Unpacking Australia’s 2023 Defence Strategic Review

In April 2023, Canberra released the public version of its Defence Strategic Review (DSR). This is only the third time in four decades that Australia has conducted a fully-fledged defense review. The other two reviews are the 1986 Defence Capabilities Review and the 2012 Defense Force Posture Review. With a total of 108 recommendations in the classified version of the DSR, 105 of which were accepted by the government, the scope of the recommendations marks a significant shift in Australian foreign policy’s ambitions. Whether Canberra is able to execute and achieve those objectives is a different question.

The government undertook this defense review against the backdrop of what Australian defence minister Richard Marles characterized as “the toughest strategic environment [Australia] has encountered in over 70 years.” Specifically, the Albanese government decided to proceed with a review in response to China’s rapid and non-transparent buildup of its military and intensifying U.S.-China competition. In addition, Prime Minister Albanese declared that a prolonged period of increased defense spending that failed to deliver tangible results had stalled the development of the Australian Defense Force (ADF) and weakened Australia’s overall deterrence capability. This lack of deliverables in defense policy in past years was another motivating factor behind the DSR.

The Labor Party, ahead of national elections in May 2022, pledged to conduct a defense posture review (where Australia’s forces are located). However, after getting elected, the Labor government subsequently broadened the coverage of the study to include defense posture, structure (what type of forces it has), preparedness (how ready those forces are for combat), and procurement. Upon assuming office, the government felt it essential to expand the scope of the review as it aimed to craft a holistic defense strategy that could inform decision-making in decades to come.

Key Takeaways from the 2023 Defence Strategic Review

As the DSR is intended to serve as a guiding strategy for Australia’s defense policy in the coming decades, it is important to understand the review’s evaluation of Australia’s current strategic environment and main recommendations. After acknowledging the escalating risks of a military conflict and years of lagging Australian defense policy, the review begins with a sober assessment of the ADF’s preparedness: the force is “not fully fit for purpose.”

Canberra’s past defense planning allowed a ten-year preparation window for a major conflict, which presumed Australia had ten years to prepare itself if a major conflict happened. The 2023 DSR determines that lead-time has significantly truncatedmeaning that, in the current strategic situation, Australia can no longer rely on a ten-year time window before a major war. This change in defense planning will have major implications for Australia’s defense posture, structure, procurement, and strategy.

To enhance the ADF’s operational readiness and ensure Australia's strategic stability in this new security environment, the review introduces the concept of a National Defence strategy. This supersedes the Defense of Australia strategy that had been employed in previous decades. The Defense of Australia strategy aimed at countering low-level threats from small to middle powers, such as terrorism threats in Afghanistan and the Middle East. However, China’s increasingly assertive behavior and the growing risk of a military conflict between major powers have destabilized regional security and prompted Canberra to embark on a substantial rethinking of its defense strategy. Articulated in the DSR as the National Defence framework, this strategy will not only include the acquisition of capabilities with longer power projection but also go beyond conventional military planning to include statecraft. To deter a potential military contingency, the National Defence strategy seeks to better position Australia to contribute to regional security and stability.

The National Defence approach is underpinned by four pillars. The first one calls for a whole-of-nation endeavor by broadening defense policy to encompass diplomacy. In particular, the review raises the need to bolster Australian diplomatic efforts in Southeast Asia and the Pacific Islands.

The second pillar underscores the importance of deepening ties with traditional allies, specifically through the implementation of AUKUS in partnership with the United States and the United Kingdom. Other critical security relationships that Canberra is putting more weight on are its bilateral cooperation with Japan and trilateral cooperation with Japan and the United States. These security ties have significantly tightened in recent years with the Japan-Australia Reciprocal Access Agreement signed in 2022 and the Australian, American, and Japanese defense ministers convening more regularly.

The third pillar recommends reconfiguring the ADF from a “balanced force” to a “focused force.” A “focused force” has a sharper focus on key military risks such as a great power conflict, as opposed to a “balanced force,” which is designed for the ADF to respond to a range of contingencies.

The final pillar focuses on operationalizing a deterrence by denial strategy, mostly by acquiring a more potent and lethal long-range strike capability and upgrading Australian northern bases to accommodate U.S. force rotations. To increase the reach of Australia’s power projection, the DSR recommends a re-structuring of the navy, air force, and, most radically, the army as well as an expansion of Australia’s industrial capacity.

Furthermore, the DSR highlights Australia’s need to expedite the development and acquisition of disruptive technologies, including autonomous systems, undersea warfare, and hypersonic missiles. Many of these technologies are intended to materialize under AUKUS Pillar 2. Per the DSR’s recommendations, the Australian government will establish the Advanced Strategic Capabilities Accelerator (ASCA), an agency that is modelled after the U.S. Defense Advanced Research Projects Agency (DARPA). ASCA’s mandate will be to facilitate the transfer of critical technologies into operational service and boost Australia’s defense innovation.

Labor’s Defense Budget  

The DSR, guided by strategic logic rather than fiscal considerations, lacks budgetary specifics about how the government will finance new capabilities proposed under it. On May 9, the Labor government issued its federal budget. Defence Minister Marles said that Australia’s defense spending would grow from 2.04 percent to 2.3 percent of GDP in the next ten years. However, the Albanese government has said that it would not allocate extra defense funding to the existing budget in the next four years. In public opinion polls, support for increasing the defense budget decreased from a high point of 51 percent in 2022 to 41 percent in 2023. This decline in public support adds more political constraints to future attempts to increase defense spending.

The government plans to initially finance AUD 19 billion for some of the review's recommendations. AUD 12 billion of this budget is drawn from the existing defense budget and about AUD 7.8 billion from downsizing and canceling previously committed projects. Within the AUD 19 billion, AUD 9 billion will be spent on AUKUS—a project with an estimated cost of AUD 368 billion by the end of 2040s; AUD 4.1 billion on long-range strike capabilities and Guided Weapons and Explosive Ordnance Enterprise (GWEO); AUD 3.8 billion on building infrastructure in northern bases; AUD 900 million on defense innovation; and AUD 397 million on workforce development and retention. It is also reported that the government has set aside a contingency fund of AUD 30.5 billion between the 2027-28 and 2032-33 fiscal years for defense expenditure.

Next Steps after the Defence Strategic Review

After the DSR release, three additional defense-related reviews have been commissioned by the Labor government. These include a naval fleet review and a Defense Industrial Development Strategy, both of which are due for completion by the end of this year. More significantly, the government announced to launch Australia's inaugural National Defence Strategy (NDS) in 2024. The biennial NDS will supplant the current irregular iteration of the Department of Defence’s white papers. This development reflects Canberra’s attempt to adopt a more systemized and holistic approach to articulating, communicating, and executing its national security strategy.

Lam Tran is a program coordinator for the Australia Chair at the Center for Strategic and International Studies (CSIS), Washington, D.C.

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Lam Tran
Program Manager, Australia Chair