Coalition sticks to defence spending pledge but won't say how it'll pay for it

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5 hours ago

The Coalition remains committed to lifting defence spending to 3 per cent of GDP but won't detail where the money will come from, as the shadow finance minister suggested the opposition would be open to considering broader tax reform.
Prime Minister Anthony Albanese is expected to meet with Donald Trump on the sidelines of G7 summit next week, amid pressure from the United States to increase defence spending from the current level of 2.04 per cent to to 3.5.
Trade Minister Don Farrell on Sunday said the government was committed to a "significant uplift in the amount of defence spending".
"We're focused on what Australia needs to do and we'll make our decisions based on what's in our national interest," he told Sky News.
The Coalition went to the election promising to earmark an additional $21 billion for the military between now and 2030, almost double what Labor had pledged.
Appearing on Insiders on Sunday, Shadow Finance Minister James Paterson said the Coalition's target of 3 per cent of GDP in a decade had not changed since the party's devastating election loss last month.
"The exact profiling of that increase is something that we'll determine through the policy process and closer to the next election. We'll be completely up front and transparent about that," he said.
"But yes, we have an objective of reaching the 3 per cent of GDP because we think it is in our national interest."
Senator Paterson said the Coalition had three years to outline where that additional funding would go, but listed some potential areas for investment as recruitment and retention, a munitions stockpile, northern military bases, air and missile defence and drones.
"There is no shortage of good things we could spend on that would increase our ability to defend ourselves and safeguard our sovereignty," he said.
But he would not be drawn on where the money to pay for the increase would come from, saying that work would occur over the coming years.
Senator Paterson did suggest the opposition was open to a discussion about the way superannuation is taxed, despite its rejection of the government's plan to double the tax on super balances above $3 million from 15 to 30 per cent.
"We're happy to contemplate tax reform. We're happy to talk to the government about tax reform. But we are not interested in increasing taxes, because I don't think that that is what the Australian economy needs right now," he said.
"If the government was genuinely serious about a broad-based tax reform process, then we'd be up for that conversation. Now, the government has to take the first steps there."
US Defense Secretary Pete Hegseth asked Defence Minister Richard Marles to increase spending to 3.5 per cent of GDP "as soon as possible" on the sidelines of a dialogue in Singapore this week, according to a statement from the US Department of Defense.
Mr Hegseth had previously made similar requests, but it was the first time the administration nominated an exact figure.
Negotiations with the United States over Mr Trump's 10 per cent tariffs on Australian exports continue, with the subject likely to dominate the anticipated meeting between Mr Albanese and Mr Trump.
Access to Australia's critical minerals has been put forward as a potential bargaining chip as Australia continues to push for an exemption.
The Coalition had previously said they would oppose Labor's plan to acquire stockpiles of critical minerals from commercial projects, to be held in a national reserve and made available to domestic industry and international partners.
But Senator Paterson told Insiders it "might be necessary" for the government to support the mining and processing of critical minerals.
"We're very happy to see what the government is proposing here. I can't commit to it in principle without having seen the details, but we're certainly open to it," Senator Paterson said.
"Any sensible steps that represent an economic opportunity for Australia and an opportunity for us to demonstrate that we are a good alliance partner of the United States is something that we would offer bipartisan support to."
Mr Farrell said Australia had offered the United States "an expanded arrangement in regards to critical minerals" as part of efforts to secure an exemption from the tariffs, which came into force in April.
The trade minister met with his American counterpart, trade representative Jamieson Greer, in Paris last week, where he said he made clear that Australia wanted "all of the tariffs removed, not just some of them".
"The position I put to Jamieson Greer is that the tariffs the United States has imposed on Australia are unjustified."