Strengthening preparedness: Australia’s response to China threat

The intensifying great power competition between the People’s Republic of China and the United States has made the possibility of future war in the Indo-Pacific region a regular feature of Australia’s national discourse. It is surprising, then, how little attention has been given to what day-to-day life could look like if a war actually did break out. While such a war is not inevitable, scrutinizing what it might look like should be an urgent priority so that the necessary steps can be taken to improve Australia’s preparedness and, ultimately, its deterrence.

Having previously worked in the Department of Defence, experts analyzed what would be required to mobilize Australia’s privately held industrial base and civil society to support various wartime scenarios. From this experience, experts believe the government has a detailed understanding of how war could impact domestic supplies of critical goods and international freight transporting supplies to Australia.

What is missing, however, is a frank engagement with industry and the public about the hardships that may arise during a crisis and how the industrial base needs to be recalibrated to address these vulnerabilities.

If such a situation arises, three categories of goods would be most impacted: energy and fuel, pharmaceuticals and raw materials, and smart devices and their components. These goods are utterly indispensable to the daily lives and the continuity of Australian society. However, Australia currently lacks the ability to produce enough of these goods domestically to endure the supply disruptions that a conflict would bring. For instance, as a member of the International Energy Agency, Australia has an obligation to maintain sufficient reserves of refined fuel to meet its needs for 90 days. In practice, however, Australia has arguably never met this requirement.

Australia’s domestic capacity for refining fuel has declined, and sufficient storage facilities have yet to be established. Recent unpublished estimates from the energy sector suggest that if supply lines were cut today, Australia would only have enough fuel to meet demand for just days or weeks. Once road freight is impacted by a lack of fuel, supermarkets would start experiencing shortages of basic goods, air travel would collapse, and non-essential retail businesses and most personal vehicle travel would likely cease. Fuel would need to be rationed for freight, emergency services, and the military. Australia’s low onshore capacity to refine and store fuel means these dire impacts could be expected from even a relatively short-lived crisis disrupting maritime supply lines.

The vast majority (90%) of Australia’s pharmaceutical products are imported, with China being a crucial source. In the event of a conflict between Beijing and Washington, these medicines would become inaccessible. Although Australia has the facilities and expertise to produce a wide range of pharmaceuticals, scaling up capacity would take time. Disruption to medicine availability could have catastrophic impacts on Australians’ welfare and potentially spark panic. Additionally, Australia’s reliance on foreign imports, especially from China, for digital devices and components would significantly change how Australians live.

Smart devices are embedded in the operational technology of most Australian industrial systems, including food processing, waste management, water treatment, freight management, transport, and pharmaceutical manufacturing. A prolonged disruption to Australia’s technology supply chain could devastate the economy and essential services, as Australians would be unable to replace or upgrade key components. This issue is exacerbated by Australia’s limited capacity to disassemble and recycle salvageable electronic components, such as semiconductors, with most discarded devices currently shipped overseas.

While these scenarios are indeed alarming, Australia’s maritime supply lines are highly adaptable. A war over Taiwan or in the South China Sea would have a far greater impact on global shipping than the Covid pandemic. However, the pandemic demonstrated the capacity of international shipping and air freight to recalibrate and adjust as key markets were disrupted by lockdowns and other response measures. After a period of shortages, the arteries of international trade to Australia were restored.

Given these complexities, Australia needs to focus its national preparedness and mobilization planning on the uncertain period between a crisis and the re-establishment of international shipping. From my examination, such planning is not taking place to a sufficient degree. The former secretary of home affairs, Michael Pezzullo, has similarly suggested such planning is overdue.

The government should adopt a “ first 90 days” national mobilization plan designed with industry partners to ensure Australia’s survival during the initial 90 days of a war or similar catastrophe in the region. This plan should focus on increasing domestic stockpiles and manufacturing capacity of the three most essential categories of goods: fuel, pharmaceuticals, and smart devices (and components). This would enable Australia to sustain itself through the initial period of conflict while waiting for international supply lines to adjust.

Australia must diversify sources of essential goods away from China due to the high likelihood of disrupted maritime routes through Southeast Asia. This diversification would ensure critical supply chains are more resilient in the first 90 days and beyond. Including industry in preparedness and mobilization planning is crucial. However, many business leaders are unaware of potential security interventions by the Commonwealth in wartime. Government concerns about causing alarm are misplaced; clarity about contingency planning can improve market confidence.

Policymakers may fear that discussing diversifying key supplies away from China could harm relations with Beijing or signal aggression. However, the opposite is true. China has been on-shoring key supplies to make its economy more resilient. Australia could point to China’s example as demonstrating prudence – hoping for the best, but preparing for the worst. Strengthening preparedness through a “ first 90 days” policy would make deterrence more credible by showing Australia takes the prospect of war seriously. This would complicate adversaries’ planning and ensure Australia could not be easily isolated and neutralized. It would also demonstrate to people, allies, and adversaries that while Australia do not want war, it intends to endure should one arise.