with countries in the region.
But any such wider contributions must be based on specific national
interests. Consideration of making wider military contributions should
not be an equally-important determinant for force structure compared toensuring we have credible capability to respond to any challenge in our
immediate region.
2.12 The Government has set three new strategic objectives for defence
planning. These objectives replace the Strategic Defence Framework set
out in the 2016 Defence White Paper. The new objectives are: to shape25
Australia’s strategic environment; to deter actions against Australia’sinterests; and to respond with credible military force, when required.
2.13 These new objectives will guide all aspects of Defence’s planningincluding force structure planning, force generation, international
engagement and operations. To implement the new objectives,
Defence will:• prioritise our immediate region (the north-eastern Indian Ocean,through maritime and mainland South East Asia to Papua New
Guinea and the South West Pacific) for the ADF’s geographical focus;• grow the ADF’s self-reliance for delivering deterrent effects;• expand Defence’s capability to respond to grey-zone activities,
working closely with other arms of Government;• enhance the lethality of the ADF for the sorts of high-intensity
operations that are the most likely and highest priority in relation toAustralia’s security;• maintain the ADF’s ability to deploy forces globally where theGovernment chooses to do so, including in the context of US-led
coalitions; and• enhance Defence’s capacity to support civil authorities in response tonatural disasters and crises.

Shape Australia’s strategic environment
2.14 Australia must be an active and assertive advocate for stability, security
and sovereignty in our immediate region. To support this objective,
international engagement will continue to be a core Defence activity.
Defence will continue to build new, and strengthen existing, partnershipsthat support this objective. This includes continuing to build on the
Government’s Pacific Step-up.

2020 DEFENCE STRATEGIC UPDATE26
2.15 Our partnerships with regional countries have a long history but will need
to be continually developed to support shared interests in the context
of our evolving strategic environment. This will involve expanding ourdefence diplomacy, cooperation and capacity-building activities, including
delivering security-related infrastructure. This increased engagement
will focus on the growing shared interest across the Indo-Pacific instrengthening sovereignty and resilience to coercion. Defence will
also expand its regional operational cooperation including in relation tohumanitarian assistance and disaster relief and maritime security.
2.16 The capacity to conduct cooperative defence activities with countries
in the region is fundamental to our ability to shape our strategic
environment. For defence planning, shaping Australia’s strategic
environment includes preventing our operational access in the region
from being constrained. Constrained access would limit cooperative
activities and the ADF’s ability to deploy military force in support ofshared interests. We must also be prepared to lead coalition operations
where it is in the interests of the region for us to do so, especially in our
immediate region.
2.17 The security arrangements, interoperability, intelligence sharing, andtechnological and industrial cooperation between Australia and theUnited States are critical to Australia’s national security. We will continue
to deepen the Alliance, including ensuring it reflects the priority our
respective defence strategies accord the Indo-Pacific.
2.18 We will also continue to prioritise our engagement and defence
relationships with partners whose active roles in the region will be vitalto regional security and stability, including Japan, India and Indonesia.
2.19 We will also increase investment in capabilities that support the ADF’s
awareness of our immediate region. This includes expanding the Jindalee
Operational Radar Network to provide wide area surveillance of Australia’s
eastern approaches. The Jindalee Operational Radar Network, based on

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world-leading Australian technology, currently provides comprehensive
surveillance of Australia’s northern and western approaches and is a vital
component of Australia’s strategic surveillance network.

Deter actions against Australia’s interests
2.20 Australia has a highly effective, deployable and integrated military force.
But maintaining what is a capable, but largely defensive, force in themedium to long term will not best equip the ADF to deter attacks against
Australia or its interests in the challenging environment this document
sets out.
2.21 The nature of current and future threats – including coercion in theregion, more capable and active regional military forces, and expandinganti-access and area denial capabilities – requires Defence to developa different set of capabilities. These must be able to hold potential
adversaries’ forces and infrastructure at risk from a greater distance,
and therefore influence their calculus of costs involved in threatening
Australian interests.
2.22 Only the nuclear and conventional capabilities of the United States
can offer effective deterrence against the possibility of nuclear threatsagainst Australia. But it is the Government’s intent that Australia takegreater responsibility for our own security. It is therefore essential that
the ADF grow its self-reliant ability to deliver deterrent effects.
2.23 Given Australia’s limited resource base, we must improve our ability todeliver these effects without seeking to match the capability of major
powers. This includes developing capabilities to hold adversary forces
and infrastructure at risk further from Australia, such as longer-range
strike weapons, cyber capabilities and area denial systems.
2.24 These capabilities will need to deliver deterrent effects against a broad
range of threats, including preventing coercive or grey-zone activities

2020 DEFENCE STRATEGIC UPDATE

28

29
from escalating to conventional conflict. The ADF’s presence andregional engagement must also serve to prevent actions that undermine
regional resilience and sovereignty.

