Two former defence leaders are being paid close to $800,000 combined to carry out a major review for the Albanese government, including a confidential update delivered this week.
Contract records show the former chief of the Australian defence force Sir Angus Houston is being paid $470,000 for his work on the defence strategic review, while the former Labor defence minister Stephen Smith will receive $306,496.
Both were appointed in August and signed eight-month contracts with the government. When this work is finished early next year, Smith will take up a new posting as Australia’s high commissioner to the United Kingdom.
The review will spell out the defence capability needed by Australia to respond to “the increasingly challenging geostrategic environment”, as China pursues its military buildup and becomes more active in the Pacific.
Houston and Smith met the deputy prime minister, Richard Marles, on Thursday to provide an interim update, but the initial report was expected to remain confidential.
Houston and Smith were weighing up the ADF’s posture and structure and where the government should prioritise its spending.
The government views the review as a significant and necessary piece of work and plans to publish the final report next year.
It believes the review, combined with looming decisions on how Australia will acquire nuclear-powered submarines under the Aukus partnership, will lay the foundations for the country’s defence policy for decades to come.
So far, Houston and Smith have received submissions from 150 entities or individuals.
They have consulted a raft of defence contractors including BAE, Boeing, Navantia, Thales, Raytheon and Lockheed Martin.
Andrew Shearer, director general of the Office of National Intelligence, and the heads of several government departments and agencies have provided input.
A spokesperson for Marles said it “would be inappropriate to pre-empt the outcome or recommendations of the review”.
“The defence strategic review will make recommendations in relation to Defence force structure, force posture, and preparedness over the next decade and beyond; and on any other matters which are deemed appropriate to the review’s outcomes,” the spokesperson said.
Thinktanks consulted include the Australian Strategic Policy Institute, the United States Studies Centre and the Perth USAsia Centre.
Houston and Smith have also heard from former defence ministers Kim Beazley (Labor) and David Johnston (Liberal). Johnston infamously said in 2014 that he would not trust the government’s shipbuilder ASC to “build a canoe” – but later expressed regret over the “rhetorical flourish”.
The Coalition’s defence spokesperson, Andrew Hastie, said Australia must take seriously the risk that China may initiate military action against the self-governed democracy of Taiwan this decade.
“The window is closing fast,” he said.
Given that Australia will not have the nuclear-powered submarines in the water in the near future, Hastie said Smith and Houston must consider how Australia could “hedge against the risk of conflict arriving sooner rather than later”.
“We need to build strike capabilities that can hold an adversary at risk beyond the archipelago to our north,” he said.
He said these options could include “strike bombers, precision guided missiles, and unmanned autonomous vehicles in the skies and in the seas below”.
While Labor has committed to annual defence spending of at least 2% of economic output, Hastie said the strategic circumstances meant that it “must be well above” that benchmark.
Hastie said the Australian government had “a moral obligation to the Australian people to build and maintain a strong deterrent to any regional aggressor, to show that there is a great cost for any unilateral military adventurism”.
Marles is likely to give a broad sense of the government’s direction when he addresses the Sydney Institute on 14 November, but any major decisions are expected to be made next year.
The review will take into account the separate but related work on the nuclear-powered submarines, which is also due by March.
Vice Admiral Jonathan Mead is head of a taskforce that is working with counterparts in the US and the UK to advise the government on how to deliver that project.
A key part of that work will be determining how long before the submarines can be operational – and whether there is a “capability gap” that needs to be filled in the meantime. It has been widely assumed that the first submarines may not be operational until the late 2030s.
Last week’s budget largely continued the defence policies of the former government amid an increasingly bleak economic outlook.
The cost of the nuclear-powered submarines has not yet been factored into the budget. They were listed as a “fiscal risk” in the budget papers.
