Government to spend $53 billion more on Defence over next 10 years to shield Australia in a riskier world

Australia will pour billions of dollars into drones and missiles as Defence Minister Richard Marles warns there are real risks to Australia in a more hostile world.

The Government will spend a total of $53 billion more on Defence over the next decade, $14 billion of that in the next four years, under the updated national defence strategy it released on Thursday.

Mr Marles warned that in the two years since the previous strategy was released, an already-deteriorating strategic environment had only worsened.

“This struggle is not abstract. It will drive elevated risks to Australia’s security and prosperity over the coming decade, increasing our exposure to conflict and coercion, requiring a relentless focus by this Government on Australia’s defence strategy and capability,” he said.

“NDS 26 reflects a clear-eyed assessment of a more dangerous and uncertain world — and a confident response to it.”

New technology like drones — as seen in wars in Ukraine and now the Middle East — were evolving faster, while the world appeared to be “at the foothills of a new nuclear arms race” driven by China.

However, Mr Marles disagreed with those, like Liberal frontbencher Andrew Hastie, who said the rules-based order was extinct.

“For all the failings of the global rules‑based order — and there have been many — we have been far better off with it than without it. Our challenge is not to discard the imperfect but rather to make the promise of an ideal better. Because if we let it go the world will deeply regret its disintegration,” he said.

The new plan and associated integrated investment program doubles spending on missile defence (now $21-30 billion over a decade) and for making missiles domestically (now $26-36 billion).

Within this funding, the amount for active missile defence to intercept incoming missiles and protect bases is increasing fivefold, from about $2 billion set aside in 2024 up to $10 billion now.

There’s also an extra $2-5 billion going to uncrewed systems such as the Ghost Bat underwater and Ghost Shark aerial drones that will be built in Australia.

Spending on AUKUS over the decade will increase to $71-96 billion, including funding for associated infrastructure like the $12 billion put towards overhauling the Henderson precinct in Perth.

That’s between $18 billion and $33 billion more than was included in the 2024 strategy, explained partly because the rolling 10-year period for the funding is shifting towards the “meatier” part of the program when submarines will actually start being built.

Australia expects to receive the first of three Virginia-class nuclear-powered submarines from the US in 2032 and a second in 2036.

Some programs will be cut or delayed, freeing up $5 billion over the next four years and $10 billion over a decade to spend on the new priorities.

The biggest victim will be the fleet of 10 Spartan C-27J small transport planes. The government has decided to scrap them and will replace them with something more suited to Defence’s needs, but is yet to pick that replacement.

But the scale of these “reprioritisations” is far less than was rolled out in the 2024 update.

Defence spending will reach about 2.5 per cent of GDP over a decade, rather than the previous 2.3 per cent

Courtney Stewart, deputy Defence program director for the Australian Strategic Policy Institute, said the 2026 NDS was “an evolution, not a revolution” that continued broadly on the same track while acting as a check that Australian was being agile enough and adapting to the current threat environment.

“The environment is so volatile — well, it’s completely unstable, and there’s a huge degree of ambiguity about where things are going . . . The old order is gone, and there’s a new order, and we’re still working through what that means,” she told this masthead.

The focus on missile defence was welcome — “There can never be enough missile defense,” Ms Stewart said — although it was unclear yet what the huge increase in money would be spent on.

The injection of funding will lift Defence spending to 3 per cent of Australia’s GDP by 2033.

After months of pressure from the Trump administration for Australia to increase its spending, Mr Marles changed tack in September to point out that, based on NATO measures, Australia’s spending was already at 2.8 per cent of GDP.

The NATO measure includes things such as military pensions and a different way of accounting for equipment purchases, and hasn’t traditionally been used by Australia.

But senior government sources indicated the shift allowed “apples with apples” comparisons to be made with other countries given the focus from the US and others on how much is being spent.

Mr Marles said by this measure, Australia would be spending more than all the G7 countries in NATO except the US, and more than most NATO countries.

On the narrower measure, Defence spending will reach about 2.5 per cent of GDP over a decade, rather than the previous 2.3 per cent, according to ASPI calculations.

Shadow Defence minister James Paterson accused the Government of “accounting tricks (that) do not make our country safer” and pretending to increase the Defence budget.

But he acknowledged there had been an increase in real dollar terms and welcomed the focus on missile defence and drones.

“It does appear the Government has now belatedly acknowledged that modern warfare has changed four years after Russia’s invasion of Ukraine and the war in Iran, and that we are now living in an age of missiles and drones,” he said.

“It’s clear that even the government recognises Australia is not adequately prepared for that era, and that we need to increase our investment in both offensive and defensive capabilities in this space to protect Australians.”

In the face of a riskier global environment, Mr Marles insisted the United States was still a reliable ally, even when pressed about President Donald Trump’s unpredictability.

He said it wouldn’t be possible to maintain a balance of power in the Indo-Pacific without the United States matching against China.

Nearly half of Australians disagree with that assessment, according to a Demos AU poll published by Capital Brief this week, while 59 per cent said the Government should distance itself from Mr Trump.

“Obviously, people are watching what’s happening in the world, but underlying all of it, the Alliance is a deep, organic, integrated relationship . . . It is very rich in terms of the levels of connection that exist, and it is profoundly important for our national security,” Mr Marles said.

Greens Defence spokesman David Shoebridge said the core of the strategy appeared to be doubling down on the US alliance despite its “chaotic behaviour”.

“The US is an increasingly rogue actor pursuing its own interests, not ours and any rational review of national defence needs to acknowledge this,” he said.