38 Foreign and defence policy

Historical background

Contemporary foreign policy making takes place against a historical backdrop which informs current mindsets and policy. Australia relied upon the UK for defence, trade and even foreign affairs until the Second World War, despite the ‘tyranny of distance’ from the motherland. This dependence was cruelly exposed by the Japanese defeat of Imperial forces in Singapore in 1942, marking a watershed in Australian thinking. Prime Minister John Curtin famously declared that ‘Without any inhibitions of any kind, I make it quite clear that Australia looks to America, free of any pangs as to our traditional links or kinship with the United Kingdom’^[2] and soon after, he belatedly ratified the 1931 Statute of Westminster that devolved full sovereignty over international policy to the Dominion of Australia. During the postwar period, leading diplomats such as H.V. Evatt sought to carve out a greater role for Australia and other medium-sized powers in the shaping of global governance, for example, through the foundation of the United Nations (UN) and the San Francisco Peace Treaty settlements in 1951. At the same time the pivotal ANZUS (Australia–New Zealand–USA) alliance treaty was inaugurated, indicating a shift from the UK to the USA in terms of defence reliance.

During the Cold War, Australian foreign and defence policy focused on the putative communist threat emanating from Soviet and Chinese expansion. Canberra acceded to the ANZUS Treaty, establishing the alliance with the United States in 1951. This was tied to the ongoing process of decolonisation as European powers sought to preserve their influence in South-East Asia against nationalist, and often Marxist, independence movements and conflicts. Canberra provided diplomatic and military support for the UN-led coalition in the Korean War (1950–53), the British in Malaya against ‘communist terrorists’ (1948–60) and against the Indonesian ‘confrontation’ policy in Borneo (1963–66), and deployed substantial military force to support the USA in Vietnam into the 1970s (including through membership of the South-East Asia Treaty Organisation Pact). At this time Australia also withdrew from its own colony in Papua New Guinea (1975) and sought to manage relations with the diverse array of newly independent countries in the South Pacific making up the British Commonwealth.

Serious challenges arose around this time. President Nixon’s Guam Doctrine (1969) signalled that America’s allies would henceforth have to provide more resources for their own defence, prompting a more self-reliant defence policy in the 1970s and 1980s. Japan’s postwar economic recovery had also encouraged increasing Australian economic engagement with Asia. But continuing Australian economic prosperity was undermined by protectionist policies, the economic rupture with the UK when the latter joined the European Economic Community in 1973, and a series of Middle Eastern ‘oil shocks’. At this time, Prime Minister Gough Whitlam also ended the isolation of communist China by his visits to Beijing, which ultimately ended in the recognition of the Peoples Republic of China in 1973, and the removal of the Australian Embassy from Taipei in the Republic of China. The 1970s therefore saw a ‘torrent of change in Australian foreign policy’.^[3]

Against this backdrop, the Department of Foreign Affairs was established in 1971 (replaced with the Department of Foreign Affairs and Trade in 1987). Economic problems in the 1970s and early 1980s led to a reappraisal of trade and financial policy and the embrace of a ‘neoliberal’ economic agenda in the 1980s: a progressive elimination of tariffs, privatisation, and opening of markets under the Hawke and Keating governments. These moves re-established Australian economic competitiveness and encouraged closer engagement with the Asian region, avoiding the possibility – in Keating’s words – that Australia might become a ‘banana republic’.^[4] Australia also drove the building of regional multilateral institutions such as Asia Pacific Economic Cooperation (APEC), and was at the forefront of peace-keeping operations in Cambodia (1992–93) and East Timor (1999).

The long-running Howard Coalition government (1996–2007) continued these regionalist and globalist policies, while simultaneously taking a ‘hard-headed’ approach to the national interest despite its nostalgia for the UK–USA ‘Anglosphere’. By the 21st century, Australia’s firm attachment to the American alliance and active participation in the Asia-Pacific region was established and deepened. But the post–Cold War and post-9/11 periods unleashed a range of new and unfamiliar policy challenges such as the rise of China, international terrorism, migration, and climate change. While Australia benefitted from the rise of Asian power and prosperity, the longstanding certainties upon which its foreign policy settings had been predicated have been called into question, prompting shifts in Australia’s conception of its primary strategic geography and region, its defence strategies, and its broad foreign policy approach.

Australian foreign and defence policy: a thematic approach

In his classic study of Australian foreign policy from 1942 to the present, Allen Gyngell identified three perennial aspects of Australian policy: a ‘great and powerful friend’, ‘regional engagement’, and a ‘rules-based international order’.^[5] These have also been officially expounded as ‘three pillars’ (the USA alliance, engagement with Asia and membership of the UN) under the Rudd–Gillard Labor governments. Moreover, subsequent Coalition and Labor governments have not significantly departed from these aspects, even if their emphases have differed. This introductory chapter takes these three elements as a point of departure and expands upon them to cover 10 key themes through which Australian foreign and defence policy can be understood and appraised. Indeed, former Ambassador to the USA, Kim Beazley, suggests that the ‘dramatic shift from state-centric diplomacy and the rise of non-state challenges has meant foreign policy must be dealt with thematically’.^[6]

The 10 themes treated here are grouped under four sections. The first section, ‘contexts’, looks at: foreign and defence policy machinery, Labor versus Coalition policy traditions, and liberal internationalism; all of which set the stage for Australian policy engagement. The second section investigates three core platforms of foreign policy engagement: economic diplomacy, defence strategy and non-traditional security. The following section concentrates on Australia’s regionalist policies through Asian engagement and foreign aid. The final section considers Australia’s relations with the two superpowers in the Asia- (now Indo-) Pacific: China and the USA, before offering conclusions. These themes interrelate and overlap, and should be considered as such – they are presented separately for analytical convenience and do not reflect any order of priority.

