The Albanese government has now come to a key point for defence spending announcements. Fret not — because last week, they’ve been announcing commitments, each one a multi-billion-dollar commitment. Australia is coming under mounting pressure to strengthen its defence capacity. The National Security Strategy and this new initiative is a direct reaction to the increasing geopolitical tensions within the Indo-Pacific area.
Among the most important is a huge $1.7 billion investment in new, lethal underwater drones — or Ghost Sharks, as they’re known. This commitment builds on the federal government’s commitment to raising defence spending overall by $70 billion over the next 10 years. Australia already spends 2 percent of its Gross Domestic Product (GDP) on defense. According to NATO’s calculations, that number skyrockets to roughly 2.8 percent.
Those expectations had previously been reinforced by the United States, which has forcefully pressed Australia to raise its defense spending. They’re calling for a target of 3.5 percent of GDP, which would work out to almost $100 billion annually before long. This increase would need to be funded with an additional $30 billion per year. That total now equals the Commonwealth’s entire budget for aged care.
Coalition’s Position on Defence Spending
The Coalition has twice reaffirmed its commitment to a 3 per cent defence spending target. Federal Shadow Defence Minister Angus Taylor echoed these sentiments when he criticized the lack of investment. He said that it “is n’t even scratching the surface” compared to urgent needs for increased capacity to address major regional threats.
Meanwhile, Richard Marles, Australia’s Deputy Prime Minister and Defence Minister, has refrained from specifying a GDP target for defence spending. This cautious approach appears to stem from a desire to avoid perceptions that the Labor government is yielding to American demands. Marles noted, “people are fixated on the GDP figure and we are not,” suggesting a broader perspective on national security priorities beyond just budgetary targets.
There have even been rumors of a special one-on-one between new Australian Prime Minister Anthony Albanese and former US President Donald Trump. A meeting like this one would help reinforce Australia’s leadership on its defence spending and alignment with U.S. strategic priorities.
Challenges in Regional Security Agreements
At the same time, Australia has been aggressively courting Vanuatu, most recently seeking a $500 million security pact. This FDI deal is intended to give the United States veto powers over Chinese investments in the island nation’s critical infrastructure. This deal has now apparently run into a last-minute roadblock. In response, Australian officials find themselves reconsidering what strategic choices remain to them in the region.
For context, the Henderson precinct—which hosts most of the AUKUS-related shipbuilding—is estimated to run over $25 billion in expenditures over the next 10 years. This new defence industrial initiative is projected to strengthen Australia’s home-grown defence manufacturing talent, but promises greater operating co-ordination with allies.
Russia’s invasion of Ukraine changed the game for transatlantic partnership, unity and resolve. Under Trump’s last administration, they committed to increasing collective defense spending to 5 percent of GDP by 2035 and made sure that core defense and security-related investments are clearly allocated.
Reassurances and Commitment from Leadership
Richard Marles has been busy on the phones with U.S. officials to assure them of Australia’s seriousness about increasing its defence investments. During a recent reception, he met with U.S. Vice President JD Vance and Defense Secretary Peter Hegseth to discuss collaborative efforts in bolstering defence capabilities.
Prime Minister Albanese has emphasized Australia’s historical commitment to its alliances, stating, “Australia has always pulled our weight. We pay our way and we contribute to our alliance each and every day.” This declaration highlights the federal government’s commitment to upholding a strong defence posture, while bringing balance to an increasingly complicated international relations landscape.
