Lieutenant-General David Morrison acknowledged there were ''concerns on the part of the Indonesian government at the moment, in terms of their relationships with Australia''.

But he said there had been tough periods in the countries' shared history, notably during the near-confrontation of the 1960s and the East Timor crisis of 1999, but that ''the way [they] worked together, through some really difficult periods … augurs well for the future''.

''My sense is that cool heads on both sides, who see the importance of both fulfilling national objectives but also meeting international obligations, will always predominate,'' he told the Lowy Institute in Sydney, in a carefully-phrased response to a question.

General Morrison also admitted being taken aback at the ''surreal'' way in which a YouTube warning he delivered to soldiers last year in the wake of the army's most recent sex scandal went viral, elevating him to the status of feminist hero. During the three-minute clip, he looked down the barrel of the camera and told defence force members to '' get out'' if they were going to ''exploit and demean'' their colleagues or other women.

He told the Lowy Institute that ''it is somewhat surreal to have a 3½-decade career crystallised into such a sharp focus [but] I am actually very proud that our army and the changes we are now undertaking are being seen in such a positive light.''

In a veiled warning about the risks of cutting too much from the defence budget as combat forces withdraw from Afghanistan, General Morrison said that talk of a ''peace dividend'' and a reduction in the need for military readiness was ''hollow''.

He said the army had ''atrophied'' in the three decades after the end of the Vietnam war, leaving it ill-prepared for the East Timor crisis of 1999.

''By the time of the East Timor crisis, which erupted with little warning … we were seriously deficient in a range of vital aspects of land operations and we lacked a coherent force structure,'' he said.

''We had great difficulty deploying, commanding and sustaining a fairly modest Australian force, let alone the multinational coalition we ended up leading.''

This was a ''potentially catastrophic failure'', General Morrison added.

Australia was entering ''one of the most uncertain and challenging eras in its history'', he said.

The army chief spoke soberly on climate change. ''Of course we have military interests in what I think has been called the great challenge of our time,'' he said.

''It's not lost on anybody … that the climatic conditions within the globe are changing and there are serious implications …''

These included challenges for the military, given the number of low-lying islands within the region, he said.