In the latter months of 1989—even before the Berlin Wall fell—it became clear to Defence policymakers that Australia’s strategic horizons needed to expand. Australia’s Strategic Planning in the 1990s, approved by Cabinet that month, though not released until 1993, made the point clearly: ‘The strategy described in this document goes beyond the defence of the nation against direct attack to include promotion of our security interests.’^[23] And a few paragraphs later:

This passage offers a fascinating contrast with the policies of the preceding two decades, and the last phrase—describing Australia as ‘a substantial power’—suggests how much Australia’s strategic self-confidence had grown over the 1980s. The paper went on to identify many of the regional trends which were to shape strategic policy over the following decade and beyond: instability in PNG and the Southwest Pacific,^[25] the post-Suharto transition in Indonesia,^[26] Japan’s evolving strategic role,^[27] and the importance of keeping the United States engaged in Asia.^[28] It accurately identified key underlying trends: ‘a growing view that the strategic stability of the Asian region should be primarily a matter for the local powers’^[29] and the ‘increasing military power of some Asian nations’.^[30] Interestingly, however, it underestimated China. Writing a few months after the Tiananmen Square incident, and two years before the collapse of the Soviet Union, the paper said that, ‘while China is developing strategic influence and reach, its preoccupations will remain internal. Economic growth will slow and China’s capacity to provide resources for Defence will be impaired … the Soviet Union will continue to be its main military concern’.^[31]

This interesting lapse notwithstanding, Australia’s Strategic Planning in the 1990s stands up very well to the scrutiny of hindsight. It followed up the predictions quoted above by quite accurately foreshadowing how Australian defence policy would respond to these regional trends: a move away from a defensive and reactive operational concept to a more proactive one,^[32] the need to provide capabilities specifically to support stability in the South Pacific,^[33] and, most importantly, the need to take a broader view of our strategic objectives and interests in planning our capabilities. The paper said: ‘We have in the past made comfortable judgements that the force-in-being developed for our national defence would provide suitable options for meeting other tasks. But the regional uncertainties noted above suggest that this judgement may be less justified in future.’^[34]

So, by 1989, defence policy was already moving away from the idea that forces developed for the defence of Australia would provide all the options we might need to protect Australia’s wider interests. How far this was true, and what we might do about it, were to become the key issues in Australian defence policy over the following decade.

Some of the ideas foreshadowed in 1989 took clearer form in the 1994 Defence White Paper, Defending Australia. Emphasis was given to operations beyond the direct defence of Australia:

After the doubts expressed in 1989, the experience of successful operations since 1989 in Iraq, Somalia, Cambodia, Rwanda and the immediate neighbourhood had restored a measure of confidence that ‘forces developed for the defence of Australia give us a sufficient range of options’^[36] to undertake such operations. But deeper questions about our future defence needs had emerged. Defending Australia bluntly predicted that Australia’s technological edge over potential adversaries was under long-term pressure^[37] and, in response, hinted that Australia would need to take a more expansive view of the defence of the continent, and adopt a more proactive strategic posture, with increased emphasis on longer-range operations^[38]—though still framed in terms of the ‘defence of Australia’ itself.

More fundamentally, the Defending Australia paper took a strikingly gloomy view of Australia’s strategic environment. It deviated from earlier policy papers by focusing not on Australia’s nearer region—Southeast Asia and the Southwest Pacific—but on the wider Asia Pacific as a whole, and it identified two key trends that would shape that region over coming decades. The first was shifting relationships between the major powers after the Cold War. The United States, it predicted ‘will neither seek nor accept primary responsibility for maintaining peace and stability in the region’.^[39] As a result, ‘the strategic affairs of the region will be increasingly determined by the countries of Asia themselves. … Much will depend on the policies of the major Asian powers themselves—Japan, China and India—and on their relationships with one another and with other countries in the region’.^[40]

The second key strategic trend identified in Defending Australia was economic growth, especially in China. By 1994 the central role of China in Australia’s strategic future was fully understood:

And while noting some hopeful signs, the paper identified a number of trends that ‘could produce an unstable and potentially dangerous strategic situation in Asia and the Pacific over the next fifteen years’.^[42] The implications were set out quite starkly:

All of these ideas were picked up and carried forward with much greater clarity and force in Australia’s Strategic Policy which was published in 1997. This was the first major defence policy statement of the Howard Government. The new government largely accepted its predecessor’s policy settings, but John Howard’s first Defence Minister, Ian McLachlan, thought that policy still took too narrow a view of Australia’s strategic interests and capability needs. He wanted a more forward posture. With his encouragement, the broad statements of the Defending Australia were translated into more specific policy.

