Defence budget increase is real unavoidable spending

Amid the worst strategic circumstances since the end of World War II, Peter Dutton’s defence policy announcement was a crucial moment in what has been a dispiriting election campaign. After years of neglect by both sides of politics, the proposed spending opens up a substantial gap between the Coalition and Labor. The Opposition Leader’s plan to lift defence spending from 2 per cent to 2.5 per cent of GDP within five years, then to 3 per cent within a decade, is an initiative Australians need in response to our deteriorating security situation. The policy, however, needs more detail.

In their mid-year economic and fiscal outlook last December, Jim Chalmers and Finance Minister Katy Gallagher baked an additional $16.3bn spending into the budget, describing it as “unavoidable”. Compared with increased welfare, cost-of-living giveaways, childcare subsidies, the National Disability Insurance Scheme, Medicare bulk billing and subsidising pay rises for care economy staff, however, it is the increased defence spending proposed by Mr Dutton that is genuinely unavoidable.

At the launch of the Defence Strategic Review in August 2022, former Australian Defence Force chief Angus Houston, then 75, rated strategic circumstances at the time as the worst he had seen in his career and lifetime. In 2023, the review found the ADF was “not fit for purpose” to face emerging threats.

More recently, Australians have seen three Chinese warships conduct a surprise live-weapons drill in the Tasman Sea before the flotilla circumnavigated the continent, a Chinese spy ship snooping close to our waters and Russia’s brazen drive to build military ties with Indonesia. US isolationism and apparent unreliability under Donald Trump are also concerns, as is the President’s abandonment of much US aid, leaving a vast soft-power vacuum in the South Pacific. Beijing is rushing to fill it, as Cameron Stewart wrote on Wednesday.

Yet Australia’s defence spending languishes at 2 per cent of GDP, behind Poland (4.1 per cent), Greece (3.1 per cent), Denmark and Finland (2.4 per cent) and Norway (2.2 per cent). It is also well below the level that the US, our most important ally, expects. Anthony Albanese has promised to increase the defence budget to 2.4 per cent of GDP by 2027-28. In Britain, Prime Minister Keir Starmer is lifting it from 2.3 per cent to 2.5 per cent of GDP.

As the Collins-class submarines rapidly approach the end of their extended service, the AUKUS nuclear-powered submarine pact with the US and Britain will take an increasing share of the defence budget. AUKUS is essential and will be a cornerstone of national security. But the first US-made Virginia-class sub is not due until the early 2030s, and the first sub to be built in Adelaide is not expected to be in service until the early 2040s. To complement those vessels in future, the priorities announced by Mr Dutton, a former defence minister, are right for the times. The extra $21bn that the Coalition would spend across five years, he said, would be for drones and guided weapons (such as missiles, the direction of which is controlled electronically during flights). Perth would be a significant beneficiary of the program. The funding also is expected to boost AUKUS infrastructure. In March, Mr Dutton pledged to spend $3bn on 28 additional F-35 strike fighters, the world’s most advanced fighter jet.

While we support the overall direction of Mr Dutton’s plan, the lack of detail adds to the impression that the Coalition’s policy work ahead of the campaign was too light on and too late. The cost will matter and demands far better economic growth. As Paul Kelly wrote this week: “Improved economic growth is not just a cost-of-living issue but an imperative in our strategic reinvention.” Well-funded, Mr Dutton’s policy would go a long way towards making up for lost time and fixing the gaps in Australia’s defences. It is the plan the ADF has needed for years. Should the Coalition lose on May 3, our national security would be poorer without the policy, or without something comparable from Labor, which has appeared reluctant to act.

Only nine days from election day, the critical campaign issue for Mr Dutton is timing. Early polling booths have been open since Tuesday, when a record 540,000 people voted. While Mr Dutton is committed to a strong finish at the business end of the campaign, the coming week and the election result will test the Coalition’s strategy. But after decades of complacency about security in the region, far more is at stake than the election outcome. Relative to its importance at a precarious time, defence has received minuscule attention by most media, including papers and broadcasters that claim to be serious. But for voters, especially those with families and an eye to coming decades, few issues matter as much.