Australia May Need To Spend More To Realize Its National Security Goals

So far, Australia has made significant progress in revamping its military for a strategy of denial in the Indo-Pacific. But, as Defense Secretary Pete Hegseth recently indicated, more may be needed—at least if Australia is to build a military capable of meeting its national defense goals.

According to its recently released Portfolio Budget Statements, this year Australia will reach a nominal increase of 4.2% in total defense expenditure from fiscal year 2025.

In the statements, Australia says it will spend a record AU $55.7 billion (USD $36.8 billion) which equates to 2.02% of their annual gross domestic product, up 0.12 percentage points from 2025’s 1.9% total.

The nation’s defense strategy, released in April 2024, highlights a significant increase in spending across the board, setting ambitious Department of Defense restructuring goals. However, most of the projected budget increases will not take effect until 2027-2028, when planned purchases of U.S. nuclear submarines will start to be reflected in the Australian defense budget. 

Recently, Australia has spent more on defense procurement than it has in a long time—but it’s unclear whether the total amount being spent is enough to meet the needs of Australia’s far-sighted and ambitious national defense strategy. Australia’s increased expenditures are welcomed, but 2.02% will likely not be enough to sustain the current and future needs of Australian national security.

Many (if not most) Australian national security experts agree.

The Australian Strategic Policy Institute mentions in its budget brief, “The Cost of Defence,” that “[an] issue is whether the government is too focused on future equipment acquisitions, rather than the preparedness and readiness of the current force.”

The defense budget reflects a recognition of threats from Australia’s neighboring nations in the Indo-Pacific—but most major acquisitions will not arrive until at least the 2030s, if not later.

The Chinese navy’s recent incursion into the Tasman Sea, where it conducted live-fire drills before circumnavigating Australia, clearly illustrates the immediate need for Australian defense.

Despite its present delay in realizing defense procurement, Australia remains a top 20 defense spender, and it’s one of America’s most committed allies.

Australia’s rhetoric is already centered around the current expenditure being the “biggest commitment to increasing defense funding over the forward estimates in decades,” and the Australian government may even decide to accelerate defense spending to match strategy needs.

During the 2025 ASPI Defense Conference, Australia’s minister for defense industry stated that “strategy without resources is just creative writing,” highlighting the 28 projects currently running years late.

That’s just one example of rhetoric that’s misaligned with allocation.

While its increase in spending is necessary and beneficial, Australia should consider increasing their defense expenditure to an eventual 3.5% of total GDP, in line with NATO’s recent agreement. That’s a clear way to bring allocation back into line with rhetoric.

While adding nuclear-powered Virginia-class submarines to the Australian fleet will undoubtedly increase Australian military power projection, increasing defense funding overall would alleviate some of Australian defense experts’ concerns about the submarines taking up such a large part of the projected budget—allowing Australia to invest more in airpower and other priorities.

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