Net assessments for Australia

In 2023, the Albanese government established a Directorate of Net Assessment in the Department of Defence. Though little recognised or remarked upon at the time, it may become the most significant innovation in Australian strategy-making since Defence White Papers were introduced in 1976. Net assessments are an analytical practice that helps decision-makers diagnose strategic problems and compete effectively. They are ideal for tackling some of the core concerns facing the Australian government today, including how to:

• Outcompete China for influence in the Pacific Islands region.
• Track the balance of power in select regions, and assess how Australia can influence it to expand the choices available to partner states.
• Deter China from achieving military leverage against Australia.
• Compare trends in technology and society as they relate to Australian security.
• Model plausible outcomes for key military conflict scenarios, and identify the relative strengths and weaknesses of adversaries, allies, and other participants.

This Policy Brief explains what net assessments are and how they work. It proposes the Albanese government should build on the foundations it established in 2023 and create Directorates of Net Assessment (DNA) in four other security-related portfolios: the Department of Foreign Affairs and Trade (DFAT), the Department of Home Affairs, Treasury, and the Department of the Prime Minister and Cabinet (PM&C).

A widespread Australian practice of net assessments — in concert with the work of the National Intelligence Community and existing public service policy analysis — would fit well with the nation’s pragmatic, problem-solving approach. It would strengthen the power of Ministers to make effective long-term decisions on how to protect and prosecute Australia’s position in the competitive and increasingly violent international environment it now faces.

The 2020s are presenting Australia with its most complex strategic environment since the 1960s. On top of what was already a full plate — wars in Europe and the Middle East, China’s aggressive actions in Asia, the chaos of climate change, and the emergence of artificial intelligence — the re-election of US President Donald Trump has upended long-standing assumptions about how Australia can achieve security.

While analysts have searched for overarching grand theories and frames to capture these challenges, none does the job effectively. There is an intense competition between the United States and China, but claims of a “New Cold War” obscure the key interdependencies, geography, and agency of countries such as Australia. Nor can we speak of a “China challenge” in a singular form, since it has distinctive economic, diplomatic, military, and social dimensions. Knitting together the region into a singular “Indo-Pacific” once held great appeal, but the dynamics within each subregion — South Asia, the Pacific Islands, North Asia — are more significant than the dynamics across them. While Australia seeks both whole-of-government and whole-of-nation approaches, select industries and communities — such as advanced manufacturing and vulnerable migrant diasporas — need intense focus if Australia is to preserve a resilient and secure nation.

Even if agreement can be reached on broad frameworks, what is a Minister supposed to do with them? Declaring we are in a “New Cold War” does not help governments decide which military capabilities to invest in. Announcing a whole-of-nation approach will not clarify the investments or regulations necessary to strengthen industrial resilience against supply-chain shocks. Governments have put great effort into writing framework documents such as White Papers and National Security Strategies, only to produce, in the words of former US Under Secretary of Defence for Policy Michèle Flournoy, “a lovely coffee table book that is a list of everything that is important”. [1] Instead of the elusive search for the right phrase or set of words to capture everything, Ministers need a way to cut through the day-to-day noise and prioritise the handful of first-order problems confronting the nation.

While the daily flow of intelligence and policy guidance is crucial for Ministers to do their job, by necessity its focus is granular and tactical. Take the case of Chinese military vessels circumnavigating the Australian continent in March 2025. Intelligence was vital to understanding the specific ships involved and their capabilities. Policy guidance was essential for identifying specific actions to protect shipping and air traffic, and how to respond diplomatically. But how do Ministers deter the PLA Navy from doing it again? What investments or changes should the government make so that it has far greater situational awareness and an effective set of response options next time? Those are questions left to overworked Ministers who are soon onto dealing with the next crisis.

Ministers in the National Security Committee (NSC) need different forms of strategic guidance than their predecessors did even a decade ago. They need to understand in detail just what the Australian Defence Force (ADF) can and cannot do in priority scenarios. They need to know how other nations plan to fight, and what a conflict would look like. They need to know how the decisions they make today will determine Australia’s position in the Pacific Islands or Southeast Asia a decade from now. They must decide which technologies and industrial capacity need rapid government investment to secure Australian interests, and which can be left to market forces. And they need a way to prioritise the overwhelming amount of information they already receive, synthesised down to a handful of comprehensive assessments of the strategic problems they care about most. The stakes are immense. If Australia’s leaders do not have an accurate understanding of the military, economic, and political balance of power, they will not be able to deter a war from starting, nor win that war if it does.

