The Defence budget has inched upwards, increasing just one per cent in real terms on the 2024-25 funding, accounting for 2.05 per cent of Gross Domestic Product, compared with 2.03 per cent last budget.
Consolidated funding for defence for 2025-26 hit $58,988.7 million, a nominal increase of 4.2 per cent.
Defence budget analyst Marcus Hellyer, Head of Research at Strategic Analysis Australia, said this year’s defence budget focussed on delivery of existing plans and there was little new.
“Defence Minister Richard Marles announced that there was $10.6 billion in additional funding over the forward estimates but this not new money. It is part of the $50.3 billion over the decade that was announced last year under the National Defence Strategy.” he said.
“There has been some reprofiling of funding within the forward estimates, with $1 billion being moved from 2028-29 into 2026-27 and 2027-28. Bringing funding forward is a good thing. But none of this affects the coming budget year.
“So we are still in the same situation where very little of the $50.3 billion announced last year is being spent in the early years.”
Defence continues to struggle to attract all the personnel it needs, though the latest figures contained in the budget papers show an encouraging increase of 600 over the past year.
“But the numbers are still almost where they were a decade ago when the 2016 White Paper aimed to put the ADF on a growth trajectory,” Hellyer said.
“Because the ADF has Because the ADF has consistently missed its goals, its personnel targets over the forward estimates have been revised substantially downwards.”
In the budget papers for last year, the total defence permanent workforce in 2027-28 was estimated at 66,873 but not any more. The latest estimate is 63,272.
With an election looming and likely to be called any day now, the budget focused on measures designed to entice voters to vote Labor.
Delivering his budget speech in parliament on Tuesday night, Treasurer Jim Chalmers said this budget built on progress that we have made together.
“It’s a plan to help with the cost of living with two new tax cuts and higher wages, more bulk billing and more help with electricity bills, cheaper medicine and less student debt,” he said.
“It is a plan to build Australia’s future with more homes, more investments in skills and education, competition reforms and a future made in Australia.”
Last year’s defence budget, including funding for the Australian Signals Directorate and Australian Submarine Agency hit $56.6 billion, in line with previous budget guidance and accounting for 2.03 per cent of GDP.
The guidance for 2025-26 was $58.35 billion, so the actual defence funding is in line with the established trajectory.
Really serious increases won’t be seen until 2027-28 with an increase to around $67.3 billion when spending on new US nuclear submarines was set to really kick in.
But is that enough? With the rise in global uncertainty in Europe and the Indo-Pacific and the advent of the Trump administration and its diminution of longstanding alliances, there’s a growing view that it may not be nearly enough.
In early March, new US under-secretary of US defence policy Elbridge Colby suggested Australian defence spending of three per cent of GDP would be more like it.
Ahead of the budget, both Labor and the Coalition hinted at funding increases.
One strong incentive was the recent circumnavigation of Australia by a flotilla of Chinese warships, creating a public perception that Australia’s defences are inadequate.
This also gave the Opposition ammunition to wage a camo-tinged election campaign far more so than might have been expected just a month back.
Opposition defence spokesman Andrew Hastie has pointed to defence spending under the coalition government rising to 2.5 per cent of GDP by 2030, adding some $15 billion a year to the defence budget.
Labor has been more cautious, with Defence Minister Marles pointing to increases already in the pipeline, with spending projected to rise from the current level to 2.33 per cent of GDP by 2034.
“In the last financial year 23-24, we had more money being spent on defence procurement than we’ve ever done before, and this financial year will be even more again,” Marles said.