Increasing Australia's defence budget requires answering tough questions

Australia Broadcast Center

25-04-2025

We have a sometimes mystifying relationship with ideas about honouring those who serve our country, and with ideas about how we defend it.
Past governments have been happy to spend half a billion dollars renovating the Australian War Memorial while so underfunding the Veterans Affairs Department that it couldn't properly look after veterans in a timely way, as documented by a royal commission.
In the long, benign sleep in which we have been happy to think we didn't have to think much about defence, because #ANZUS, there have been the odd stirrings from slumber amongst the aficionados about what the right defence posture might look like.
For example, should we look to the "Defence of Australia" — a policy stance which focused on our physical north — or did we have to think on a broader scale and commit to being part of a bigger unit racing around the South China Sea (for example) or being part of a global force for good.
Both sides of politics signed up to AUKUS with very little debate, despite the many critics who questioned whether an even closer defence alliance with the United States was a good idea.
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AAP: Darren England
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Along came AUKUS
Most recently, in 2021, along came AUKUS with its appeal of new ties, and new technology, with allies old and new. Both sides of politics signed up to it with very little debate, despite the many critics who questioned whether an even closer defence alliance with the United States was a good idea and also worried about an over-heavy investment in just one form of technology: nuclear submarines.
Now we are in an election campaign where the opposition's biggest immediate financial commitment is to an escalation in our national defence spending.
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two male politicians wearing suits
Peter Dutton has pledged to better prepare Australia for future geo-strategic threats by spending an additional $21 billion between now and 2030.
The Coalition wants us to spend 2.5 per cent of GDP within five years and 3 per cent of GDP on defence within 10 years, compared to about 2 per cent now, which Labor says it will lift to 2.3 per cent over the next 10 years.
What's a good number? Well, strategic analyst Marcus Hellyer says, 3 per cent "has become the new industry standard for countries that are serious about preserving their security and also countries that are interested in demonstrating that they're not just freeloaders on the US".
"A few years ago, the kind of industry standard was 2 per cent and so the NATO countries, for example, were aiming to get to 2 per cent," Hellyer says.
"However, since then, we've seen war in Ukraine. We've seen a very wobbly US in terms of its international commitments, and also a US that is kind of running out of patience with freeloaders, and is demanding that its friends and partners.
"It's telling the Europeans, it's telling its Asian allies that they need to get to 3 per cent. That is now the new benchmark."

Why not increase defence spending?
So, both sides think given everything going on in the world, we need to increase defence spending.
And look, seriously, pick any number you like: 2.3 per cent; 2.4 per cent; 3 per cent or go the whole hog and follow Australia's richest person, Gina Rinehart and say it should actually be 5 per cent.
Why not?
Well, we don't have the money is why not. The conversation about increasing defence spending is taking place in the general la-la land in which discussions about the role of governments and spending takes place these days.
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a male politician wearing a suit speaking at lectern in front of party members
The opposition leader is being cautious with his language as he doesn't want to turn off Chinese-Australian voters, as the Coalition did last election.
That is, if we want to dramatically increase defence spending, we need a major structural change in our budget. More taxes to be blunt.
There also needs to be an updated, coherent and clear-eyed bipartisan view about what our defence strategy is trying to achieve. And, if we are going to spend so much money, what are we actually planning to spend it on?
Already AUKUS is absorbing the increase in defence spending that the current government has announced during its term of office — to the detriment of other defence procurement and priorities.
A navy without ships
Hellyer, long one of our most respected defence analysts, particularly when it comes to the defence budget, says that the national defence strategy released by the Albanese government last year included "a lot of new money over the 10 years: $50 billion is the number they stated".
(Even that commitment doesn't involve spending a lot of money immediately: another sign we are putting off a debate about actually funding all these ambitions.)
"But all of that, except for $1 billion, goes on two capabilities: nuclear powered submarines being delivered under AUKUS and the so-called general purpose frigate program, which, essentially aims at making sure the Royal Australian Navy actually has some ships, because our ship building programs have been so slow that the navy's at risk of becoming a navy without any ships," Hellyer says.
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"So it's a high priority program and an important program, but those two programs absorb all of the new money."
The nuclear-powered submarine (SSN) program, he says, is already "distorting the ADF acquisition plan".
"So already we are spending more on SSNs, and we're still seven, eight, nine years away from having them," Hellyer says.
"But this year, already, we're spending more on SSNs than on the Air Force's entire acquisition budget.
"If you want SSNs, but you also want to be growing the rest of the ADF to have the kinds of capabilities we need to have an effective deterrent, so certainly, I think 3 per cent is the sort of goal we should be heading towards."