Respond with credible military force
2.25 The prospect of high-intensity conflict in the Indo-Pacific, while still
unlikely, is now less remote. The ADF must be better prepared for suchconflict if deterrence measures fail, or to support the United States andother partners where Australia’s national interests are engaged.
2.26 This means it is vital that we continue to enhance the lethality andreadiness of the ADF, as well as the logistic support required forhigh-intensity warfighting. In the event of a high-intensity conflict thatengages the ADF, we need to have depth for sustaining key capabilities
and materiel, especially munitions. This will require less risk-averse
engagement with industry to accelerate capability development andstrengthen supply, as well as selectively increasing interdependencewith the United States and other partners in more responsive andassured global supply chains.
2.27 Defence will also need to enhance its support to civil authorities in
response to national and regional crises and natural disasters, suchas pandemics, bushfires, floods or cyclones. This includes detailed
planning for the provision of logistic and other support for civil authorities
during and after a disaster. The Government has directed further
development of Defence capability in this area, including in relation
to equipment, facilities, training, logistics and planning. It also means
strengthening partnerships with civil authorities in Australia to support
national efforts against shared challenges, including closer relationships
with other Commonwealth as well as state and territory authorities.

2020 DEFENCE STRATEGIC UPDATE30
Implications for force structure
2.28 The 2016 Defence White Paper judged that Australia required a force
structure and military capability able to undertake a broad range oftasks. Objectives for this force covered Australia and its approaches, ournearer region, the broader Indo-Pacific and global order. The objectives
were equally weighted for force structure and force posturedecision-making.
2.29 The 2016 Defence White Paper maintained broad continuity with pastdefence planning, based on a strategy designed to respond to a wide
range of regional and global challenges. Our relatively more benign past
security environment provided the strategic space for this strategy.
2.30 Our environment is now more complex, with Australian interests being
more directly challenged than in the past, and sharper prioritisationis required. Although the security implications of the COVID-19
pandemic are unclear, they are unlikely to improve the long-term trendsin Australia’s environment, such as increasing strategic competition,
or decrease the importance of building a more potent ADF. Defence
must be able to deploy military power to shape our environment,
deter actions against our interests and, when required, respond withmilitary force. The new policy will require force structure and capability
adjustments focussing on responding to grey-zone challenges, thepossibility of high-intensity conflict and domestic crises.
2.31 More detail on the Government’s plans to strengthen Defence
capabilities to deliver its strategic policy is set out in the next chapter.

32020 DEFENCE STRATEGIC UPDATE

32

33
` Chapter Three: Capability
3.1

As a result of the decisions the Government made in the 2016 Defence
White Paper, Defence has made substantial progress in building a morepotent, capable and agile ADF. Defence is regenerating and expanding
its maritime capabilities, delivering a fifth-generation air force andenhancing the mobility and security of its land forces. Defence is also
implementing upgrades and enhancements to critical enabling functions
that support its warfighting capabilities.

3.2

However, the Government has decided that adjustments to the 2016
Defence White Paper plans are required. These adjustments focus on
ensuring the ADF can shape Australia’s strategic environment, delivercredible deterrence and respond to challenges to our interests. The
Government’s strategy includes continuing to strengthen the intelligenceand cyber capabilities of the Australian Signals Directorate, which
are critical for identifying and responding to foreign threats targeting
Australian interests.

3.3

The Government’s plans include:• capabilities to support an enhanced Defence posture andwhole-of-government efforts to build Australia’s partnerships andinfluence in the region, including the Pacific Step-up objectives;• more potent capabilities to hold adversary forces and infrastructure
at risk further from Australia, including longer-range strike weapons,
cyber capabilities and area denial systems;• more durable supply chain arrangements and strengthened
sovereign industrial capabilities to enhance the ADF’s self-reliance,
including in the context of high-intensity operations;• increased investment in capabilities to respond to grey-zone
activities, including improved situational awareness, cybercapabilities, electronic warfare and information operations; and2020 DEFENCE STRATEGIC UPDATE34• measures to enhance ADF support to civil authorities in response tonational crises and natural disasters, such as pandemics, bushfires,floods or cyclones.

