WE SHOULD thank Julia Gillard and Wayne Swan. Their budget cuts have destroyed the defence policy of the 2009 white paper, and that is a good thing because it was a bad policy. Now it is their job to do better, and create the defence policy Australia needs to be a middle power in the Asian century. That will not be easy.
First, they need to understand what went wrong in 2009. It is very simple. The last white paper acknowledged that the shift in wealth and power to Asia is fundamentally changing Australia's strategic situation, and then did nothing about it.
The myth is that, in 2009, Kevin Rudd not only identified China as a threat, but ordered a massive defence build-up to deal with it. The reality is that his white paper made no real changes at all to the plans for defence that John Howard had made over the preceding decade. The ADF in 2035 was going to look exactly the same after the 2009 white paper as it was going to look before.
What about Rudd's famous 12 new submarines? They were a distant dream. On his plans, Australia would still have only six submarines - same as now - 25 years after his white paper. We would not have 12 until the mid-2040s.
Rudd saw clearly that the rise of China is fundamentally changing Australia's strategic position, but he lacked the policy skills and political courage to launch the equally fundamental changes to our defence policy that this requires.
To do better, Gillard and her colleagues (or successors) will need to start by understanding that, in the Asian century, America may no longer dominate Asia as it has in the past.
America's unchallenged primacy in Asia has long provided the essential foundation both for Australia's security and for the stability of Asia as a whole. This has limited our need for forces either to defend Australia or to support America in any conflict involving a major power such as China.
But now this comfortable assumption is being overturned as China challenges America in Asia, and newer powers such as India, and eventually even Indonesia, start to spread their wings. We should not assume that Asia's great powers are headed for rivalry and conflict, and we must do all we can to avert it. But our defence policy must deal with the clear possibility that it will happen anyway.
This poses a rather confronting question for us. Are we serious about being a middle power in the Asian century, or are we happy to follow New Zealand's lead and relegate ourselves to the ranks of the small powers? We cannot take being a middle power for granted as we slide inexorably down Asia's economic league table. We will have to work at it.
Militarily, no country can count as a middle power unless it can fend off a major-power attack on its territory, and make a substantial contribution to a regional coalition with allies and friends. Australia's defence forces today and over the decades do not and will not meet these benchmarks. As things stand, Australia does not and will not have the military weight of a middle power in the Asian century.
The problems the white paper must address go deep. It is not just that after decades of complacency both within its own ranks and from the governments it has served, the defence organisation seems incapable of building and maintaining the forces Australia requires. It is incapable of providing the government with coherent advice about the kinds of forces we need.
The result is a program of defence investment that lacks any strategic rationale. The army is being converted into a mini-Marine Corps, reshaped for high-level amphibious operations that it will never undertake, and that would have no strategic effect if it did.
The navy is building a new class of expensive warships that have no role other than to protect these useless amphibious forces, while it allows a slow-motion, high-cost train smash in the replacement submarine program that jeopardises the future of perhaps the most important single capability for Australia over the next few decades.
And the air force looks on seemingly helplessly as plans for its future air combat and strike forces go into a holding pattern, hostage to the impact of the Pentagon's budget cuts on the Joint Strike Fighter program.
These are failings not just of Defence but of successive governments. On both sides of the aisle, Australia's political leaders have been in denial about the magnitude of the responsibilities they carry for future security, because they cannot imagine that, quite soon, American power might no longer be the answer to every strategic question.
Labor's new defence white paper, if it is ever delivered, offers a critical opportunity to fix this epic mess. Seizing this opportunity will take real political courage and policy skill.
The white paper will need to acknowledge how different the Asian century is going to be, identify as precisely as possible what tasks our forces must be able to do, and ruthlessly reshape them to do these tasks as cost-effectively as possible - otherwise Australia will not be a middle power in a couple of decades' time.
Hugh White is professor of strategic studies at ANU and a visiting fellow at the Lowy Institute.