Labor eyes defence budget rejig amid Coalition, US pressure

The Albanese government is looking at fast-tracking $5bn worth of defence spending in next week’s federal budget.

A Patriot surface-to-air missile launcher fires an interceptor during a test at White Sands Missile Range in New Mexico. Picture: Raytheon

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The Albanese government is looking at fast-tracking $5bn worth of defence spending in next week’s budget as Peter Dutton vows “much more investment” on military capabilities to make Australia more self-reliant.

Labor has canvassed the figure with stakeholders in its budget preparations amid growing concerns over the state of the Australian Defence Force and pressure from the Trump administration for a significant boost to military spending.

While the government is said to be comfortable with its commitment to spend an extra $50bn on defence over a decade, lifting the defence budget to 2.33 per cent of GDP by 2033-34, industry sources said it had indicated some of the long-term spend could be brought into the four-year forward estimates.

Ahead of what’s set to be a khaki-tinged election campaign, the Opposition Leader declined to confirm speculation that the ­Coalition would lift defence spending to 2.5 per cent of GDP within four years, but said its boost for the portfolio would be substantial.

In a major foreign policy speech on Thursday, Mr Dutton said his first overseas trip if he won the election would be to the US to meet Donald Trump, arguing “there is a lot of repair work to do in that relationship”.

Mr Dutton said he was better placed to forge close ties with Mr Trump than Anthony Albanese, blaming Labor’s “ill-disciplined and disparaging remarks” about the President for Australia’s failure to gain an exemption from his steel and aluminium tariffs.

He said he would press Mr Trump to restore US aid to the ­Pacific that was slashed by Elon Musk’s Department of Government Efficiency, suggesting the cuts handed China a diplomatic advantage in the region.

Pledging to restore “moral clarity” to Australia’s diplomacy, Mr Dutton said he would also move quickly in government to repair Australia’s relationship with Israel with an early call to the country’s Prime Minister, Benjamin Netanyahu, and the restoration of Australian support for the Jewish state in the United ­Nations. He said unlike Labor, which is considering deploying peacekeeping troops to Ukraine, the Coalition would “prioritise the security of Australia”.

“Our focus must be doing what we can in our own region – in concert with partners and allies – to deter aggression and maintain peace through strength. To do that, we need much more investment in defence,” Mr Dutton told the Lowy Institute. “We need to develop our defence capabilities at speed and scale so we can become a more credible partner to contribute to the objectives of ­deterrence and peace.”

Mr Dutton, whose speech was briefly interrupted by two anti-nuclear activists, said the ­Coalition would continue to support Ukraine with military equipment and supplies, and argued the Russian flag should never fly over Kyiv. But he said it was Europe’s job to provide peacekeepers to the country, not Australia’s.

“It’s also worth noting, no ­European nation – including Germany, France or Italy – have made a troop commitment in the way the inexperienced Anthony Albanese has done,” he said.

Foreign Minister Penny Wong said Mr Dutton – “the man who made fun of the Pacific, who talked about the drums of war” – had little credibility on international affairs. “As Opposition Leader, I don’t think he has visited one ­Pacific Island country or one Southeast Asian country. What does that tell you about his priorities?” she told The ABC.

The pre-election debate over the defence budget comes as Australian Industry Group analysis reveals the government’s projected spending on new military capabilities fell by more than 9 per cent between its first budget and its May 2024 forecasts, while its estimated spending on sustainment dropped by about 4 per cent.

Spending rose over the same period on the defence workforce (up by 7.4 per cent), IT systems (up 15.2 per cent) and defence facilities and security (up 19.4 per cent).

In an opinion article for The Australian, AiGroup chief executive Innes Willox warns “the days of languid defence procurement must end immediately”.

“Australia’s defence budget ... will ­seriously struggle to meet the ­desired capability requirements set out in the national defence strategy,” he writes. “This funding pattern poses a real risk of weakening Australian defence industry capabilities to build and supply critical platforms. Once that ­national capability is eroded, it will be hard to rebuild.”

Opposition Leader Peter Dutton addresses the Lowy Institute in Sydney. Picture: John Feder