Section 1: Contexts

Australia’s foreign and defence policy machinery

Australian foreign and defence policy making primarily resides within three major organs: the Prime Minster and Cabinet (PM&C), the Department of Foreign Affairs and Trade (DFAT) and the Department of Defence (DoD). At the apex of policy making, the government, headed by the prime minster and their foreign and defence ministers, as well as other portfolios, will normally play a significant role in shaping policy directions. Indeed, with the ongoing trend towards a more ‘presidential’ system of government, power has become more concentrated in the PM&C. Yet prime ministers have varied in their inclination and ability to put their stamp on foreign and defence issues. For example, at one end of the spectrum was Prime Minister Kevin Rudd, who effectively usurped the role of his Foreign Minister, Stephen Smith, during his tenure, while his successor Julia Gillard, who had scant interest or experience in foreign affairs, found herself substantially delegating to her ministers (including her Foreign Minster: Kevin Rudd!). Indeed, the relationship between the prime minister and their foreign ministers has been a key aspect in executing a harmonious and cohesive foreign policy posture, with great combinations such as Prime Minister Paul Keating and Foreign Minister Gareth Evans juxtaposed with highly fractious ones such as Prime Minister Gillard and Foreign Minister Rudd.

The National Security Committee of Cabinet (NSC) is the peak decision and policy-making body for security. It conducts high-level consultations aimed at shaping and implementing broader security policy and brings together the prime minister, relevant ministers, PM&C, and the heads of the Australian Defence Force (ADF) and key national intelligence organisations (Office of National Intelligence [ONI], Australian Security Intelligence Organisation [ASIO], Australian Secret Intelligence Service [ASIS]). This is in line with the trend towards the ‘securitisation’ of foreign policy, indicated throughout this chapter. The objectives of foreign and defence policy are also periodically outlined in government commissioned white papers, which are indispensable for a full understanding of current affairs.

The government of the day is supported by DFAT and the DoD, permanent bureaucratic organs that are designed to advise and implement foreign and defence policy respectively. Other actors, such as the Department for Homeland Affairs (DHA), which was established in 2017, also play a significant role in selected issues. DFAT is charged with the implementation of foreign policy, foreign relations, foreign aid, consular services, and trade and investment. Yet, in the last two decades DFAT has been subject to significant budget cuts, organisational restructuring, loss of oversight to a range of other agencies, and a revolving door of foreign ministers (and prime ministers) at its helm, despite its apparently pivotal role in the foreign policy process. Though the department saw a measure of revitalisation under Foreign Minister Julie Bishop and head of its policy planning unit, Peter Vargese, it is still affected by resource shortages, poor morale, and lack of strategic focus.^[7] The DoD, on the other hand, forms part of the Australian Defence Organisation (ADO), along with the ADF. Its remit is more narrowly focused upon defending Australia and its citizens and engaging in overseas coalition and peace-keeping activities. DoD has also suffered from attacks upon its ‘bloated bureaucracy’ that have emphasised ‘front-end’ material capabilities but has remained relatively unscathed from the cuts that DFAT has experienced due to its unique bureaucratic culture and enormous size.^[8] By way of comparison, the total funding allocation for Defence in 2025/26 is over $83 billion, with DFAT receiving just over $9 billion.^[9]

Generally speaking, foreign policy issues do not attract great attention among the Australian public (with some exceptions, such as asylum seekers), and civil society groups have traditionally struggled to influence the foreign policy establishment just described. An exception are think tanks such as the Australian Strategic Policy Institute (ASPI) and the Lowy Institute, which command some influence. However, in the age of social media and activism, foreign policy increasingly needs to consider civil society preferences on one side and the ramifications of external polices on the domestic landscape on the other.

Labor versus Coalition leadership and foreign policy traditions

The Coalition’s (Liberal and National Parties) and Australian Labor Party’s (ALP) foreign and defence policy traditions are frequently thought to conform with the international relations paradigms of realism and liberalism respectively.^[10] The Coalition is commonly associated with realism, which assumes that the competitive interaction of states, acting in their self-interest in an anarchic international system, results in ‘a politics of power and security’.^[11]< Both scholars and Coalition members alike tend to agree that the Coalition reflects elements that can be characterised as ‘realist’: a strong preference for alliances to ensure security, a scepticism towards the utility of multilateral forums and agreements, and a tendency towards pragmatism rather than idealism in decision making.^[12] Prime Minister Howard’s government epitomised such an approach to foreign and defence policy. His government’s 1997 Foreign Policy White Paper, In the National Interest, made the argument that the Coalition’s approach was ‘the hard-headed pursuit of the interests which lie at the core of foreign and trade policy’.^[13] More recent foreign and defence policy decisions from Prime Ministers Abbott, Turnbull and Morrison have continued to reflect the realist mindset with the continuing centrality of ANZUS  (and now AUKUS) to defence strategy, the ongoing proliferation of bilateral defence co-operation and free trade agreements (FTAs) during the Coalition government from 2013–22, and the ‘pragmatism’ of the Liberal Party approach evident in the 2017 Foreign Policy White Paper.^[14]

In contrast, the ALP is often linked with liberalism, which assumes democracy, free trade, and multilateral institutions and norms are viewed as the most conducive means of achieving co-operation between states and international peace.^[15] The ALP has thus placed faith in international law, the UN, and global/regional organisations as a means for pursuing Australia’s national interests and values. ALP Prime Ministers Gough Whitlam, with his rapprochement with China, and Paul Keating, with his drive for Asian engagement, set the precedents for such approaches. The Rudd–Gillard governments continued to evince these tendencies – the championing of multilateral forums like the G20, the bid for a non-permanent seat on the UN Security Council, and norm entrepreneurship and activism at the 2009 UN Climate Change Conference in Copenhagen. This approach has often been referred to, especially in Labor rhetoric, as ‘middle power diplomacy’ – and scholars have adopted the ‘middle power’ framework to characterise and understand such behaviour.^[16] The ‘middle power’ concept  (normally measured as the countries ranked globally from about 6th to 30th in terms of GDP), with an inclination towards foreign policy activism on key global or niche issues, such as climate change or disarmament. Middle powers have traditionally viewed themselves as good international citizens, supporting international laws and norms through multilateralism, rather than as self-interested mercantilist or military powers. Former Prime Minister Kevin Rudd’s initiative on creating an Asia Pacific Community (APC), a new multilateral pan-regional grouping to improve stability and security among the region, was exemplary of such self-styled creative middle power diplomacy. It has become firmly established in the lexicon of Australian foreign policy, despite the Coalition’s distaste for the middle-power descriptor itself.

