Australia is set to significantly increase defence spending to around 3% of GDP by 2033 under its 2026 National Defence Strategy, as Canberra responds to a rapidly evolving global security environment and growing pressure from key allies.
Defence Minister, Richard Marles is due to unveil the strategy alongside the Integrated Investment Program, outlining an additional A$14 billion in defence funding over the next four years and a further A$53 billion over the coming decade.
According to Richard Marles, Australia faces its most complex and threatening strategic circumstances since the end of World War II.
“International norms that once constrained the use of force and military coercion continue to erode. More countries are engaged in conflict today than at any time since the end of World War II, and this is occurring across every region of the world.
” In the face of this, the Albanese government is pursuing every avenue of increasing defence capability quickly: mostly through bigger defence appropriations but also through accessing private capital.”
Richard Marles
The increase builds on the trajectory set out in the 2024 strategy and represents what is described as the largest peacetime expansion of defence spending in the country’s history.
However, the government’s headline target of 3% of GDP relies on a revised calculation aligned with NATO definitions of defence spending. This broader framework allows for the inclusion of certain indirect or related expenditures, effectively increasing the overall figure when compared to Australia’s traditional, narrower accounting method. Under this NATO-based measure, Australia is already spending an estimated 2.8% of GDP on defence, compared with roughly 2% under the existing definition.
This shift comes amid sustained calls from the United States Department of Defence for allies to increase their military spending commitments.
US President, Donald Trump repeatedly pressed allied nations to shoulder a greater share of collective security costs, while former Pentagon official Elbridge Colby has specifically cited the 3% benchmark as appropriate for Australia given its strategic position in the Indo-Pacific.
During the most recent election campaign, the opposition Coalition likewise promised to increase defense expenditure to 3% of GDP at the domestic level, demonstrating the bipartisan agreement that increased military capabilities is necessary as international threats grow. Analysts claim that this alignment lessens political tension surrounding defense spending, enabling the government to more confidently pursue long-term expenditures.
Marles is expected to frame the strategy as a direct response to a worsening global security climate, warning that the Albanese government is facing one of the most complex and challenging strategic environment over the past decades.
He is also likely to point to the erosion of international norms, the growing number of active conflicts worldwide, and the increasing willingness of states to use military force and coercion to achieve strategic objectives.
Capability Expansion and Strategic Reorientation
Under the updated investment programme, total defence funding is projected to reach approximately $887 billion by 2035–36, marking a substantial escalation in long-term military expenditure. Of this, around $425 billion will be directed toward capability development, a significant increase from the $330 billion allocated under the previous framework.
A major focus of the new funding will be on advanced and emerging technologies, particularly unmanned systems.
Prime Minister Anthony Albanese’s government has committed between $12 billion and $15 billion over the next decade to drones and counter-drone capabilities, reflecting the growing importance of autonomous technologies in modern warfare.
These systems are expected to enhance surveillance, intelligence gathering, and rapid-response operations, while also strengthening deterrence against both conventional and asymmetric threats.
Improving Australia’s defence self-reliance is a major focus of the plan, in addition to urgent capability increases. This includes initiatives to increase domestic industrial capacity, fund regional production, and lessen reliance on international supply lines that might be disrupted in emergency situations.
In an effort to speed capabilities development, the Albanese government is also looking to use private sector investment, indicating a more integrated approach to defense finance. Policymakers want to get quicker results while distributing financial risk across a larger base by mixing public and private investment.
However, Australia’s defence strategy will continue to be strongly linked to its network of alliances and partnerships, underscoring the significance of collaborating with reliable regional and international partners to tackle common security issues, especially in the Indo-Pacific area where strategic rivalry is becoming more intense.
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