Lifting defence spending a must

Unlike his deputy, Defence Minister Richard Marles, who is “very much up for the conversation” with the US about increasing Australia’s defence spending, Anthony Albanese has mulishly rejected the call by US Defence Secretary Pete Hegseth to lift it to 3.5 per cent of GDP. There is no single magical spending figure that would plug the serious gaps that leave the nation exposed at such a dangerous time. These include lack of missile defences and attack drones; the need for more fighter jets; the lack of ability to de-mine our ports and, if the need arose, to mine enemy ports, and; a shortage of about 5000 uniformed personnel. The Prime Minister needs to take a longer-term view of national security and systematically increase spending, as he has been advised by former Labor defence ministers Kim Beazley, Joel Fitzgibbon and Stephen Smith, and by Mr Smith’s co-author of the 2023 Defence Strategic Review, retired defence force chief Angus Houston. Last week’s Australian Strategic Policy Institute report, which Mr Albanese dismissed too lightly, explained why. But he cannot dismiss strategic reality.

Increasing the $55bn defence budget from 2 per cent to 2.5 per cent of GDP would cost an extra $13.5bn. The price of taking it to 3 per cent would be about $27bn. In a still-wealthy nation that is far from impossible. Now is the time to act, before the security situation and our defence preparedness worsen. It is to Australia’s advantage that despite Donald Trump’s inclination towards isolationism in some regions, Mr Hegseth confirmed the US was “reorienting towards deterring aggression by Communist China”.

In lifting defence spending, Mr Albanese would need to be upfront about the hard choices involved. These would probably involve paring back the care economy (the National Disability Insurance Scheme will cost $48.5bn this year, set to rise to $63.4bn by 2028-29). Growing the economy through productivity gains and tax reform to boost incentive are also vital. Hard as they are, these choices are unavoidable. Other nations in this region and Europe are dealing with the same issues. The Albanese government should expect bipartisan support. Judging by opposition defence spokesman Angus Taylor’s commentary piece, it would be provided. The Australian Defence Force, he writes, must have the funding it needs to keep the nation safe and prepared. In a challenging environment “we are not ready”, he says.

Nor should we be under any illusions. Should the US respond militarily to a Chinese attack on Taiwan, which Mr Hegseth says could be “imminent”, with a risk of China gaining regional hegemony, joint Australia-US communication bases such as Pine Gap – essential for early warnings of incoming attacks – would be targets. A military confrontation also would put paid to Australian trade with China, especially the sale of iron ore.