Australia is poised to significantly increase its defence spending, adding $53 billion to the budget over the next decade, with an initial $14 billion boost over the next four years. The announcement comes ahead of the release of the 2026 National Defence Strategy (NDS) tomorrow, which will outline the strategic challenges facing Australia and the capabilities needed to address them.
Building a Bigger Budget
The government anticipates that this increased investment will bring Australian defence spending to approximately 3 per cent of GDP by 2033, calculated using NATO’s methodology, which incorporates defence-adjacent spending like pensions. The Henderson shipyards in Western Australia will receive $12 billion for upgrades to support the AUKUS nuclear-powered submarine program and the construction of Mogami-class frigates.
Between $2 billion and $5 billion will be invested in new drone technology, as previously announced. While the bulk of the spending is slated for the latter part of the decade—$8.7 billion in 2033-34 and $9.8 billion in 2034-35—the government is responding to pressure from the United States to increase its defence spending as a percentage of GDP.
The government is pursuing “alternative financing” methods, potentially including equity stakes in companies or investments in government-business enterprises, and will also implement “reprioritisations” within existing defence plans. Details of these reprioritisations—what projects may be cut back or delayed—have not yet been released. Defence Minister Richard Marles has acknowledged that these decisions will be tough but necessary.
Frequently Asked Questions
What is driving the increase in defence spending?
The government states the increase is in response to “intensifying” global risks and the most complex and threatening strategic circumstances Australia has faced since the end of World War II. Recent conflicts in the Middle East and Ukraine have also influenced the new strategy.
How will the spending be measured?
The government will use NATO’s methodology, which includes defence-adjacent spending like pensions, to calculate defence spending as a percentage of GDP. This is expected to reach 3 per cent by 2033.
What changes to existing projects might occur?
The government has flagged “reprioritisations” within the defence plans, but details on which projects may be cut back or delayed are not yet known. Three years ago, the government rolled back two army projects, slashing a planned acquisition of infantry fighting vehicles and reducing planned orders for self-propelled Howitzers.
As Australia prepares to unveil its new defence strategy, how might these increased investments and potential shifts in priorities shape the nation’s role in an increasingly uncertain global landscape?
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