National Economic Security

National Economic Security Briefing Paper

Key Recommendations:

Australia is grappling with an increasingly challenging security landscape, polarised by heightened strategic competition, accelerating technological modernisation, protectionist policies and the severe consequences of climate change.

The Future Strategic Leaders Program within The Institute for Regional Security (The Institute) has identified seven key economic security vulnerabilities which threaten the stability of Australia’s economy, namely:

• Economic dependence and coercion
• Resource Scarcity and supply chain disruption in crises
• Economic espionage and sabotage
• Insufficient technological innovation and uptake
• Demographic pressures
• Ecosystem degradation
• Global governance system capture or corruptionAlthough the Government has implemented policies and strategies to address major economic vulnerabilities and risks, the complex interplay of these vulnerabilities calls for a more integrated and systematic approach. The Institute proposes three principal policy recommendations intended to strengthen and expand upon the Government’s existing efforts to protect Australia’s economy.

1. Creation of a National Economic Security Committee in PM&C

Given the nexus between economic and national security, a first step for Australia should be the establishment of a National Economic Security Committee (NESC) within Prime Minister and Cabinet (PM&C). Mirroring the structured whole-of- government approach to traditional security domains in the National Security Committee (NSC), this committee would be a central hub for addressing economic security crises, such as cyberattacks, supply chain disruptions, economic coercion and major climate-induced disasters. As with the NSC, the NESC would be supported by a Secretaries’ Committee and a Secretariat.

Under the leadership of the Prime Minister and involving relevant Departments and agencies, the NESC would streamline interdepartmental collaboration on economic security matters and ensure a cohesive domestic strategy that aligns with Australia’s overarching economic objectives.

The establishment of the NESC is predicated on the need for an integrated, whole-of-government approach to navigate the complexities of economic security. Without such a centralised body, Australia faces the risk of a disjointed and inefficient response, where departmental policies might inadvertently conflict or overlap, diluting the effectiveness of economic security policies.

2. Creation of a National Economic Security Strategy

While Australia has existing standalone strategies which address the identified vulnerabilities (including critical minerals, cybersecurity, and critical infrastructure), the interconnected nature of these threats necessitates a unified, comprehensive national economic security strategy (NESS). Led by the Prime Minister and Cabinet (PM&C) and subject to review by the NESC, NESS will play a crucial role in promoting key economic interests, strengthening economic sovereignty, and addressing the main causes of economic instability and uncertainty.

While the NESS is a government initiative, its development should incorporate insights from industry and academic leaders, ensuring a well-rounded perspective. Consultation promotes unity across government, business, and community sectors and ensures the strategy is fit for purpose. Ultimately, this strategy aims to navigate Australia confidently towards a future equipped to handle economic adversities and seize opportunities.

3. Development of a Collective Economic Security initiative by DFAT

With the Government’s success in improving relations with China, the challenge remains of successfully navigating competition to reshape global institutions, alliances, and rules, and to manage economic relations with strategic competitors. To this end, the Department of Foreign Affairs & Trade (DFAT) should lead a collective initiative to engage in partnerships with market-based middle powers and smaller states, particularly Pacific Island countries, to bolster economic security. This initiative could aim to enhance individual and collective supply chain resilience, bolster security of critical infrastructure and help manage geo-economic great power competition.

By doing so, Australia would solidify its role in promoting a stable and open economic environment in its region. This initiative is envisioned to work in tandem with
existing frameworks, such as the Indo-Pacific Economic Framework (IPEF), offering specialised and actionable strategies for smaller and mid-sized economies that are more vulnerable to global supply chain fluctuations and trade barriers.

Conclusion

Adoption of these three recommendations would signal the Government’s commitment to Australia’s economic security and understanding of the increasingly complex interplay of security, economics, and trade in Australia’s international relations.

Immediate action is crucial to safeguard Australia’s long term economic security. The Government’s initial steps, while significant, must be escalated to address the urgency of the situation. Any delay or inaction risks compromising national security, heightening economic instability for Australians, and undermining the government’s commitment to its citizens.

A detailed policy research paper accompanies this brief here