Australia’s Strategic Policy did that in several ways. First, it affirmed and amplified the judgements in Australia’s Strategic Planning in the 1990s and Defending Australia about the trajectory of Australia’s strategic environment. It spoke explicitly of the ‘uncertainties about the direction Indonesia will take when President Suharto eventually leaves office’,^[44] emphasised the risks posed by endemic weakness among our smaller neighbours,^[45] and dealt at length and with surprising frankness about the challenges of China’s rise:

Second, it went further than either Australia’s Strategic Planning in the 1990s or Defending Australia to explicitly discard the idea that Australia’s primary strategic interests were concentrated in a region of primary strategic interest covering Southeast Asia and the Southwest Pacific:

Third, Australia’s Strategic Policy picked up and amplified the idea first hinted at in Australia’s Strategic Planning in the 1990s, namely that Australia’s force planning should focus more on the kinds of operations we might need to undertake to defend wider interests beyond the defence of the continent, both in the Asia-Pacific and beyond. To underline this new approach, the paper deliberately dropped the iconic phrase ‘defence of Australia’ and used instead the fresher and more active ‘defeating attacks on Australia’. In a major change, ‘defeating attacks on Australia’ was described, not as the sole primary task of the ADF, but as one of three basic tasks: ‘There are three basic tasks which could require the ADF to undertake combat operations: defeating attacks on Australia, defending our regional interests, and supporting our global interests.’^[48]

The paper affirmed that DAA (using the Defence Department’s abbreviation for ‘defeating attacks on Australia’) remained the highest priority task and the most important criterion in force planning,^[49] but it gave significant and sustained attention to the new task of Defending Regional Interests. The paper referred to the significant possibility that ‘we might want to make a direct contribution to the maintenance of broader regional stability, in a future conflict in which Australia’s strategic interests were engaged’.^[50] By this the drafters meant that we needed the capability to make a meaningful contribution to conflicts involving the major powers of Asia if, as seemed possible, our interests were caught up in conflicts between them—for example over Taiwan. That was a sobering thought, and the paper went on to draw out its implications with some care:

The eclipse of ‘defence of Australia’ as the cynosure of our defence planning was plain: ‘In the end, our judgement on the priority we give to defeating attacks on Australia will be tested to see how well a force developed on this basis is able to perform other tasks.’^[52]

Fourth, Australia’s Strategic Policy broke new ground by offering a clearer, more systematic and substantive definition of Australia’s strategic interests in the Asia-Pacific region than had been set out in an official policy document for some decades, if ever.^[53] The need to do this was clear: if the ‘defence of Australia’s’ regional interests was to become an increasingly important task for the ADF, and a growing influence on its force structure, it was important to be able to give a clear and rigorous statement of those interests.

Fifth, the paper gave specific attention to the third of the basic tasks of the ADF—Supporting Global Interests.^[54] The way this task was treated in Australia’s Strategic Policy drew together two elements of Australia’s strategic environment: (1) the increasing importance of non-traditional military tasks including peacekeeping and humanitarian operations; and (2) the growing importance of global security interests, including the need to support both the United States and the United Nations in their emerging roles as supporters of stability in the post-Cold War world. By running these two together, the paper did not specifically identify what was soon to become a prime driver of defence policy—the need to undertake, and to take the lead in, stability operations in Australia’s immediate neighbourhood. But by identifying Supporting Global Interests as a third basic task for the ADF, the paper did significantly raise the profile both of stability operations and of the significance of global commitments to Australia’s broader security—thus moving policy in important ways away from the 1980s paradigm, and clearly foreshadowing important future developments.

Sixth, the paper sounded a sombre warning about the importance of long-term economic trends for Australia’s future security. If, as seemed likely, long-term economic growth among our neighbours exceeds that of Australia, our relative economic and hence strategic weight in the region would gradually decline. Australia therefore faced a twin challenge: to meet increasingly demanding strategic circumstances with resources which were dwindling relative to those of potential strategic competitors and adversaries.^[55] For several years following the 1997–98 Asian financial crisis this warning seemed a little too gloomy, as Australia’s economic growth continued while that of some of our neighbours collapsed. But as the long-term trends have reasserted themselves, the importance of this challenge is again clear.