Capability priorities
3.4

As is longstanding practice, Defence regularly reviews its capability plansto ensure they can deliver the Government’s strategy. Under the 2020
Force Structure Plan, a comprehensive assessment of the ADF’s force
structure and current and future Defence capability investments has
been conducted. This assessment focussed on meeting the strategic
guidance set out in this document, responding to new technologies andsupporting ongoing modernisation of Defence over a 20 year timeframe.

3.5

The Government has directed that Defence implement the 2020 Force
Structure Plan. To deliver the Government’s defence strategy, including
the capabilities set out in this chapter and the 2020 Force Structure Plan,
the Government will provide Defence, including the Australian Signals
Directorate, with total funding over the decade to 2029-30 of $575 billion,
including approximately $270 billion of investment in Defence capability.
Further details of the Defence funding model are set out in Chapter Five.

3.6

The development of the 2020 Force Structure Plan was based on
extensive experimentation and analysis, underpinned by cost modelling.
This included assessing the ADF’s ability and capacity in relation to arange of possible scenarios, including responding to natural disasters,
and managing a number of concurrent tasks.

35
3.7

This investment plan will strengthen Defence capability across fivedomains: Information and Cyber; Maritime; Air; Space; and Land. The
Government has also allocated funding for measures to enhance resilienceand supply chain security and initiatives to enhance Defence’s workforce,enterprise information and communications technology and infrastructureand estate. These capabilities are essential for strengthening the ADF’s
ability to deploy and operate as an integrated joint force.

Chart 1 – Proportional Capability Investment for the
Decade 2020-2030
3%
24%

28%

6%
2%
11%

20%
6%

Air Domain
Other Enterprise andEnabler Programs
Enterprise Information
Communication Technology
Enterprise Infrastructureand Estate
Information and Cyber Domain
Land Domain
Maritime Domain
Space Domain

Note: these percentages are rounded numbers and may not equate exactly to the capability
domain investment figures.

3.8

Key investments in each of these areas are set out below, with further
detail outlined in the 2020 Force Structure Plan. The capabilities outlinedin this plan will provide the Government with a flexible range of options toshape Australia’s strategic environment, deter actions against Australia’sinterests and respond with credible military force. Increasing integration
across Defence will continue to be critical to deliver these options, withindividual capabilities contributing to different options in different ways.

2020 DEFENCE STRATEGIC UPDATE

36
Information and Cyber capabilities
3.9

Information underpins all effective military operations. Secure andresilient information systems are critical to delivering capability,
conducting operations, sharing information with partners andcommunicating with other government agencies. This includes measures
to ensure that critical information and communications infrastructure,systems and networks are defended against cyber attacks.

3.10 Investments are planned in joint command, control and communications
systems, joint electronic warfare and defensive cyberspace operations.
This investment in systems will be complemented by the establishmentof a new counter-intelligence capability, including infrastructure andtraining equipment.
3.11 Defence will also invest in offensive cyber and operational cyberspacecapabilities for deployed forces, as well as systems to integrate
intelligence, surveillance and reconnaissance programs and data.
Intelligence capability will be further bolstered by continued investment
in signals intelligence and the expansion and upgrading of securecommunication systems.
3.12 This investment in strengthened Information and Cyber domain
capabilities will total around $15 billion over the next decade.

Maritime capabilities
3.13 Australia’s naval and maritime forces are a vital element of our defence
strategy. They must be able to project force at long range from Australia,
operate across vast distances and work closely with civil maritime
security agencies to protect our borders. The 2016 Defence White
Paper laid the foundation for the largest recapitalisation of the Royal
Australian Navy in modern history, underpinned by a continuous National
Naval Shipbuilding Enterprise. This includes the acquisition of 12 Attack

