‘Money talks, bullshit walks’ assessment is correct, but let’s avoid arbitrary GDP figures

This transformation, in both funding priorities and corresponding force structure implications, underscores Australia’s enduring strategic commitment to preserving peace, security and stability in the Indo-Pacific and the core pillars of the post-Second World War economic, political and strategic order.

I have long stated that one of the central challenges of Australia’s defence policy, posture and strategy has been defined by a case of “budget driving strategy” as opposed to “strategy driving budget”, which has been dominated by the lingering impact of the Cold War-era Defence of Australia concept of a decade-long “warning time”, “self-reliance” and continental focused doctrine, posture and capability acquisition pathways.

However, in an attempted shift in policy, doctrine and acquisition priorities, both the DSU and FSP outlined a AU$270 billion investment over the next decade, prioritising advanced capabilities such as long-range strike systems, cyber defence, and enhanced maritime security, which would also pave the way for the acquisition of a fleet of conventionally armed, nuclear-powered submarines.

Building on this foundation, the Albanese government’s 2023 Defence Strategic Review (DSR) reaffirmed Australia’s commitment to addressing the rapid deterioration of its strategic environment, driven in large part by the increasing provocations in the Indo-Pacific by the People’s Republic of China.

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While the DSR underscored the critical importance of strengthening alliances, particularly with the United States and partners under the AUKUS agreement, the central priority remained, which is to enhance Australia’s self-reliant defence capabilities through the development of a robust, sustainable and competitive defence industrial base, supporting a “deterrence” focused Australian Defence Force.

The 2024 National Defence Strategy (NDS) and Integrated Investment Program (IIP) further advanced this trajectory through a series of strategic funding “reprioritisations” designed to shift the emphasis and capability focus of the ADF to better meet the government’s focus on a “strategy of denial”, once again playing into the old trope of “budget driving strategy”.

Depending on who one asked, these budgeting “reprioritisations” were met with varying degrees of applause or criticism and a clear sense of there being “winners” and “losers”, which only became more apparent when one took a straw poll across the breadth of Australia’s defence industrial base as they disproportionally bear the brunt of acquisition “reprioritisations”, while the Australian taxpayer was often hit with higher unit costs for less materiel in the hands of the warfighter.

Despite this, Deputy Prime Minister and Defence Minister Richard Marles sought to calm the horses, saying, “The inaugural National Defence Strategy sets out a clear and priority-driven approach to protecting against threats to Australia and our interests. The National Defence Strategy outlines how we are transforming the ADF and equipping it to survive in a much less-certain world.”

“The 2024 Integrated Investment Program is a complete rebuild of the integrated investment programs of the past. While it contains more money, it also required the reprioritisation of AU$22.5 billion over the next four years and AU$72.8 billion over the decade,” the Deputy Prime Minister said at the launch of the 2024 NDS and IIP.

The rhetoric and much of the analysis around the NDS and IIP stressed the continued importance of aligning Australia’s military posture with its strategic objectives, infrastructure upgrades, supply chain resilience and accelerated acquisition of critical technologies, including outlining clear pathways to capability acquisition and better “pull-through” from “concept to capability” to achieve greater operational effectiveness across the ADF.

Central to the ongoing conversation and debate around the future of the Australian Defence Force and “deterrence” focused force posture, doctrine and capability acquisition is the eternal debate about Australia’s defence spending, which has historically fluctuated around the 2 per cent of gross domestic product (GDP), with current projections indicating the nation’s defence spending is to rise to approximately 2.3–2.5 per cent of GDP by 2030.

The dominance of this conversation once again plays into a very real and demonstrable case of “budget driving strategy” as opposed to “strategy driving budget”, which ultimately has a long-term impact on the capability of the ADF, the viability of the nation’s defence industrial base and, by extension, the complexity of the broader economy with detrimental impacts on “whole-of-nation” security.

Bringing us conveniently to the latest in the Institute of Public Affairs (IPA) and Strategic Analysis Australia’s (SAA) Defence of Australia report series, titled The Defence of Australia: A blueprint for the next government - Paper 4: Funding the Defence of Australia which has a central thesis of raising Australia’s proportion of defence spending to 3 per cent of GDP by the end of the next term of government or the 2028–29 time frame.

