"Human conflict will continue to be violent, dynamic, unpredictable, difficult to control and chaotic," the report says.
It warns the world is rapidly changing around Australia. Allies are facing increasing budget pressures while throughout the rest of the region defence spending is rising.
While its key ally, the United States, will continue to be the world's strongest military power for the next two decades, the rise of China will inevitably influence the way other countries plan their futures.
Beyond changing strategic horizons, social and demographic trends will create new challenges. Key among them are vast shifts of population to cities, creating huge urban jungles along coastlines in the region, eating up productive land, water and other resources. Competition for resources could trigger new conflicts.
Within the megacities, the report warns of potential shifts in power between authorities and new populations of different ethnicities, cultures and values.
"Where problems of access to food, water and services emerge, non-regulated networks of gangs and quasi-state actors may seek to apply their own rules and codes of conduct in competition with the existing rule of law," the report says.
"The emergence of unregulated cities, or zones of disadvantage where traditional rule of law models don't apply, within functional cities, provides a potential haven for organised crime, terrorists and insurgents, from which they can organise and launch operations."
Eventually they are likely to gain access to sophisticated new weapons such as rocket-propelled grenades tipped with thermobaric or chemical warheads. Thermobaric weapons use air to magnify high-temperature explosions.
And despite the billions Australia is spending on state-of-the-art weapons systems, intelligence, communications and cyber warfare, the nation faces the eventual end of its technological superiority in the region.
"Current cyber-defence capabilities have not kept pace with technological change and the army must develop an ability to defend critical networks against cyber attack, while also being prepared to operate in a degraded network environment."
Enter the super-soldier, pushed to far higher levels of resilience and physical and mental robustness to cope with brutal, confusing and complex battles.
The report says physical and cognitive abilities need to be boosted by developments of "exosuits" - powered overalls that increase strength and endurance - or long-lasting performance-enhancing stimulants.
It concedes there are risks, and research is needed for "potentially unintended physical and mental health consequences".
Robots may also expand into roles at present carried out by humans, raising new doctrinal and ethical questions.
