On a Earth supposedly at peace with itself, a armed surface Navy would service what purpose?
My take was that Malcolm was referring to a Royal Navy composed of starships.
The United States "Second Navy" would like to say 'Hi!"
While many of it's "homeland security missions" might be curtailed - defensee readiness, maritime law enforcement (tho enforcement of safety and environmental laws could still very much be a thing), migrant interdiction, PWC security and drug interdiction) - many of their "non-homeland security missions" would seem to still be needed - ice operations, fisheries resource management (debatable), marine environmental protection & safety, aids to navigation, and search and rescue - even into the 24th Century.
However, while ENT more or less confirms that the Royal Navy continues to exist into the 22nd Century in something resembling its traditional role -
ARCHER: I understand you came from a long line of Royal Navy men. Your father, your grandfather. Why pick Starfleet? Why not continue the family tradition?
REED: God knows I tried.
ARCHER: What happened?
REED: I'll need a circuit probe.
ARCHER: So, what happened?
REED: (working on the power cell) I was raised on the water. I knew how to handle a boat before I could ride a bicycle. Studied all the great naval battles. I don't know. I suppose I thought I'd just grow out of it.
ARCHER: Grow out of what?
REED: Aquaphobia.
ARCHER: You're afraid of the water?
REED: More precisely, afraid of drowning.
ARCHER: So instead of a life on the sea you chose a life in the vacuum of space?
- The existence of HMS New Zealand (DY-732) and HMS Lord Nelson (DY-500-B) as referenced in Up the Long Ladder (TNG) suggests that the RN (probably via a merger between the Fleet Air Arm and the RAF) also operated spaceships/starships pre-UFP.