US Secretary of Defence Leon Panetta … “The United States military is rebalancing and brings enhanced capabilities to [the Pacific] region.” Photo: AFP

AUSTRALIA has thrown its support behind a ”rebalancing” of American military might in the Pacific region, which promises to deepen strategic rivalries with China.

Defence Minister Stephen Smith yesterday spoke of the ”positive impact” of the United States on regional security, just hours before the US presented its most detailed plan of how it will bulk up military might into the Pacific region while making budget cuts elsewhere.

Chinese analysts said the US and Australian comments would provide more ammunition to those in China who argued that the US was using its allies to ”contain” China’s rise.

But, they said, the civilian Chinese leadership was unlikely to be drawn into a new verbal spat with the US or Australia as it continues to play down diplomatic incidents – including the arrest of an alleged American spy – in an attempt to smooth the road to a once-a-decade leadership transition later this year.

”By 2020, the navy will reposture its forces from today’s roughly 50-50 split between the Pacific and the Atlantic to about a 60-40 split between those oceans,” US Defence Secretary Leon Panetta told Asian officials at a conference in Singapore yesterday.

”That will include six aircraft carriers in this region, a majority of our cruisers, destroyers, combat ships and submarines,” he said.

”Make no mistake – in a steady, deliberate and sustainable way – the United States military is rebalancing and brings enhanced capabilities to this vital region.”

Mr Smith spoke at the same Shangri-La conference in Singapore, en route to Beijing, making his first visit as Defence Minister.

A new book – The Kingdom and the Quarry: China, Australia, Fear and Greed, by David Uren – has revealed the existence of a secret chapter in Australia’s 2009 Defence White Paper that contemplated war with China.

Mr Smith yesterday dismissed the possibility that American military and economic power would ”somehow be rapidly eclipsed overnight as a result of the new distribution of power to Asia”.

”In Australia’s view, the United States has underwritten stability in the Asia-Pacific for the past half-century and will continue to be the single most important strategic factor in our region for the foreseeable future,” he said.

But the US announcement is one more step towards a militaristic rivalry between the world’s two largest powers.

”The strategic rivalry between Beijing and Washington is becoming more profound,” said Shi Yinhong, professor of international relations at the People’s University of China.

”At least into the next generation we will continue to see strategic rivalry becoming more profound and more widespread.”

Andrew Davies, director of military operations and capabilities at the Australian Strategic Policy Institute, said there was too much economic integration between China and the US to allow a Soviet-style cold war to develop between the two powers.

But, he said, the strategic rivalry was becoming more militaristic.

Beijing and Washington have managed to smooth over a series of diplomatic incidents in recent months.

In recent days it has emerged that the personal assistant to a vice-minister at China’s Ministry of State Security has been detained in China on charges of spying for the US.

Last month the US gave political refuge to the Chinese human rights activist Chen Guangcheng.

In February China’s most famous policeman, Wang Lijun, sought refuge in another US diplomatic mission, precipitating the purge of a Politburo member, Bo Xilai.

EXCLUSIVE

“I expect State Transit to become more efficient” … Gladys Berejiklian, Transport Minister. Photo: Rob Homer

The government bus fleet may be handed over to the private sector.

Government buses could be privatised before the next election as the state government looks to cut hundreds of millions of dollars in subsidies to the State Transit Authority.

The running of the 2250-strong bus fleet and its 5000 employees will be handed over to the private sector, as the O’Farrell government has already done with Sydney Ferries.

The bus union has warned it will fight any move to privatise buses serving Sydney’s most densely populated areas, including the central business district, inner-west, eastern suburbs, lower north shore and the northern beaches.

Public transport advocates fear service levels will fall if State Transit were put out to tender, pointing to a recent botched privatisation in Adelaide, where one in two buses now arrive late or do not show up at all. The government-owned fleet had operated efficiently under a private company but unions, passengers and the state government say the service has deteriorated since it was taken over by several companies, including Transfield, one of the new operators of Sydney Ferries.

In a statement, the NSW Transport Minister, Gladys Berejiklian, said privatisation was ”not currently government policy”. But The Sun-Herald has learnt that on at least three occasions the minister has told leaders of the private industry that State Transit would be put on the block. Her office would not deny this.

The prospect has been used as a carrot for bus companies, which were recently told their exclusive contracts with the government had been thrown open to competitive tender.

Ms Berejiklian told private companies, which run 11 of the 15 metropolitan contract regions in Sydney, they have a chance to ”get their houses in order” before the four government contract regions are put out to tender.

The government’s retreat has begun, with State Transit recently telling 90 drivers on the Liverpool to Parramatta T-way it would not re-tender for that express route in region three, which is otherwise serviced by the private companies Metrolink, Westbus and Busabout. It is understood at least one government contract region could be privatised before the 2015 state election. The Bus and Coach Association declined to comment but sources said it had informed 40-odd members of Ms Berejiklian’s stance.

In a statement, the minister said: ”Private involvement in STA is not currently government policy but I expect State Transit to become more efficient and deliver improved services to customers.”

The minister will not want to intensify hostilities with the Rail, Tram and Bus Union, having recently announced she would split RailCorp in two and sack one in five managers. She is also grappling with the need to build a second harbour crossing, as revealed yesterday by The Sydney Morning Herald, to ease congestion on the CityRail network and allow for trains from the government’s centrepiece transport project, the north-west rail link.

A bus privatisation would free up much-needed cash in the transport budget. State Transit costs government more than $1.5 billion a year to run whereas the private bus sector, which has 55 per cent of the market, costs $1 billion. On a distance basis, the subsidy to State Transit is 8.5¢ per kilometre compared with 5¢ for private operators.

Government bus drivers are paid more and drive less kilometres but the union’s divisional president, Gary Way, said its complex and congested routes made State Transit a special case.

”Unlike some other modes of transport, we are reasonably efficient,” he said. ”Areas that have a government bus service – which are mostly blue-ribbon Liberal electorates – have had a better service and a more regular service. The travelling public appreciate that.”

Passenger advocates said they should be concerned. The spokesman for Action for Public Transport, Allan Miles, said a private operator would want to reduce services such as overnight running or demand higher fares or staged fares.

”These companies want a profit, that’s what they do. Privatisation is not unexpected but it does not bode well for passengers judging on previous experience in Australia and overseas,” he said.