Almost a year ago, the Defence Strategic Review (DSR) set homework for the Department of Defence, including reprioritising the country’s rolling plan for military capability spending, the Integrated Investment Program (IIP). That update is now nearly due.  

But we should not assume that the government can address defence funding problems by shifting funds between projects in a spending plan that is already overburdened. 

There’s a widespread view in the public that Defence wastes money, a view reinforced in recent years by critical Australian National Audit Office reports detailing cost increases for many Australian Defence Force projects. The Hunter frigate program is a well-known example, with the Government citing the $20 billion cost increase as one reason for cutting the project from nine to six frigates. 

This leads to false assumptions that better fiscal responsibility and prioritisation will free up pots of gold within the IIP. It doesn’t help that the IIP is poorly understood and that Defence engages little in public discourse, whether to justify skyrocketing costs, debunk myths around capability acquisition or highlight its on-budget delivery of most projects. 

Created in response to a recommendation of the 2015 First Principles Review, the IIP outlines Defence’s funding lines for capability acquisition and sustainment for the coming 20 years. 

Only two public versions have been released, one in 2016 and one in the 2020 Force Structure Plan (FSP), leaving a public impression that the IIP remains fixed for long intervals. In fact, it is a classified living document, updated twice a year. The updates include reprioritisation. 

The DSR highlighted the deterioration of Australia’s strategic circumstances, including the ‘the prospect of major conflict in the region that directly threatens our national interest’. Accordingly, it called for a highly integrated, enhanced-lethality ADF. 

To achieve this, parts of the ADF need to be reshaped, new capabilities must be acquired and some that already in planning need to be accelerated. The DSR gave some indication of those changes, but the vast majority have been left as homework for the department. The first instalment of the biennial National Defence Strategy (NDS), to be issued with the IIP update, will hopefully reveal more details. 

While many of the DSR’s recommendations were welcome, the handbrake on its success was the government’s position that the review’s changes of approximately $19 billion must be cost-neutral within the forward estimates—from 2023-24 to 2026-27.  

Although the recently announced replacement and expansion of the Royal Australian Navy’s surface combatant fleet is expected to come with a $1.7 billion uplift in the forward estimates, this doesn’t address the broader requirements of the DSR or NDS. Fiscal relief for the defence budget is not due until 2027-28, with an uplift of $30 billion to be provided from then until 2032-33. 

A cost-neutral DSR implied some combination of two things: some of the announcements were at least partly factored into the IIP already, and some projects in it would need to be cancelled or amended. Indeed, some cancellations and amendments were made public when the DSR was released, but many were not. 

The DSR made plain that the IIP was under significant pressure. Unfunded announcements had been pushed into it since the 2020 FSP without going through the prioritisation process. 

The 2016 white paper recommended that the IIP carry 20 percent overprogramming, meaning that for each year the programmed spending would be a fifth higher than available funding. That was based on the historical observation that there will always be some projects that slip. It’s a sound budgeting mechanism, but the DSR revealed that the IIP was actually carrying 24 percent overprogramming. And changes called for in the DSR have probably added to that. 

To address the funding pressure, the DSR recommended that ‘lower-priority projects’ should be stopped or suspended and that ‘funding should be released by the rebuild and reprioritisation of the IIP’. 

While reprioritisation within the IIP makes sense in our changing strategic circumstances, the problem is that it has been the go-to bucket of money for some time. The Defence funding envelope was set in the 2016 white paper, so almost every capability change since then has resulted in reshuffling of existing IIP funds. In the last couple of years, such initiatives as the Australian Signals Directorate’s uplift of $11.5 billion for the Redspice program and the $38 billion investment in Defence workforce growth have wreaked havoc on the IIP, resulting in the cancellation, reshaping or shaving of projects. 

The likely result is that, despite the DSR’s recommendation to generate additional capability funding through removing the IIP’s low-hanging fruit, it is unlikely that there is any low-hanging fruit left. Considering the IIP pressure described in the DSR and the need to fund such efforts as Redspice and Defence workforce growth, the overall acquisition and sustainment program is clearly at significant risk. 

Defence Minister Richard Marles has already signalled that the IIP to be released in coming weeks will show significant cuts to projects. 

While talk of reprioritisation and greater fiscal responsibility is easy to sell to a public that’s unfamiliar with the IIP, repeated pillaging of what has likely become a bare bones capability program is risky in a time where our strategic reviews say we should be strengthening preparedness. 

We must not imagine that there is a pot of gold at the end of the IIP rainbow. Defending the country simply demands a real uplift of funds, and Defence needs to explain publicly why this matters, otherwise we will be piling more risk onto the capability program at one of our greatest times of need in nearly 70 years. 