37
Class Submarines, nine Hunter Class Frigates and 12 Arafura Class
Offshore Patrol Vessels.
3.14 The Government will continue to deliver this nationally significant programof investment in ships and submarines, modern shipyard infrastructure
and the associated vital workforce growth and skilling initiatives.
Additional investments will be made in anti-submarine warfare, sealift,border security operations, maritime patrol and reconnaissance, airwarfare, sea control and undersea warfare capabilities. The Government
will also prioritise the acquisition of strike weapons to increase the ADF’s
maritime deterrence and long-range land strike capabilities.
3.15 Significant planned investments will extend Navy’s ability to projectand sustain joint operations, including in responding to disasters. This
includes two multi-role sealift and replenishment vessels, life extensionof Australian Defence Vessel Ocean Protector and its subsequent
replacement with an ice-rated vessel capable of operating in theSouthern Ocean. The Government is also planning the acquisition of avessel built in Australia to support the Pacific Step-up. The Government
will also invest in area denial systems including an enhanced mine
warfare capability to secure Australia’s maritime approaches. Navy’s
mine countermeasures and tactical hydrographic capabilities will beenhanced through the acquisition of up to eight additional vessels,
built in Australia, potentially based on the Arafura Class Offshore Patrol
Vessel design.
3.16 The Government’s strengthening of the ADF’s maritime capabilities will
involve investment of around $75 billion over the next decade. Further
detail on the critical role of Australia’s shipbuilding industry in delivering
this plan will be included in an update to the Government’s Naval
Shipbuilding Plan at the end of 2020.

2020 DEFENCE STRATEGIC UPDATE38
Air capabilities
3.17 Australia requires a technologically advanced strike and air combat
capability which must be capable of defeating threats as far from
Australia or its deployed forces as possible. As well as possessing
potent weapons, our air combat capabilities must be fully integrated
with supporting intelligence, surveillance, reconnaissance and logistics
systems. Investment will be made in Australia’s air combat capability,
comprising the F-35A Lightning II Joint Strike Fighters and EA-18G
Growler Electronic Attack aircraft, to ensure they remain capable ofdelivering lethal and potent effects. Defence will also acquire additional
advanced air defence and longer-range strike weapons.
3.18 The Government’s plans also include the acquisition of remotely
operated and/or autonomous air vehicles and the development ofadvanced air-to-air and strike capabilities with improved range, speed
and survivability, potentially including hypersonic weapons. The
survivability of our deployed forces will also be improved through newinvestments in an enhanced integrated air and missile defence system
and very high-speed and ballistic missile defence capabilities for
deployed forces.
3.19 The Government will also enhance Defence’s intelligence, surveillance
and reconnaissance capabilities. This includes expanding the Jindalee
Operational Radar Network to provide wide area surveillance ofAustralia’s eastern approaches.
3.20 To deliver these strengthened air capabilities the Government will invest
around $65 billion over the next decade.

Space capabilities
3.21 Assured access to space is critical to ADF warfighting effectiveness,situational awareness and the delivery of real-time communications
and information.

39
3.22 The Government will significantly increase investment in Defence’s
space capabilities. This includes plans for a network of satellites toprovide an independent and sovereign communications network andan enhanced space control program. The Government will continue
investment in space situational awareness, including sensors andtracking systems.
3.23 Defence will work closely with industry and other government agencies
to advance its space capabilities, including through the AustralianSpace Agency.
3.24 The Government has agreed to invest around $7 billion in spacecapabilities over the next decade.

Land capabilities
3.25 The land force must be connected, protected, lethal and enabled.
Enhanced mobility, firepower, protection and situational awareness willallow land forces to rapidly deploy, achieve their missions and returnhome safely.
3.26 To enable this, investments will be made in enhancing the protection,
weaponry and communication systems of the land force. Long-range
lethality will be strengthened through additional long-range rocket
systems, protected mobile artillery and enhanced missile development.
3.27 Regional force projection and lift capabilities will be enhanced with newlarge landing craft, special operations vehicles, watercraft and longrange helicopters.
3.28 The Government will strengthen the ADF’s land capabilities withinvestment of around $55 billion over the next decade.

