Threats to Fuel Supply Could Cripple Australia: Australian Defence Minister

Australian Deputy Prime Minister and Defence Minister Richard Marles speaks to the media during a press conference after the release of the Defence Strategic Review at Parliament House in Canberra, Australia, on April 24, 2023. AAP Image/Lukas Coch

Economic coercion from China could cut off Australia’s fuel supplies, crippling the vast country’s food and transport sectors, according to Deputy Prime Minister Richard Marles.

Marles, who is also Australia’s defence minister, said that Australia’s exposure to economic coercion is even greater than the risk of invasion, and the potential of such coercion going forward is also “much more significant.”

“We are much more reliant upon our economic connection as the world. [In] the early 1990s, our trade as a percentage of our GDP was around 32 percent. In 2020, it was up to 45 percent,” he told the ABC Insiders program on Sunday.

“And there’s a physical dimension to that economic connection; most of our liquid fuels now, almost all, come from overseas. Back in the 90s, we used to do it all on shore. In fact, most comes now from just one country, and that’s Singapore.

“That’s where the threat lies. And that’s why we need to re-posture for that.”

Asked by host David Speers whether China could block Australia’s fuel suppliers in the next three years, Marles said he was not just worried about the next three years.

“Well, first, it’s not just the three years—it is that, but I think it’s beyond that,” he said.  “So, we are thinking about this over the next three, the next ten years and beyond.

“But the point that we’re really making is that when you look at the way in which great power contest is playing out, and particularly in our region, you look at that military build-up, and you look at our exposure to that through a much greater economic connection to the world, we are much more vulnerable.”

Australia Still Tied Extensively to China

Australia’s major imports are refined petroleum ($19.6 billion), cars ($18.8 billion), delivery trucks ($8.08 billion), broadcasting equipment ($6.68 billion), and computers ($6.61 billion), and the imports are derived predominantly from China ($70 billion), United States ($25.7 billion), Japan ($15.3 billion), Thailand ($12.1 billion), and Germany ($11.6 billion).

In 2021, China exported A$70 billion to Australia, with the main products being computers, broadcasting equipment, and furniture. However, in February this year, China’s exports decreased by 4.61 percent million while imports increased by 24.1 per cent.

Australia’s largest export destination is currently China, followed by Japan, Korea, Taiwan, India, and Singapore. Australian exports to China were valued at US$102.35 billion in 2022, with the main product being iron ore.

During the last 26 years, exports from Australia to China have increased at an annualised rate of 17.2 percent, from $2.24 billion in 1995 to $138 billion in 2021.

According to the think tank Australian Strategic Policy Institute, as a result of banning imports of Australian coal, China “suffered ‘brown-outs’ in many cities in 2020 while its steel-making operations will have suffered from excessive use of inferior domestic coal, which shortens the lifespan of its coke ovens.”

“China’s purchases of Australian coal went from $13.7 billion in 2019 to nothing last year,” ASPI’s report on April 27 noted. “Coal was the first previously banned commodity that China started buying after the thaw in trade relations this year.”

Global Rules-Based Order Under Threat

While not directly naming China, Marles said the world is seeing the global rules-based order coming under threat or stress, which could be seen in the Russian invasion of Ukraine as well as conflicts in the South China Sea.

“We obviously see that in Ukraine, but we also see it in our own region, in places like the South China Sea. This is being accompanied by the biggest conventional military buildup that the world has seen since the end of the Second World War. That obviously has an implication for our strategic landscape,” he said.

China is currently undergoing the largest ramp-up of it military assets in the Pacific.

Marles noted that Australia needs to posture its defence force to deal with these factors in the region because “so much of what we need to do is beyond our shores.”

“So to have a defence force with the capacity for impactful protection across the full spectrum of proportionate response is now what we are seeking to achieve.”

Marles revealed that the Albanese government would repurpose $7.8 billion worth of expenditure that’s “about tweaking” and is also about “making a decision right now” to expand domestic defence manufacturing.

“Ultimately, our ambition is to establish a production line with companies in this country which would provide for the manufacture of those long-range strike missiles and doing as much of that as possible in the next couple of years,” he said.

“We hope that we can begin with the assembly of the strike missiles that go in the HIMARS (High Mobility Artillery Rocket) system. But we want to build on that so that we’re actually manufacturing the full suite of these weapons in Australia.”

The comment comes after the release of a defence review, which noted that increasing recruitment, securing trade routes, and boosting energy supply are among the biggest issues for the Australian Defence Force.

The review, which was published by the Albanese government on April 24, warned that Australia’s geographical isolation is no longer a significant strategic advantage that can provide defence enough time to prepare for an incoming attack in the “missile age.”

The review suggested that Australia needs to plug its workforce and capability gaps to discourage foes.

Victoria Kelly-Clark contributed to this report.