The defence policies of many countries in the world are in disarray. With the end of the Cold War, the United States and its NATO allies, as well as Russia and former members of the Warsaw Pact, are having great difficulties justifying their large defence forces. As a result, defence budgets are being slashed and force structures are being reoriented away from nuclear conflict and major conventional war. In Asia, however, strong economic growth is sustaining the largest increase in defence spending of any area of the world. This is taking place even though most countries in Asia face no palpable threat. Furthermore, few countries in the region have set out in the public domain reasoned arguments for their defence-force acquisitions. As a close ally of the United States and as an important regional power, how does Australia’s defence policy fit into these two divergent trends? Has Australia’s defence policy changed radically since the end of the Cold War? What about Australia’s economic and political engagement with Asia? Has it led to less anxiety in official circles about potential military threats from the north and has this resulted in any changes to the force structure?