The United States has called on Australia to increase its defence budget to nearly $100 billion annually “as soon as possible,” urging greater support in countering China’s influence in the Indo-Pacific.
The message was delivered by US Defense Secretary Pete Hegseth to Australian Defence Minister Richard Marles during their meeting at the Shangri-La Dialogue in Singapore, where the US-China rivalry continues to dominate discussions.
The call for higher Australian defence spending follows sharp accusations from China, which over the weekend rejected US claims that its military activities are part of an invasion rehearsal for Taiwan, labelling the assertions “groundless.”
At the same time, US President Donald Trump announced plans to double tariffs on Australian steel and aluminium, a move Prime Minister Anthony Albanese has denounced as “inappropriate” and “economic self-harm.”
Australia Resists Arbitrary Targets
Australia currently spends around 2% of GDP on defence. Lifting that to 3.5% would require an additional $40 billion per year — roughly equal to the federal government’s aged care budget.
Prime Minister Albanese pushed back against the US demand, stating Australia would not be dictated to on how much to spend.
“You base defence spending on capability requirements, not on random percentages,” Mr Albanese said. “That’s what my government is doing. The opposition made defence announcements without saying what they were for or how they would be funded. That’s not a responsible approach.”
Still, Australia’s defence budget is set to grow to 2.33% of GDP over the next eight years.
US Calls for Faster Action
Secretary Hegseth, however, emphasized the need for urgency, warning that the threat from China is “real and potentially imminent.” The US currently spends around $US1 trillion annually on defence — about 3.4% of its GDP and more than the combined spending of the next nine highest-spending nations.
Coalition Pushes for Bigger Defence Budget
The federal Opposition has proposed an additional $21 billion over five years for defence and set a long-term goal of 3.5% of GDP in defence spending. Shadow Finance Minister James Paterson backed the US position, arguing that Australia’s current outlay is inadequate for the current strategic environment.
“We are living through the most dangerous period since World War II,” he said. “We need to spend more to ensure our security.”
Government Open to Further Increases
On Friday, Defence Minister Richard Marles acknowledged the US request and said Australia is open to discussions about increased defence investment.
“I won’t commit to a specific number, but the topic certainly came up,” Mr Marles said. “We understand the US is asking more of its allies, and we’re open to that conversation — in fact, we’re already having it.”
Think Tank Criticism and Upcoming Talks
Last week, the Australian Strategic Policy Institute warned that Australia risks ending up with a “brittle and hollowed” defence force without greater investment — a conclusion Mr Albanese dismissed as a “predictable” view from the think tank.
The Prime Minister is expected to meet President Trump later this month during the G7 leaders’ summit in Canada, where defence spending and regional security are likely to feature in their talks.