In the 2023 defence strategic review (DSR), the Australian government recognised that Australia’s innovation ecosystem needed a leg up. Greater support for innovation, reinforced by faster acquisition timelines and deeper ties between government and industry is essential to meeting Australia’s national security needs. While the government is directing large scale review and reform to address this need, the potential to leverage established and highly effective innovation opportunities in allied countries, such as the US, should not be overlooked.

The Joint Interagency Field Experiment (JIFX) run by the Naval Post Graduate School (NPS) in Monterrey, California, is an example of where Australian companies and government could plug into an existing innovation network with partners. ASPI analysts saw how JIFX provides an opportunity for the NPS faculty, students, private companies and academia to freely test, demonstrate and evaluate new technologies related to the needs of the US Department of Navy and Department of Defense in an operational field environment.

Weeklong field experiments are held quarterly and attended widely by the US defence community with the understanding that the ‘event aims to identify, influence, and mature early prototype technologies into next-generation capabilities that will support the United States’ national security objectives’.

Where participating in similar field experiments can often cost upwards of US$25,000, JIFX is unique in that it is free for companies, open to both US and foreign nationals, and creates a people to people link between innovators and government. The low risk JIFX model helps informally socialise government decision makers with early-stage dual use tech companies to collaborate both in the ideation and iteration of the technologies for defence needs. Building these relationships helps to break down the wariness between government and industry around collaboration.

Throughout 2023 the Australian government undertook a myriad of activities to address the need for a more effective innovation ecosystem to underpin the technological and defence capabilities required to achieve the DSR’s national security objectives.

It established the Advanced Strategic Capabilities Accelerator (ASCA) with $3.4billion over the next decade to help streamline defence innovation and drive capability development and acquisition pathways. A landmark review of higher education from an innovation perspective took place through the University Accords. The final report, published in late February 2024, reaffirmed that Australia’s innovation strength lies in its university sector at the R&D level and is under utilised by industry. This has increased pressure on the federal government to lift investment in R&D from 1.69% of GDP to 3%. Australia has also pursued greater innovation engagement internationally under the AUKUS Pillar 2 in partnership with the United Kingdom and United States. Greater industry engagement through the AUKUS Industry Forum is also expected.

The scale, breadth, and future-looking focus of these activities is testament to the government’s recognition that greater coordination and signaling is required to boost innovation. However, regardless of funding increases, there’ll be an inevitable time lag before we see these changes break down risk appetites between government and private sector to improve collaboration and accelerate startups growth and keep them in Australia.

As Assistant Minister for Defence Matt Thistlethwaite stated in a recent interview, ‘demand for innovation in Defence is both urgent and persistent.’ Given the pressing challenge of maintaining a technical advantage against known malign actors, namely China, Australia needs to identify and engage with existing innovation ecosystems and opportunities that can easily, rapidly and effectively be leveraged by government and industry to support DSR and allied goals under AUKUS.

JIFX is one of a range of innovation ecosystems connected to defence services among the US defence innovation organisations which have proliferated in recent years, and include the Air Force’s AFWERX, Army Applications Laboratory and the Joint Rapid Acquisition Cell. These independently operated DIOs are designed to address specific needs and rapidly harness and utilise commercial technologies to solve defence problems. They illustrate that no single pathway for innovation exists and, while there are challenges regarding coordination, they have proven effective in the early phases of identifying and demonstrating commercial technologies.

As is the case with JIFX, these DIOs are leveraged by US entities such as NavalX, which have offices worldwide, and the Office of Strategic capital, to build relationships, provide briefs to participating companies and identify funding opportunities and grants they should be looking too. The seniority of representation from US defence entities at JIFX speaks to the value of the model in contributing to America’s technological advantage.

For Australia, these forums offer a strategic opportunity earlier on in the innovation process to highlight more formal, long-term acquisition opportunities for dual use companies in Australia, such as ASCA. This pipeline has significant potential to be effective when coupled with clear problem articulation, incentive structures for commercial partners and guidance for procurement. The early engagement also has the added benefit of helping to breakdown the risk aversion to public-private sector collaboration between dual use start up and defence. By socialising at a personal and technical level it ensures that relationships are built and the right challenges are being solved at the beginning of the design process.

The UK Ministry of Defence already engages with JIFX and provides funding for it. That helps JIFX an ideal starting point to experiment with bringing established activities under the AUKUS banner. Australia should encourage and enable Australian SMEs and start-ups to participate in JIFX and other field experiments, and increase engagement from Australia’s Defence and Austrade agencies in the US.

Beyond increasing its presence at existing JIFX events, Australia should emulate the model domestically, ideally in partnership with NPS and an Australian university.

