31. The cost of Defence: ASPI Defence Budget Brief 2025-2026
- Author:
- Marc Ablong
- Publication Date:
- 05-2025
- Content Type:
- Special Report
- Institution:
- Australian Strategic Policy Institute (ASPI)
- Abstract:
- Australia faces a perilous strategic environment with multiple threats overlapping and, in some cases, converging. We’re confronted simultaneously by the rise of aggressive authoritarian powers, multiple conflicts around the world, persistent and evolving terrorism, foreign interference and the normalisation of cyberwarfare. Our largest trading partner, China, is increasingly aggressive militarily and has growing control of critical technologies integral to our societies. In Europe, the Middle East and the Indo-Pacific region, rearmament is underway, including increased prospects of nuclear proliferation. Australia is a part of that rearmament, though others are moving much faster. Great powers flout the international rules-based system, either seeking to expand their spheres of influence, as Russia and China are doing, or pursuing a transactional and user-pays form of vassalage in the case of the US under the Trump administration. To be clear: the actions of the US are not comparable to those of Russia and China, but the administration’s tendency to treat all countries the same, without separating friend from foe, is causing unhelpful disruption and adding to global uncertainty. Many countries’ politics are become more partisan and prone to populist movements, fuelled by social-media outrage and demagoguery. Hybrid attacks on critical national infrastructure, internet-connected systems and the political foundations and institutions of states are becoming more common. Trust in public institutions is eroding, and cynicism is rising and often turning into belief in conspiracies. We’re reminded in the ministerial forewords to almost all public national-security documents that there’s no greater responsibility for the government than defending Australia. Part of that most fundamental responsibility is the obligation of government to resource the national-security community appropriately to prepare the nation for the challenges it faces. That’s why, this year, the Australian Strategic Policy Institute has broadened its budget brief, The cost of Defence, beyond its traditional focus on the budget of the Department of Defence. The security challenges that Australia faces cannot, and should not, be borne by Defence and our armed forces alone. For too long, Australian governments have partitioned Australia’s security and failed to deliver a comprehensive approach to national security. ASPI has been vocal in calling for comprehensive national-security planning, and now we reflect that by examining the government’s national-security spending as a whole. Moreover, The cost of Defence: ASPI defence budget brief 2025–26 thoroughly examines the government’s progress with, and spending on, the 2024 National Defence Strategy. The core of the strategy is the concept of national defence, defined as ‘a coordinated, whole-of-government and whole-of-nation approach that harnesses all arms of national power to defend Australia and advance our interests’. This year’s Cost of Defence therefore asks some more fundamental and strategic questions and evaluates whether the government is paying enough attention to the traditional strategy calculation of ends, ways and means. Has it identified and articulated the objectives that meet Australia’s strategic intents, as set out in the 2023 Defence Strategic Review and the 2024 National Defence Strategy? Has it chosen the best plans for meeting those objectives? And has it allocated enough resources for those plans? We also examine whether the government is giving enough attention to the nation’s preparedness and resilience. This is a major theme for ASPI in 2025. The 2025 ASPI Defence Conference: Preparedness and Resilience will focus on those challenges for Australia, including how they bear on our industry, civil society and relationships with international partners. This year’s Cost of Defence provides ASPI’s views as a lead-in to that conversation. Another issue is whether the government is too focused on future equipment acquisitions, rather than the preparedness and readiness of the current force. Given that most of the major acquisitions won’t arrive until well into the 2030s and 2040s, we must ask the unnerving question of whether the ADF is too hollow for military operations this decade. Can the ADF we have now deter adversaries from attempting military domination in our area of primary interest? The issue has been on the country’s mind since a Chinese flotilla this year sailed close to Australia, conducted live-fire drills in the Tasman Sea and rehearsed strikes on Australia’s cities, national infrastructure and joint military facilities. Finally, this year’s Cost of Defence asks the hard questions about whether the government’s rhetoric about a once-in-a-generation investment in defence and about the criticality of Australia’s defence industry base, national economic base and resilience is being matched by resources. This includes money in the latest Budget for 2025–26 and the forward estimates and, perhaps more importantly, human capital in the form of a larger skilled workforce. There are also the strategies, concepts and interagency, intergovernmental and international engagements that government must be delivering. We argue, as we did last year, that resourcing isn’t matching the rhetoric. We suggest that, in part, that’s because the implementation of strategy has been frustrated by bureaucratic, time-consuming and inefficient processes. In a first for the Cost of Defence series, we recommend ways for the government and the Defence Department to shift the dial towards agility, adaptability, effectiveness and efficiency. That includes increased and more effective messaging on why defence investment is needed. Whatever percentage of GDP the government spends on defence, it is a large number, and not enough has been done to foster public support for the defence spending required to deter the types of conflicts we see in Europe and elsewhere. Governments shouldn’t wait for public pressure to make security decisions, but a measure of social licence is needed for defence investment, and that in turn takes candour about the gravity of the threats we face. ASPI’s charter requires us to inform and nurture public debate on defence and security and to provide alternative advice for the government. The cost of Defence does so objectively, sharing the government’s and Defence’s aim of strengthening Australia’s long-term security, prosperity and sovereignty. It’s never been more important for experts inside and outside the Australian Public Service to speak truth to power frankly and fearlessly in order to give decision-makers the strongest possible suite of options. We don’t expect all readers to agree with our positions. Indeed, we welcome debate and disagreement in the hope that Australia will be stronger, more prepared and more resilient for the challenges we confront now and will face in the future.
- Topic:
- Economics, Armed Forces, Artificial Intelligence, Defense Industry, Research and Development, and AUKUS
- Political Geography:
- Russia, Australia, and Asia-Pacific