Mike Pezzullo proposes new defence production commission

Former Home Affairs Department secretary Mike Pezzullo has proposed a defence production commission with procurement ‘superpowers’ to prepare the nation for a possible war.

Defence expert and former chief of the Department of Home Affairs Mike Pezzullo at home in Canberra. Picture: Martin Ollman

Mike Pezzullo has proposed a new defence production commission with procurement “superpowers” to leverage the nation’s economic weight to better prepare the nation for conflict, arguing there was now a one-in-five chance of war in the Pacific by 2030.

The former home affairs department secretary on Tuesday also took aim at China following the visit of Premier Li Qiang, urging the Australian government to take on Beijing “forcibly in ideology, values (and) mores.”

While the restoration of trade and warm relations with the Chinese people were warranted, Mr Pezzullo argued that “we should have nothing warm to do with their government – it’s a totalitarian communist regime.” Beijing had never “accounted for the atrocity of 35 years ago … of driving tanks over university protesters in Tiananmen Square.”

Speaking at an event in Canberra, Mr Pezzullo upped the probability of a Pacific War occurring between now and the end of the decade to 20 per cent – an increase on the 10 per cent figure he had previously given.

War meant “active military engagements” where US and allied forces were in combat with Chinese and possibly Russian forces in the Pacific or Indian Oceans for a potentially prolonged period.

While this could involve conventional and cyber weapons, it was “even possible to imagine a situation where tactical nuclear weapons might be employed in such a war.”

Citing CIA director William Burns in February last year warning that Xi Jinping was readying the PLA to conduct an invasion of Taiwan by 2027, Mr Pezzullo said the most optimal time for such an action was in April that year once tides and typhoons had been considered. He said this was only 33 months away.

“While we cannot in 33 months do much about rapidly expanding the force in terms of major platforms, we could do a great deal in terms of equipping and reading the force,” Mr Pezzullo said.

Mr Pezzullo said a new approach was needed to prepare the nation, declaring that “we can reduce time delays by concentrating authority in the hands of those who are not frightened to use it and to answer for it.”

Proposing a new defence production commission to boost Australian preparedness, Mr Pezzullo argued a new mechanism was needed to “mobilise the entire economy in the face of looming peril, ensuring that the entire spectrum of capital, innovation, workforce and scale across the Australian economy was brought to bear.”

The commission would be chaired by a new director-general of defence production who would be joined by the Secretary of Defence and the Secretary of Industry. It would report to a cabinet minister for industry and defence production.

“Defence production, on this model, would be seen as a sovereign national capability in its own right and nested in Australia’s industrial structure,” he said.

The proposed commission would take responsibility for “shipbuilding, guided weapons, explosives, ordnance and munitions, autonomous systems and … the repair and maintenance of aircraft and vehicles.”

It could be established under a new defence production act which would exempt the commission from the requirements of the Public Governance, Performance and Accountability Act of 2013. The new director-general for defence procurement would also be exempt from appearing before Senate estimates.

Mr Pezzullo said the legislation would allow the commission to be handed new procurement “superpowers” including the use of debt and equity financing, loans and other forms of business guarantees included accelerated depreciation and even requisition during wartime to achieve results.

It would be able to enter into strategic investment partnerships with pension, private equity and national security funds. Consideration should be “under this model” to repurposing the entire $15bn National Reconstruction Fund.

Mr Pezzullo said the commission would have powers to abolish red tape and strip back unnecessary regulations, while aiming for a 60-day turnaround between proposals and contracts being signed.

“The commission would drive aggregation of effort across the Australian industry and beyond the latter perhaps through allied defence production free trade zones involving AUKUS, Japan, the Republic of Korea the European Union, and others potentially,” he said.