Posted: 24 Jan. 2020 15 min. read

A “vital” interest: Western Australia’s leading role in the Indian Ocean region

In her first speech after being named Minister for Defence, Senator Linda Reynolds spoke of a renewed focus on the Indian Ocean in the face of rising regional challenges. Located on the doorstep of this region, Western Australia will inevitably play a role. Matt Judkins, partner at Deloitte, sits down with Minister Reynolds to discuss the changes developing in the Indian Ocean and the opportunity for WA to take a leading role.

Matt Judkins: The Indian Ocean is becoming a more prosperous but more complex region. Can you tell me about Australia’s interests in the area?

Minister Linda Reynolds: The Indian Ocean is vital to Australia’s long-term economic and security interests. It is home to five of Australia’s top 15 trading partners (India, Indonesia, Malaysia, Singapore and Thailand) as well as some of the world’s fastest growing economies. Around 40 percent of international offshore oil production comes from the Indian Ocean with the region containing some of Australia’s largest hydrocarbon deposits and important offshore territories. Australia is committed to playing a leading role in managing the opportunities and challenges in the region over the coming decades.

The Indian Ocean is vital to our national security. Australia has one of the longest Indian Ocean coastlines, one of the largest Exclusive Economic Zones (81 million km2) and the largest search and rescue zone (53 million km2). Our Exclusive Economic Zone extends deep into the Indian Ocean and contains strategically valuable and significant territories such as Christmas Island and Cocos Keeling Islands. Half of Australia’s navy fleet is based permanently on the Indian Ocean in Western Australia, reflecting the importance we place on the region.

MJ: How is the Indian Ocean region changing?

LR: Like the Pacific, the Indian Ocean is increasingly characterised by rising strategic competition and intensifying great power rivalries, which has led to a more congested and contested regional environment. We are seeing a proliferation of naval activity, with military modernisation enabling regional naval forces to operate at a greater range and with more precision. This, at a time when competition to secure access to strategic ports right across the Indian Ocean rim, is rising and presenting economic and strategic advantages. 

MJ: What impact are these changes having on the strategic environment?

LR: India has emerged as an economic powerhouse in the region and is demonstrating leadership in a way that reflects its size and democratic values. China has rapidly expanded its Indian Ocean footprint. Other players, such as the US, France, Indonesia and Japan, are also playing a greater role. 

Growing strategic competition within the region poses major challenges to all actors operating in the Indian Ocean. Coercive statecraft, grey zone tactics, and transnational crime (such as people smuggling and piracy) have the potential to increase. Further challenges such as intensifying competition over declining resources, as well as natural disasters and extreme weather events continue to impact the region. 

MJ: Defence is a key priority for Australia in continuing to ensure the security of the region. What do you see as Australia’s role in the defence of the Indian Ocean?

LR: Australia is committed to developing strong and positive defence relations with nations who share our interests in the Indian Ocean. The challenges are too complex for any one nation, which is why we are working closely with like-minded regional partners, such as India and Indonesia. As I highlighted at the Shangri-La Dialogue in June, Australia is stepping up its maritime security cooperation with both of these countries in areas such as maritime domain awareness, combatting illegal, unregulated and unreported fishing and border security, and irregular maritime arrivals.

MJ: How are we approaching collaboration with other nations, particularly India, to achieve greater stability in the Indian Ocean region?

LR: The 2016 Defence White Paper highlights the importance of deepening our defence relationship with India. India, and the Indian Ocean, are vital to a stable and prosperous Indo-Pacific. We support and encourage India’s leadership role in the region, with our defence cooperation through bilateral defence activities with India increasing four-fold in the last five years. 

Engagement with India was the focus of the Indo Pacific Endeavour deployment this year, with our bilateral navy exercise, AUSINDEX, at its centre. It saw the largest Australian task group deployed to India, with focus on anti-submarine warfare, demonstrating the high degree of trust between our two countries. 

Beyond bilateral relationships, Australia is working closely with Indian Ocean fora – such as the Indian Ocean Rim Association and the Indian Ocean Naval Symposium – to cultivate regional maritime security cooperation. This collaboration is key to building communication and transparency to ensure that strategic competition does not escalate into a conflict situation. Australia welcomes India’s establishment of an Information Fusion Centre for the Indian Ocean region, which will assist with improving our collective ability to monitor movements in the region. It is in Australia’s national interests to grow this cooperation with India and other partners in the region.

MJ: Clearly, the Indian Ocean region will be an evolving focus for Australia. What is the opportunity for Western Australia here? 

LR: As well as strengthening our regional partnerships, building collaboration and increasing our presence, Australia is also rising to the challenges facing our region by investing in our defence capability. A strong, resilient and internationally competitive Australian defence industry is key to supporting Australia’s defence capability needs.

Western Australia is well positioned to take advantage of these capability needs and the transformation underway in our defence industry. Western Australia is Australia’s gateway to the Indian Ocean, is perfectly placed to be an export hub into the Indo-Pacific, and the industry in Western Australia is already strong and able to leverage the large adjacent mining and energy sectors. It’s also home to key defence platforms and capabilities, including the Collins Class submarines, most of the ANZAC Class frigates, and the Special Air Services Regiment. 

MJ: How is investment supporting Western Australia to better embrace these opportunities?

LR: To date, the Centre for Defence Industry Capability has awarded more than $1.2 million in grants to 15 WA-based companies, while the Defence Innovation Hub has awarded two contracts to WA-based companies worth $3.1 million.

The Defence Science Centre in Perth, which opened earlier this year, is building science and innovation connections across universities, industry and defence to support security and technology development and capability requirements.

Western Australia is now Australia’s second naval shipbuilding hub and is responsible for the construction of 31 new vessels for both the Royal Australian Navy and our partners in the pacific. In 2018, Austal commenced sea trials on the first Guardian Class Pacific Patrol Boat, and Civmec began construction on an $80 million purpose-built shipbuilding facility for the Offshore Patrol Vessel Program. 

Western Australia’s thriving local defence industry is key to safeguarding Australia and delivering the capability the Australian Defence Force requires. This assists the ADF with deterring threats to our security, positively shaping our regional security environment and making a significant contribution to global security.

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Matt Judkins

Matt Judkins

Partner, Deloitte Access Economics

Matt leads the Deloitte Access Economic practice in Western Australia. He assists clients with macroeconomic forecasting, economic impact assessments, policy development, and market and industry reviews. Prior to Deloitte, Matt held roles with McKinsey & Company, Saha International and Arthur Andersen.