State on state conflicts are being replaced by hybrid wars and asymmetric conflicts in which there is no clear cut distinction between soldiers and civilians and between organised violence, terror, crime and war. Given the enormous changes in Australia's security environment, it is time to rethink our defence strategy which has four major failings. It is based on a misplaced geographical determinism that ignores the diverse and globalised nature of modern conflict. It has shaped the Australian Defence Force for the wrong wars. It gives insufficient weight to the transnational threats that confront us. And it fails to recognise that modern defence forces must win the peace as well as the war. Australia needs a strategy for the future not the past and a transformed defence force structured for the very different security challenges of the 21st century.