Anthony Albanese likely to delay defence funding strategy update despite expected Trump pressure

The Government is likely to wait for a defence strategy update due next year before revealing any funding boost, despite strong expectations Donald Trump will pressure Anthony Albanese over Australia’s budget position at their imminent meeting.

Government ministers have pointed to the national defence strategy, expected to be released around April, as they argue it’s more important to work out what to spend any new money on than promise an arbitrary figure.

US Defence Secretary Pete Hegseth last week told Australian minister Richard Marles that America wants Australia to lift its spending rapidly to 3.5 per cent of GDP.

Defence Personnel Minister Matt Keogh said the point of setting up a biennial formal process was to make sure “there is a regular drumbeat of those activities” in assessing what the strategic situation meant for capability, acquisition, sustainment, “and how that flows into the budget”.

“The point around the National Defence Strategy and that being updated and reported to Parliament every two years is it makes sure that the entire system ... is doing that process in an orderly way and providing that public transparency around how we are engaging in supporting Defence and building the capability that’s required in the strategic circumstances we face as those change as well,” he said.

His comments came a day after Defence Industry Minister Pat Conroy said the Government was “open to having a conversation about increasing defence spending” but also pointed to the national defence strategy as a way to focus on doing what mattered most first.

Chief of the Defence Force David Johnston said the two-yearly strategy gave Defence the chance to offer its “frank advice” on the need to increase spending.

The previous national defence strategy was released in April 2024 and the next one, which Defence has already started writing, is expected early next year.

But as allies like the United Kingdom and Germany increase their spending commitments, the pressure is on Australia to follow suit.

Strategic studies expert Peter Dean said while the Prime Minister was taking the right approach in prioritising capabilities over a dollar figure, the spending as a proportion of GDP figure had become a “signal of will” on the international stage.

“(It) has become a political proxy, both internationally and domestically, about commitment and will in terms of defending yourself, but also matching your international partners. And of course, certainly the Trump administration has taken that proxy amount and has doubled and tripled down on that,” he told The Nightly.

“Of course, it’s actually a really bad way to do defence funding, because GDP goes up and GDP goes down.”

However, he saw the openness of government to spending more as a good starting point.

The release of the defence strategy would give the Government a chance to convince sceptical voters why spending had to be increased, he said.

Mr Albanese is expected to meet Mr Trump when he travels to Canada for the G7 summit later this month for a discussion likely to canvass the AUKUS partnership, Defence spending, trade and critical minerals.

Professor Dean said it appeared Mr Albanese was positioning himself to have a conversation with the President “that moves beyond the vagaries of GDP numbers to discuss things about specific capabilities and specific things that we might want to partner with the US on” in a more nuanced way.

But he was sceptical whether the tactic would work.

“President Trump is so mercurial and President Trump has proven he’s not into the depths of policy nuance,” he said.

“He skates along the surface of things, and he loves shorthand proxies to explain almost everything, whether they have a basis in truth or not.”