Anthony Albanese’s lukewarm response to the US Defence Secretary’s request for Australia to increase its defence spending to 3.5 per cent of GDP is a huge missed opportunity.
The United States’ request for us to lift our defence spending was provided officially on the US Defence Department’s website as a “readout” of a meeting between the US Defence Secretary, Pete Hegseth, and Australia’s Defence Minister, Richard Marles. Their meeting was on the sidelines of the Shangri-La Dialogue in Singapore.
Two days later our Prime Minister said dismissively that “we’re a sovereign nation. And the idea that we, you know, respond to every comment that’s made as if it’s new, what we do is serious policy.” The PM went on to say that Australia is lifting its defence spending from 2 per cent to 2.3 per cent of GDP over ten years, well short of the request from the United States.
This financial year Australia plans to spend around $55 billion on defence. To lift our spending to 3.5 per cent of GDP we would need to increase spending by $40 billion a year in today’s dollars.
This is a lot of money, but it is small relative to the increase in the Australian Government’s spending since COVID.
In the last budget before COVID, the Australian Government spent $478 billion per year. In next financial year’s budget, we are set to spend $777 billion. An increase of almost $300 billion in just seven years.
To put this huge number in perspective, $300 billion amounts to $30,000 each year for every Australian household.
We would not increase defence spending by $40 billion overnight. But setting a medium-term target of 3.5 per cent of GDP in defence spending is affordable, especially if we got serious at cutting the other wasteful spending that has ballooned in the past few years.
Spending on people with disabilities has gone up by $40 billion a year since COVID, the same amount required to meet the 3.5 per cent target for defence. Some of this increased spending is important to help those less fortunate but so much of the spending has proven to be wasteful. There is clear scope to reduce spending without reducing services to disabled people.
The general public services component of the Australian Government (which includes foreign aid) has gone up by $8 billion a year. And, spending on renewable energy initiatives has gone up by $10 billion a year.
Why are we pursuing net zero emissions goals ahead of the goal to defend our nation?
In his speech to the Shangri-La conference, Pete Hegseth mentioned Australia seven times. He spoke about how the US is excited to partner with Australia on a new industrial strategy which includes plans for Australia to make radar systems, guided weapons and 155-millimetre ammunition.
The Prime Minister talks vaguely of a Future Made in Australia but why isn’t he embracing the chance to work with the United States to increase our defence manufacturing capability, when they clearly want to work with us?
More ominously for Australia, Secretary Hegseth said that “we know that many countries are tempted by the idea of seeking both economic cooperation with China and defense cooperation with the United States … Economic dependence on China only deepens their malign influence and complicates our defense decision space during times of tension.”
Our Prime Minister has put a lot of his reputation on rebuilding economic ties with China and banking on “climate change” to help rebuild Australian manufacturing. Neither of these strategies seems smart now as Chinese aggression increases and the world moves away from net zero goals.
Instead of rudely dismissing requests from our most important ally it would be better for the PM to think carefully about what is in the best interests of our nation first.
