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Donald Trump’s choice to be under-secretary of defence for policy at the Pentagon, Elbridge Colby, has put Australia’s policymakers on notice, warning that this new administration expects a lot more from its partners, with 3 per cent of GDP for defence spending now the new floor.
For much of its history, Australia’s strategic relationship with the Indo-Pacific has been shaped by two distinct – yet often competing – approaches.
The first revolves around relying on a strategic benefactor – a “great and powerful mate” – to ensure security and influence. In earlier times, this role was filled by the British Empire, whose dominance in global and maritime affairs provided Australia with a sense of security as a loyal outpost of the Crown.
After the Second World War and the subsequent decline of British imperial power, the United States stepped into that role, cementing its status as Australia’s primary ally under the ANZUS Treaty of 1951 and through shared Cold War commitments.
The second approach recognises the inherent vulnerability of being a relatively small power in a vast, geopolitically dynamic region. This has long compelled Australia to punch above its weight, taking on the role of a “loyal deputy” within the prevailing global and regional order.
From the Boer War to the World Wars, the Korean and Vietnam Wars, and more recent conflicts in the Middle East, Australia has shown its commitment to its allies’ demands – often paying the price in both blood and treasure.
Throughout the 20th and 21st centuries, this loyalty has been reflected in robust defence spending, ensuring Australia can meet its alliance obligations while safeguarding its interests. Governments across the political spectrum have aimed to maintain defence expenditure at or near 2 per cent of gross domestic product (GDP), a policy that has grown in importance as the Indo-Pacific has emerged as a key arena of global power competition.
Today, the Indo-Pacific’s strategic landscape is being reshaped by the rise of the People’s Republic of China, whose economic and military ambitions have altered regional power balances, and by the re-emergence of Russia as a global player. These shifts are accompanied by the growing influence of emerging powers like India, Indonesia and others – each pursuing its own designs for the region.
Meanwhile, the American-led global order is also under mounting pressure from asymmetric threats posed by non-state actors, such as the Iranian-backed Houthi movement in Yemen, which disrupts vital international trade routes.
Amid these challenges, the United States – long seen as the linchpin of global stability – finds itself increasingly stretched. Its allies, Australia included, are being urged to shoulder more responsibility. This call was particularly strong during Donald Trump’s first term (2016–20), when he stressed the need for allies to boost their defence budgets and take on a greater share of the burden.
Now, a few months into his second term, firebrand President Donald Trump has doubled down on his expectation that America’s global partners and allies increase their defence spending, with under-secretary of defence for policy nominee Elbridge Colby calling on American allies, including Australia, to rapidly and significantly expand their own defence spending.
Highlighting this is Matthew Knott for The Sydney Morning Herald in a piece titled Trump admin to Australia: spending $56 billion on defence isn’t enough by half, in which Knott unpacks our new normal.
Boost the budget
As it stands, Australia’s defence budget hovers around the 2 per cent of GDP zone, the long-recognised NATO benchmark, which in dollar terms works out to approximately AU$56 billion per year.
Knott highlighted the expectation from the US administration that its allies, including Australia, begin to raise their defence spending as the world continues to devolve into an increasingly competitive and volatile environment, driven by the emergence and re-emergence of revisionist powers hostile to the post-Second World War economic, political and strategic order.
In Australia’s context, this has only become more prominent in the Australian consciousness following Beijing’s naval expedition to circumnavigate Australia, highlighting the nation’s lack of preparedness and seeming appalling lack of defence capability.
Knott stated, “With national security set to feature prominently in the upcoming federal election campaign, Defence Minister Richard Marles defended the government’s plan to pump an extra AU$50 billion in defence over the next decade while the Coalition vowed to outspend Labor when it announces its costings...
“The Australian Defence Force announced on Wednesday morning that the three Chinese ships had passed Perth, tracking past Australia’s largest naval base at Garden Island, and were coming close to completing a circumnavigation of the continent.”
Bringing us to the comments made by Elbridge Colby at his Senate confirmation hearing in which he describes Australia as a “core US ally”, that “has the right strategic approach as reflected in its strategic documents”, nevertheless, that doesn’t protect us from the need to increase our defence spending.
“The main concern the United States should press with Australia, consistent with the President’s approach, is higher defence spending. Australia is currently well below the 3 per cent level advocated for NATO, by NATO Secretary General [Mark] Rutte, and Canberra faces a far more powerful challenge in China,” Colby told the Senate confirmation committee.
This push has, as Knott confirmed, been reinforced by a number of Australian experts, “including former Australian Defence Force chief Angus Houston, former Defence Department boss Dennis Richardson and former Home Affairs Department boss Mike Pezzullo”, all of whom have called for Australia to increase defence spending to 3 per cent of GDP.
Knott stated, “Marcus Hellyer, a leading defence economist, estimated defence spending would rise from the current $56 billion annually to a nominal AU$130 billion a year in a decade, if funding increased to 3 per cent of GDP. Defence spending is projected to rise from 2.02 per cent of GDP this year to 2.33 per cent by 2033–34 under the government’s projections.”
While there remains some conjecture about how much of the funding promised by the current government would be matched or exceeded by the Coalition, should they return to government, given the nation’s current dire economic and financial outlook.
Adding further complexity to these challenges is the recent announcement by Chinese President Xi Jinping that the world’s rising superpower is expected to increase their own defence spending by 7.2 per cent, in spite of stagnant economic growth.
This will see Beijing’s reported defence spending come in at US$245.65 billion (AU$387.63 billion), with expectation that the “real” budget could actually be as much as 45 per cent higher than that which is reported.
Final thoughts
First, Australia must abandon the unrealistic expectation of achieving world-class performance – like that of an Aston Martin or Ferrari – on a Toyota Camry budget. No amount of negotiation or crafty haggling will make this feasible.
Although defence isn’t alone in facing such challenges – with almost every area of Australian policymaking hampered by unrealistic budgets, a lack of performance-based incentives, poor contracting practices and even weaker business cases – the defence sector’s repeated shortcomings over the past 30 years make this a cause I will fiercely champion.
Realistically, meeting our true requirements will come at a high cost. Similarly, overhauling the entrenched culture, processes, and, frankly, the people responsible for decades of failed defence capability development and procurement will be both disruptive and expensive. However, this transformation is vital for the safety and effectiveness of the men and women we send into harm’s way.
In light of the ongoing political transition in the United States and the well-known expectation from the incoming Trump administration that its allies should shoulder more of their own security responsibilities, Australia must address these issues sooner rather than later. Otherwise, our so-called “great and powerful friend” may soon become far more selective about where it commits its limited economic, political and strategic resources.
Despite the constant debate, many Australians seem either reluctant or completely unaware that the world is shifting towards a multipolar order – and that the Indo-Pacific region, our own backyard, is rapidly emerging as one of the most contested areas on the globe.
This prevailing attitude only reinforces a sense that we are hurtling towards a predetermined outcome, leaving both the public and policymakers feeling disempowered as we grapple with monumental challenges that offer little benefit relative to their high risks.
Given these costs and implications, it’s understandable why so many Australians – both the general public and decision-makers – appear disengaged, willing to let the nation continue limping along in a state of managed decline while relying on others to shoulder our burdens.
If both citizens and leaders fail to confront the comforting illusion of an “End of History” and instead remain cocooned in its false security, Australia risks facing a harsh new reality. In that scenario, we would no longer be masters of our own 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
