Federal Treasurer Jim Chalmers has confirmed that Australia will not heed the Trump administration’s call to enhance defence spending to 3.5 per cent of GDP. In relation to the NATO summit taking place in the Netherlands, where allied nations may elevate their defence budgets to 5 per cent of GDP, Chalmers stated that Australia’s defence spending is set to increase to 2.3 per cent of GDP, as previously outlined.
Chalmers acknowledged that it is common for international partners to encourage higher defence expenditures. He pointed out that Australia is already making significant investments, with an additional $11 billion planned for the near term and an impressive $57.5 billion earmarked over the next decade. This adjustment will raise defence spending from the current level of around 2 per cent to 2.3 per cent by the start of the next decade, marking a notable rise.
In April of the previous year, Deputy Prime Minister Richard Marles announced a federal commitment of an extra $50.3 billion to be allocated to defence through 2034. However, a recent report sounded alarms about the potential risks of the Australian Defence Force lagging in capabilities unless funding levels were reassessed.
The Australian Strategic Policy Institute (ASPI) has suggested that Australia is navigating some of the most complex global conditions since World War II. They emphasised that the pace of acquiring essential defence capabilities is slower than required.
Chalmers acknowledged the evolving international security landscape, indicating that Australia is closely monitoring global developments. He reiterated the importance of increased spending, citing recent announcements from Europe as a point of reference. He expressed confidence in Marles’s ability to represent Australia’s interests at the NATO summit, underscoring that the country is already making substantial investments in its defence capabilities, which he views as necessary in today’s climate.
While in the Netherlands, Marles is not anticipated to engage in discussions with U.S. President Donald Trump on the margins of the NATO meeting. This decision reflects Australia’s independent stance on its defence funding priorities amidst pressures from allies.
In summary, Australia remains focused on gradually increasing its defence budget while maintaining a careful watch on international developments, rather than conforming to external demands for higher spending.