This fact, and further similarities between the parties, reflect the structural constraints that guide the decision making of middle powers like Australia in the international system. A core of bipartisanship regarding Australian defence policy can be identified ‘including a focus on defending the Australian continent, an alliance with the United States, and the capability to contribute to regional and global coalition efforts’.^[17] Similar levels of bipartisanship exist regarding issues of foreign policy – trade policy is broadly neoliberal in orientation and supports the principles of free trade and marketisation (not to be confused with International Relations liberalism or the Liberal Party). As such, the differences between the Labor and Coalition foreign and defence policy traditions may be better characterised as different means to similar middle-power ends. The idea of a firm divide between a ‘realist’ Coalition and ‘liberal internationalist’ ALP therefore does not capture the significant bipartisanship between the two parties or the strong continuity of both the practice of Australian foreign policy and its major foundations.

Liberal internationalism

There is considerable bipartisanship between Australia’s major parties regarding how to engage with the international system. This may be captured by the principle of ‘liberal internationalism’.^[18] Yet, liberal internationalism stands more broadly for the extroverted role of Australia in engaging with international institutions, participating in free trade and upholding a ‘rules-based international order’ (anchored in USA global primacy). This has its basis in the identification of Australia as a liberal democratic country with associated interests and values that should be pursued and defended. This liberal internationalism – defined as an ‘activist foreign policy that promotes liberal principles abroad, especially through multilateral co-operation and international institutions’^[19] – reflects Australia’s self-perception as a ‘good international citizen’.

Australia has been active in foreign policy spheres aligned with its national interests and has pursued its values and support for an international rules-based order in areas like trade and finance, global governance, human rights and justice, the environment and aid. For example, the Rudd government played an entrepreneurial role in encouraging the elevation of the G20 to a leader’s summit in the context of the Global Financial Crisis (GFC). Such multilateral forums have reflected the consensus that Australia’s economic needs are best served by free trade and open markets,^[20] but also that better global governance can be achieved through such forums, too. Australia has been similarly active pursuing international action on environmental issues that affect Australia, including the Montreal Protocol of 1987 that addressed the role chlorofluorocarbons played in ozone depletion and anti-whaling action against Japan in the International Court of Justice in 2010 (though Australia has had a more mixed record regarding climate change negotiations).

More recently, Minister for Climate Change and Energy, Chris Bowen, announced that he will assume the role of President of Negotiations for the 2026 COP31 climate change meeting. These actions demonstrate the liberal internationalist belief in institutions to provide opportunities for dialogue, mediate disputes and promote good global governance.

Similarly, Australia identifies the liberal world order established by Pax Americana (the relative international peace ensured by USA hegemony) as a key security interest, with the 2016 Defence White Paper arguing: ‘The growing prosperity of the Indo-Pacific and the rules-based global order on which Australia relies for open access to our trading partners are based on the maintenance of peace and stability.’^[21] The Albanese government’s 2024 National Defence Strategy similarly stresses the importance of a global rules-based order to Australia’s security and prosperity.^[22] Australia has been active in multilateral agreements that uphold this ‘rules-based order’, such as pursuing service as a non-permanent member of the UN Security Council, sanctioning illiberal states like North Korea or Syria, and advocacy for the Responsibility to Protect, a principle that seeks to prevent mass atrocity war crimes.

Australia has also defended such principles, including participation in operations in Afghanistan and Syria against global jihadism; humanitarian intervention in Timor Leste in 1999 and again in 2006; a long history of peace-keeping efforts; and attempts to hold Russia accountable for the downing of the airliner MH17 in 2014 while on the UN Security Council. Australia has also trod a ‘middle path’ on nuclear weapons – advocating for a South Pacific Nuclear Free Zone and the 1996 Comprehensive Test Ban Treaty, supporting international efforts to control horizontal proliferation by actors like North Korea and Iran, but not supporting recent multilateral pushes to eliminate nuclear weapons, as seen through the International Commission on Nuclear Non-proliferation and Disarmament. Australia’s actions demonstrate the liberal intolerance of non-democratic countries and their attendant challenge to the liberal order.^[23]

Section 2: Core policy platforms

Economic diplomacy

Soon after Federation, Australian policy makers agreed to regulate and protect the economy with tariffs, wage arbitration, state-led development, and British Imperial Preference for Australian goods. This Australian Settlement and Keynesian economic management underpinned the long postwar boom.^[24] The collapse of British Imperial Preference, the problem of slow economic growth combined with high inflation known as ‘stagflation’, and the unravelling of the Keynesian orthodoxy in the 1970s challenged this consensus. The Hawke–Keating governments responded by liberalising the Australian economy and opening it up to international market forces in an effort to ensure economic security.

These policy shifts also advocated multilateral agreements to lower tariffs for Australian resources and agricultural goods – an area where Australia retained a comparative advantage. The record here was mixed – the conclusion of the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) in 1994 did contain successes for Australia, but the Maastricht Treaty of 1992, which set the framework for the EU single market, the creation of the North America Free Trade Agreement (now USMCA), and moves by ASEAN (Association of South-East Asian Nations) to negotiate a free trade agreement that excluded Australia, concerned Australian policy makers.^[25] Reducing trade protection barriers further was of particular concern given the increasing importance of Japan, China and South-East Asian countries as growing economies and important markets for Australian exports. APEC was therefore a forum that Labor has embraced to promote liberalisation in the region, but a pan-regional APEC free trade agreement remains elusive.

