The Australian Defence Forces (ADF) and the Department of Defence (hereafter referred to as ‘Defence’) are currently operating at an unprecedented level of activity, due primarily to the events of 11 September 2001, the resulting war against terrorism, increased concentration on border protection and unauthorised boat arrivals, and Australia’s continued commitments in East Timor. This chapter outlines Defence’s objectives and direction from the Government, the strategic environment in which Australia operates, Defence's capabilities and operations, and its financial and human resources. Also included are articles on the aftermath of the events of 11 September 2001, and on the Reserve forces and the Cadet scheme.