Sometime this week or next the Prime Minister and Defence Minister will present publicly what is arguably the most complex and comprehensive Defence White Paper the Commonwealth Government has produced. It will clarify strategic direction and the future force structure of the Australian defence forces. It will be informed by a strategy of self reliance within the framework of our alliances.

Our alliances make self reliance affordable. Were we to attempt to replicate the information-gathering capabilities of our American ally, the qualitative enhancements of our equipment and the amount of equipment and personnel needed in the case of the absence of a powerful ally, we would bust the budget. In the absence of coverage by the American system of extended deterrence, the most important defence debate we would now be entertaining would be over the development of an Australian nuclear weapon.

This need not make us slavish dependants. We bring a fair amount to the table. We can create the space for independent foreign policy initiatives, but the task is getting harder.

Defence, in the end, is about what you can afford compared to others. When I was responsible for the 1987 White Paper, Australian GDP was greater than the combined GDP of the ASEAN nations. China was largely under the US umbrella. It is not now and has had the boost of 10 per cent real per annum growth in its defence budget for 20 years. Our GDP is now 70 per cent of the combined ASEAN states. By 2050 Indonesia's GDP alone will be three times ours. Allies are not going to get less important in this environment.

The American alliance is primarily a military pact. So what does our ally intend now? A fortnight ago, US Defense Secretary Robert Gates presented a clear picture of the Obama administration's direction and funding. It was jumped on by commentators here who had joyfully supported the Howard Government's policy of backing away from defending the country as the ADF's main force structure priority, in favour of expeditionary missions. Likewise it was seen as providing comfort to those who felt the Government was too concerned about emerging regional capabilities, in particular, China's. It was a far more complex document than that.

Gates' statement was about immediate threats and continuing missions. However, it was also about hedging against longer term possibilities, including capabilities developing in our region. Most importantly, it was about affordability now and in the long term. It was about exploiting the advantage the US now has by enhancing proven platforms - about not making unproven, grossly expensive, new technologies (exquisite as Gates describes them) the budget enemies of enhancing existing capabilities. This should particularly be the case when those capabilities are superior to anything anyone else has.

Though it does not look like it, and though it was sold as a bottom-line increase of $US13 billion in the defence budget, it is a budget cut. Gates dragged into the bottom-line defence budget many of the recent increases in personnel, support for families and service entitlements that were put in place to respond to Afghanistan and Iraq but were hitherto recorded in supplemental appropriations. He does not outline as yet the savings from the total defense budget by this process, but you can bet they will amount to more than $US13 billion. He makes a virtue of fiscal necessity. He argues that bringing these measures, important to the welfare of service men and women, into the base defense budget will create for them a Pentagon constituency who will argue priorities with the future equipment-focused armed service leadership.

Gates hits expensive and/or unproven next-generation procurement very hard. The ultra costly F22 Raptor programme concludes with a number at 187. For the Navy, the replacement destroyer for the Arleigh Bourke Air Warfare Destroyer is frozen at three, down from an anticipated 32. The Arleigh Bourke production line is reopened, with technological enhancements focused on the older platform. The air force's new bomber is put on hold. The Missile Defence Agency's (MDA) budget is substantially reduced with a re-emphasis on theatre defences and the choking off of a number of laser technology strategic options. The new satellite programme is terminated and more of existing satellite technology deployed. This is a sampling. There are too many examples to list.

"Some will say I am too focused on the wars we are in and not enough on future threats," Gates said. "The allocations of dollars in this budget definitely belie that claim."

Indeed, as you go through the programme, there is a definite focus on improving technologies in proven platforms that could be categorised as capability hedging against more serious potential enemies than those the US engages in Iraq and Afghanistan. Through this process, Gates sends a powerful message to Pentagon planners that the salad days of experimentation, free of dollar constraints with endlessly extended missions to be covered by new platforms which now drive dollars exponentially, are over.

For those who think he dismisses the sorts of concerns over emerging Chinese capabilities that trouble Australian defence planners, Gates' argument on the F22 programme and the Joint Strike Fighter (F35) in which Australia is interested, are cautionary. He describes the F22 as a "niche, silver bullet solution required for a limited number of scenarios". Instead he accelerates the F35 programme. He says: "I considered the fact that Russia is probably six years away from Initial Operating Capability of a fifth generation fighter like the F35, and the Chinese are 10 to 12 years away." By then the US will have 1000 F35s on their way to 2400 under Gates' plan. Quite clearly, burgeoning Chinese capabilities are firmly in mind and realistically assessed.

There are some interesting lessons for Australia in this, though we are not comparable to the US in any quantifiable way. Firstly, Gates is very strong on joint service solutions where like capabilities are needed. The air force's new rescue helicopter is scrapped and the services encouraged to develop a common solution to what is a like problem for each of them.

The US has delayed the acquisition of further amphibious ships like the two monster LHDs the Howard government foisted unplanned and unprepared for sustainment on the ADF. These behemoths are suitable for missions and strategy of diminishing importance to the US. For the types of operations around the waters we confront in our region, Gates has accelerated the smaller, faster, shallower draft Littoral Combat Ship. An Australian design from WA firm Austal is competing for this. What a tragedy Howard moved Australia to the Spanish monster option, ignoring the clear American preference for an Australian solution for Australian-type conditions so far ignored by us.

Another lesson can be seen in Gates' savings measures on contractors doing the support service work that could be done by public servants. This coming year, Gates will employ 13,000 more public sector workers on his way to 30,000 more over five years. He will pay for this by cutting the 39 per cent of the support workers who are contractors to 26 per cent. There are immense savings in this. Public sector workers are cheaper. As the Australian Government approaches its defence savings task, they will find similar benefits here.

Apart from the lessons, what is valuable here for Australia?

Firstly, the United States is rendering a potent defence force both happy and affordable. Good news for allies concerned for the long term. Secondly the US is stressing enhancing systems that Australia can afford. This can be seen in the emphasis on the F35 and in the focus on theatre missile defence systems ahead of the strategic. This is an issue as we consider the future weapons capability of our new Air Warfare Destroyers. We can be sure that the US will make a capability we can afford very effective. There is little controversial in Gates' approach to ballistic missile defences and it should enhance systems Australia can afford and ensure that our new ships are not rendered obsolete by the next generation of American destroyers.

Thirdly, Gates clearly has regional capabilities, about which Australia is concerned, in view. While Chinese military developments are not dependencies of what the US does, there is no pressure here to drive exponential increases in Chinese capabilities, particularly nuclear capabilities. There is a fine balance between prudent hedging and provoking arms races which slip out of the arcane military sphere into a defining element of regional diplomacy. The Gates position is easy for Australia, concerned to keep a low temperature in Chinese American relations.

There will be nothing in the Defence White Paper that clashes with the new US strategic priorities. We can get on with optimising Australia's capability in our approaches and region. It is just such a pity, given our regional responsibilities and border protection issues, that John Howard crowded out of our amphibious capabilities an Australian design which would actually be useful in our region. Ah well, perhaps we can call on the Americans when we need help in our region.

Kim Beazley is a former Defence Minister and Opposition Leader of the Federal Labor Party, now Professorial Fellow, Department of Political Science and International Relations, University of WA.

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