The Australian government has already recognised the need for a problem-based approach for designing the future ADF. Overturning the long-standing principle of a “balanced force” that could handle a wide range of tasks, in 2023 the Albanese government decided that the ADF “needs a much more focused force structure based on net assessment, a strategy of denial, the risks inherent in the different levels of conflict, and realistic scenarios agreed to by the Government”. [2] A Directorate of Net Assessment was created inside the Department of Defence to diagnose these scenarios and discipline the future ADF to those problem sets. This is a great start, but Australia’s security is more complex than just getting the right military capabilities. If the Albanese government is to achieve its strategic goals, including to “deter any conflict before it begins”, to “contribute to the regional balance of power that keeps the peace by shaping the region we want”, and to safeguard Australians from extremism and foreign interference, further reforms are necessary. [3]

This Policy Brief proposes an expansion of net assessment practices across the core security agencies of the Australian government — the Department of Foreign Affairs and Trade, the Department of Home Affairs, Treasury, and the Department of the Prime Minister and Cabinet — along with an expanded analytical remit for the directorate in the Department of Defence. The DNA in the Department of the Prime Minister and Cabinet would play a coordinating role across the agencies. In line with the US experience, net assessment offices would not be a “substitute or rival for the ongoing analyses … that the defence and intelligence communities conduct”. Rather, they will focus on “the diagnosis of problems and opportunities”. [4] That is, they would offer not just analysis but synthesis, cutting through to what matters most for ministerial decision-making.

First established by the United States during the Cold War, offices of net assessment have also been set up in the United Kingdom, Japan, Israel, and India to help their governments better respond to the 21st-century strategic environment. [5] Net assessments have their limits — they will not speed up the pace of delivery for ADF capabilities nor help Australian diplomats in their day-to-day relationship-building across the region. But done right, net assessments will help Ministers directly and pragmatically grapple with the most important problems facing Australia’s security. Net assessments reveal the core choices facing the nation’s leaders so that they can use the daily flow of decisions — on capabilities, personnel, funding, organisational structure, and much else — to strengthen Australia’s competitive position, pre-empt emerging security problems, and impede the efforts of those who would do Australia harm.

Late in the evening of 22 February 1946 in Moscow, a little-known American diplomat sent off the most important dispatch of his life. George F. Kennan’s “Long Telegram” is today credited with helping the United States understand and triumph in its four-decade-long strategic competition with the Soviet Union. Yet on that cold evening, Kennan did not set out to write a grand strategy. He was a Russia expert who believed many in Washington did not understand their new adversary. Comparing his task to the way a doctor studies an “unruly and unreasonable individual”, Kennan argued that only by diagnosing the specific nature of the Soviet threat, the nation’s history, culture, and resources, could a workable set of policy and strategic responses be established. [6] It was through this detailed analysis of the specific problems the Soviet Union posed to the United States that the war-winning strategy of “containment” was born.

Three decades later, in 1976, Andrew Marshall and a co-author Jim Roche sent their own memo to then Secretary of Defence Donald Rumsfeld. Drawing on Marshall’s work as the Director of the Office of Net Assessment since 1973, they returned to Kennan’s framing of a long-term competition with the Soviets and pointed out that the United States had lost sight of Kennan’s approach. The Pentagon had become too focused on iterative responses to military threats and on outspending, rather than outcompeting, its adversary. Given the economic conditions of the 1970s, this was no longer viable. [7] To generate an effective strategy, Marshall argued the Secretary of Defence should view their day-to-day decisions as a series of “moves” within a competition and prioritise moves that created “net” asymmetries for the United States against the Soviet Union.

