The latest Defence Update reveals an inability to deal with new realities

The Government's new defence update 2003 paper is a frustrating mixture of good sense, unrealistic ambitions and bad judgement.

There is good sense in the recognition of significant strategic change since the publication of the defence white paper in late 2000.

The unrealistic ambitions flow from an unwillingness to accept that needed changes are in the nature of "instead of" rather than "as well as". This imposes heavy new burdens on the long-suffering taxpayer, who is already picking up the tab for some low-grade management of important projects (like the Collins submarines, the Seasprite helicopter, etc, etc).

The bad judgement lies in the servile acceptance of US positions on issues like Iraq - particularly the pre-emption doctrine - and the Bush administration's relentless, dangerous (and probably futile) push for a defence against ballistic missile attack.

Certainly, as the new paper says, we live in a changed strategic environment. There is even less risk today of Australia's being attacked by an aggressive foreign state than there has been for years. Instead we face different security issues: terrorism, possibly at the strategic or catastrophic level; some regional instability; border protection; weapons of mass destruction.

But a revealing supporting paper for the new strategic document says that "the [2000 White Paper] description of our strategic interests and objectives, military strategy, capability priorities and so on are still a robust framework for our defence. Within this framework, we need to rebalance capability priorities and expenditure to reflect the new strategic environment."

This is not acceptance of the real implications of change; it is an attempt to suppress them.

In truth the old framework, focused on conventional conflict with foreign military forces, is past its use-by date. "Rebalancing" within it only rearranges deck chairs on the Titanic. Today's framework requires focus on counter-terrorism, maritime surveillance and interdiction and regional peace-support.

The Government, however, wants to do both: maintain the large conventional war-fighting establishment and address the new issues too, whereas it should be de-emphasising traditional capabilities and expanding others with the resources this releases.

Hence we are confronted with unrealistic ambitions and the threat of yet more dollars going down the Defence black hole.

To take one example: there is a real need to upgrade maritime and air surveillance of the approaches to Australia. This requires adequate numbers of suitable ships and aircraft. These can be funded by taking a few major warships out of the Navy inventory and scaling down the RAAF's love-affair with the highest of high-technology. But the government wants to have its cake and eat it too, at the taxpayer's expense.

The natural conservatism of defence establishments (both uniform and civilian) accounts for some of this, and the rest is explained by the government's attitude to the United States, which wants our conventional forces to lend legitimacy to its pre-emptive wars.

Now Washington wants us to fight in Iraq, with or without United Nations approval. This will cost Australia hundreds of millions of dollars and an unknown number of lives (of course, Iraqi military and civilian casualties could be horrendous). It already costs us billions each year to maintain high-tech forces for US-led coalition war. Indifferent to these costs, blind to the risks of pre-emption, slavish almost to the point of self-abnegation, the Government clings to the US as a literal security blanket.

US missile defence, a still-unproven technology, can do little for us. We are not threatened with ballistic missile attack. The primitive missiles possessed by North Korea are wildly inaccurate and, even if Pyongyang has nuclear weapons (debateable), on the CIA's estimate it has only one or two. It seems doubtful that these would be wasted on us.

But missile defence is fuelling a renewed nuclear arms race in our region. Russia and China have reacted by starting to upgrade their nuclear forces. Beijing has tested dummy or decoy warheads. Even assuming that its denials of having already done so can be accepted, sooner or later it will test Multi-Independent Re-entry Vehicle warheads (MIRVs) - multiple nuclear warheads on the one missile. India will react to China's moves, Pakistan to India's and so on in the deadly escalation cycle of arms races.

The Bush administration's pre-emption policy sets dangerous precedents. If Washington can attack other countries pre-emptively, so too can anyone who feels (or claims to feel) threatened. Similarly, US withdrawal from the Anti-Ballistic Missile Treaty caused Russia to abandon the START II nuclear arms control agreement. North Korea suddenly felt able to threaten withdrawal from the Nuclear Non-Proliferation Treaty. If Washington can walk away from arms control treaties, so can anyone else who feels like it.

Bush's arrogant unilateralism is a problem for many strong US allies. The North Atlantic Treaty Organisation has been severely fractured by Washington's drive for pre-emptive war against Iraq. In almost no liberal democracy, including Australia, is there popular support for a war without UN approval.

At best, the new strategic paper is a half-way house on the road to realistic and affordable security policies. The demands it places on taxpayers are unsustainable and should not be supported. There is no call (other than populist) for a "khaki budget"; we can meet our needs by reducing some traditional capabilities and funding new ones with savings.