The Howard government faced many of the same challenges as Labor and, acting upon a preference for neoliberal principles, took the view that bilateral trade negotiations could supplement multilateral efforts. This was informed by the difficulties of the Doha Round of the GATT and was especially a concern about trade access in East Asia, where Australia was making little headway with ASEAN 3^[26] and signs were developing of regional and bilateral trade agendas that excluded Australian participation. The Howard government negotiated bilateral FTAs with Thailand, Singapore, and more controversially the US (AUSFTA), where political imperatives to solidify the Australian–US relationship seemed to be as paramount as economic considerations.^[27] Multilaterally, the Howard government was instrumental in the negotiation of the ASEAN–Australia–New Zealand free trade agreement^[28] and provided funds to the International Monetary Fund as part of the bailout package during the Asian Financial Crisis (1997–98).

Since then, further bilateral FTAs have been negotiated with Chile, Malaysia, South Korea, Japan and China. Multilateral agreements include the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the withdrawal of the USA from the Trans-Pacific Partnership (TPP) negotiations in 2016 and the Regional Comprehensive Partnership that includes ASEAN members plus Australia, China, Japan, South Korea, and New Zealand. This reflects the continuing significance of the neoliberal consensus in trade policy that has remained even after the shocks of the GFC. Australia particularly championed the CPTPP, pushing hard to revive negotiations after the USA withdrawal.

More recently, Australia’s economic diplomacy has faced considerable challenges. The 2017 Foreign Policy White Paper noted that emerging economic challenges included rising anti-globalisation sentiment and economic nationalism, challenges to the rules-based international order, including economics and trade, and the use of economic coercion by states to pursue political and strategic objectives. This last challenge turned out to be rather prescient. Just three years later, the Morrison government’s call for an inquiry into the origins of COVID-19 would be the final insult in a series of what the Chinese government felt were ‘unfriendly actions’ undertaken by Australia. It prompted China to level trade sanctions against Australia as a form of economic coercion designed to compel a shift in Australia’s behaviour and achieve redress for several Chinese grievances, including the Turnbull government’s decision to ban Chinese companies Huawei and ZTE from participating in the construction of Australia’s 5G network.

 

Chinese trade restrictions on Australian exports began in 2020 and included tariff increases on barley and wine, non-tariff barriers such as bans on coal, lobster, and cotton, and additional biosecurity measures on some exports.^[29] The trade restrictions resulted in a significant fall in China’s share of Australia’s export market, which fell from 33 per cent in 2020 to 27.6 per cent in 2022,^[30] but ultimately achieved relatively little in terms of shifting Australian behaviour or policy, other than to encourage, at least in part, the Morrison government’s efforts to strengthen Australia’s relationship with the US and other ‘like-minded’ states in the Indo-Pacific and Europe. The election of the Albanese government in 2022 saw a gradual easing of tensions between Australia and China and the ending of all trade restrictions by 2024.

 

Yet, unfortunately for Australia, its major ally has also presented challenges regarding trade and economic diplomacy. The second Trump administration has pursued an ‘America First’ approach to all policy areas, including trade. Shortly after commencing his second term, Trump released the ‘America First Trade Policy Memorandum’. It directed senior Cabinet members and other officials to review a wide range of trade issues, including the reasons for the US’ persistent trade deficits, unfair trade practices by other countries, and the creation of an ‘External Revenue Service’ to collect revenue from tariffs and duties.^[31] President Trump then announced ‘Liberation Day’ tariffs on 2 April 2025. Australia received a baseline 10 per cent tariff (the lowest rate) on most goods exported to the US. Other goods are subjected to higher tariffs, such as steel and tariff which have received a 50 per cent tariff. The AUSFTA has proven to be no shield for Australia against Trump’s tariffs, and the Albanese government has not been able to secure any exemptions.

This story of Australia’s international economic engagement reflects its position as a middle power. Canberra has attempted to ensure the comparative advantage of its resources, services and agricultural goods in the international marketplace, but has also reflected its geographic position by negotiating key bilateral and multilateral agreements centred in the Indo-Pacific rim. This has been especially important as the resources boom is a story closely intertwined with China’s rise. In the context of growing regional rivalries and USA rejection of the free trade agenda under President Trump, strategic security begins to come to the fore just as much as economic security. China’s Belt and Road Initiative and attempts at economic coercion, and the abandonment of the TPP by the US and Trump’s tariffs will continue to concern Australian policy makers worried about challenges to the orthodoxy of the international rules-based order.

Defence strategy

Australia’s defence strategy has undergone several iterations since Federation, but its strategic interests have remained largely in the Indo-Pacific arc as, historically, threats to the Australian continent have emerged from South-East Asia.^[32] While the area of interest has remained consistent across time, the nature of the threat, the balance of power among great nations, and Australia’s own capability to respond have not remained the same, leading to different strategies being adopted since the Second World War: expeditionary school of ‘forward defence’ until 1972; and the ‘continental defence’ of Australia school until 9/11. More recently, the Albanese government has outlined a new doctrine of ‘National Defence’ (see below).

The Second World War demonstrated that the British were no longer the pre-eminent power in Asia. But the war also crushed Japan and saw China consumed by civil war. This left Australia in the peculiar situation of continuing its alliances with powerful allies, but also capable of projecting power with these allies into South-East Asia to resist communism.^[33] This ‘forward defence’ policy led to Australian military commitments to Korea and Vietnam with the US, and to Malaya and Borneo with the British. Australia was able to defend the continent far from its northern approaches due to the relative weakness of the states in South-East Asia and the relative strength and commitment of Australia’s allies in the region. The forward defence era ended when the fear of the spread of communism in the region reduced, the relative power of South-East Asian nation-states increased, and Australia’s allies reduced their commitment to the region in the 1960s.^[34] Australian policy makers worked through the implications in the 1976 Defence White Paper, the 1986 ‘Dibb Report’ and the 1987 Defence White Paper.^[35]

Dibb argued for the self-reliant defence of the Australian continent in two ways: treating geography as an independent variable with an enduring effect on Australia’s strategic interests; and that Australia should maintain a regional technological edge.^[36] These ideas were meant to ensure that Australia could still undertake overseas deployments with allies, but had to prioritise a military geared towards the air and sea defence of Australia’s northern approaches. It also involved a relative de-emphasis upon the traditional prioritisation of the army.