If the United States could identify its distinctive and enduring strengths, such as in missile or space technology, Washington could create policy initiatives that posed a “heads I win, tails you lose” dilemma for Moscow. If the Soviets chose not to compete, they would fall further behind and have their weakness demonstrated to the world. If they did compete, they would have to divert resources from domestic spending — undermining the regime’s political position — and likely still produce inferior systems. [8] Several years later, the Reagan administration would embrace this “competitive strategies” logic to help send the Soviets bankrupt. [9]

For both George Kennan and Andrew Marshall, good strategy emerged from a careful diagnosis of the specific strategic problems facing the nation. Only once a clear sense of each problem was established could solutions and overarching frameworks then help to drive effective policymaking. Marshall would spend the next half-century refining this insight into the analytical practice we now know as net assessments.

Since 1973, the Pentagon’s Office of Net Assessment (ONA) has been tasked with providing the Secretary of Defence and the service chiefs with “insights to help them make better decisions on long-term competition”, identifying “the ways in which [adversary] conduct differed from ours … [and] the asymmetries that favored the United States or that provided opportunities for US strategy to exploit”. [10] Over the years, three broad types of net assessment were produced by ONA:

1. Balance and comparative assessments, which examine how America compares with adversaries in key areas, looking beyond raw numbers to factors such as culture, organisation, training, and politics to identify asymmetries.
2. Policy and net technical assessments, which analyse competition and trends in select economic, technological, social, and military domains. Such assessments helped the United States identify its advantage in information technology and precision guidance and thereby prosecute the so-called “Revolution in Military Affairs” many years before other nations.
3. Operational assessments, which explore specific scenarios to inform force planning and doctrine. For example, how might a conflict over West Germany or the Korean Peninsula play out? This is roughly the model Australia’s Directorate of Net Assessment in Defence uses today. [11]

The key word in net assessment is “net”— as in, the difference between two sums. Net assessments go beyond the analysis of an isolated threat to provide a comparative and comprehensive assessment of two or more states and their strategic interactions over the long term. Each of the net assessments produced by the US Office — on topics such as the strategic nuclear balance in Europe, the maritime balance of power in the Atlantic, and the emergence of precision guided weapons — assessed the relative strengths and weaknesses of both the United States and its adversaries. Strength was defined not just in quantitative terms but by examining the doctrine, organisation, culture, demographics, and socio-political trends that shaped each state’s long-term capacity and the nature of the competition underway.

Net assessments have a handful of distinctive characteristics. First, they are designed for a specific audience — Cabinet-level officials. They are targeted at the issues these senior leaders find most important, and seek to diagnose problems and identify opportunities to enable meaningful progress. [12] This clear sense of the audience allows net assessments to range broadly, and draw on a wide set of analytical tools — such as futures, horizon scanning, and war gaming — while disciplining the analysis to serve the nation’s leaders. [13]

Second, net assessments are unlike intelligence analysis as they seek to understand the capacity of the home nation and government as well as the threats it faces. Obtaining an accurate sense of a nation’s own strengths and weaknesses (and those of its allies and partners) is difficult and can be politically sensitive. However, such information is crucial for understanding potential interactions in competition or in moments of intense crisis or conflict. As the Second World War demonstrated, nations such as France, which did not understand the doctrine and capacity of its adversaries, or those such as Australia, which did not understand the limits of its allies, faced grave risks. [14]

Third, because net assessments are framed in terms of competition and the interactions between states, they seek to identify opportunities. Good net assessments consider how comparative asymmetries — involving the weaknesses on the other side, as well as the threats they pose — can be exploited over time. Rather than presenting a singular response option to government, the aim is to help Ministers understand the range of choices before them, both to pre-empt potential risks and to pursue advantages for Australia. Net Assessments are not a “strategy”, they are guidance to the nation’s real strategists: the Ministers attending the NSC.

Fourth, net assessment rejects “black box” logic where “China” or “Australia” are treated as singular entities with one voice and viewpoint. The policies and approaches of nations are shaped by culture, bureaucratic turf wars, history, intellectual proclivities, and paranoias as much as they are shaped by “rational” argument. [15] “China” and “Australia” are legal fictions and nonsensical as targets of a strategy. What matters for effective strategic action is understanding the specific people and organisations that do things, and diagnosing why they do them.