2020 DEFENCE STRATEGIC UPDATE40
The Defence enterprise
3.29 A Defence enterprise that is resilient to shocks and outside interferenceis critical to the Government’s defence strategy. The ADF must increase
its self-reliant ability to deploy and deliver combat power and reduce
its dependencies on partners for critical capability. The ADF mustalso be more capable of working with Commonwealth and state andterritory agencies, including to respond to disasters within Australia.
The Government will enhance Defence’s resilience through a range ofinvestments and sustainment funding in the Defence enterprise.
3.30 To further build resilience and self-reliance, Defence will increase therange and quantity of the weapon stocks it holds. Funding has also
been allocated for exploring and potentially implementing additional
measures, including the development of sovereign manufacturing
capabilities for advanced guided weapons and explosive ordnance andexpanding ADF fuel storage capacity.
3.31 Increased sustainment funding will increase the ADF’s preparedness toprovide faster responses, longer duration assistance and more flexibility
to Government in support of operations in Australia or overseas. The
ADF’s preparedness will also be increased through enhancements to
Defence training areas and facilities both live and simulated.
3.32 The Government will also continue to build Australia’s self-reliant
geospatial-information and intelligence capability, both to support
strategic intelligence requirements and support precision guided
weapons. This will include acquisition of a sovereign space-based
imagery capability to enhance coverage of the Indo-Pacific region.
3.33 Upgrades to Defence’s core enterprise management systems will be
driven by a business enterprise architecture and transformation program,which will include improvements to Defence’s human resource, health,resource planning and enterprise information management systems.
3.34 This capability investment in the Defence enterprise will be around$15 billion over the next decade.

41
Workforce
3.35 The Government has determined that the ADF and Defence’s
Australian Public Service workforce must grow beyond the plans in
the 2016 Defence White Paper. The requirement is based on detailed
analysis of a range of scenarios, from humanitarian assistance anddisaster relief operations to combat. Additional growth is also plannedfor cyber operations within the Australian Signals Directorate.
3.36 In the short term out to 2024, the Navy, Army and Air Force will all
grow their workforce. In particular, the Navy workforce must expand tosupport the introduction of new naval capabilities. This larger workforce
will support increasing maritime commitments in the region, including an
increased presence in the Pacific and enhanced border security.
3.37 The Government has directed Defence to develop further plans for
subsequent workforce growth over the medium to long term forconsideration by Government in 2021. This growth will be critical todeliver the enhanced capabilities set out in this document. Continualreform will be essential to recruiting, developing and supporting ourworkforce to ensure that Defence has the people it needs into the
future. This is particularly important in growing and highly competitive
fields including shipbuilding, cyber security and information andcommunications technology.

Information and communications technology
3.38 Defence has undertaken significant investment in its critical enabling
information and communications technology, including provisionof a secure Defence terrestrial communications network and themodernisation of desktop computing and infrastructure.
3.39 Over the next five years, Defence will need to plan for developments
including next generation secure wireless networks, artificial intelligence
and augmented analytics. The technology changes with implications

2020 DEFENCE STRATEGIC UPDATE42
for Defence projected over the following six to ten years will also likely
include robotics, immersive technologies and quantum computing.
3.40 Defence will continue to focus investments on ensuring it is able to seize
the opportunities and meet the challenges posed by such developments.
In particular, investments aligned to security, information access andmanagement, connectivity, and processing and storage are planned. They
include upgrades to secure networks and to systems that support sharing
information with domestic and international partners. In addition to its
investments, Defence will continue to deliver enterprise-wide informationand communications technology business transformation projects.
3.41 The Government has committed investment of around $5 billion in
Defence information and communications technology capability over the
next decade.

Estate and infrastructure
3.42 Infrastructure such as bases, ports, airfields, training areas and logistics
facilities underpin the ADF’s ability to prepare for, conduct and sustain
military operations including in response to disasters. The Government
has committed to strengthening the Defence estate and infrastructurewith investment of around $30 billion over the next decade.
3.43 The Government will continue to invest in new and enhanced facilities
to support and sustain the ADF. Key planned investments include
a new Army watercraft base in Northern Australia, upgrades to key
maritime ports to support Navy’s operations, upgrades or new facilities
to support the expanded submarine fleet and provisions for significant
enhancements for Australia’s airbases.

43

4

44

45
` Chapter Four: Industry andInnovation
4.1

The Government remains committed to developing a strong, sustainable
and secure Australian defence industry and supporting leading edge
national innovation. Both are vital to the ADF’s ability to act with greater
independence in an increasingly contested strategic environment.

Industry
4.2

A robust, resilient and internationally competitive defence industrial baseis a fundamental input to Defence capability. Continuing the culturalshift to a genuine partnership between Defence and industry is critical toensuring the expertise resident in our industrial base effectively supports
Australia’s national security. This means making it easier for industry
to work with Defence to access opportunities in the defence sector,
including in major capability and infrastructure programs. Defence mustalso help industry equip itself with the skilled workforce it will require to
support the ADF and connect industry to opportunities in international
markets.

