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The federal opposition has hinted at a marked increase in the nation’s defence spending, aiming to bring it up to 2.5 per cent of GDP by 2029, with just one catch, it all hinges on the budget position.
In recent years, Australia’s defence spending has been a focal point of political debate, reflecting the nation’s response to evolving global security dynamics. Under the Gillard government (2010–13), defence expenditure was reduced to 1.6 per cent of gross domestic product (GDP) – the lowest since the 1930s – amid efforts to achieve a federal budget surplus.
The subsequent Abbott and Turnbull governments (2013–18) sought to reverse this trend, committing to increase defence spending to 2 per cent of GDP by 2020. This commitment was driven by concerns over regional security and the need to modernise Australia’s military capabilities.
Meanwhile, the Morrison government (2018–22) maintained this trajectory, emphasising the importance of a robust defence posture in light of strategic challenges in the Indo-Pacific region.
In 2021, the AUKUS trilateral security partnership was established with the United Kingdom and the United States, marking a significant shift in Australia’s defence strategy. A central component of this partnership is the acquisition of conventionally armed, nuclear-powered submarines, aimed at enhancing the Royal Australian Navy’s capabilities and blowing traditional defence budget quantums out of the water.
The Albanese government, elected in 2022, commissioned the Defence Strategic Review, released in April 2023. The review highlighted worsening security challenges and recommended restructuring the Australian Defence Force (ADF) to focus on protecting the nation from military threats. This included transitioning from a “balanced force” to a “focused force” and expanding long-range strike capabilities. The government accepted most of these recommendations, underscoring a commitment to adapt to the changing security environment.
Despite these initiatives, debates persist regarding the adequacy of current defence spending. Critics argue that the planned increase to 2.34 per cent of GDP by 2034 is insufficient, especially when compared to allies like the United States, which allocates 3.4 per cent of its GDP to defence. Recent geopolitical developments, such as Chinese naval activities near Australian waters, have intensified calls for increased investment to uphold commitments under alliances like ANZUS.
As we head towards an election campaign that will be tinged with khaki, the state, scale and scope of Australia’s defence spending will play an important part in both sides’ campaigns, as they seek to respond to the emerging challenges presented by a rising China and a United States eager to see its allies and partners step up to the plate and take more responsibility over their own spending.
Now, the federal opposition, led by former defence minister Peter Dutton has hinted at a rapid and sizeable increase in the nation’s defence spending, aiming to bring it up from the (about) 2 per cent (or AU$56 billion) mark to 2.5 per cent by 2029, with an important caveat, telling Neil Mitchell, “It depends on how much money is in the bank and the state of the books, as we find them after the election.”
Bringing into question what we can expect when the Treasurer, Dr Jim Chalmers, hands down the federal budget next week, while setting the stage for an election that will no doubt see defence and national security figure prominently even amid the ongoing cost-of-living crisis.
Seeking to provide more clarity, without promising too much, opposition defence spokesman Andrew Hastie said, “A Dutton Coalition government will increase Defence spending above its current levels to meet the challenging strategic circumstances Australia faces. We will have more to say on our national security commitments in due course.”
In contrast, the Albanese government’s current funding plans are expected to see the nation’s defence spending to hit between 2.3–2.4 per cent of GDP by the end of the decade.
Something Hastie launched a scathing attack on the government for, saying, “Labor has already walked away from their target of increasing Defence spending to 2.4 per cent of GDP with Pat Conroy confirming their ambition is now to ‘get Defence over 2.3 per cent’. Labor is lowering the bar to adjust for their failures in Defence.”
"This weak Albanese government has made $80 billion in cuts and delays to Defence, which is sapping capability,” Hastie added.
If Australia were to reach 2.5 per cent of GDP by 2030, with the International Monetary Fund predicting Australia’s economy to be worth approximately AU$2.18 trillion (US$1.38 trillion), this would see a figure of approximately AU$54.5 billion (in today’s dollars) on the Australian military, but it is still a far cry short of the expectations of the new Trump administration’s “new” floor of 3 per cent.
Meanwhile, if we were to take AusTrade’s predicted size of the Australian economy, at AU$2.91 trillion (US$1.85 trillion) by 2030, we would see approximately AU$72.75 billion (in today’s dollars) spent on the Australian Defence Force.
Either way, this coming federal election is shaping up to be a critical one for the nation and its security as we respond to the mounting challenges posed by the new world order.