As the 2024 higher education review found, industry’s engagement with Australia’s R&D ecosystem at the university level is underutilised. The JIFX model, which is run by NPS, offers further opportunities to deepen the relationship between industry and Australia’s university sector, and with allied partners. The natural collaboration that occurs in field experiments like JIFX also increases the likelihood of partnership between Australian and US companies attempting to meet defence needs outlined under AUKUS.

There are many pieces to the innovation puzzle that Australia wants to enhance and improve. While large scale efforts are important, the utility and effectiveness of small, dynamic activities such as JIFX should not be overlooked. Innovation is ultimately about people and how they solve problems. History shows that chance conversations among people working on a problem from different angles can generate brilliant ideas.

Bringing together startups with ideas and the skills to experiment, and governments with  problems that need solving provides a fertile environment for innovation.

Today’s asymmetric national security environment, characterised by what Foreign Minister Wong recently referred to as ‘grey zone threats’, requires far more than the acquisition of neoteric naval, air, ground, and cyber weapon systems by Australia. It also necessitates a concerted effort by government, in cooperation with industry, to procure the most critical component within a precision weapon system, intelligence mission data, the foundation of which is precision intelligence.

If everything in the government’s surface fleet review comes to fruition, and all the defence strategic review’s recommendations are enacted, the daunting reality is that without precision intelligence, the new Hunter class frigates are nothing more than tugboats, Tomahawk missiles mere pyrotechnics, and F-35 fighter jets, crop-dusters.

As it applies to AUKUS, nuclear fission is the muscle of a Virginia class submarine, but precision intelligence is the brain and neuro system for the entire vessel, its torpedos, missiles, sonar and command and control systems. Without precision intelligence, the muscles don’t know what to do or when to do it.

The enormity of the task and the fastidiousness required to gather the precision intelligence needed for the weapon systems Australia is obtaining is something weapon developers and manufacturers don’t discuss much because the costs are mammoth. This has plagued defence acquisitions in the United States since the late 1990s and it’s the primary reason weapon system costs balloon so dramatically.

It is commonly believed that the business of the intelligence community is simply to produce assessments that provide clarity on the intentions, capabilities, and weaknesses of potential adversaries to our national security leaders. These analytical products are important, however, the most critical product we receive from the intelligence community, unbeknownst to most, is precision intelligence.

The amount Australia’s national intelligence community spends on precision intelligence is classified. However, in 2023, our closest ally, the US, spent a substantial portion of its 143-billion-dollar intelligence budget producing such high-level data for its weapon systems, cyber activities, and ISR operations.

It’s assessed that the axis of dictatorships—China, Russia, Iran, and North Korea—spent as much as the US or more on their precision intelligence systems, data, and architectures in 2023. They are expected to spend twice that amount in 2024.

The production of precision intelligence has been a systemic problem for Australia for at least eight years. That’s been caused by our intelligence agencies and defence contractors poaching intelligence and data analysts from each other with scant regard for the consequences it has to each other’s mission, or to overall national security objectives. As a result, Australia’s ability to produce precision intelligence is waning.

The creation of the position of director-general of national intelligence (DGNI) in 2017 was a good start by government in attempting to fix the production of precision intelligence issues within the intelligence community. However, until the DGNI is given sufficient budget, force management and intelligence production authority, individual agencies and government departments will continue to operate in a bifurcated and independent manner. That will leave Australia at the back of the pack in what the members of the Five-Eyes intelligence sharing agreement now refer to as the ‘precision intelligence arms race’.

Defence has tried to rectify some of its internal challenges in producing precision intelligence by creating the position of chief of defence intelligence and the defence intelligence group. It is also establishing a combined intelligence centre in Canberra between Australia’s Defence Intelligence Organisation and the US Defense Intelligence Agency. Unfortunately, these actions only assist Defence, not the broader intelligence community, and they don’t eliminate the principal issues hindering Australia’s production of precision intelligence—personnel poaching, duplication of activities, lack of resources and a failed requirements management system.

All one has to do is look at Ukraine to appreciate the value of precision intelligence on targeting and cyber operations. The effectiveness of the Bayraktar TB2 drone, the Patriot air defence system, Harpoon anti-ship and HIMARS artillery rocket missiles is directly attributable to the precision intelligence imbued into each of these weapon systems.

As operational information from Israel becomes more available, the importance and power of precision intelligence in the urban and sub-terranean (tunnels) operational environment will further illustrate why it’s critical for Australia’s intelligence community to be on its front foot in its development.

The Houthis appear to be master gunners due to precision intelligence!

The process that develops and produces precision weapons is a marathon. For the intelligence community, this marathon is run as a sprint because of the speed precision intelligence technologies are advancing and the immediacy of the need.

If Australia is to regain the distance it has lost in this race, government must align its sovereign capabilities strategy for national security, intelligence, and surveillance with its weapons capabilities vision and acquisition strategy—and fund it!

