Australia is a maritime nation. The sheer scale of our sovereign maritime territory and responsibilities, our dependence on maritime trade for our prosperity and the increasing value of activity in the maritime environment must all be recognised in our maritime strategy. In a highly interconnected world, we face fundamental vulnerabilities from the realities of our geostrategic situation. In this report, the author argues that the Royal Australian Navy (RAN) lacks the resources to adequately protect Australia’s vast maritime interests. This concern isn’t unique to our time: maritime strategists have long lamented that, despite being uniquely an island, a continent and a nation, Australia struggles to understand the central importance of a maritime strategy to our defence and security. The underappreciation of Australia’s dependence on the maritime domain and that domain’s significance for the nation’s prosperity and security has consistently produced a RAN that’s overlooked and under-resourced.
In this report, the author examines whether the bipartisan thesis of a structural change in our strategic circumstances, as articulated in the 2023 Defence Strategic Review (DSR), also requires a structural change and an expansion of the RAN. The author argues that both are needed, through both an increased surface-combatant fleet that’s designed on the principle of a balanced fleet and a review of the RAN’s structure. Such a structural review should include consideration of bold changes, including reconsideration of a fleet auxiliary, a coastguard or forward basing of assets to support the workforce requirements of an expanded fleet.
This report looks mainly at the structure of the surface-combatant fleet, noting the recent finalisation of the surface-combatant fleet review. In the light of the Australian Government’s consideration of that review’s recommendations, the report makes eight recommendations for government consideration.
The author also argues that the status quo of 11–12 major surface combatants is insufficient for Australia. That was the case even when the force was structured around the concept of Australia having 10 years warning time of military conflict. That problem has become more acute today, given the new era of strategic competition and the capability and size of our potential adversaries, in particular China, as recognised in the DSR. The report recommends that a major surface-combatant fleet structure of 16–20 ships is needed.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2024/12/13123247/SR199-An-Australian-maritime-strategy_Cover.png541820nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-10-30 06:00:002025-03-06 10:31:57An Australian maritime strategy: Resourcing the Royal Australian Navy
The US Army is undergoing its most consequential period of transformation since the end of the Cold War. The re-emergence of great power competition and a deteriorating strategic environment is forcing the US Army to rethink not just its approach to land warfare but also its future role alongside the US Marine Corps in key regions around the globe. In the Indo-Pacific, this doctrinal and structural transformation is informing a new approach to joint exercises and ‘no gaps’ defence collaboration to deter Chinese aggression. These developments hold important insights for key US allies and partners, including Australia and Japan.
Australia’s new unifying strategic approach to national defence and the high degree of convergence this has with US defence strategy offers a timely window of opportunity for the Australian Army to explore the combined use of land power in a heighten threat environment. This work should be mutually reinforcing and constitute part of Australia’s approach to managing risk and threats and balancing its contributions to deterrence.
This report aims to provide the Australian defence establishment and military leaders with well-considered options for engaging the US on matters of mutual interest. The report provides an overview of the US Army’s changing force posture and approach to land warfare, followed by a brief analysis of its evolving role as an essential enabler of joint force operations in a maritime environment. The report then explores the US Army’s ‘campaigning’ activities in the region and its efforts to increase allied and partner capacity for high-end military contingencies in all domains. Finally, the report highlights opportunities for the Australian Army to enhance interoperability with US land forces in a deepening US-Australia alliance.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2024/12/13143816/SR198_US_Landpower-banner.png4501350nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-10-06 06:00:002025-04-11 10:57:46US land power in the Indo-Pacific: Opportunities for the Australian army
The inaugural Beaten Zone Pitch Fest convened in August in Perth, WA sought to back 16 early-stage sovereign Australian teams creating the next generation of novel Robotic and Counter-Robotic systems for the warfighter. Each participant delivered a 5-minute pitch to a panel of five judges and afterwards engaged in a short Q&A defending the merits of the technological innovation.
The right to negotiate for up to $500,000 investment on offer for the winning pitch was jointly awarded after a split-decision. Those two teams were, Outlook Industries and Tekuma, led by Luke Townsend and Annette McClelland respectively, with Tekuma also winning the Crowd Favourite pitch prize. Outlook Industries and Tekuma will now enter into formal negotiations with Beaten Zone.
Pelos Group, a company developing a revolutionary new Wireless Power Distribution System that will transmit safe, clean, and persistent power on the battlefield and led by Cos Luccitti, came away as the runner-up with two tickets to SOFWEEK 2024.
