This piece is drawn from Agenda for change 2016: strategic choices for the next government.

The 2016 defence white paper didn’t end the contemporary defence debate; it began it.

Our strategic environment is full of uncertainties, and material defence capabilities are so situated in a revolutionary moment that no decades-long projection can survive more than two or three years as a source of comfort for policymakers. Our defence and broader diplomacy need to reflect the challenges and opportunities identified in the white paper. Some of it goes to medium-term projections on what appeared settled: funding and major equipment. Above all, the ideas indicate why it is desirable to have white papers at least every five years. The questions unanswered will always be more important than those which are.

We federated over a hundred years ago as a nation, in large measure because we perceived the need for a national defence. Defence has a very modest share of the budget pie. Even with the intention to lift GDP share, annual defence outlays remain around 7.5% of the federal budget. They are dwarfed by social spending. Yet whenever commentators reach for an example of something we could do without it is inevitably from the defence capital program.

So a sense of proportion is retained: in the 1980s when I was defence minister we routinely accounted for around 8.5–9.0% of the budget. The government averaged 2.3% of GDP in defence spending. Were we dealing with these numbers now, the defence budget would be $5 billion a year better off. Yet, as the Soviets used to say, ‘the correlation of forces’ has shifted decisively against us.

In 1987 our GDP exceeded that of the ASEAN states combined. Indonesia’s economy alone is passing us now. We seized a peace dividend at the end of the Cold War and nothing in the numbers suggests we want to seriously amend that. That’s a massive constraint. We can’t afford a blowout in a major program. The proceeds which flow from Defence reform will be critical. None of it will be sufficient. The spread of a consensus on the vital character of the defence function has to be the ballast at least of its sustainment but also a platform for a closer look at priority.

In allied relationships the paradox of the post–Cold War era is that we’re now closer to the United States than we were then. This simply reflects the transition of Southeast Asia from a post-Vietnam Cold War backwater to the southern tier of the focal point of the global economy. As the Americans engage Asia they appreciate a ‘muse’ with an agenda less troublesome than those of their other allies.

From our point of view, access to the best American technology is now critical for any chance of an Australian capability edge in its strategic zone. This is the post ‘revolution in military affairs’ or ‘second offset’ event acting out in our procurement program. It took effect in the early 1990s. We spend $13 million a working day in US defence industry. The Australian embassy in Washington DC manages over 400 foreign military sales programs. To cite one example of the fruit of this, one could point to the most effective air defence of our approaches we have ever had.

Both globally and regionally, our strategic situation has deteriorated. We confront a fraught situation in the Middle East where we support fragile local allies struggling with the fundamentalist extremist side of a confessional dispute in the Muslim community. We do so because our American ally is there, we have been engaged in Iraq and Afghanistan, and we know, though this aspect of the struggle is local to the Middle East, it is global in impact. There’s a real possibility of its intensification in the region where the bulk of the world’s Muslims reside—Asia.

Though there’s no good reason for it, Russia determines a course dragging the US back to a European confrontation. China ignores the sage advice of Deng Xiaoping and persists in a challenge around its maritime borders. Global events, particularly the impact of climate change, tease forth a multiplicity of conflict scenarios. These are intellectually more challenging than a simple reflection on defending our approaches. They make prioritising force structure issues very hard and DWP 2016 unsatisfactorily resolved this by delineating all challenges as of equal priority.

In the next few years this will be less of a challenge to defence policymakers than the impact of a further technological revolution in defence equipment. The ‘third offset strategy’ is well underway. Artificial intelligence, autonomous systems and directed-energy weapons, together with applications of these changes in space and underwater systems in particular, disturb not only our priorities but the viability and relevance of some very expensive platforms.

One wonders, for example, over the long-term prospect of SEA 1000 when strides seem at last to be made on the use of autonomous systems in underwater detection. Directed-energy weapons render potent a lesser platform than the US normally operates at sea. Ballistic-missile defences are becoming more viable and from an American point of view more important. The new systems, if affordable, trump most capacities for regional asymmetric warfare. Down this road goes obsolescence of a lot we plan on and a premium on the American relationship.

Assuming the US sustains its global stance, our future conversation will be not so much about interoperability as about integration. The US will increasingly rely on using the capacities of others as it confronts the costs of replacing platforms, supporting personnel and introducing new weapons.

Australia’s defence planning will be massively more complex than has appeared to be the case with DWP 2016. And more expensive. We face a major strategic challenge for our national budget: can we sustain hybrid European levels of social provision and a hybrid American taxation system?

We can’t and we won’t face up to it. Unless we do, one wonders how we tease out of the budget what really ought to be our first-order priority—the resources to sustain the means of our survival.