Critics argue that there is a disjuncture between continental defence and what the ADF actually does.^[37] The 2016 Defence White Paper’s prioritisation of a ‘stable Indo-Pacific region and a rules-based global order’^[38] demonstrates how far removed current Australian strategic thinking is from actual continental defence. Such debates reflect the changing regional balance of power. This is further reflected in the 2023 Defence Strategic Review and the 2024 National Defence Strategy, both of which highlight the deteriorating, complex, and increasingly challenging strategic environment that Australia finds itself in.^[39] Chief among the challenges facing Australia is strategic competition between the US and China. This and other challenges have led to Albanese government to develop the doctrine of National Defence:

National Defence is a coordinated, whole-of-government and whole-of-nation approach to meet the strategic challenges Australia faces, including the threat of conflict and the prospect of coercion. It is much broader than the previous military strategic concept of Defence of Australia [continental defence]: it harnesses all arms of Australia’s national power to establish a holistic, integrated and focused approach to protect our security and advance our interests.^[40]

Capability acquisitions and renewed investment in force posture and the ADF’s structure are key elements of the government’s approach to implementing National Defence. Perhaps no more recent capability project has elicited as much attention, or controversy, as AUKUS, an agreement between Australia, the US, and the UK to supply Australia with a new fleet of nuclear-powered submarines. Announced in September 2021 by then-President Joe Biden and then-Prime Ministers Scott Morrison and Boris Johnson, AUKUS entails Australia’s acquisition of 8 nuclear submarines as part of Pillar 1 and the sharing of technologies and enhanced interoperability of US, UK, and Australian forces as part of Pillar 2. Critical technologies and capabilities here include AI, hypersonic weapons, and undersea capabilities.

AUKUS has been controversial since its announcement. Critics have pointed to significant risks, including the high cost of the project (estimated at up to $368 billion over 30 years),^[41] the uncertainty associated with the development and production of the submarines and the local infrastructure in Australia necessary to support their operations and maintenance, the long timelines involved, and the ‘sovereignty-constraining’ implications of the project, which will tie Australia ever more closely to US foreign and defence policy preferences.^[42] Added to this are recent doubts regarding the Trump administration’s support for AUKUS and US military industrial capacity and its ability to produce the Virgina-class submarines that Australia will receive in the 2030s before acquisition of new AUKUS-class submarines later on. Throughout much of 2025, it was unclear if Trump would support AUKUS. The Pentagon conducted a review of the project, and it was not until Trump’s meeting with Albanese in October that he gave an explicit endorsement of AUKUS.

Given that both the Morrison Coalition and current Albanese Labor governments have committed to AUKUS and significant increases in defence spending, the size of the defence budget, the affordability of defence procurements, the question of value-for-money when purchasing interoperable defence capabilities from alliance partners, and even the effective deliverability of an Australian defence industry, come to the fore as crucial issues for policy makers. Defence is a department that ultimately needs to compete with other departments for government funding and against cutbacks. Further, policy makers must balance these strategic aims with domestic political contests. Addressing these competing priorities will continue to confront defence chiefs and their ministers in the future.

Non-traditional security challenges

The ‘almost complete alignment of Australia’s foreign policy priorities with its national security agenda’ reflects a broadened definition of ‘security’ and the increasing ‘securitisation’ of foreign policy evident since the Howard government.^[43] In this respect it is more appropriate to employ the broader term security policy rather than defence policy. These policy shifts are demonstrated by the declining budget for DFAT and expansion of the security-oriented institutional apparatus, including the ONI, ASIO, ASIS, the NSC and the DHA.

This reflects the securitisation of a range of non-traditional issues in addition to traditional concerns about the regional strategic environment. For instance, cyber security has been an area of increasing concern, with attacks launched by both state and non-state actors upon Australia’s political, economic and defence sectors.^[44] Added to this are less obviously defence-related threats such as climate change and other environmental disasters, financial risks, pandemics and societal/political instability, typically described as ‘non-traditional security challenges’.^[45] As such, these challenges are increasingly considered as national security threats, sometimes demanding a militarised response.

In the wake of the 2001 al-Qaeda attacks upon the US (which for the first time activated ANZUS), Australians were subjected to attacks in Bali (2002 and 2005) and Jakarta (2003 and 2004), followed by foiled plots in Australia. Canberra responded by deploying military force alongside the USA in the Middle East and expanding counterterrorism powers and institutional capacity. While Islamist extremism remains a concern, today, politically motivated violence, particularly from the far-right, represents a growing share of ASIO’s caseload – in 2020 estimated at 30–40 per cent, up from 10–15 per cent before 2016.^[46]

Irregular population movements also have an outsized presence in Australian security policy, often involving asylum seekers. While Australia has accepted refugees from Vietnam or China in the past, such arrivals have since been criminalised and with ongoing bipartisan support, military assets are now used to apprehend them in tandem with Indonesia (Operation Sovereign Borders), and arrivals detained in offshore processing centres (earlier known as the ‘Pacific Solution’). Whilst such policies violate Australia’s obligations under various human rights treaties and international law and damage its reputation as a ‘good international citizen’, they are broadly supported by over 75 per cent of the Australian public.^[47]

Climate change, natural disasters, and pandemics are also now widely considered to be security issues in Australia. The Black Summer bushfires and the COVID-19 pandemic prompted unprecedented ADF domestic deployment with Bushfire Assist (2019–2020) and COVID-19 Assist (2020-2022) operations. These crises illustrate the widening securitisation of environmental and health threats, that alongside the limited capacity of civilian agencies to deal with increasing turbulence, are driving expanded intelligence sharing amongst Five Eyes allies and domestic ADF roles in crisis and disaster management.^[48]

Section 3: Regionalism

‘Asian engagement’

Australian recognition of its geographic place at the southern tip of South-East Asia occurred glacially, as it clung to its European colonial roots. The gradual postwar shift from a fading Britain to the greater strength of a fellow Anglo-Saxon American ally continued Australia’s limited engagement in Asia (with exceptions, such as the 1950 Colombo Plan), and Australia engaged in wars of decolonisation in the region, allied with the (neo)colonial UK and USA. Another major impediment to Australia’s acceptance in the Asian region was the racist ‘White Australia’ policy, which was only officially ended in 1973. Otherwise, Australian contact with Asia remained confined mainly to strategic issues, despite the increasing importance of trade with a revitalised Japan from the 1960s.