The successful initiative will return next year to support a new generation of entrepreneurs focused on systems that will give the ADF a tactical edge!
The event was attended by ASPI Defence, Strategy and National Security’s Director, Bec Shrimpton, and Research Intern, Marcus Schultz.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2024/04/17135358/v2Artboard-1-copy-scaled.jpg8532560markohttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngmarko2023-09-20 11:25:272024-11-08 11:32:43Inaugural Beaten Zone Pitch Fest, August 2023
As we approach four years since the first cases of Covid-19 in the Chinese city of Wuhan, the world seems relatively familiar again, albeit an increasingly scary place because of war in Europe, accelerating climate change, and the unhealthy nexus between new technologies and authoritarian coercion by Beijing and others.
Within this ‘polycrisis’, Covid-19 now feels like a secondary concern. But the world remains unprepared for the next pandemic, which the Director-General of the World Health Organization, Dr Tedros Adhanom Ghebreyesus, has warned could come soon and be even more deadly.
This report provides a comprehensive stocktake of the lessons our region should draw from Covid-19 at precisely the time we risk forgetting the pandemic’s significance, not just for health but also for the resilience of our societies, economies and international rules-based trade and security.
This collection of papers by Japanese and Australian academics, journalists and think tankers explores varying aspects of the regional impact of the pandemic, including on trade, foreign affairs and security. The collection includes detailed case studies on Japan, the Philippines and Indonesia, as well as thematic analysis at the regional and multilateral levels.
We hope the compilation is useful for policy makers and decision makers throughout the region, in particular the examination of the systemic links between different forms of crisis preparedness, the sovereign resilience of smaller powers against great power influence, and the effect of Covid-19 in accelerating pre-pandemic regional trends, including mounting challenges to liberal democracy.
This report was produced with funding support from the Japanese Government.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2024/12/13203443/Covid-19-implications-for-the-Indo-Pacific_banner.png4501350nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-09-07 06:00:002025-03-06 10:32:37Covid-19: Implications for the Indo-Pacific
Last weekend, China’s Coast Guard and maritime militia carried out dangerous and aggressive manoeuvres against a small Philippines boat, blocking and blasting it with a powerful water cannon.
The vessel was trying to resupply a remote Philippines armed forces garrison on Second Thomas Shoal, in the South China Sea’s Spratly Islands, within the Philippines undisputed Exclusive Economic Zone.
This brazen escalation by China is a test for the Albanese government’s readiness to speak up in defence of the international rules-based order, and to show support for a key security partner in Southeast Asia – a region Canberra has identified as critical to Australian interests.
At the AUSMIN meeting last week in Brisbane between Australian and US defence and foreign ministers, our two nations committed to upholding a “global order based on international law” and “fundamental principles of sovereignty and territorial integrity”.
They expressed their “strong opposition” to destabilising actions in the South China Sea, including “the dangerous use of coast guard vessels and maritime militia”. They specifically denounced China’s excessive maritime claims as inconsistent with international law and reaffirmed their support for the landmark 2016 arbitral tribunal award in The Hague, which found in favour of the Philippines in its maritime legal dispute against China.
Washington reacted swiftly to the incident at Second Thomas Shoal, issuing a clear condemnation of China’s actions, simultaneously reassuring Manila and warning Beijing that any escalation to an armed attack on Philippines government vessels would be covered under the US-Philippines Mutual Defence Treaty. This was consistent with Defence Secretary Lloyd Austin’s June commitment to the 2016 arbitral tribunal ruling at the Shangri La Dialogue when he stated: “It is legally binding, and it is final.”
By contrast, Canberra has so far refrained from issuing a statement from either the Foreign Affairs or Defence portfolios. The Australian ambassador to Manila did tweet concern about “dangerous and destabilising” actions but, unlike her US counterpart, did not name China.
AUSMIN communiques are important, but they tend to be general and not widely read. The test was always going to be holding specific actions to account. The longer this official reticence about China is maintained, the more it calls into question Australia’s willingness to live up to its rhetoric on the South China Sea when the Philippines has unambiguously been on the receiving end of bullying and intimidation by Beijing.
It is to the Albanese government’s credit that bilateral relations with China have improved and tensions have reduced. But the formulation of “co-operating where we can and disagreeing where we must” is not sustainable if the policy means trying to reduce tensions by ignoring differences. This doesn’t deter Beijing’s destabilising actions; it emboldens them.