Precision weapons without precision intelligence are nothing more than delusions.

During my nine years as a nuclear trained surface warfare officer in the US Navy, I qualified in integrated undersea surveillance systems (IUSS) and became lead trainer for my command. I believe that for Australia to deal with the diminished warning time identified by its defence strategic review (DSR), and to reinforce the Australian Defence Force’s deterrent capabilities then it must place a greater emphasis on these systems. 

Three primary areas of focus can be started immediately: increasing joint training in undersea monitoring and engagement with the US Navy, improving protocols for sharing data and tracking information among the ADF and its allies, and maximising joint operations and interoperability. This would supplement pillar one of the AUKUS agreement immediately at affordable cost to meet a strategic need identified by the DSR.  

As it is currently constituted, training within the Royal Australian Navy for sonar technicians, the primary operators of IUSS equipment, consists of fairly standard schoolhouse instruction throughout the sailor’s career, and on the job training aboard naval vessels. All of this takes place within the RAN. While this produces excellent operators, it does not involve sharing best practices or drive innovative war fighting and can lead to friction during joint exercises. While multilateral exercises such as Integrated Battle Problem 23-3 give invaluable joint operational experience, these are rare and do not encompass the whole force. There are also exchange programs where a handful of officers or enlisted sailors are stationed with the US navy for training or a tour of duty. But this only gives a small number of sailors hands on experience with American forces.  

Conducting joint IUSS training, from classroom training to live events, should be at the forefront of RAN and US Navy planning and should build on existing exchange programs. This would allow existing budget line items to be used and permit an immediate ramp up. 

When I coordinated joint forces in the Arabian Gulf, I saw at first hand the learning curve new vessels faced when they joined the joint strike group. They used different wording on communications and made different assumptions on how to execute commands. Bringing together the two navies will drive innovation and help maintain their strategic edge in IUSS operations as well. Conducting more joint training would minimise friction points and improve the effectiveness and interoperability of the two navies as they work to maintain safe and stable waterways throughout the Indo-Pacific.   

Ensuring the RAN and US Navy share acoustic data and tracking information is essential as they collaborate in the region. Joint data processing would greatly improve RAN warning times throughout the area of operations and improve response time to potential threats. 

While there are security and classification concerns with this, existing workarounds can be used to minimise potential leaks while maximising effectiveness. Having sailors cleared to see classified data from both countries, or temporarily restricting the ability to view sensor readings while sensitive data is being received are already practised and are measures easy to implement in new watchfloors. Data sharing is vital to developing a common operating picture among allies, improving strategic decision making and lowering the cost in manpower and funding to the individual countries. 

This will provide the added benefit of building off the joint training conducted to improve interoperability and minimise the learning curve when conducting operations. 

Knowing that multiple interested nations are monitoring undersea movements, and that they are cooperating to ensure safe navigation and operations, will provide a strong deterrent to any would be malicious actors. Given the clandestine nature of undersea operations, the ability to identify and expose malicious activities, and to rapidly respond with a variety of policy measures, will deny an adversary the ability to act with impunity and will act as a strong deterrent.  

The overall thrust of the integrated training and data sharing should be increased interoperability and joint operational effectiveness. Integrated joint operations and shared watchfloors provide numerous benefits, but the most important would be the increased ‘on scene’ time it provides all allied participants. 

The US and Japanese navies have eight surface ships outfitted with SURTASS passive towed array sonar equipment in the Indo-Pacific. With the RAN’s purchase of the modular variant of SURTASS and its future deployment on its ships, there’s an opportunity to conduct extensive, long-term monitoring throughout the Indo-Pacific. 

Due to the nature of submarine operations, the increased time on station drastically decreases the chances of contacts of interest being missed. This would allow for a more robust response further from sensitive areas on the Australian coast or near allied military installations. Combined with the efforts to develop RAN nuclear attack submarine capabilities, this will dramatically improve ADF readiness over the near, and medium to long term.  

The DSR rightly notes how defence planning must shift to meet the loss of effective warning time. Bolstering and integrating IUSS capabilities within the ADF and regional partners quickly is imperative to maintain regional security with improved warning time. Coordinating training between the RAN and the US Navy will strengthen the ability of both to coordinate and execute joint operations. Sharing data and tracking information puts more eyes on an integral, yet volatile, region while spreading the costs in manpower and equipment. Working toward routine joint operations and shared watch floors spread costs among allied forces and act as a force multiplier. 

This multifaceted approach capitalises on existing cooperation between Australia and the US, allows for scaling at relatively low cost, and will provide a strong deterrent to those who would threaten freedom of the seas. There’s more to undersea warfare than submarines, after all.