In a move to ease tensions with the Trump administration, Australian Prime Minister Anthony Albanese has hinted at a significant increase in defence spending, potentially exceeding $40 billion annually.
During an appearance on the Today show, Albanese stated that while his government has already committed to a $10 billion short-term defence spending boost, he would not rule out further investments in the Australian Defence Force (ADF).
Background
The proposed defence spending hike comes amid growing concerns over China’s rapid military build-up in the Indo-Pacific region.
The US has been urging its allies, including Australia, to increase their defence budgets to counter the perceived threat.
In June, US President Donald Trump successfully persuaded NATO members to invest 5% of their GDP in defence and security.
The Trump administration is now pushing for similar commitments from its Indo-Pacific allies.
Official Statements
When quizzed about his government’s defence budget, Albanese emphasized the need for Australia to provide its armed forces with the necessary assets and capabilities.
“We’ll continue to provide whatever investment is required to make sure that we lift our capability and we lift our relationships as well,” he said.
US Defence Secretary Pete Hegseth has called on Australia to set a defence spending target of 3.5% of GDP, equivalent to around $97 billion annually.
This would require the Australian government to find an additional $40 billion, potentially straining other government spending programmes.
Implications
If implemented, the defence spending boost would significantly impact Australia’s federal budget.
The country’s defence spending is currently projected to rise from 2.02% of GDP to 2.33% by 2033-2034.
The move is also likely to influence Australia’s relationships with its regional allies and the US, as the country seeks to play a more significant role in maintaining peace and stability in the Indo-Pacific region.