If Australia does not strongly call out such a provocative and destabilising breach of international law, one has to wonder what constitutes an issue on which we “must” disagree with Beijing. Consistency is vital in international relations. In this case, it would both demonstrate Australia’s commitment to the rules-based order and signal to all countries, including China, what actions we consider unacceptable. The danger of choosing what “must” be dealt with on an ad hoc basis, rather than by principle, is the same diplomatic error that led major European powers to think a default of silence and inconsistent engagement in the face of Russia’s aggression would eventually lead Russia’s Vladimir Putin back to the straight and narrow.
International rules either mean something or they don’t. In the valid attempt to reduce regional tensions, signing onto communiques that few read while failing to speak up when it matters most risks reducing trust in both Australia and the multilateral system.
We stood up for the Philippines in 2016 when the tribunal ruled against Beijing, and we should do so now. This is a core issue for Manila. Less than a month ago, Philippines Foreign Secretary Enrique Manalo thanked the US and Australia for their support on the 2016 arbitral award. The Philippines has become one of Australia’s most important defence partners in the region. It was among the first to support AUKUS and has a bilateral visiting forces agreement enabling a high level of access, including Australian surveillance flights over the South China Sea. It is not in Canberra’s interests for Manila to doubt the strength of Australia’s commitment.
Failing to hold Beijing to account for maritime breaches would be another mistake in the mould of the misjudgment to end our World Trade Organisation case against Beijing’s punitive tariffs on Australian barley. Abandoning the case spared Beijing the indignity of another adverse international legal ruling that would have deterred Beijing and held it to account on economic coercion. It would also be a mistake to leave the condemnation to the US, as that serves Beijing’s strategic narrative that the issues at stake are only about great power competition and US containment of China. We are all competing to shape the world in which we want to live – it is not a struggle limited to the US and China. Australia has a vital role by demonstrating that regional stability requires all nations to contribute.
Australia doesn’t have to fight every battle. But to win a competition, you have to play in it. The law-and-order principles set out in the AUSMIN communique go to the heart not just of our security and sovereignty, stretching from the seabed to space, but to the collective security of our region. If that isn’t worth standing up for, what is?
Image: China’s Maritime Militia and fishing fleets, pictured in the South China Sea. The Australian 2023.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/08/14120925/d17e5c152882d23ae028ad3e510b4bbd.jpg5761024nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-08-10 13:10:562025-04-14 12:10:15Beijing’s bullying of Philippines a test of Aussie mettle
Strategically, Japan and Australia have more in common than just about any two nations – to the extent that we are allies in all but treaty status. Australia wants – and in fact needs – that relationship to get even closer.
Both nations need to be participants in the strategic competition that is firmly under way. We cannot afford to ignore it as something that is the exclusive business of the US and China. And the key foundation for the next stage of our partnership must be technology co-operation because critical technologies are fundamental to that strategic competition.
The relationship was not always on this trajectory. While for many years Japan has been finding ways to manage Beijing’s increasing assertiveness, Australia until around 2017 remained fixated on China as an economic silver bullet, taking us down a path of market concentration, economic dependency and security vulnerability. We found it easier to pursue Japanese whaling than we did Beijing’s cyber attacks, militarisation of the South China Sea or covert influence of domestic and international institutions. But partly in response to China’s increasingly aggressive behaviour across the past decade, Japan and Australia have drawn closer together.
Our shared interests and values and our strong desire to keep the Indo-Pacific free, open and resilient required nothing less. Countries – even strong economies and democracies such as Japan – cannot face and counter economic coercion, cyber attacks and disinformation campaigns alone. Hence a new phase of co-operation and partnership is under way.
Both countries have recognised the importance of India and embraced the revitalisation of the Quad grouping. When the US pulled out of the Trans-Pacific Partnership, it was our two countries that kept it together. And in Tokyo and Canberra there is a recognition that our bilateral relationship should be comprehensive: being about people, economics, security and defence.
We can continue these gains of recent years by working together on the challenge of technology co-operation. Technology sits at the heart of strategic competition in the sense that it is driving unprecedented change to economies, security, individual lives and international relations. The countries – or coalitions of countries – that gain pre-eminence in these technologies and set the international standards for these critical fields will gain an enormous strategic advantage.