Fifth and perhaps most importantly, net assessments encourage an empathetic form of assessment. If Australia wants to balance the People’s Republic of China (PRC), it needs to understand how China’s leaders view the balance and why their assessments might differ radically from those of Australia. So too, only by understanding the political limits and intense pressure faced by Pacific Island governments can Australia help their leaders resist external influence-buying campaigns. A core lesson of the Cold War was that a failure to consider the world from the perspective of the other side would doom any effort at either reassurance or deterrence. [16] In a world where it is easy to call for stronger rhetoric and higher defence spending, net assessments help Ministers to understand, at a granular level, what is driving the unwanted behaviour of other states.

Though net assessments are new in Australia, they are a good fit for our national character as pragmatic problem solvers. Many of the nation’s best foreign policy achievements have come from this style of policymaking. In the early 1990s, DFAT’s “niche diplomacy” agenda prioritised regional problems where Australia could make a distinctive contribution, such as assisting post-war Cambodia and preventing chemical weapons proliferation. [17] In the early 2000s, the Australian government achieved remarkable regional cooperation on combatting irregular migration and terrorism through targeted, behind-the-scenes diplomatic work. [18] So too in the 2010s, the National Intelligence Community led an effective response to the rising threat of foreign interference through a detailed and targeted approach. [19] Net assessments provide a way to turn Australia’s pragmatic, problem solving culture into regular and comprehensive accounts of the security issues Ministers care about most, and to empower their decision-making.

So, how might net assessments be put into practice?

Department of Foreign Affairs and Trade

In 2023, Foreign Minister Penny Wong outlined the Albanese government’s new strategy of seeking “a balance where strategic reassurance through diplomacy is supported by military deterrence”. [20] Implementing a balancing strategy requires a finely grained understanding of select regions or military domains (such as undersea in the Pacific, or across the Taiwan Strait). A Directorate of Net Assessment, located in the Strategic Planning and Coordination Group, would be the ideal home for conducting assessments of the evolving balances of power that matter most to Australia. This would strengthen the Department’s existing use of futures and horizon scanning, focused on select strategic problems. The Directorate would not only underpin the Minister’s effort to navigate and shift key balances in Australia’s favour, its insights would also be vital to other members of the NSC whose portfolios generate the resources — economic, military, and technological — that Australian influence depends upon.

Department of Home Affairs

Australia’s defence strategy of “deterrence by denial” is not just a military task, given the growing range of non-kinetic threats. These too need to be denied if Australia is to comprehensively deter. A Home Affairs Directorate of Net Assessment would be the ideal place to assess the evolving nature of threats, such as damage to power and industrial grids, cyberattacks, and foreign interference, and how to deter them. This work should be proactive, searching for opportunities to advance Australian interests, such as assessing long-term technological trends that benefit the nation’s security. A Directorate of Net Assessment would help the Minister and Secretary for Home Affairs to strengthen their long-term perspective on Australian resilience and stability.

Treasury

The importance of economics to security — and vice versa — is widely recognised, and Australian officials have capably responded to crises and begun to shift risk assessment frameworks. [21] Yet as the 2024 Independent Intelligence Review observed, there is a clear need for the Treasury to be able to undertake “analysis of [the] long-term implications of Australia’s economic security decisions … horizon-scanning … [and] scenario planning”. [22] A Directorate of Net Assessment would be the ideal home for this work, while ensuring economic perspectives and resource issues remain front-of-mind for net assessments produced across government.

Department of Defence

The Department of Defence’s Directorate of Net Assessment already has a clear mission to support force design. This is important and should be kept in place. Over time, and with sufficient resourcing, the Department should supplement this with comparative military assessments (strengths and weaknesses, quantitative and qualitative) of China, the United States, Japan, Indonesia, and India. This is a sensitive task — Australia’s intelligence agencies are prevented from assessing friendly countries as it carries the implication that Australia spies on them. But as a growing number of influential analysts have proposed, Australian decision-makers today urgently need to know how capable each potential adversary or partner is in specific scenarios, and how conflict may play out. Without such knowledge, there is a risk that more Australians will fall prey to a fatalism wherein the PRC seems a “mountain” of an adversary, impervious to any “toothpicks” thrown by the ADF. [23] Such claims reflect a profound misunderstanding of warfare — just ask the Ukrainians if smaller nations are powerless against larger bullies. But this mindset is understandable when Australia lacks a tradition of net assessments that evaluate the military, political, technological, and economic balances upon which our security depends.

