Major General Lewis, who retired from the public service in 2019 after roles leading ASIO and the Defence Department, also said Australia must be careful not to compromise its interests in managing its relationship with China.

He spoke to The Canberra Times upon his appointment to an academic role at the Australian National University's National Security College, one of Australia's main schools for national security officials.

The former diplomat, ASIO director-general, defence force special operations commander and Defence Department secretary on Tuesday said Australia's strategic outlook was more uncertain than at any time in his working life.

Australia had the advantages of a sound economic base, natural resources, a modern defence capability and an educated population, he said. However the former ambassador to Belgium, Luxembourg, the European Union and NATO said Australia also had a weakness in its approach to its strategic environment.

"One of the things I think has been underdone for many, many years in Australia is our diplomatic heft, our capacity to cover the field of diplomacy. This is not just a partisan comment, this goes across a succession of Australian governments, that we have been underdone," he said.

"Having been in the Defence Department for many years, I came to realise as I became a diplomat that diplomacy had been underdone and we needed to lift our game.

"I think that has probably become even more acute since I left government, because the need for very clever and innovative diplomacy is particularly necessary for a middle power.

"You need to tread very confidently but cautiously. It sounds a bit contradictory but you need to be both confident and cautious as you move forward and I think diplomacy could do with a bit of a shot in the arm."

Major General Lewis retired in 2019 as ASIO director-general after a 47-year career in public service including in the military. He warned then that foreign interference against Australia was growing and, along with espionage, was a potential existential threat to the nation.

The former senior official said on Tuesday in the last six years, the rise of foreign espionage and interference, combined with shifting power balances in the Indo-Pacific region, had changed Australia's national security focus after years responding to the threat of terrorism.

He said Australia had to pursue its national interests, by identifying and then protecting them.

However it was yet to fully develop an understanding of its national interest, Major General Lewis said.

"I don't think we have completely distilled our national interest, and I think there is more work to be done to sharpen the pencil around that, because otherwise you start wasting time and effort on things that aren't important, and missing things that are," he said.

"Our national interest needs to be very carefully developed, there needs to be of course collaborative development of that. You can't leave large slabs of the society out, it needs to be an inclusive process.

"It's not to say it has not been worked on, of course we've been working on our national interest for many, many years, but it is a piece of work I think requires further effort."

Major General Lewis said Australia had to carefully manage its relationship with China, as the nation's major trading partner and a country with legitimate interests as a global power.

"It's been very difficult, particularly as China has shown an increasingly propensity to use economic levers by way of punishment," he said.

"I'm not sure that China has done itself many favours with some of its behaviour, and it's not only in the economic area, of course. The South China Sea is the obvious example, more recently of course in Hong Kong where China has drawn attention to itself.

"We do however at the one time need to be very careful about our own interests and make sure we're not compromising our own interests and a lot of this hinges around values."

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Major General Lewis, who played a role in establishing the National Security College in 2009, will join it as a professor of practice and said the institution's work was now a significant part of Australia's national security capability.

The National Security College has also appointed former Department of Industry, Innovation and Science secretary Heather Smith as a professor. Dr Smith, who served in senior intelligence and foreign policy roles in the public service, said Australia's capacity to project power and influence were heavily impacted "by the interaction of domestic economic success and far-sighted international engagement".

"If either is given too little attention, we run the risk of confronting emerging challenges for which we are either not prepared or for which we lack the capability to respond," she said.

"This period of great uncertainty could unfold in many ways. Perhaps the best we can hope for is an era of competitive coexistence."

Major General Lewis' warnings about Australia's diplomacy heft follow commentary including from Liberal MP and former diplomat Dave Sharma calling for a larger diplomatic budget, and warnings that under-resourcing was undermining the nation's influence overseas.