‘Money talks, bullshit walks’

While this proposed increase to Australia’s defence spending and the surrounding debate is nothing new as a frequent point of debate among Australia’s strategic policy community, it does come at a time of heightened anxiety in capitals across the Western world as they prepare for second Trump administration and very clearly articulated expectations by the incoming US President that allied defence spending must be lifted well beyond the 2 per cent NATO floor.

This has been highlighted recently as Trump’s transition team has hinted at an expectation that NATO member states “will be” required to lift their defence spending to 5 per cent of their respective GDPs, in exchange for better trade terms and continued US financial and materiel support in Ukraine; however, some experts have indicated that Trump “would settle for 3.5 per cent“.

Adding further fuel to this anxiety is the recognition that Australia’s current defence spending sits at approximately the 2 per cent figure (between 1.98 and 2.11 per cent of GDP) today, with the reprioritisations outlined in both the 2024 NDS and IIP expected to hit 2.4 per cent of GDP by 2033–34 or approximately AU$100 billion, an increase of AU$50.3 billion.

By any metric to the uninitiated, that AU$100 billion figure is an impressive figure, however, when one considers the costs associated with the acquisition, operation, maintenance and upgrade through the life of various platforms, for example our initial Block 1 Hunter Class guided missile frigates are tipped to cost in the realm of AU$3.3–7.5 billion (US$2.2–4.9 billion), what is more important to consider is that the initial acquisition only often represents 20 per cent of the total life cycle cost, thus this AU$100 billion figure becomes less impressive.

This figure becomes even less impressive when one accounts for the costs associated with the broader modernisation and acquisition programs currently transforming the Australian Defence Force, programs like the Australian Navy’s acquisition of 200 Tomahawk cruise missiles worth approximately AU$1.3 billion or Army’s total AU$2.6–3.6 billion acquisition of High Mobility Artillery Rocket System capabilities.

Simply put, it all begins to add up, making light work of our “impressive” AU$100 billion budget by the 2033–34 time frame, all before we add the costs associated with the acquisition of our conventionally armed, nuclear powered submarine fleet.

This conveniently brings us to the subheading and central thesis of the joint Institute of Public Affairs and Strategic Analysis Australia’s latest report, summarised as “Money talks, bullshit walks”, in which John Storey, director of law and policy at the Institute of Public Affairs, said, “The price of deterring war is far better than the alternative. However, Australia’s defence budget is not sufficient to rebuild capability and arm the nation to provide a credible and effective deterrent from foreign aggression ... Lifting Australia’s defence budget to 3 per cent of GDP in three years will radically transform our defence preparedness. The ‘3 in 3’ goal is feasible and achievable with political commitment and focus.”

But as anyone who has built a home, undertaken renovations or even been conned by a dodgy mechanic knows, you can spend all the money in the world on a problem, if the solution is broken, the outcome and problem won’t get any better.

And unfortunately, that is where we find ourselves currently, once again defaulting to “budget driving strategy” with disastrous consequences on the capabilities being pursued, the timelines for delivery and the broader capability of both the Australian armed forces and the supporting economic and industrial ecosystem that provides the capacity to stay in the fight beyond the first few hours at worst case and first day at best.

Squeezing every penny requires a realistic assessment

First things first, it is time Australia stopped trying to get an Aston Martin or Ferrari on a Toyota Camry budget, it’s just not going to cut it and it isn’t going to happen, no matter how much you haggle with the car dealer.

While defence is not unique in facing this challenge (virtually all areas of Australian policy making are held hostage to unrealistic budgets, a glaring lack of performance-based contract incentives, poor contracting arrangements and often even worse business cases), given our repeated failures in the defence ecosystem over the last three decades, that is a hill I will vehemently defend and die on.

It is important to recognise that the IPA and SAA do recognise this, with Storey saying, “There’s no point spending more on defence if it is not spent well. Australians need to have confidence that their tax dollars are not being wasted by a broken bureaucracy, but rather are delivering an improved defence force that will protect them far into the 21st century.”