4.3

The positive and effective relationship between Defence and industry has
been demonstrated in the context of the COVID-19 pandemic. Defence
has worked closely with industry to ensure continuity of support tocritical national security capabilities despite the pressures and impactof the pandemic. The Australian Government has also implemented
significant initiatives to support defence industry through the pandemic,
and Defence will continue to contribute to strengthening and growing theAustralian economy as it recovers from this crisis.

2020 DEFENCE STRATEGIC UPDATE46
Australian Industry Capability
4.4

The Australian Industry Capability Program supports Australian industry
involvement in Defence procurement and projects. The program requiresthat prime companies competing for Defence contracts demonstrate how
they will maximise Australian industry involvement. Examples include theacquisition contract for Boxer Combat Reconnaissance Vehicles involving
an Australian Industry Capability commitment of $1.3 billion and themore than 300 Australian companies that are currently associated withthe construction of the Offshore Patrol Vessels.

4.5

Australia’s defence industry is growing with over 4,000 businesses
employing approximately 30,000 staff. An additional 11,000 Australiancompanies directly benefit from Defence investment and, when further
downstream suppliers are included, the benefits flow to approximately
70,000 workers in total.

4.6

The Government is committed to maximising opportunities for Australianindustry, including in regional areas, to participate in Defence projects.
Defence is establishing an independent audit program to ensure thatprime contractors deliver on their contracted obligations to support
Australian industry and that commitments to Australian businesses arehonoured. Defence will use contractual and non-contractual means toensure that prime contractors meet the Government’s expectation thatthey maximise Australian industry involvement.

Sovereign Industrial Capability Priorities
4.7

The Government has identified an initial ten Sovereign Industrial
Capability Priorities, set out in the 2018 Defence Industrial Capability
Plan. They are the industrial capabilities that are critical to Defence andmust be developed or supported by Australian industry. This means
Australia must have access to, or control over the skills, technology,

47
intellectual property, financial resources or infrastructure that underpin
the Priorities. The Priorities represent a subset of the industrial
capabilities that Defence relies on to deliver its core objectives and will
be managed closely across Defence and industry planning.
4.8

By the end of 2020, implementation plans will be available for eachof the Priorities. The plans will further clarify the specific industrial
capabilities that Defence needs now and into the future. These plans
will give industry the confidence to invest in the equipment, people andtechnologies needed to develop and deliver these industrial capabilities.

Skilling
4.9

Science, technology, engineering and maths skills will underpin theindustries and jobs of the future, including in the defence sector. The
Schools Pathways Program, the Defence Industry Internship Programand a new Skilling Australia’s Defence Industry program will continue
to equip the defence sector with the skilled workforce it will require to
support and sustain the ADF. The Naval Shipbuilding College is also
working closely with industry and education and training stakeholders tounderstand demand and supply requirements of the naval shipbuilding
industry throughout all phases of build and sustainment.

Innovation
4.10 The Government will continue to invest in innovation through astructured approach to deliver a comprehensive, cohesive and agile
innovation system that will bridge the gap between technology
development, acquisition and delivery into service.
4.11 Effectively shaping and harnessing the national science and technology
enterprise is required to achieve a cohesive and agile innovation systemthat can deliver defence priorities. Defence, through the Defence

2020 DEFENCE STRATEGIC UPDATE

48
Science and Technology Group, will play a stronger role in enabling,
coordinating and focusing support to Defence from the national scienceand technology enterprise including universities, other publicly funded
research agencies and industry.
4.12 This more focussed science and technology effort is set out in the More
Together: Defence Science and Technology Strategy 2030. The strategy
provides guidance to ensure the national science and technology
enterprise is strengthened and leveraged to address the strategic
challenges Australia faces. It includes initiatives to direct resources toDefence’s most critical challenges and supports a more streamlined
transition of promising technological concepts into capability.
4.13 The future Defence innovation system includes continued funding for
the Next Generation Technologies Fund and the Defence Innovation
Hub. This will enable investment in potentially high payoff research andin relatively lower-risk incremental innovation developed from industry
technology. This investment reinforces Defence’s commitment tostability and continued growth in the innovation sector.
4.14 To ensure Defence’s innovation system has the capacity to meetthe demands of future technological development, a new Capability
Acceleration Fund will be introduced from the middle of this decade.
This fund is planned to support the development of key disruptive
technologies with industry beyond the early-stage research anddemonstration stages, taking promising future technologies all the way
through to acquisition.
4.15 The Government has committed around $3 billion of capability
investment in Defence innovation, science and technology over the next
decade.
4.16 Effectively leveraging Australia’s defence industry and innovation
capabilities will depend on ongoing reform of the Defence organisation,
as set out in Chapter Six.

