An extra $53 billion will be injected into defence over the next 10 years as the Albanese government seeks to rebuff claims the nation’s military is dangerously unprepared for the age of modern warfare.
The government will argue defence spending will grow to 3 per cent of gross domestic product by 2033 – the level demanded by a raft of military experts – but only by junking the definition traditionally used in Australia to calculate this influential figure.
Even using the new method to calculate defence funding, the figure falls short of the 3.5 per cent of GDP target that Trump’s Secretary of War Pete Hegseth has called for Australia to spend on defence.
The budget boost, which includes an extra $14 billion for defence over the next four years, is a win for Defence Minister Richard Marles and Defence Industry Minister Pat Conroy, who have argued within cabinet that a significant increase is needed for a tumultuous era in which countries are increasingly using force, rather than diplomacy, to resolve disputes.
Many defence experts and the Coalition, however, are likely to argue that the increase still falls short of the funding level needed to ensure Australia can pay for the AUKUS nuclear-powered submarine program without draining the rest of the defence force.
The extra defence spending, which amounts to around a 5 per cent increase over the next four years, comes on top of $50 billion in additional defence funding over a decade announced by the government in 2024.
The government has flagged it will need to cut, cancel and delay some planned defence programs to pay for extra spending on drones and other advanced technologies, though it has not yet revealed its targets.
Defence Minister Richard Marles will tell the National Press Club on Thursday that the government was making “the biggest peacetime increase in defence spending in our nation’s history”.
“International norms that once constrained the use of force and military coercion continue to erode,” Marles will say, according to speech notes.
“More countries are engaged in conflict today than at any time since the end of World War II, and this is occurring across every region of the world.”
Marles will say the new defence strategy is “not a departure in direction, but a strengthening of resolve with an increased focus on self-reliance”.
The government is seeking to tap alternative forms of defence funding, including equity-based financing through government agencies, and private sector investment, Marles will say.
Speaking before the release of the new defence strategy, former defence department boss Dennis Richardson said: “If you maintain all the existing capability that we have and, in addition, have nuclear-powered submarines, you’re going to spend more than 3 per cent of GDP on defence.
“Anyone who argues differently is seeking to pull the wool over people’s eyes.”
Australia spends around 2 per cent of GDP on defence, a figure that was set to rise to 2.33 per cent by 2033 under the funding plan announced two years ago.
The government will claim defence spending will hit 3 per cent of GDP by 2033 by using a North Atlantic Treaty Organisation (NATO) definition that differs from Australia’s traditional calculation by including money spent on military pensions and a broader definition of military infrastructure.
Marles argued last year that Australia was already spending 2.8 per cent of GDP on defence using the NATO definition, reflecting the significant discrepancy between the two methods.
The opposition, which went to the last election promising to raise defence spending to 3 per cent of GDP, is likely to accuse the government of using accounting trickery to claim a major increase in defence spending when it is not dramatically rising as a proportion of GDP.
The funding details were provided to journalists on the condition they not seek comment from third parties.
Speaking ahead of the release of the figures, retired major-general Mick Ryan said he feared the ADF was becoming too focused on naval capabilities such as frigates and submarines as he argued the army and air force should not be marginalised.
“The threat is here now, and we need to be spending big by the end of the decade to help prevent an even more catastrophic situation in our region than we have seen in Ukraine and Iran,” he said.
Ian Langford, a retired senior army officer who served in top roles in the ADF, said: “The government’s rhetoric about Australia facing its most dangerous security circumstance since the Second World War is not being matched by resources.”
Matthew Knott is the foreign affairs and national security correspondent for The Sydney Morning Herald and The Age.Connect via X, Facebook or email.