Japan is a technologically advanced country that recently has unveiled plans for a 10 trillion yen ($107bn) national endowment fund to boost research and innovation through its top universities. As the Australian Strategic Policy Institute’s own research has shown, it performs strongly in some key areas relevant to the AUKUS partnership, including quantum and hypersonics. Our Critical Technology Tracker also shows, however, that China is leading the world in high-impact research in 43 out of 51 technology fields relevant to defence. Beijing’s investment in critical technologies relevant to national security has been of a scale that no individual nation – not even the US – can confidently match it. This is the logic behind the AUKUS partnership. As ASPI’s tracker shows, we can remain competitive if we work together.
AUKUS pillar two – which serves as an accelerator for development of critical capabilities related to hypersonics, AI, quantum and other advanced technologies – has a much greater chance of success if we make it inclusive, not exclusive. We should therefore encourage Japan and others to participate as appropriate.
This is in fact a huge development opportunity: for partnerships, for technology, for capability, for deterrence and for a more stable and secure world.
The Japanese government has committed to a dramatic increase to its defence spending commitments. But, as with Australia’s own investments, this increase is not about creating instability and increasing the risks of conflict; rather about bolstering deterrence to avoid war and improve regional stability. Stability doesn’t mean an absence of difference or competition. It means living with and managing tension, not thinking it can be ignored.
This is why deterrence is mandatory for stability: it doesn’t prevent differences or competition or even some low-level conflict, but it does help prevent those from escalating into greater conflict or war. Technological superiority and partnerships together make the most potent recipe for deterrence based on strength.
Moreover, authoritarian regimes including Beijing are expertly filling the gap between war and peace with strategically targeted economic coercion, cyber-enabled theft and disinformation and, as we have seen this month, dangerous military intercepts on the seas and in the skies.
Democratic countries have struggled to find adequate responses, especially collective responses. We failed to join forces to increase internet safety and security. And we failed to come together to bake security into social media. This must change as we face the next leap in technology – artificial intelligence, which is shaping up to be a revolution like no other.
Japan’s recent example of leading on economic security as hosts of the G7 set an important example for others to follow in terms of how states can work together on emerging security challenges. We need more global leadership like this and we must encourage the next G7 chair, Italy, to grasp the baton, pursuing an economic security agenda and inviting nations like Australia, South Korea and India.
We can control our destiny or abdicate responsibility and hand it to the control of others who do not have our interests at heart. It’s vital that we continue to build our relationship because a stable balance of power will take effort by all. As regional powers, Australia and Japan are in the prime position to do the heavy lifting.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/07/14121226/6ec65567842b5268397fc21cf26ab8a5.jpg5761024nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-07-15 13:22:352025-04-14 12:12:44Why Japan-Australia alliance needs new strategic edge to do some ‘heavy lifting’
Danish physicist Nils Bohr once said “prediction is very difficult, especially if it’s about the future”. The insurrection launched by Wagner boss Yevgeny Prigozhin at the weekend lasted a little over 24 hours. But the serious implications of these events must now be considered, with Vladimir Putin emerging from this extraordinary event much weakened.
Wagner forces moved quickly to secure control over the strategically important city of Rostov-on-Don, and advanced on Voronezh along the M4 highway, with the next stop being Moscow itself.
Prigozhin clearly had the initiative and momentum, with a core of 25,000 troops, and more support flocking to him, as his forces were welcomed into southern Russia.
Then Prigozhin surprisingly accepted a deal with Belarus’s ageing dictator, Alexander Lukashenko, which saw him end his uprising, reverse his advance – which had come to within 200km of Moscow – and accept exile in Belarus. The insurrection – and with it the immediate risk of military clashes in the streets of Moscow – appeared to be over as quickly as it had begun.
So, what are the longer-term implications of the apparent failed insurrection by Prigozhin and, more importantly, what are the potential challenges Putin now faces?
Prigozhin’s fate remains uncertain, but it’s highly unlikely he’ll retire to a villa in Belarus, after challenging Putin’s power by confronting Defence Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov. It’s more likely Putin will seek Prigozhin’s demise at some point, especially to prevent him from returning to direct Wagner.
Wagner looks likely to splinter between those men who sign contracts with the Russian Defence Ministry and those who walk away from the role, perhaps to do other mercenary work. That’s probably good news for Ukraine, because it reduces the threat it faces from what’s left of Wagner.
But the main loser – apart from Prigozhin – is Putin himself.