49

2020 DEFENCE STRATEGIC UPDATEIntentionally blank51

52020 DEFENCE STRATEGIC UPDATE

52

53
` Chapter Five: Resourcing
5.1

The Government is providing long-term funding certainty for Defence
so it can deliver the strategy set out in this document. To provide thiscertainty, the Government is continuing its policy of providing a 10-year
funding model for Defence, first articulated in the 2016 Defence White
Paper. This funding model will provide Defence, including the Australian
Signals Directorate, with total funding of $575 billion to 2029-30.

5.2

Defence needs this certainty so it can plan over the long term, including
for complex capability acquisition programs that can span decades.
Australian defence industry also requires certainty to underpin its
investments in the skills and technology that Defence relies on to deliverand support its capabilities.

The Government’s Defence funding model
5.3

The Government is on track to meet its commitment to growing the
Defence budget to two per cent of Australia’s Gross Domestic Product(GDP) in 2020-21, providing $42.2 billion of funding to Defence(including the Australian Signals Directorate) in 2020-21.

5.4This funding will grow over the next ten years to $73.7 billion by2029-30. The total funding of $575 billion over the decade includes
around $270 billion in capability investment, compared to $195 billion
in capability investment for the decade to 2025-26 when the 2016
Defence White Paper was released. The Defence Budget has been
decoupled from GDP forecasts to avoid the need for adjusting Defence’s
plans in response to future fluctuations in GDP.

2020 DEFENCE STRATEGIC UPDATE54
Table 1 Total Defence Funding Profile 2020-21 to 2029-30(Including the Australian Signals Directorate)

Defence Funding(including ASD)1

2020-21 2021-22 2022-23 2023-24
$m
$m
$m
$m

2024-25 2025-26 2026-27
$m
$m
$m

2027-28 2028-29 2029-30
$m
$m
$m

Total
Decade2020-21to2029-30$m

42,151

55,56764,639574,969

46,03750,17053,31858,175

61,23969,986

73,687NOTE:
1. Defence Funding (including ASD) is as at the MYEFO 2019-20 price basis. This price basis will be regularly adjusted in line with
Commonwealth Budget processes.

How will Defence funding be spent?
5.5

The Defence budget, not including its funding for operations, comprises
three major categories of costs: acquisition of new capability;
sustainment of capability; and workforce. A fourth category, theoperating budget, is comparatively minor. Details of the three key
categories of funding are outlined below.

5.6

Over the decade to 2029-30, investment in the acquisition of newcapability will grow from $14.4 billion (34 per cent of the budget) to$29.2 billion (40 per cent of the budget).

5.7

Over the decade to 2029-30, investment in sustainment of current andfuture capability will grow from $12.6 billion (30 per cent of the budget)to $23.8 billion (32 per cent of the budget).

5.8

Over the decade to 2029-30, investment in the Defence workforce willgrow from $13.5 billion (32 per cent of the budget) to $19.2 billion(26 per cent of the budget).

5.9

The breakdown of the categories of Defence funding, including theAustralian Signals Directorate, is illustrated in the chart below.