Further policy realignment was catalysed by the 1989 Australia in the Northeast Asian Ascendancy report and was solidified by ALP Prime Minister Paul Keating, who insisted that Australia face the reality that its natural home was as part of Asia, and not simply as an isolated ‘cultural outpost’ of an Anglo-Saxon protector.^[49] Keating, and foreign minister Gareth Evans, carved a sometimes controversial path of ‘Asian engagement’, and the country has since assumed a strong role not only in the economy of the Asian region, but also in its institutional arrangements. Indeed, Keating and Evans were instrumental in the creation of pan-regional organisations such as APEC and the ASEAN Regional Forum. The ‘region’ in which Australia resides is referred to variously as ‘Asia’, the ‘Asia-Pacific’ and more recently the ‘Indo-Pacific’. Liberal Prime Ministers, including most recently Scott Morrison, have placed more emphasis on ‘Anglosphere’ partners, but they have not interrupted the regional shift begun by Labor (a dynamic originally identified as the [John] ‘Howard paradox’).^[50] But even so, an emphasis remains on both sides of politics on a transactional and instrumental connection with Asia and a familiar, fond and warm relationship with the Anglosphere.^[51]

Canberra has focused upon the major powers in Asia, building trading and, in some cases, security ties. Successive government white papers have identified Japan, India, South Korea, India, as well as China, as the main foci of engagement. First came Japan from the 1960s onwards, as Australian natural resources played a major role in Japan’s economic boom and rise in regional pre-eminence into the 1980s–90s. From a long-term foundation of economic and cultural ties, more recently the relationship has taken on a strategic aspect with the 2007 Joint Declaration on Security Cooperation, and subsequent 2015 Japan-Australia Economic Partnership Agreement (JAEPA), and the 2022 Joint Declaration on Security Cooperation.^[52] Second, India’s economic liberalisation in the 1990s precipitated a greater presence in Asian affairs and strengthening of bilateral ties. With the ‘Indo-Pacific’ reframing of Australian strategic policy and its accompanying ‘Free and Open Indo-Pacific’ strategy, cooperation was evident in defence and security relations but efforts to secure a free trade agreement have proven more challenging.^[53] The ‘Quad’ dialogue between Australia, Japan, India and the USA, also reinforces Australian engagement with these leading Asian powers. Third, South Korea is a significant Australian trading partner and Canberra remains deeply engaged with the question of North Korean nuclear proliferation. Fourth, managing relations with Indonesia has presented a major challenge in Australian foreign policy, particularly as this emerging power acts as a fulcrum of both ASEAN and the ‘Indo-Pacific’ concept, and ties with Jakarta have been subject to a series of highs and lows related to human rights concerns, terrorism, irregular migration, and pronounced cultural differences. Nonetheless, in November 2025 the two countries agreed to a new bilateral Treaty on Common Security, committing to regular leader and ministerial level consultations, and also when either country is threatened.^[54] Finally, Canberra is now deeply embedded in the ‘regionalism’ process in the Indo/Asia-Pacific. Australia can count membership in a plethora of multilateral regional organisations, mainly centred upon ASEAN, such as the East Asia Summit, ASEAN Regional Forum, APEC, which it helped found, and the Five Power Defence Agreement (including Singapore and Malaysia).^[55] But whilst ASEAN is an important forum for South East Asian nations, Australia is hindered in its ASEAN engagement by its focus on regional security agreements, ASEAN’s reluctance to embrace formal security architectures and sometimes cultural tensions. Nonetheless, bilateral trade and diplomacy in the region are generally strong and mutual interests ensure a shared outlook on fundamental relationship matters.^[56]

Foreign aid

Aid is an extension of Australia’s national interest, with a regional focus. Prime Minister Howard once reflected: ‘Australia’s most immediate interests and responsibilities will always be in our region’ – the South Pacific (Pacific Island countries) and South-East Asia.^[57] This area is sometimes described as an ‘arc of instability’,^[58] a term that conveys the connection between aid, security and the national interest. Aid was not always conceived of in this securitised fashion. Aid thinking prior to the mid-2000s was primarily development centred, with an emphasis upon economic growth and market-based solutions.^[59] But global jihadism and the danger of failing states in the region shifted Australia’s approach to aid to one that sought to manage ‘the spill-over to Australia of transnational risks, potentially festering within the borders of “ineffective” states’.^[60] The primary means to influence the region has largely been through foreign aid or overseas development assistance, through forums like the Pacific Island Forum, and, in extreme situations, military intervention.

Australia’s aid budget 2025–26 reflected this regional prioritisation. Out of $5.1 billion of Official Development Assistance, $2.2 billion was allocated to the Pacific region and $1.3 billion to South-East Asia, and smaller amounts to regions with more pressing needs – South and Central Asia and to the Middle East and Africa.^[61] If aid was given on the basis of need it would be geared especially towards Africa, which contain most of the world’s 44 least developed countries (LDCs). But regional dangers were brought into sharp relief post 9/11, epitomised by Australian intervention in Timor Leste, the Regional Assistance Mission to the Solomon Islands, and ongoing governance issues and political instability in Papua New Guinea and Fiji. Countering Chinese influence in the Pacific region has also been a priority of Australia’s recent foreign aid commitments.^[62]

The securitisation of the region, coinciding with the increasing revenues garnered from the mining boom, ushered in a ‘golden consensus’ of bipartisan support for an 80 per cent increase in aid from 2003/04 to 2012/13,^[63] aiming to minimise risk and improve governance and state capability. But the 2008 GFC broke this consensus. The Gillard government cut aid in the pursuit of budget repair and the incoming Abbott government in 2013 cut even deeper, merging the stand-alone statutory body AusAID into DFAT in 2014 and cutting aid spending dramatically.^[64] During Covid, and into the Albanese government from 2022, a more circumscribed ‘cautious consensus’ on aid has emerged: maintaining current aid spending levels and only modestly growing in future; incremental, pragmatic and under-the-radar aid policy change; and prioritisation of the near-region. This has occurred as political decision makers are sceptical about aid’s effectiveness, combined with its low priority on the policy agenda, and fears about political backlash.^[65] The securitisation of aid, its regional focus, and recent caution regarding any kind of expansion of the aid program, demonstrate that foreign aid is geared towards political priorities and the national interest, as much as it is towards Australia’s liberal internationalist values.

