By a Political Editor September 14, 2025
CANBERRA – The Albanese government has committed to injecting an additional $70 billion into Australia’s defence budget over the next decade, a monumental fiscal decision designed to fund the sweeping acquisition of nuclear-powered submarines, long-range missiles, and a larger naval fleet as recommended by the Defence Strategic Review.
- The government has confirmed it will increase defence spending to well over 2.5% of GDP by the early 2030s, allocating the new funding to meet the urgent capability demands of a rapidly deteriorating strategic environment.
- Defence Minister Richard Marles has described the spending as a “historic and necessary investment,” arguing the cost of failing to act would be far greater for the nation’s security and sovereignty.
- The Opposition and budget analysts are questioning how the massive expenditure will be funded, warning it will require deep cuts to other government services or future tax hikes amid persistent cost-of-living pressures.
The long-term funding commitment, confirmed by senior ministers on Sunday, provides the financial muscle for the government’s ambitious overhaul of the Australian Defence Force. It is the clearest signal yet of a fundamental shift in Australia’s strategic posture, moving beyond the budget constraints of recent decades to meet what the government calls “the most complex strategic landscape since the Second World War.”
The additional funds are earmarked to cover the multi-billion dollar price tags of the AUKUS submarine program, an expanded surface combatant fleet—kickstarted by the $12 billion Henderson shipyard investment—and the acquisition of long-range strike capabilities that can hold adversaries at risk from a distance.
“We have made the decision that as a government, and as a nation, we cannot afford to do otherwise,” Defence Minister Richard Marles said in a statement. “This is not a choice, but a necessity. This funding ensures the ADF will have the resources it needs to defend Australia and our national interests in the decades to come. It is the price of peace and stability in our region.”
The increase will push Australia’s defence budget from its current level of approximately 2.1% of GDP to a forecast of more than 2.5% by 2034, a level not seen in decades.
However, the announcement was made without a detailed plan for how the massive increase will be paid for, immediately drawing fire from the Opposition and raising concerns among economists.
Treasurer Jim Chalmers acknowledged the decision would have significant budgetary implications. “This is a core responsibility of government, and it will be reflected in our budget priorities,” Dr Chalmers said. “This will require difficult decisions and a reprioritisation of spending across the board. Every dollar will be accounted for, but we make no apologies for placing the security of the nation at the top of our agenda.”
Shadow Treasurer Angus Taylor accused the government of writing a blank cheque without a funding plan. “Labor is announcing a massive, unfunded spending commitment that will inevitably be paid for by higher taxes or deeper debt,” Mr Taylor said. “At a time when Australian families are already struggling, the government needs to come clean about how it plans to foot this bill. National security is too important to be built on a foundation of fiscal fantasy.”
Independent analysts suggest the $70 billion figure, while substantial, may still be a conservative estimate of what is required, particularly for the AUKUS program, where costs are expected to run into the hundreds of billions over 30 years.
“This is the government finally putting a number on the strategic ambition of the DSR,” noted a senior analyst from the Australian Strategic Policy Institute. “It’s a significant step, but the real test will be in the execution. Can these funds be managed without the waste and delays we’ve seen in past projects? And will this require a fundamental national conversation about the trade-offs between defence spending and social services? That conversation is now unavoidable.”