Putin’s image as a strong Russian leader has been weakened dramatically, even though the worst outcome for him – fighting in the streets of Moscow – has been avoided. A major armed insurrection occurred on Russian territory under his presidency, which looked to be on the verge of achieving success. Combined with the risk of looming defeat in Ukraine, this has done much to reinforce growing perceptions that Putin’s rule is ending and that he is a much diminished leader. So Putin will be determined to reverse any perception that he is weak.
Some possibilities to watch for include a purge of perceived opponents, especially anyone who was seen to show any support for Prigozhin’s insurrection. This could extend through all levels of Putin’s regime, including into the siloviki and the oligarchs – the elite of the security and intelligence community, and Russia’s super-wealthy business elite, which keep Putin in power in return for economic gain.
Putin may also adopt a tougher approach to the war in Ukraine, perhaps by announcing a national mobilisation, though that could then generate more opposition in the streets. The last thing Putin wants would be a popular uprising or a whiff of a “colour revolution” immediately after a military insurrection.
Yet Putin’s goal is to wear down western resolve in supporting Ukraine in a long war, and national mobilisation would give him a much greater chance to achieve that goal.
Expect Putin to amplify his fraudulent narrative that Russia is at war with NATO and Western states, even to the extent of trying to claim the West had organised Prigozhin’s “march for justice” and ramp up nationalist diatribe against NATO that could be accompanied with more provocative behaviour along NATO’s eastern and southern periphery.
It’s also quite likely Putin will rattle nuclear sabres again, having deployed nuclear weapons to Belarus to implicitly threaten use of tactical nuclear weapons against Ukraine or even against NATO. He needs to reinforce his image as the strongman in full control, especially given he knows Beijing is watching closely.
All this probably won’t save him if Russia is ultimately defeated in Ukraine. The insurrection may be over, but it is perhaps best seen as the beginning of the end of the Putin regime.
Image: Minister of Agriculture Dmitry Patrushev meets with President Vladimir Putin 20 February 2024 concerning humanitarian shipments and relations on the African Continent. kremlin.ru 2024 Wikimedia Commons.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/06/14122730/Patrushev_meets_Putin_February_2024.jpg580940nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-06-26 13:25:592025-04-14 13:41:57Is Putin witnessing the beginning of the end?
The leader of private military company Wagner, Yevgeny Prigozhin, has declared what amounts to an insurrection against Russia’s military leadership.
He’s now commanding a Wagner military force that has advanced into the southern Russian city of Rostov on Don, surrounding the Russian Southern Military district headquarters, and promised to march on Moscow. In response, Russian military forces in Moscow blockaded Red Square to protect the Kremlin.
The Wagner chief then reversed his extraordinary coup attempt.
These extraordinary and fast-moving developments raise some key risks and uncertainties.
If the Wagner forces gain support from the Russian military ‘rank and file’ soldiers, as opposed to Russian Ministry of Defence General Staff, it’s possible that Prigozhin’s insurrection will grow into something larger and more significant.
A march on Moscow for expanded Wagner forces would then become possible, and if the Russian General Staff, together with associated security agencies, fail to stop such a movement, the real risk of a civil war, or a military coup emerges. Events are not at that point yet, and it’s equally possible that Russian military forces will put down this insurrection, and in that outcome, Prigozhin is likely to meet his end.
However this insurrection ends – be it in civil war, a coup, or demise for Prigozhin – it highlights that Putin’s credibility is under increasing threat, and perhaps his days are also numbered.
Outside of Russia, Ukraine is likely to take advantage of any disruption to Russian military operations along their defensive lines in eastern and southern Ukraine, especially if those lines are weakened by Russian forces being redeployed to fight Wagner.
So, it’s quite possible that if the internal battles between Wagner and elements of the Russian military gather pace, the Ukrainians may see new gaps in the Russian defensive lines that they can probe, breakthrough and exploit to retake their territory.
Putin would then not only face the prospect of armed internal uprising – or even civil war – but military defeat in Ukraine. His credibility as Russian leader would be at a nadir, and other challengers could emerge from the Oligarchs and Siloviki – elites in the Russian security and intelligence community – that have up until this point, kept him in power.
Which takes us back to Prigozhin and his attempted coup attempt on Moscow.
The objective would be to remove Putin and place a successor in charge – not necessarily Prigozhin, but someone from the shadows – that would be more willing to align with hard line nationalist views of the Siloviki, and perhaps willing to undertake mass mobilisation to try to turn around the war in Ukraine in Russia’s favour.