Section 4: The superpowers

Rise of China

Since its official ‘opening up’ under Deng Xiaoping in 1979, China has risen to economic pre-eminence in the region. The Chinese economy grew from US$178 billion in 1979 to US $18 trillion in 2024.^[66] Australia has been a major beneficiary of Chinese economic development as it has provided raw materials, and increasingly services, to China. Bilateral trade with China amounted to $311.6 billion in 2024.^[67]

This has boosted the economy immeasurably, even more so than Japanese trade did during its 1960s–1980s boom period. Australia has engaged Beijing diplomatically (through the Australia–China annual Foreign and Strategic Dialogue) and joined regional initiatives spearheaded by China such as the Asian Infrastructure Investment Bank and the Regional Comprehensive Economic Partnership. The important tertiary education sector in Australia has also seen an influx of mainland Chinese students, and the establishment of Confucius Institutes, exposing the nation to contact with all things Chinese as never before. Beeson and Hameiri attest to ‘the game-changing nature that China’s rise has had on nearly every aspect of Australia’s foreign policy and much domestic policy, too’.^[68]

But Australian policy makers have been somewhat uncomfortable with China’s meteoric rise to power,^[69] and Australian economic dependency upon China is a double-edged sword as Beijing’s national interests and values are, in many ways, inimical to those held by Australia. In the past, Australia enjoyed the happy concurrence of its trade and security centred upon the USA and its allies (especially Japan), but efforts to ‘compartmentalise’ trade and security initiated under Howard have now run their course.^[70] In contrast to Australia’s liberal democratic capitalist democracy, China is a (nominally) communist authoritarian government which holds different views on domestic practice and regional affairs. For example, Australia is mindful of Chinese ‘core interests’ and refrains from aggravating Beijing over the status of Taiwan, Hong Kong and Tibet (e.g. receiving the Dalai Lama), subdues its criticism of human rights (to an extent), and weighs the support it gives to Washington and Tokyo when this conflicts with Beijing’s views.

Of particular note is Australia’s opposition to Chinese assertiveness in the South China Sea, where Beijing has territorial disputes with neighbouring countries and is engaged in a process of militarising artificial land features, against the strong protests of the USA and others. The Morrison government hardened Australia’s opposition in July 2020 as tensions mounted with China, declaring that there is no legal basis to Chinese territorial claims in the area and that such claims were inconsistent with the UN Convention on the Law of the Sea.^[71] Australia risks both diplomatic chastisement and economic retaliation (‘punishment’) for diplomatic missteps in Beijing’s eyes – such as decrying China as a ‘threat’ (as in the 2009 Defence White Paper). As highlighted above, China imposed economic sanctions on Australia in 2020 and sought to use economic levers to compel a shift in Australian behavior and policy towards China. The tension evident in Australia’s response to China’s rise has been well demonstrated across several white papers and initiatives undertaken by successive governments. The 2024 National Defence Strategy notes that China has engaged in coercive actions in the South China Sea, engaged in disruptive ‘Grey Zone’ tactics, and is pursuing an unprecedented improvement of its military capabilities ‘at a pace and scale not seen in the world for nearly a century’, one that is occurring ‘without transparency about its strategic purpose’.^[72] Australia’s participation in the revived Quad too signifies its concerns regarding the strategic implications of China’s rise.

Moreover, Chinese influence on Australia’s domestic politics has not always been benign. The revelation of expansive industrial and defence espionage activities and attempts to shape political dynamics within the country (known as ‘influence operations’) have revealed the stark divergences in political and cultural mores among the two.^[73] Australia has since sought to increase its resilience to such efforts and has passed legislation to scrutinise Chinese investment due to linkages with state-owned enterprises. The Director-General of ASIO, an organisation within the Australian Intelligence Community that is responsible for, among other things, counter-espionage, has warned repeatedly of foreign interference and espionage activities in Australia. This includes attempts by Chinese hackers to penetrate and gain undetected access to critical infrastructure systems in Australia, allowing them to engage in sabotage whenever they wish.^[74]

Thus, Beeson and Hameiri conclude that ‘for better or worse, however, attempting to manage relations with China is going to be the litmus test of policy efficacy for any Australian government for the foreseeable future’.^[75]

USA alliance

The USA alliance has remained a central pillar of Australian foreign and defence policy planning since its codification in the ANZUS Treaty of 1951, which served to shield the country from the communist threat of the USSR and China. The ANZUS Treaty created a trilateral Australia–USA–New Zealand arrangement, but is now effectively bilateral since Wellington was excluded by the USA in 1986 over its non-nuclear policy.^[76] The alliance retains strong elite and public support in Australia and the country remains ‘dependent’ upon Washington for its ultimate national defence, including the important function of the US nuclear capability to deter armed attack upon its territory (‘extended deterrence’).^[77] Indeed, without American military support Australia would need to raise its defence budget significantly, and perhaps even contemplate developing an independent nuclear deterrent to secure its national defence.^[78]