55
Chart 2 –Total Defence Funding Model by Category (including theAustralian Signals Directorate)
80,00070,00060,000$m

50,00040,00030,00020,00010,0002020–212021–22

WORKFORCE

2022–23

2023–24SUSTAINMENT

2024–25

2025–26ACQUISITION

2026–27

2027–28

2028–292029–30OPERATING

Alignment of strategy, capability and resources
5.10 The strategy and resourcing set out in this Strategic Update provide
Defence with clear direction and certainty to underpin its planningto support Australia’s security. However, Defence’s capability
and funding plans must continue to be responsive to our rapidlychanging circumstances. The 2016 Defence White Paper set out theGovernment’s direction that Defence maintain alignment of strategy,
capability and resources over time.
5.11 To ensure Defence remains responsive to the challenges of today andto those in the future, adjustments have been made to several projects
planned in the 2016 Defence White Paper. These adjustments arenecessary to ensure the future ADF can project military power to shape
our environment, deter actions against our interests and, when required,respond with effective military force. Major adjustments include a2020 DEFENCE STRATEGIC UPDATE56
significant reduction in the planned modernisation and replacement of
the G-Wagon vehicle fleet. Defence will also adjust the composition of
its intelligence, surveillance and reconnaissance, refuelling and airlift
aircraft fleets and will not proceed with the purchase of an enhanced
long-range search and rescue capability. A number of infrastructure andenabling projects will also be adjusted.
5.12 Although resources have been allocated to implement thisStrategic Update, further force structure adjustments and, potentially,
trade-offs will be required over the medium to longer term. In particular
this could involve the introduction of additional, longer-range weapon
systems, which are being developed and introduced into service in many
advanced military forces and which will be critical for the ADF to be able
to deliver credible deterrent effects.
5.13 Accordingly, the plans set out in this Strategic Update will be subject toregular review by Government and regular reporting to the Australianpeople through the Parliament. The Government expects that Defence
will continue to make investment decisions that balance expenditureon capability acquisition, sustainment, operating and workforce costs
to ensure the Government’s strategy is delivered within the Defence
budget. Ongoing reform of the Defence organisation will be criticalto continuing to deliver capability efficiently and effectively, and isaddressed in the next chapter.

57

6

59
` Chapter Six: Reform
6.1

The Government has directed that the three pillars of strategy, capability
and reform underpin all aspects of Defence planning and activity.

6.2

Defence must be a single strategy-led and centrally directedorganisation – one that is agile, proactive and effective in adapting tostrategic and technological trends and changes. To achieve this vision,
Defence must improve its capacity to identify and seize opportunities fororganisational reform.

6.3

The 2015 First Principles Review commenced Defence’s transformation
into an adaptive strategy-led organisation. Implementation has
enhanced Defence’s agility in strategic policy and capability
development, including tighter alignment of strategic and force structure
analysis, policy development, acquisition, research and development andindustry policy.

6.4

Defence is now driving its next phase of reform under Defence 2022 –Embedding One Defence. These reforms are strengthening Defence’s
strategic centre and clarifying accountabilities to improve strategic
performance and governance.

6.5

The new strategic policy framework set out in this Strategic Update will
be incorporated into Defence’s classified planning guidance. This annual
planning guidance directs all planning processes across Defence toensure the ongoing alignment of strategy, capability and resources.

6.6

Defence continues to mature its approach to managing capability
through an end-to-end capability life cycle. Improvements in theprocesses and analysis of force design decisions are also enhancing
Defence’s performance in developing and delivering capability.
These improvements have underpinned the Government’s recordof implementing its capability plans through significant numbers of2020 DEFENCE STRATEGIC UPDATE

60
capability investment approvals, while ensuring ongoing responsible andeffective management of Defence’s resources.
6.7

The culture of reform has also underpinned the development of the2020 Force Structure Plan.

6.8

Work has commenced to determine further reforms necessary to deliver
the outcomes required by this new strategy, including improving Defence’s
accountability and reporting frameworks. Stronger force design processes
will be complemented through capability being managed as programs
rather than individual projects. Capability will be delivered through clearer
and even more streamlined acquisition processes and in even closer
partnership with Australian Defence Industry.

6.9

Cultural reform undertaken through Pathway to Change: Evolving
Defence Culture 2017-2022 continues to embed workplace norms andbehaviours that support Defence people, help attract the best talent andpromote Defence values.

6.10 Defence will further transform its business processes and integrate
the delivery of corporate and enabling services to ensure Defence
personnel focus on their core roles in delivering and supporting Defence
capability. These changes will strengthen Defence’s strategic centre,
improve enterprise performance and governance, and redirect resources
currently devoted to administering Defence to bolstering capability.
6.11 The outcome of these reforms is not simply about the extent to which
Defence is performing well against its own internal measures, rather
its capacity to ensure that its development and use of capability issustainable and robust as well as transparent to all Australians throughthe Parliament.

61
6.12 Continuous transformational reform is essential for building Defence’s
capacity to respond to a more uncertain external environment. Reform
cannot be a one-off process – improvement is continual – and it mustbe purposeful. Defence must continue to evolve and adapt to meet
Australia’s changing strategic environment and maintain alignment ofstrategy, capability and resources.

2020 DEFENCE STRATEGIC UPDATE