There’s one other dimension that western states will be very concerned about. Russia is a nuclear weapons state, and any internal conflict – especially if a full-on civil war were to emerge – in a nuclear power is an extremely serious contingency.
A key concern must be ensuring positive control of nuclear forces, to make sure nuclear weapons cannot be used without authorisation. This is especially the case for tactical nuclear weapons that would be forward deployed, including in areas such as Rostov, and which may have simpler safety and arming processes than strategic nuclear forces such as silo based nuclear-armed ICBMs.
So western leaders will be carefully watching the posture and readiness of Russian nuclear forces. Given that risk it’s vital that western states send strong deterrent signals to the Putin regime to ensure that there is no temptation to consider the use of tactical nuclear weapons – be it against Ukraine, or in an internal conflict. That could turn what at the moment is a limited insurrection into a much more dangerous crisis that threatens the entire globe.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2023/06/14134731/Man_in_front_of_police_cars.jpg19202560nathanhttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngnathan2023-06-25 13:28:452025-04-14 13:48:26Is Russia headed towards a new civil war?
This is a very different year for the defence budget. We are in a time of significant change and upheaval.
Uncertainty is rife, but some fundamentals can help in working through uncertainty, especially in the world of defence policy, planning, capability programming and budget. The order of those words is important.
Defence budgets are not arbitrary. Capability requirements must drive budgets. It doesn’t mean that the budget is unlimited but it demands that governments consider proposals for what is required and assess what can be afforded. If budgets drive capability, it risks the true capability needs not being put to government which results in failure to ask of government what they are elected to do – make decisions based on all available information.
The oft-cited metric of defence spend as a percentage of GDP is helpful as a point of comparison on the rate of effort of specific economies towards defence outcomes. It establishes a baseline from which we can measure – and therefore tell a story about – defence spending over time, and in the context of broader geopolitics. The low percentages across major European economies helps to illustrate why deterrence failed against the Putin regime and should be a lesson for all in relation to why defence spending is so important for managing tension and long-term peace.
But a percentage in isolation is not helpful in assessing whether the budget allocated to Defence will allow it to deliver the capabilities for which the government has asked.
The Albanese government released the 2023 Defence Strategic Review (DSR) and its Portfolio Budget Statements (Budget) within weeks of one another. The DSR establishes the future strategic direction for the Department of Defence and the ADF, including by identifying priorities that must be acted upon in the immediate term. The Budget represents a continuity approach with the strategic and budgetary guidance from the 2020 Defence Strategic Update and 2016 Defence White Paper.
There is, therefore, a disconnect between the two. This can be addressed and will be through a series of further reviews and specific activities to be progressed by Defence in the coming year. There are significant additional bodies of work yet to be finalised that will affect the future defence budget; all indications point to a steady and possibly substantial rise.
Australia must of course invest in defence capability commensurate with the challenges of the strategic environment. Crucially, however, the role of defence to help deter wars, while being ready for times of conflict, requires spending even in times of relative peace. A detailed discussion of how defence is budgeted to both deter and win wars, and the external and internal dynamics that drive budget (and other) programming and management, is more important today than at any time in the post-Cold War era. This document is a must read for those interested in current and future defence spending and for increased understanding of its importance to the government’s overall budget theme of providing increased certainty to Australians in an increasingly uncertain world.
Executive summary
Defence has long been seen as a necessary burden on the federal budget. However, it is assuming the status of an urgent priority in the wake of the AUKUS agreement and the far-reaching reform urged by this year’s Defence Strategic Review (DSR). Both are responding to a much more challenging geopolitical environment and the realisation that Australia doesn’t have the luxury of time to achieve readiness.
This year’s Defence budget reflects the urgency of the demands upon Defence to the extent that it includes the initial spending on the nuclear-powered submarines and the first response to the DSR, despite there being only very approximate estimates for how that spending is to be scheduled and for the savings that will pay for them.
However, the urgency of the demands upon Defence isn’t reflected in its short-term funding. The only increase in the Defence budget over the next three years is compensation for the increased cost of imported military equipment flowing from a fall in the value of the Australian dollar.
Excluding this, the core funding of Defence (not including the Australian Signals Directorate) has actually been reduced at a time when unprecedented demands are being placed upon it. Between 2023-4 and 2025-6, Defence funding, excluding compensation for adverse foreign exchange movements, drops from $154.0 billion to $152.5 billion.