Department of the Prime Minister and Cabinet

Finally and most importantly, a Directorate of Net Assessment in the Department of the Prime Minister and Cabinet’s International and Security Group would have two roles. First, to coordinate the practice of net assessment — and associated scenarios, futures, and horizon-scanning methods — across the government, ensuring this work is directed towards the primary concerns of the NSC. Second, to assess the handful of security issues that are the Prime Minister’s personal responsibility. Although the 2024 National Defence Strategy identifies deterrence as Australia’s “primary strategic defence objective”, this is not only a defence task. [24] Deterring aggressors will depend just as much on the Prime Minister’s personal statements and credibility as it will on the lethality of the ADF. A PM&C Directorate of Net Assessment would support the Prime Minister to establish deterrence in the highest priority areas and pursue those opportunities that emerge only at the highest level of national decision-making.

Expanding the practice of net assessment will present some challenges. Each Department would want a pool of around 12–15 net assessors, with 7–10 staying in their department and the rest seconded to the other Directorates to share skills and ensure diverse perspectives in each office. Given current workforce concerns, it may be necessary to establish the Directorate of National Assessment in PM&C first (alongside the existing structure in Defence) and use secondments from DFAT, Treasury, and Home Affairs to build up the skill sets necessary for the eventual establishment of DNAs in their departments.

Financially, the impact to the budget would be small, as Net Assessment staff should all be existing public servants. Only those with well-established careers have the knowledge, relationships, and clearances to make this type of work viable. These staff will need to be freed from day-to-day responsibilities to develop their craft. As Andrew Marshall insisted, good diagnoses only emerge from “sustained hard intellectual effort”. [25] A modest research budget should be provided to each DNA to enable them to gain access to national, regional, and global expertise. This small funding stream was crucial to the effectiveness of the Pentagon’s Net Assessment office under Marshall. [26] Ultimately, however, the key challenge is not financial but cultural. This proposal is not about creating new bureaucratic layers; it is about freeing up a small number of Australia’s most experienced people to think deeply about the nation's most pressing problems.

One important task for the new Directorates would be to establish what defines “net” in an Australian context. Is Australia in direct competition with others, and so seeks a “net” power asymmetry? Or is that unrealistic, and should analysts instead focus on how evolving balances influence Australia’s place in the region and its primary interests? It is not enough to simply chart each balance. The whole point of the exercise is to give Ministers real choices about how they can improve Australia’s security and wellbeing over the medium to long term.

What counts as good strategic guidance depends on the problems you are trying to solve. From the 1970s to 1990s, Australian governments sought to establish a coherent “joint” military force and justify the defence budget share in the absence of a clear threat. This led to the creation of public framework documents known as Defence White Papers. In the early 2000s, the pressures of large expeditionary deployments and the War on Terror led to classified and planning-heavy documents such as the Defence Capability Plan and Defence Planning Guidance. [27] In 2023, the Albanese government identified the need for a problem-based approach to military force design in the context of great power competition with China, inaugurating the Australian use of net assessments.

Net assessments are an analytical practice ideally suited for Australia in the mid-2020s because they shift the focus from trying to come up with an ideal set of words to capture the challenges of our day — New Cold War, Indo-Pacific, whole-of-nation, etc — and instead direct attention to diagnosing the most important strategic problems that Ministers seek to address. Used to great effect by the United States during the Cold War, and now embraced by the United Kingdom and Japan, expanding the use of net assessments in Australia would provide a pragmatic and proven approach to strategic guidance in a complex age. [28]

The Australian practice of net assessment has already begun strongly in the Department of Defence. This should be supplemented by an expanded set of Directorates of Net Assessment across the Departments of Foreign Affairs and Trade, Home Affairs, Treasury, and the Prime Minister and Cabinet. Defence’s directorate should also be expanded to provide comparative military assessments. These cost-effective changes would help Ministers drive action on the core strategic problems facing the nation, including to “deter any conflict before it begins”, “contribute to the regional balance of power that keeps the peace by shaping the region we want”, and to safeguard Australians from extremism and foreign interference. [29] Australia cannot solve all the strategic problems it faces. But it can and must do better at diagnosing their core dynamics and directing its government to pragmatically and effectively addressing them.