The answer, according to Australia’s Strategic Policy, was to focus harder than ever on spending our defence dollars on those capabilities which are most cost-effective in meeting our needs, and to deliver those capabilities as efficiently as possible.^[56] The paper made at best a modest start to these tasks: it proposed a simple hierarchy of capability priorities,^[57] and highlighted the need for further efficiency improvements in Defence. The paper did not attempt a rigorous financial analysis of capability options and long-term funding needs. All it did was sound an important warning that while current funds if carefully managed could sustain current forces in the short term, long-term cost pressures were going to force some tough choices. It concluded: ‘The current budget does not make it possible to contemplate developing major new capabilities in the form of new fighter aircraft or new surface combatants.’^[58]

This was the challenge that the Australian Government had to confront when, after the 1998 election and the appointment of John Moore as Defence Minister, it announced the preparation of a new Defence White Paper. In the event Defence 2000: Our Future Defence Force was not published until December 2000. As a result, the paper was influenced in important ways by the experience of East Timor in late 1999, although Defence 2000 was not primarily a response to East Timor. Its aim was to draw together the defence-policy trends that had emerged during the 1990s and articulate some clear answers to the questions they had posed. Only by doing so could we create the kind of rigorous policy which Australia’s Strategic Policy had signalled was necessary to meet Australia’s underlying strategic challenges.

In particular, the government needed clear new policy directions to make a well-informed decision about the long-term future of defence funding. Over the 15 years since 1985, defence funding had broadly held steady in real terms, while costs (especially real per-capita personnel costs) had risen inexorably. Personnel numbers had been cut sharply to compensate, but the scope for further cuts was inevitably dwindling. The government faced a simple choice: to either provide long-term funding increases or scale back capabilities and hence strategic options. In the event, the government decided to commit to a significant long-term increase in defence funding after Australia’s National Security Committee had considered at length how Australia’s policy should respond to the strategic lessons of the 1990s and the trends of the new century. In many ways these discussions foreshadowed the wider public debates since 2001. During 2000, Ministers considered whether the ADF still needed to prepare to fight conventional wars, or whether it should plan instead to focus on stability and other non-conventional operations. They considered whether ‘defence of Australia’ needed any longer to be a major policy priority, and whether in the new security environment higher priority should be given to the Australian Army at the expense of the RAN and the RAAF.

The policy framework that was developed to answer these questions drew strongly on the ideas that had been evolving throughout the 1990s, and especially those presented in Australia’s Strategic Policy. But it went significantly further in many ways. Building on the policy paper, a specific statement of Australia’s broader strategic interests and objectives was developed and set out in Chapter 4 of Defence 2000: Our Future Defence Force. These interests covered not only the defence of the continent and its direct approaches, but the stability of the immediate neighbourhood, the security of Southeast Asia and the wider Asia-Pacific, and support for global security.^[59] They provided the foundation for the statement of strategic tasks for the ADF in Chapter 6 of that paper, which included not only defending Australia but contributing to the security of the immediate neighbourhood, and supporting wider strategic interests.^[60] This was a significant elaboration of the ‘three basic tasks’ set out in Australia’s Strategic Policy, and took defence policy even further away from the classic ‘defence of Australia’ construct of an ADF developed simply to defend the continent against direct attacks. Defence 2000 clearly set out the government’s aim to see the ADF evolve into a flexible instrument designed to achieve a wide range of different functions beyond the defence of Australia.

This was reflected most clearly where it mattered most—in Defence 2000’s plans for ADF capabilities. First, the government decided that in order to ensure the ADF could help defend our interests in the wider Asia-Pacific, air and naval forces had to be able to operate effectively in coalition operations against the region’s major powers like China. This was critical to the Australian Government’s decision to undertake major long-term enhancements of Australia’s air and naval forces. In particular, it underpinned the largest single capability decision in Defence 2000—the allocation of major funding for a large number of new fifth-generation combat aircraft.

Second, the Defence 2000 overturned earlier thinking about the role of the Australian Army. It described the increasing demands of non-traditional military tasks (including stability and humanitarian operations) and concluded:

The implications were spelled out clearly when Defence 2000 dealt with the future of the Australian Army’s capability. The decision was made to increase permanently the number of high-readiness battalions from four to six, and to invest in new capabilities, including larger amphibious ships, to improve significantly the ADF’s capacity to deploy and sustain land forces beyond Australia’s shores. The rationale was spelled out quite clearly:

We had come a long way from 1976 and 1987.