Sustained Australian commitment and ‘loyalty’ to the alliance has been demonstrated through its unfailing military contribution to coalitions led by the US in Vietnam, Afghanistan, Iraq, and in the broader ‘War on Terror’ against al-Qaeda/ISIS. The capabilities of the ADF are closely interoperable with those of their American counterparts and utilise much of the same US technology.^[79] AUKUS and the provision of nuclear submarines is the latest, and arguably most significant, Australian acquisition of US military technology that has a long history. Australia also hosts a range of ‘joint facilities’ such as the Pine Gap intelligence facility and ‘rotational’ deployment of the US Marine Air Ground Task Force near Darwin. Finally, recent white papers and defence strategies have indicated that Canberra is committed to deepening its alliance interdependence through increased military integration.^[80] As such, Canberra has been a resolute diplomatic supporter of US foreign and strategic policy in a bid to ensure its own national security through the maintenance of US primacy in Asia (e.g. through the ‘Free and Open Indo-Pacific’ strategy). This is enshrined in Australian defence thinking as necessary ‘payment of an alliance premium’ to assuage ‘fear of abandonment’, thus theoretically ensuring that the US reciprocates should Australia find itself under attack in some future unspecified contingency.^[81] When Australian governments speak of a ‘rules-based international order’, what they mean is one that continues to be underpinned by US primacy, especially in the Indo-Pacific.

Yet, debates regarding the reliability and desirability of the US alliance have been sparked when Washington has engaged in internationally controversial and destabilising policies such as the invasion of Iraq or President Trump’s rejection of international norms. Though bipartisan support for the alliance is resolute, and the benefits are clearly enumerated above, the alliance is not without its academic and political critics, many of whom point out that the ANZUS Treaty itself is less than unequivocal about automatic American military support for Australia.^[82] Indeed, the shifting power dynamics in Asia and President Trump’s disruptive ‘America First’ foreign policy, especially the tariffs that he has pursued in his second administration, have demonstrated that ‘the credibility of US primacy has been visibly diminished’.^[83] Trump’s imposition of tariffs against Australia (and most other countries) and equivocation throughout 2025 on AUKUS have created serious concerns for Australia’s defence and foreign policymakers. Wakefield suggests that Albanese’s successful meeting with Trump in October 2025, where Trump confirmed his support for AUKUS and the two leaders signed an $8.5 billion critical minerals deal, demonstrates that Australia’s greatest strength may be that Trump does not think about it much.^[84] Given Trump’s ‘transactional and emotive worldview’, countries such as Australia that neither ‘threaten nor flatter’ Trump’s domestic narrative that the US has been ripped off by other countries, particularly traditional allies in Europe and Japan, allows Australia to ‘fly under the radar’ and quietly pursue its policy goals.^[85]

Still, some Australian analysts have consequently pondered if the attachment to the US is removed from a clear appraisal of genuine Australian national interests, and perhaps impedes the development of a more ‘independent’ or ‘mature’ foreign policy for the nation: ‘The long- term efforts binding Australia to the USA have decidedly narrowed Australia’s policy options’, according to Nick Bisley.^[86] Moreover, the dominant concern is that unalloyed support for the USA raises difficulties with Australia’s primary economic partner and rising regional power: China. According to Dibb, ‘China wants to be acknowledged as the natural hegemon of Asia and to see an end to America’s alliance system in the region, including ANZUS’.^[87] Not only is Beijing on record as opposing the US bilateral alliance system in the region, but, as US–China rivalry sharpens, Canberra risks being drawn into a conflict (‘entrapped’) in support of the US, over a flashpoint like Taiwan or the South China Sea.^[88] Hugh White, whose earlier work discussed ‘choosing’ between Washington (security) and Beijing (economy), points out that the dependence upon the US for protection is a fading asset as Chinese power eclipses that of the US in, at least, the Asian region.^[89] As such, the credibility of American commitments in Asia are increasingly drawn into question, all while Washington continues to demand greater support in return.

Conclusions

This chapter highlighted a range of key themes central to the thinking and practice of Australian foreign and defence policy. Many of the long-term issues are familiar – how to balance the US alliance with good international citizenship and Asian engagement – but these issues may develop in new ways into the future, and new pressing issues may emerge that create serious challenges to existing foreign policy settings. The stresses between these central factors are increasing as US power and purpose in the Indo-Pacific is undermined both by American policies and structural decline (the end of ‘unipolarity’), but also by the rise of China and other Asian powers, which will substantially reshape the regional environment that Australia inhabits. Added to this is the prospect that Australia itself will become relatively less powerful over time and thus less able to influence events into the future – a fact exacerbated by the diminution of the institutional apparatus, especially DFAT – and the seemingly unstable pattern of government that has emerged in recent years.^[90]

In brief, though Australia will retain a strong state capacity, including military forces, it will face the future from a weaker and more uncertain position than it has in the past. At the same time, Australian policymaking has become increasingly ‘presidential’, with greater power invested in the office of PM&C and increasingly ‘securitised’ through the operation of multiple new or strengthened security/ intelligence organs, mentioned above. Shifts in the international environment and the domestic policy-making terrain in Australia will combine to shape how foreign policy is directed in an uncertain future, full of ‘wicked’ problems – i.e. challenges that defy easy resolution and often demand coordinated ‘whole of government’ responses. And yet Andrew Phillips reminds us that ‘Australians have also proved remarkably adept in adjusting to changing international circumstances’.^[91] Time will tell.

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About the authors

Dr Nicholas Bromfield is a lecturer in public policy at the University of Sydney. He researches and teaches broadly in the areas of political science and international relations. His recent publications have been featured in the Australian Journal of Political Science and the Australian Journal of Politics and History.

William Clapton is Associate Professor of International Relations in the School of Social Sciences. He has research interests in International Relations theory, sovereignty, international hierarchy, risk in International Relations, the defence and immigration policies of the United States, European Union, and Australia, and popular culture in global politics.

Dr Thomas S. Wilkins is a senior lecturer in international security at the University of Sydney, where he teaches Australian foreign and security policy, and a senior research fellow at the Japan Institute for International Affairs. He specialises in Australian foreign policy and security issues in the Asia-Pacific region, and has published on these subjects in journals such as Review of International Studies, Australian Journal of Political Science and Australian Journal of International Affairs, among others. He is currently an associate editor for the journal Pacific Affairs and co-area editor for Japanese Studies journal (Australia).