Both the AUKUS submarines and the DSR conclusions highlight an approach in which capability will drive budget conversations – not vice versa. That is welcome. But there is clearly much more work to be done to clarify the capability implications of the DSR, and then reflect those accurately – and at the appropriate time – in the budget.
The difficulty in bringing the DSR reforms and the spending on submarines into the budget is understandable. The timing of the DSR meant it reached the staff compiling the Defence budget very late in the annual process, while the nuclear-powered submarine program is of historically unprecedented complexity for any government project. The broad outline of the submarine program was only announced in March 2023.
New programs responding to the DSR such as a long-range strike capability or the hardening of the northern Australian bases, are not the subject of budget measures, with Defence expected to provide the additional funds needed with savings obtained from other programs.
Funding in each year continues to move faster than the predicted annual rate of inflation, consistent with the recommendations of the 2016 Defence White Paper (DWP) and the 2020 Defence StrategicUpdate (DSU).
However, the Defence Department’s financial controllers have fewer real resources to work with over the next three years than they were expecting in March 2022, when the Budget still contained the French submarine program and the DSR hadn’t even been commissioned.
The surge of inflation over the past year has made the constraints of a reduced funding base even tighter. The Treasury now expects inflation to reach 6% this year, or double the level it predicted a year ago. Inflation is being powered, both in Australia and globally, in large part by an overheated economy that’s the result of record low interest rates and large government deficits and further exacerbated by the impact of the Russian invasion of Ukraine on food and energy markets.
With unemployment at near record lows, Defence has been unable to meet its recruitment targets, which has been further exacerbated by increasing separation rates among uniformed personnel.
Defence had planned for the ADF to raise its numbers this year (2022-23) by 2,201 but instead faced a contraction in size by 1,389 uniformed personnel.
The rigid constraints on Defence funding over the next four years reflect the Treasury’s judgement that total government spending must be curbed if inflation is to be brought under control. Treasury’s economic forecasts assume that the combined efforts of government and the Reserve Bank of Australia will succeed in taming inflation over the next 18 months, bringing inflation back into the Reserve Bank’s target band by 2024-25.
The government will start providing increased funding for defence from 2027-28 onwards. An amount of $30.5 billion has been set aside for defence spending out to 2032-33. It’s expected that this will increase the defence share of GDP from around 2.05% to more than 2.3%. The additional funding will lift Defence’s share of government spending from about 8.2% now, including both operational and capital spending, to about 9.7% by 2032-33.
However, the principal task for Defence over the year ahead is to decide how to reconfigure its force structure and capability acquisition programs in line with the DSR and the difficult budget constraint.
That work is to be completed ahead of the planned 2024 National Defence Strategy, which is expected to be released before next year’s budget. The uncertainty surrounding the existing Integrated Investment Program (IIP) will affect defence industry as the scope and schedules of major programs are reviewed. Although Defence has raised the share of its procurement sourced domestically from about 45% to 55% over the past five years, it’s possible that the pressure to acquire new capabilities quickly will result in more ‘off-the-shelf’ imports.
Given the intense re-ordering of the Defence capital program expected over the year ahead, this year’s ASPI defence budget brief isn’t a detailed examination of the major acquisition programs. Rather, it’s a guide for the government, industry, academia and citizens interested in Australian defence strategy, capability and budget.
The strategic context for the 2023-24 defence budget is complex and extremely challenging. There’s currently a gap, and quite a significant one, between the rhetoric of the 2023 DSR and the 2023-24 defence budget (and forward estimates). How Defence and the rest of government will work together to bridge the gap will become clearer over the coming year. This publication focuses on what ASPI can usefully contribute to that process, and where the key issues lie in the defence budget.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/03/12141010/The-big-squeeze-ASPI-defence-budget-brief-banner.png515792markohttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngmarko2023-05-30 14:07:452025-03-12 15:33:15The big squeeze
ASPI’s Jennifer Parker describes key findings of the latest ASPI Defence Budget Brief to the ABC News.
https://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2024/04/17135358/v2Artboard-1-copy-scaled.jpg8532560markohttps://aspi.s3.ap-southeast-2.amazonaws.com/wp-content/uploads/2025/04/10130806/ASPI-Logo.pngmarko2023-05-30 11:51:002024-11-08 11:54:41Defence Force is receiving less ‘core funding’, new budget analysis suggests