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Dubbed REDSPICE - Resilience, Effects, Defense, Space, Intelligence, Cyber, Enablers - the program’s acronym is a clumsy dig at China, but the target is clear. “It responds to the deteriorating strategic circumstances in our region, characterized by rapid military expansion, growing coercive behavior and increased cyber attacks,” the ASD said in a statement.

Dubbed REDSPICE - Resilience, Effects, Defense, Space, Intelligence, Cyber, Enablers - the program’s acronym is a clumsy dig at China, but the target is clear. “It responds to the deteriorating strategic circumstances in our region, characterized by rapid military expansion, growing coercive behavior and increased cyber attacks,” the ASD said in a statement. (Chris Ratcliffe/Bloomberg)

With no land borders and one of the world’s longest coastlines, Australia is a particularly challenging place to invade, or defend. But the internet changes that equation by making the nation more vulnerable to threats in cyberspace than on the battlefield. So the government is stepping up, with China clearly at top of mind.

A new $7.5 billion (AU $10 billion) spending package unveiled Tuesday for the Australian Signals Directorate over a decade is a massive increase for the Defense Department’s unit in charge of signals intelligence and cybersecurity. The funds will help the division double in size and triple its offensive capabilities. A further $27.6 billion (AU $38 billion) was outlined to boost the nation’s defense force.

Dubbed REDSPICE - Resilience, Effects, Defense, Space, Intelligence, Cyber, Enablers - the program’s acronym is a clumsy dig at China, but the target is clear. “It responds to the deteriorating strategic circumstances in our region, characterized by rapid military expansion, growing coercive behavior and increased cyber attacks,” the ASD said in a statement.

The announcement, part of the center-right Liberal government’s annual budget, comes less than two months before Prime Minister Scott Morrison must call a federal election and says a lot about the signal he wants to send both to Beijing, and his own electorate. The spending bill as a whole - which includes cuts in fuel taxes and one-off cash payments to families - is seen as a desperate attempt by Morrison to buy voter support amid a slide in popularity. It’ll be largely funded by an increase in tax revenues driven by rising commodity prices.

Clearly, Morrison believes voters care about the threat from China, and wants to appear tough on Beijing. He’ll use that to contrast the center-left Labor Party, which has been criticized for being weak on foreign policy and hewing too closely to the Chinese Communist Party. Russia’s invasion of Ukraine also plays into the government’s national-security posturing, with Treasurer Josh Frydenberg noting in his budget speech that “war rages in Europe.”

Australian companies and organizations have increasingly become targets, mostly from overseas, with Chinese hackers blamed for a ransomware attack on electricity provider CS Energy and a Russian group purportedly behind a breach of logistics provider Toll Group. A single significant attack could cost Australia $22.6 billion (AU $30 billion) and 160,000 jobs, ASD director-general Rachel Noble told parliament last year.

Yet spending on cyber capabilities is also a savvy way for the government to sharpen its defenses without appearing to escalate militarily. In September last year, Australia, the U.K. and the U.S. announced a trilateral security pact - called Aukus - that included a deal to help Canberra procure nuclear-powered submarines.

But China, one of Australia’s biggest export markets, issued a strong rebuke over the move, and said the alliance was “intensifying the arms race.”

Morrison, and his defense minister, Peter Dutton, are not averse to rattling China’s cage. But both nations rely on each other. Australia has the agricultural and natural resources the world’s second-largest economy needs, and China has the cash to buy them. So Canberra is looking for ways to be tough on Beijing without pushing too far.

Boosting cybersecurity, and announcing a huge spending package to back it up, offers that opportunity while responding to a very real need. It also brings Australia closer to the level of spending its larger allies are undertaking to boost their own capabilities. U.S. President Joe Biden has proposed a $2.5 billion budget for the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency next year. That’s in addition to cyber spending undertaken by other agencies including the Pentagon and Federal Bureau of Investigation. Australia’s GDP is approximately one-fifth of the U.S. so its increased allocation stacks up well.

To achieve its goal, the government will recruit heavily. It plans to add 1,900 staff in roles including hackers, language specialists and psychologists. By increasing its focus on offensive skills, Canberra is keen to sharpen its ability to strike back if attacked.

With a $7.5 billion (AU$10 billion) budget in hand, Australia is letting its rivals know that it will not only fight them on the beaches, but on the internet, too.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tim Culpan is a technology columnist for Bloomberg Opinion. Based in Taipei, he writes about Asian and global businesses and trends. He previously covered the beat at Bloomberg News.


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