Comment

Hugh White
Can Albanese fix Australia’s defence?

The news that Washington is reviewing the AUKUS submarine deal puts a bombshell under Australia’s defence policy and sharpens the debate of recent weeks about defence spending. In that debate, suddenly 3 per cent is the new 2 per cent. For 30 years, 2 per cent of gross domestic product has been widely accepted as the benchmark for responsible defence spending. Recently, the number has drifted up towards 2.5 per cent. Now, under pressure from United States Secretary of Defense Pete Hegseth, people, including the Coalition, are seriously considering 3 per cent.

This is real money. Each per cent of GDP means about $28 billion, every year. Defence is important, but it is a big mistake to spend more on it than necessary, because every dollar taken from other priorities for defence makes us a less educated, less healthy and less productive society.

We will never discover how much we need to spend on defence by bandying GDP percentages. In this debate they are close to meaningless, as Anthony Albanese has, to his credit, made clear. The only sensible way to set the defence budget is to build the case step by step. What broad strategic objectives do we want our armed forces to be able to achieve? What operations do they therefore need to be able to perform? What capabilities would perform those operations most cost-effectively? How much do those capabilities cost?

To some, and it seems this includes the Coalition’s new Defence spokesman, Angus Taylor, there is no need to go to all the trouble of debating these questions. They think we need to spend whatever someone in Washington wants us to spend, apparently in the belief that doing so will by itself guarantee our ally’s support and hence our security. This is not how alliances work. The US will defend us if, and only if, it serves their vital interests to do so – and that depends on their strategic circumstances, not on our defence budget. How much we need to spend depends on our strategic circumstances, which only we can judge.

That starts with understanding the threat. Everyone in politics tells us that we face our biggest strategic threats since World War II. They do not explain clearly why that is, however, or what it means. Instead, they hint darkly at China’s growing military power and ambition, and its threats to Taiwan. We are left to join the dots… China’s threat to Taiwan threatens Australia.

Does it? Well, yes and no. Beijing’s subjugation of Taiwan would be a tragedy, but it would not threaten our security directly. What would threaten our security is deciding to go to war with China alongside the US to defend Taiwan. That is, in fact, the only currently credible circumstance in which Australia would face a direct military threat anytime soon. Is this a good reason to be spending a lot more on defence?

The answer is no. That is not because a Chinese attack on Taiwan is unlikely: it is a clear and present danger. There are, however, three good reasons why we should not frame our defence policy around fighting alongside the US in this contingency.

The first is that, despite Pete Hegseth’s tough talk in Singapore recently, Donald Trump’s isolationist America has no stomach for this fight. Defending Taiwan may well be vital to the credibility of US global leadership but, in the face of dangerous rivals such as Russia and China, preserving global leadership is no longer seen as such a big imperative.

The second reason is that, if the US did fight China, it would be the biggest war since 1945, and very likely a nuclear war, which the US would not win. It is a war that would fail, saving neither Taiwan nor America’s position in Asia.

Third is that no Australian contribution would make any material difference to this outcome. So what, really, would be the point? There would be no strategic gain or moral merit in following our ally into yet another massively mistaken adventure, like Iraq or Afghanistan but a thousand times more costly.

There is a much better and more compelling reason to increase our spending on defence, and that is the very high likelihood that within a few decades, and perhaps much sooner, the US will withdraw strategically from Asia and abandon its alliance with Australia. Indeed this is already happening – very plainly under Donald Trump and less obviously but just as significantly under Joe Biden. It is, however, something our political leaders never mention.

This is the biggest transformation in Australia’s strategic circumstances since at least World War II and it changes our long-term threat assessments in two ways.

First, it gives Asia’s great powers – China, India and eventually Indonesia – much more freedom to use armed force around the region, including potentially against Australia. This does not mean that China threatens Australia militarily today. Anyone who thinks that the Chinese naval task force’s deployment around Australia shows otherwise does not understand what a military threat looks like. What it does mean is that if in future decades China or another great power develops an intention to attack us, they would have the capacity to do so. This is new.

The second change is that, if we ever do face such a threat, we would face it alone. For the first time since European settlement there would be no “great and powerful friend” to defend us.

Together, these shifts require a radical transformation of our defence policy. Australia faces the challenge of preparing to defend itself independently against the forces that a major Asian power could deploy and sustain against us. This is not impossible. Our geography offers huge advantages, as do the technological trends that decisively favour defence over offence, especially in maritime warfare.

But we will have to spend a lot more, not just to match the forces that potential adversaries have now but to keep pace with the even bigger forces they will develop over the next few decades. That probably will mean about 3 per cent of GDP. We will have to spend it much more wisely, by rigorously applying the logic of defence policy – defining strategic objectives, setting operational priorities, selecting the most cost-effective capabilities, and delivering them as cheaply and efficiently as possible. It is a long time since our defence policy was subjected to this kind of ruthless analysis.

The broad outlines of the posture that should emerge from this process are clear. The priority is to build forces that can deny our air and sea approaches to an aggressor as cost-effectively as possible. The forces we are building today are a very long way from this, and AUKUS is at the heart of the problem. The security partnership serves the wrong strategic objective – supporting the US, not defending Australia. The nuclear-powered submarines it aims for would not achieve our operational priorities as cost-effectively as conventionally powered subs, and their cost is already crowding out investment in the other capabilities we need. More than that, they will never be delivered. We will never get our defence policy on track to meet the real long-term risks we face until AUKUS is scrapped.

So what will Anthony Albanese do? He responded robustly to Hegseth’s blunt demands that we spend more on defence, saying that these were sovereign decisions for Australia to make. This encourages hope that in his second term, after a decisive electoral win and facing a demoralised and discredited opposition, Albanese will no longer feel compelled to make his defence policy a carbon copy of the Coalition’s. Clearly the politics of defence have changed somewhat with Donald Trump’s return to the White House. It is a lot less credible and politically appealing now to make everything about the US alliance.

That does not mean Albanese is yet prepared to take the big steps required to bring our debate about defence policy and defence spending into line with the massive shifts in our strategic circumstances. To do that, he would have to admit AUKUS is a mistake, explain that the US alliance is a dwindling asset, acknowledge that we now need to build our defences independently, and argue for substantial and sustained increases in defence spending. All this should be much easier to do now that Washington itself is having doubts about AUKUS – doubts that go to the whole question of America’s future in Asia. Albanese could seize this opportunity to reframe our defence debate.

But... to lead the Australian people through such a massive shift in policy, he himself would need to engage with the issues confronting Australia and its future in Asia in a way he has never done before. He would have to follow the examples of Arthur Calwell, Gough Whitlam, Bob Hawke, Paul Keating and Gareth Evans – people who understood that there was more to government than politics. Nothing Albanese said during the election campaign, and nothing he said at the National Press Club this week, suggests that he is ready to follow in their footsteps. One fears that the only question on his mind when he ponders the future of defence spending is: “Are there any votes in it?”

Hugh White’s Quarterly Essay, Hard New World: Our Post-American Future, was published on June 2.

This article was first published in the print edition of The Saturday Paper on June 14, 2025 as "Can Albanese fix Australia’s defence?".

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