Prime Minister Anthony Albanese has left the door open to increasing Australia’s defence spending to three per cent of GDP.
Mr Albanese insists any decision will be based on national interest, not external pressure, amid demands from US President Donald Trump and the Coalition.
The Trump administration has called on Australia to lift defence spending to 3.5 per cent of GDP while the Coalition has committed to 3 per cent.
Speaking at the National Press Club on Tuesday, Mr Albanese stressed that his decision on defence investment would be based on capability above all else.
“I think that Australia should decide what we spend on Australia’s defence. Simple as that,” Mr Albanese said.
While he didn’t rule out lifting spending, he said that any increase would be driven by clearly defined capability needs rather than political pressure.
“I’ve made it very clear—we will support the capability that Australia needs,” Mr Albanese said.
“Arbitrary figures lead to a cul-de-sac. And we want to make sure as well that every single dollar that defence spends results in actual assets.”
The remarks came in response to a question from Sky News referencing former defence chief Angus Houston’s recent comments at the US Studies Centre.
Mr Houston—who co-authored the Albanese government’s Defence Strategic Review—argued that “AUKUS must be a net addition to Australia’s military capability”.
He said that “the only way (it) can be a net addition… is to increase our defence spending to 3 per cent of GDP as we move into and through the 2030s”.
Mr Albanese praised Mr Houston as “a friend” whose advice he respects, but pushed back on the notion that anyone else could dictate military policy.
US Defence Secretary Pete Hegseth recently urged Australia to lift defence spending to 3.5 per cent of GDP, up from the 2.33 per cent projected by 2033.
The Coalition, meanwhile, has pledged to lift spending to 3 per cent of GDP in order to counter growing regional threats.
Defence Chief Admiral David Johnston also told a defence summit on Wednesday that his department would likely ask for a funding boost in the next biennial review.
“The opportunity we have with the biennial cycle now is to keep coming back and reviewing the strategy,” he said.
“Looking at the opportunities or where the investments are required, putting the case to government to increase the defence expenditure where we believe it is needed.”
While refusing to be drawn into a bidding war on military budgets, Mr Albanese’s remarks suggest a willingness to increasing defence spending.
With Donald Trump expected to attend the G7 summit in Canada on June 15, Mr Albanese is expected to raise these issues face-to-face.
Mr Albanese’s reticence to commit to any increase in defence spending followed his National Press Club address in which he said he would stick to his election mandate.
Despite securing a resounding victory at the federal election, Mr Albanese reaffirmed his commitment to governing within the mandate Labor took to voters.
This includes his election focuses on healthcare, housing, renewable energy and cost of living support.
“Our government’s vision and ambition for Australia’s future was never dependent on the size of our majority,” Mr Albanese will say.
“But you can only build for that future vision if you build confidence that you can deliver on urgent necessities.”
The tone reflects a cautious approach, aimed at reinforcing “public trust in democratic institutions” rather than leveraging political capital for bold reform.
The Albanese government has control of the lower house and needs only the Greens in the Senate to pass legislation.
