Anthony Albanese looking at spending more on missiles and drones after pressure from Donald Trump

While Anthony Albanese, Richard Marles and Jim Chalmers are actively considering increasing spending, they will not bow to pressure from Trump to lift Australia’s defence spending to 3.5 per cent of GDP.

Richard Marles, Anthony Albanese and Jim Chalmers on Wednesday (AEST).

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Anthony Albanese, Richard Marles and Jim Chalmers are actively considering increasing defence spending on missiles, drones, frigates and nuclear submarine facilities but will not bow to pressure from Donald Trump to lift Australia’s defence spending to 3.5 per cent of GDP.

As the US President flew into the Netherlands for a royal reception amid rising hopes that his ­historic ceasefire deal between Israel and Iran would hold, Mr Trump was on the verge of another major foreign policy coup with NATO members set to increase defence spending to a total 5 per cent of GDP.

The pledge – a response to ­repeated demands from the White House that Europe pay more for its own security – was celebrated by Mr Trump after he leaked a ­private text message sent to him by NATO secretary-general Mark Rutte, which lauded him for striking Iran’s nuclear facilities and his success in pushing allies to spend more on defence.

Sitting with Mr Rutte, the US President said NATO, which he has regularly criticised, would now “be strong with us.”

“It’s a great victory for everybody I think,” Mr Trump said. “I’ve been asking them to go up to 5 per cent for a number of years, and they’re going up to 5 per cent, that’s a big (jump) from 2 per cent and a lot of people didn’t even pay the 2 per cent so I think that’s going to be a very big news.”

Mr Marles, who is representing the Prime Minister at the NATO summit in The Hague, was not ­expected to meet Mr Trump, who is only visiting the Netherlands for a short period of time.

The Defence Minister on Wednesday (AEST) was also not scheduled to meet any officials from the Trump administration, instead meeting officials from Germany, Poland, the Netherlands, Japan New Zealand and South Korea.

Government sources left open the possibility that Mr Marles would meet US Defence Secretary Pete Hegseth but that depended on whether Mr Hegseth would leave the summit early with Mr Trump.

It is still not clear when Mr ­Albanese will finally have his first face-to-face meeting with Mr Trump after the latter had to leave the G7 summit in Kananaskis, Canada early to deal with the ­Israel-Iran war. The Australian revealed on Wednesday that the Prime Minister’s well-advanced trip to China may take place before he meets Mr Trump.

Mr Marles played down the absence of Mr Albanese at the NATO summit after it was suggested this had something to do with Mr Trump’s treatment of allies.

“Well, I wouldn’t overread, you know, the presence at any given meeting of leaders,” the Defence Minister said.

Mr Marles said NATO had become “much more significant” for Australia in recent years despite Mr Albanese’s absence. “This forum has been much more significant to us than it would have been five years ago – and indeed, in that time, our Prime Minister has attended two NATO summits and I’ve now attended two.”

Papua New Guinea’s Foreign Minister Justin Tkatchenko has also reportedly told local media that the country’s Prime Minister James Marape is hoping to meet Mr Trump in coming weeks

As NATO member countries deliver on the Mr Trump’s ­demands to lift defence spending to 5 per cent of GDP by 2035, ­senior Albanese government ­figures believe there is a disconnect between specified defence spending figures and how funding is allocated. Under the NATO spending spread, 3.5 per cent of the commitment would be for core defence ­expenditure and 1.5 per cent would cover upgrading of roads, bridges, ports and airfields.

The Australian understands the Albanese government is ­resistant to simply appearing to lift Australia’s defence spending by adding associated infrastructure like roads to total expenditure.

Many NATO countries are ­expected to fall short of their 3.5 per cent defence spending pledges, while Spain has been ostracised for rejecting the 5 per cent target as “unreasonable”.

The Treasurer – who spoke with US Treasury secretary Scott Bessent on Wednesday – said the government was watching NATO’s moves closely but had ­already done a lot in its March pre-election budget to boost military spending.

“It’s not unusual for our partners and friends around the world to express or have a preference for us to spend more on defence,” the Treasurer said. “We are actually already very substantially increasing our investment in defence. We’ve found room in tight budgets for an extra $11bn over the forward estimates and around $57.5bn over the course of the next decade.

“Obviously we’ve seen the ­announcements out of Europe. We’re obviously tracking those developments very closely.

“(Defence Minister) Richard Marles will do a characteristically great job representing our interests at the NATO summit, but we are already dramatically increasing our investment in defence. That’s warranted, and that’s why we’re doing it.”

The Albanese government, which is expected to announce spending boosts in coming months for the Henderson consolidation project and SEA3000 frigates program, has authorised major purchases over the past 12 months for US ammunition, rockets and guided weapons.

As the US and key allies including Britain and Japan ramp up ­defence spending, senior government sources made clear they were exploring ­increased funding for specific ­defence capabilities and projects, which would lift overall defence spending levels.

The NATO family and friends, including Donald Trump, front, fourth left, and Defence Minister Richard Marles, top right, with King Willem-Alexander and Queen Maxima at the royal palace in The Hague. Picture: AFP

They also believe that the strategic advantage the US would gain from accessing Australian naval bases from 2027 was another major positive in the US-Australia defence relationship.

Amid pressure from Mr Hegseth for the Albanese government to lift defence spending to 3.5 per cent of GDP as soon as possible and the Pentagon ordering a snap 30-day review into the AUKUS nuclear submarine pact, Australian and US defence chiefs are finalising plans for their biggest joint military exercise.

In defiance of Chinese military aggression in the Indo-Pacific and after Mr Hegseth raised concerns about the potential of President Xi Jinping ordering an invasion of Taiwan by 2027, more than 35,000 defence personnel from Australia, the US and 17 other countries will participate in Exercise Talisman Sabre from July 13 to August 4. The show of force will include live fire and training exercises, amphibious landings, ground-force manoeuvres, air combat and ­maritime operations in Australia, and for the first time, Papua New Guinea.

Sussan Ley on Wednesday urged Mr Albanese to increase defence spending to at least 3 per cent of GDP with a “focus on key capabilities, including space, drones and missiles”. Speaking at the National Press Club after receiving a national security briefing on Tuesday night, the Opposition Leader said global instability has “only worsened” since the Defence Strategic Review was delivered more than two years ago.

“Look at how much further it has deteriorated, even since last month’s election,” Mr Ley said. “Look at how much has changed in the past week alone. These developments underscore the need for Australia to step up our commitment to defence. Across the world autocratic countries are spending more on military capabilities. Many of our trusted allies are responding by matching urgent rhetoric with urgent action.”

Strategic Analysis Australia founder Michael Shoebridge said it was “highly embarrassing and beyond awkward” for Mr Marles to be at NATO “watching ­countries do what he knows he should be doing” in lifting defence investment. “He should be looking at what happened to Spain, when the Spanish Prime Minister tried to get out of the funding increase to defence saying ‘we’ll invest in capability, we don’t need to spend more than 2.1 per cent’,” he said.

“He was roundly condemned and pressured to change because the rest of NATO knew this didn’t make sense. If the 32 NATO member nations know they have to do more, then us lonely people down here in the Indo Pacific facing china as security challenge sure as hell need to do so.”

ADDITIONAL REPORTING: Joe Kelly, Noah Yim, Marcus de Blonk Smith