Before he took the stand to speak at the Lowy Institute in August, Stephen Smith had already achieved a considerable feat in Australian defence policy. He had united Defence's 'tribes'. The Army, Navy, Air-Force and civilians, hitherto in near-permanent disagreement, had finally found common cause, though problematically for Smith, only in their disdain for his management of the portfolio.

His speech at Lowy only aggravated the situation. It shouldn't have. With competition intensifying across the region and Australian defence expenditure reduced to its lowest level since 1938 – inauspiciously, the time when Australia last failed to reckon with its deteriorating strategic circumstances – a major public speech of this kind should have served as an opportunity to face up to the complex, interlocking predicaments confronting Defence.  Here was a chance to take the initiative on policy, to begin softening the ground for a strategic rethink in light of new financial realities, and to canvas a few practical ideas about how the ADF might adapt to a new era of austerity. Although no panacea, this would have been a useful first step in restoring confidence in the coherence of Australia's long-term defence planning.

Unfortunately, Smith failed to grasp the opportunity. He took a different course instead, using the speech to insulate himself from being criticised for denuding ADF capability. He did this cleverly. Having raided the defence budget, Smith pre-emptively tied the hands of his strategists, particularly those assigned to the White Paper team, by publically affirming Australia's long-standing hierarchy of strategic objectives as the basis for the forthcoming White Paper, due in the first half of 2013.

Put simply, the Minister committed the ADF to all the same tasks, but in a more exacting strategic environment and with much less money. No major capabilities or roles would be divested, and like the 2000 and 2009 White Papers, the ADF would be expected to prepare for the self-reliant defence of the continent. It would also retain the capacity to exert a decisive strategic influence to the immediate north, play a leading role in Maritime Southeast Asia, and make contributions along a spectrum of commitment in contingencies further afield.

These have always been worthy ambitions, to be sure, but they were unattainable even with the steady 2% of GDP to which Defence had become accustomed. At 1.5%, they had devolved into the realm of fantasy. With Defence Secretary Duncan Lewis – who'd already registered his discontent in a public speech to ASPI – refusing to fall in line, the White Paper was frozen and a crisis ensued, the full consequences of which were apparently averted with a last-minute deal: Lewis posted to Brussels, the redoubtable Dennis Richardson to become the new Secretary.

This bureaucratic reshuffle may have defused the immediate crisis, but as my colleague Peter Dean points out, it has not resolved the fundamental dispute that brought it on. The incoming Secretary now faces two formidable challenges which need to be addressed consecutively: first, to dissaude the Minister from propagating the misleading notion that the ADF can do more with less. And second, if proper funding is not restored, to begin the process of determining which of the two inner concentric circles – defending the continent or underwriting stability in the immediate neighbourhood, which are the determinants of ADF force structure – will be compromised to bring Australia's ends and means into balance.

Photo by Lowy Institute.