2%, 2.5% or 3% and the question of how much is enough?

Walking the floor of Land Forces last week and talking to a range of people, I was met by two distinct groups with wildly different views on the core question of our time: Is Defence spending enough and how much is enough?

The first was the group that said to me some variation of “Stop bashing the Defence budget”, on the basis that the 2023 Defence Strategic Review, 2024 National Defence Strategy and Integrated Investment Program had set out a clearly funded road map for the Australian Defence Force to recapitalise and reprioritise in the face of great power tensions.

On the flip side of this first group was those who repeatedly told me, “It is pretty simple, if you’re not in nuclear-powered submarines, either of the frigate programs of guided weapons and explosive ordnance, there really is no money for you”.

Bringing me back to a multitude of conversations I have had over the past 12–18 months and arguably even further back to my most recent time in Canberra, but one that continues to cause consternation around Defence spending and the debate around is just how much is enough?

This question often starts at the 2 per cent “floor” in defence spending as established by NATO membership (not that many NATO members have historically met this figure) through to seemingly arbitrary figures of 2.5, 3 or even 3.5 per cent of Australia’s gross domestic product needing to be spent on our defence capability.

Now yes, there has been extensive analysis and conversation framed around this exact question, particularly since the 2016 Defence White Paper and the follow-on 2020 Defence Strategic Update and 2020 Force Structure Plan, much of it spearheaded by the likes of the indefatigable Marcus Hellyer, with specific emphasis on just how much of the Defence spending is being consumed by our future fleet of nuclear-powered submarines.

It also brought me back to conversations I have had with former minister for defence and former Australian ambassador to the United States Kim Beazley and analysis provided by him, where he highlights that in the dying days of the Cold War and in the early days of implementing the Defence of Australia policy that Australia enjoyed Defence spending in the realm of 3 per cent of GDP.

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All of this got me thinking and posing the question to myself: Just how much is enough?

Where do we currently stand?

One thing I am not going to do is throw out an arbitrary figure, particularly when we account for the fact that as it stands, Australia’s Defence spending is expected to rise from its approximately 2 per cent figure (between 1.98 and 2.11 per cent of GDP) today to 2.4 per cent of GDP by 2033–34 or approximately AU$100 billion, an increase of AU$50.3 billion as outlined by Deputy Prime Minister and Defence Minister Richard Marles during the launch of the 2024 National Defence Strategy and Integrated Investment Program.

The Deputy Prime Minister said, “This financial year spending in Defence will be $53 billion. These increases will see annual Defence spending almost double over the next 10 years to $100 billion in the financial year 2033–34.

“It will see Defence spending as a proportion of gross domestic product projected to increase to around 2.4 per cent by 2033–34. Prior to the government commissioning the Defence Strategic Review in 2022, the previous trajectory of the Defence budget over the same period was to plateau at around 2.1 per cent of GDP.”

Yes, you read that correctly. Australia’s Defence spending is expected to hit AU$100 billion by 2033–34, a truly astronomical figure for the nation, but still only a fraction when compared to programs like the National Disability Insurance Scheme (NDIS) which is expected to hit (at least) AU$200 billion over the next four-year forward estimates period.

So just let that sink in.

But the figures quoted by the Deputy Prime Minister and Defence Minister fails to account for the quoted figures for Australia’s future nuclear-powered submarine fleet, which Marles explained, saying, “Front and centre is a $53–63 billion commitment over the next 10 years to acquire a nuclear‑powered submarine capability under the banner of AUKUS.”

Just for the record, at the lowest end, this figure accounts for 53 per cent of the quoted AU$100 billion figure and 63 per cent of the AU$100 billion figure at the top end, respectively.

Now yes, I know that figure won’t come out of the AU$100 billion figure as a block, but it is still a sizeable portion of Australia’s future Defence spending at a time when the challenges posed by increased great power competition will be really hitting their stride, particularly in the Indo-Pacific.

What constitutes ‘transformational spending’?

Both sides of Australia’s political debate have been quick to point out that their respective investments in defence capability have constituted “transformational” spending for the nation’s defence capability.

And for the most part, both statements are accurate, with any new investment in defence capability inherently being transformational by its nature, particularly as the Australian Defence Force, like many militaries across the Western World, transitions towards being an information-driven, “smart” military where the flow of information, speed to effect and decision making is as important as the kinetic capabilities sent down range.

This is exemplified by the Defence Strategic Review’s emphasis on transitioning the Australian Defence Force into an “integrated, focused force” in a major departure from the policy of a “balanced force” outlined in the 1987 Defence White Paper and its emphasis on the “Defence of Australia”, however, in an era of increased multipolarity and great power competition, is what has been proposed truly “transformational”?

Well, to summarise former defence minister and Australian ambassador to the United States Kim Beazley’s statement: no, probably not.

Indeed, he stated as much, saying in October 2022, “If our Defence spending were to receive around the US figure of 3.5 per cent, it would be transformative. It is unlikely to happen, but some movement towards it is essential. If we were at our Defence spending level achieved in the 1980s – 2.3 per cent of GDP – that would amount to $4 billion extra a year.”

Going further, Beazley stated, “Remember that we federated in 1901 to defend ourselves. Defence’s current share of 5.5–6 per cent of today’s federal budget doesn’t cut it.”

Final thoughts

Despite the rhetoric, Australians seem reluctant at best or, indeed, even oblivious at worst that the world is increasingly becoming “multipolar” and our own home, the Indo-Pacific, in particular, is fast becoming the most hotly contested region in the world.

Declining economic opportunity, coupled with the rapidly deteriorating global and regional balance of power and the increased politicisation of every aspect of contemporary life, only serves to exacerbate the very reality of disconnection, apathy, and helplessness felt by many Australians.

This attitude is only serving to be compounded and creates a growing sentiment that we are speeding towards a predestined outcome, thus disempowering the Australian people and, to a lesser extent, policymakers as we futilely confront seemingly insurmountable challenges with little-to-no benefit and at a high-risk/reward calculation.

Taking into account the costs and implications, it is therefore easy to understand why so many Australians, both in the general public and within our decision-making circles, seem to have checked out and are quite happy to allow the nation to continue to limp along in mediocrity because, well, it is easier than having lofty ambitions.

If both Australian policymakers and the Australian public don’t snap out of the comforting security blanket that is the belief in the “End of History”, the nation will continue to rapidly face an uncomfortable and increasingly dangerous new reality, where we truly are no longer the masters of our own destiny.

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it..