What should we spend the money on?
Hellyer, who is head of research at Strategic Analysis Australia and describes himself as an AUKUS "agnostic", says that rather than a shopping list there are "two high-level principles here".
The first is there's a lot of risk around AUKUS: that they don't arrive in time, or we don't get them at all. He asks: what other capabilities do we need? What do we need to hedge those risks?
The second high level principle is: "are we happy to be dependent on the US, and where do we want to have self-reliance? What do we want to be able to do ourselves using Australian industry and Australian supply chains?"
The lesson of Ukraine, he says, is that while we might never be completely self-reliant in fighter planes or nuclear powered submarines, we can deal with making "those smaller, so called consumables of war, in ammunition, in missiles, in drones".
The Coalition's huge new spending policy was lacking a lot of details about what it intended to spend money on, though defence spokesperson Andrew Hastie did emphasise that, beyond procurement, we need to spend more on sustainment (keeping things working) and on personnel.
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Opposition Leader Peter Dutton said this week a Coalition government would spend the extra money on "drone capability, guided weapons — which we invested into, that this government has pulled money out of — munitions and our capability across most platforms, including frigates, and our cyber defences".
(Hellyer says that while it was true the current government had cut back spending on some programs, the Morrison government's wishlist was "just too big for the amount of money that they wanted to spend".)
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a young male politician speaking in front of a blue background
Senior opposition figure Andrew Hastie has warned Australia's long-standing military alliance with the United States faces uncertainty.
Which brings us back to the glaring question in all this big talk on defence: where's the money coming from?
This was where we got some of the most unsatisfactory answers. Hastie said it would come from "growing the economy". In the short term, the only source of funding that Dutton mentioned was repealing Labor's $17 billion tax cuts.
Polls pointing to the Coalition possibly receiving its lowest ever primary vote next week makes the question of what it is proposing for defence, and the poor quality of its announcement, seem a little hypothetical.
But it is still important because it has helped frame the discussion about where defence policy should go, even if Dutton loses next Saturday.
As Hellyer makes clear, there are holes, too, in Labor's spending plans.
There are also holes in Labor's defence spending plans.
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ABC News: David Sciasci
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Culture wars undermine credibility
Defence, national security and law and order are supposed to be Dutton's political strong suits and they have all been out for a gallop this second last week of the election campaign.
None of them landed with, shall we say, great aplomb. And the credibility cost of the sort of culture wars that Dutton has run as opposition leader were all too evident on Anzac Day when Australians saw Dutton decry the despicable disruption of the Dawn Service in Melbourne by a group led by neo-Nazis heckling through the Welcome to Country.
Many Australians may have remembered that it was Dutton and his Coalition who, earlier this year, attacked funding for Welcome to Country ceremonies, which Dutton's waste-reduction spokesperson James Stevens said had become a "multimillion-dollar industry".
Australians also know that the man who would be prime minister walked out on the Apology to the Stolen Generations in 2008 and said he wouldn't be standing in front of the Indigenous flag at media events as prime minister.
"I've said before that Welcome to Country is an important part of official ceremonies, and it should be respected," he said on Friday morning when he condemned the incident.
"I don't agree in our democracy that people can't accept the views of others."
If only some of our leaders could consistently accept the views of others, instead of trying to weaponise them.
Laura Tingle is 7.30's political editor.

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