Again, I come back to the idea that Australia is constrained by a model of “budget driving strategy”, and while there has been some element of geopolitical and geostrategic risk assessment go into successive white papers, one has to question the accuracy and legitimacy of any analysis that seems to already have a set of unconfirmed and uncontested presuppositions, like for example, “Australian forces will always operate under the strategic umbrella of American forces”, therefore we require less kinetic capability.

This approach feeds directly into the shift in force posture from a “balanced force” towards a “focused force” as outlined and articulated in the 2023 DSR and then further reinforced in the 2024 NDS and IIP, and again, ultimately feeds into how the Defence budget is spent and the materiel outcomes the Australian warfighter ultimately receives.

On this basis, while an increase in overall spending to 3 per cent of GDP is certainly welcome, we need to get smarter, tighter, less compromising and more discerning with how and what our defence dollars are spent on and in order to do so, we need to start from an uncomfortable, yet potentially realistic presupposition: Australia may have to fight on its own for an undefined and protracted period of time, so we need to be capable of acting accordingly.

This doesn’t mean that our allies, mainly the United States, won’t be involved in the same potential conflict, but rather that the bulk of its capabilities may very well (and very realistically) be tied up by a host of other contingencies that require a great prioritisation and focusing of US tactical and strategic combat power that detracts from Australia’s own priorities and areas of interest.

Recognising this, it becomes clear that the 3 per cent figure is a rather arbitrary figure; that being said, both the IPA and SAA recognise that it shouldn’t be the “hard and fast” figure that we accept as the new normal, stating, “just as 2 per cent is not the right number for all time, neither is 3 per cent”, one can’t help but feel that the figure is the “new floor” rather than an ambitious ceiling.

This combination of factors means that for every piece of capability delivered to the Australian warfighter, it needs to be the most comprehensively capable, lethal and survivable platform available. That means no more accepting the “under gunning” multi-billion dollar warships. It means no more brittle force structures that are top heavy with too many chiefs and not enough Indians. It means no more “like-for-like” platform replacements (think 72 F-35As for 72 F/A-18 Hornets) because that is how it has always been done.

Rather, it means acquiring what we, as a nation, need in order to be independently capable of defending our own interests, at least for an undetermined period of time without the support of our “great and powerful friend”, or simply put, you can’t buy an Aston Martin for the price of a Toyota Camry.

Equally important is the need to hold the institutions and the people responsible for the repeated and well-documented abject failures, including the sclerotic culture of apathy, bureaucratic inertia and passing the buck that has metastasised around Defence to account and to excise the problem entirely, or we’re just going to continue to set money on fire for suboptimal results.

Now while I understand that this is a step change in the way the bureaucracy, the political class and the policy community think about the nation and its strategic role, it is a necessary part of our maturation as a democracy and a critical part of ensuring that government’s most sacrosanct responsibility, that of national security, is done effectively and efficiently.

This is essential if the government is committed to its vision for the nation’s defence capabilities, which is buried but well-articulated in the 2023 DSR, which states: “Australia does not have effective defence capabilities relative to higher threat levels. In the present strategic circumstances, this can only be achieved by Australia working with the United States and other key partners in the maintenance of a favourable regional environment. Australia also needs to develop the capability to unilaterally deter any state from offensive military action against Australian forces or territory.”

Final thoughts

Importantly achieving this objective won’t come cheap, particularly if we are realistic about what we actually require. Equally, the process excising the culture, processes and, dare I say it, personnel responsible for the repeated failures of defence capability development and acquisition over the last three decades (at least) while disruptive, also won’t come cheap, but I promise you, it will ultimately be worth it for the men and women we send into harm’s way.

Given the political transition underway in the United States and the well-documented expectation of the incoming Trump administration that its partners will do more to carry their own “security” water as it were, this is a situation that will need to be addressed, sooner rather than later in Australia, or perhaps our “great and powerful friend” may become far more discerning as to where it deploys its own limited economic, political and strategic capital.

Yet for all the ongoing debate and 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.

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 a state of managed decline, deferring to others to do our heavy lifting and dirty work.

If Australians – both citizens and leaders – fail to confront the illusion of the “End of History” and remain wrapped in the false comfort it provides, the nation risks facing a harsh new reality. In such a world, Australia would no longer be the master of its destiny, forced instead to navigate an increasingly uncertain and perilous global landscape.

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..