Warning that half the world's submarines and advanced combat aircraft will be operating in Australia's region in the next two decades, Prime Minister Malcolm Turnbull has unveiled an ambitious new defence blueprint.
The beefed up militarisation of the Indo-Pacific has complicated Australia's security, Mr Turnbull said as he announced an extra $30 million to be spent in the next decade on new ships, aircraft, missiles, drones and a national shipbuilding industry.
"We would be concerned if the competition for influence and the growth in military capability were to lead to instability and threaten Australia's interests, whether in the South China Sea, the Korean peninsula or further afield," he said as he launched the new Defence White Paper.
"We have a strong, vital, vested interest in the maintenance of peace, stability and respect for the rule of law."
There will be 12 new submarines, nine new frigates and a dozen offshore patrol vessels.
As well, there will be seven additional Poseidon maritime patrol aircraft, making a fleet of 15 to survey Australia's seas in conjunction with seven Triton long-range unmanned surveillance aircraft.
Controversially, defence will buy new armed drone aircraft and will upgrade defence surveillance capabilities as a foundation for a future ballistic missile defence system.
Defence funding of $32.1 billion at the last budget will rise to $42.4 billion in 2020/21 in line with the government's promise to lift defence spending to two per cent of gross domestic product.
A total of $29.9 billion more will be spent on defence over the next decade.
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Mr Turnbull said it set out a clear-eyed appraisal of Australia's strategic environment, the threats and oportunities.
The paper outlines a series of factors which will shape Australia's strategic outlook out to 2035, especially the
relationship between China and the US which will remain the pre-eminent global power over the next two decades.
While major conflict between the US and China is unlikely, there are a number of points of friction, including the East China and South China Seas, their airspace and the cyber domain.
In the leadup to the release, Australian officials briefed representatives of the US, UK, Japan, Indonesia and China.
Asked how China responded, Defence Minister Marise Payne said:
"Appropriately."
In Australia, the reaction was generally positive.
Australia Defence Association executive director Neil James was pleasantly surprised.
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"The document is coherent. Just as importantly ... the funding has been thought through in the context of the strategic outcomes you want and the capabilities required. That's pretty much a first in any white paper," he said.
Labor defence spokesman Stephen Conroy said the opposition broadly supported the plan, its strong support of the US alliance and the government's commitment to lifting defence spending to two per cent of GDP.
He said the government has finally acknowledged Labor was correct in deciding Australia needed 12 new submarines, although it had yet to commit to building them in Australia.
South Australian Premier Jay Weatherill said this was an unambiguous win for SA, where much of the new shipbuilding will take place.
"This is a win not only for South Australian workers and their families who rely upon the Defence industry for their jobs, it is also a win for Australia," he said.
