Australia’s Defence funding given major boost with $53 billion injection over the next decade

Australia will boost its Defence spending to 3 per cent of GDP by adding an extra $53 billion over the next decade in an updated plan detailing how the Government will prepare for and tackle Australia’s most significant strategic risks in the coming years.

Defence Minister Richard Marles will release the biannual update of the Government’s national defence strategy (NDS) on Thursday.

This will outline how it plans to ensure the ADF is prepared to defend Australia and its immediate region, and has the capacity to contribute to securing the Indo-Pacific and help maintain the global rules-based order if called upon.

It is anticipated this will include further changes to the plans for building and buying new equipment and weapons, which is known as the integrated investment program.

Mr Marles is expected to say the “increasingly adverse trends” identified in 2024 had only worsened over the past two years.

“NDS 24 made clear that Australia’s strategic environment was deteriorating, and that the assumptions which had underpinned Australia’s security for decades – geographic distance, warning time for conflict, and Australia’s regional military superiority – were no longer valid,” he will say, according to draft speech excerpts.

“NDS 26 builds on the foundations laid in NDS 24. It is not a departure in direction, but a strengthening of resolve with an increased focus on self-reliance.”

Overall, the Government plans to add $14 billion to Defence spending over the next four years and $53 billion over the decade.

It’s already announced it will spend up to $15 billion on drones across air, water and land, of which between $2 billion and $5 billion is new money.

The total boost will lift Defence spending to 3 per cent of Australia’s GDP by 2033.

After months of pressure from the Trump administration for Australia to increase its Defence spending, Mr Marles changed tack in September to point out that, based on NATO measures, Australia’s spending was already at 2.8 per cent of GDP.

That NATO measure includes things such as military pensions and a different way of accounting for equipment purchases, and hasn’t traditionally been used by Australia.

The funding boost will be covered by some new money, a sale of Defence properties expected to net $3 billion, plus shifting money from cuts, delays and scaling back of some existing programs, and “alternative financing” that could call on Commonwealth investment vehicles or private financiers.

An example of where this latter model might be used is the overhaul of the Henderson precinct. The Government has set aside $12 billion for this, but it is expected to cost at least $25 billion.

In the 2024 NDS, the Government “reprioritised” $22.5 billion of previously planned spending over four years and $72.8 billion over the decade.

This included scrapping some programs while others, like the number of infantry fighting vehicles, shrunk.

The scale of reprioritisations in the 2026 update is not expected to be as dramatic as two years ago, but is still necessary, according to Government sources.

Shadow Defence minister James Paterson said on Wednesday he intended to scrutinise the announced finances closely “because this is a government that plays a lot of games with numbers”.

“They haven’t increased defence spending at all. And the reason why that’s a problem is they’re trying to deliver the new AUKUS capability, including nuclear submarines … and in the meantime, to pay for that, instead of increasing the Defence budget, they’ve actually made a whole lot of cuts to the Defence department, particularly the Australian Army,” he told 2GB radio.