Australia is ludicrously, irresponsibly, culpably, madly unprepared for any serious external national security emergency where the Americans don’t ride to our rescue. Lack of cargo ships and lax fuel security leaves Australia exposed
Take two critical examples: cargo ships, and fuel security.
Once we had more than 100 cargo ships flagged and or controlled by Australia. Now we have 13. That’s right, 13. Four of these are dedicated LNG tankers that will soon be replaced by foreign vessels.
By comparison, Britain, about two and a half times our population and with a similar standard of living to us, has something like 470 such vessels.
In the normal scheme of things, not owning anything can be a cheap way to operate. We are wealthy because of iron ore, coal and other bulk commodities. As a Harvard study showed, we are the simplest and least-sophisticated economy of any nation in the world at our standard of living.
We use our mineral wealth to pay for a services economy that finances good hospitals and well resourced universities. In both those we do some clever things. But as far as possible, we make nothing in Australia and buy it all from overseas.
Appalling industrial relations in our ports is one factor that killed our shipping industry. Therefore we need strategic government intervention. Every developed nation that has cargo ships does this. Barrett, who is on the board of Maritime Industry Australia Limited, says we could not in an emergency guarantee supply of our own fuel, pharmaceuticals, key agricultural products or many of the other things critical to a modern economy.
His views on this are shared by former deputy prime minister, John Anderson; Australian Industry Group chief Innes Willox; Australian Strategic Policy Institute head Peter Jennings; and indeed everyone else who knows the field that I spoke to.
Willox says we are perhaps more vulnerable to external shock than at any time since World War II.
Consider fuel security. Last week, we learnt we would lose another oil refinery, leaving us with a pitiful two refineries.
We have no strategic fuel reserve in Australia. According to the International Energy Agency, we are supposed to have 90 days reserve. But really I couldn’t care less about the IEA. It’s obvious if a crisis comes we would need a reserve in Australia.
Ninety days is no more than a useful benchmark for the obvious, incontrovertible and strategic common sense: we need a strategic fuel reserve in Australia.
Again, this contradicts free market theory. It’s cheapest to do everything “just in time”. So why store fuel, when that costs money? It’s cheaper to buy it just in time, every time. Well, of course, in the real world you might get a pandemic-induced disruption much worse than COVID. Or a colossal natural disaster. Or, most likely of all, geo-strategic and military disruption.
Nearly a year ago, Energy Minister Angus Taylor announced that he had bought us a fuel reserve. And where is it? In the US of course, because we don’t have any storage capacity.
Remember again that since 2013 we have had a national security-focused conservative government in Canberra. And then remember that 15 years ago we had eight refineries, one year ago we had four, and soon we will have two. At the same time as we bought our US-based reserve, which is only of use to us if there is no emergency, that is to say in circumstances where we won’t need to use it at all, Taylor also announced we would build storage facilities in Australia; fuel farms.
So one year later, how’s that going?
You’ll be pleased to hear that a grants process is in train to see if folks will apply for a government grant in order to get paid to build a fuel farm.
One of the drollest observations on our national security was that in the time we take to write a defence white paper, China conquered and militarised the South China Sea. We are happy campers in a row boat notionally chasing an ocean liner disappearing over the horizon.
Despite all the government’s many counting and accounting tricks, we have a little more than three weeks supply of most types of fuel. Even when, or if, the fuel farms are all built, we still won’t keep a 90-day reserve supply onshore but a good deal of that will be in ships on the oceans….”