The latest ‘Cost of Defence’ report is out and makes for sober reading. With the say-do gap only growing, how sustainable is our strategy? ⬇️
Another National Defence Strategy purportedly addressing the most dangerous geopolitical circumstances in our region since WWII. A federal budget seeking to greatly increase the tax take, yet including little if any additional Defence funding. Are we dealing with fiscal reality as it is, or as we wish it to be?
For 25 years, the Australian Strategic Policy Institute has analysed Defence strategy and budgets through its annual ‘Cost of Defence’ report. The 2026 edition is clear, concise, and pulls no punches:
“Global conflict and tension are now so entrenched that they no longer mark a temporary period of disruption or deteriorating circumstances, but a long-term era of instability and insecurity in which further conflict is a credible possibility.”
Australia continues to hasten slowly, raising the bar on rhetoric while maintaining unipolar-moment settings in revenue. The AFR’s analysis of ASPI’s work captures the say-do gap plainly:
“ASPI found the government’s defence boost was back-loaded: of every dollar in the additional $53 billion spending, just 4¢ will be spent in the coming budget year. The remainder sits in the forward estimates, the decade-out years, the contingency reserve and so-called ‘alternative financing’ arrangements.”
In his recent National Press Club address, Richard Marles articulated the bind any Defence Minister faces: an Expenditure Review Committee navigating GDP per capita recession and accelerating welfare liabilities. Compounding this challenge, ASPI lays bare the cost of the bipartisan peace dividend taken at the Cold War’s end:
“By the most recent assessments, the cumulative defence underspend since the 1990s is in the order of $285 billion in lost capability investment… Australia isn’t building a defence force from scratch; we’re recovering from decades of structural underinvestment in a strategic environment that has materially deteriorated.”
‘She’ll be right’ is not a strategy and neither is an expenditure plan that assumes funding will flow in peacetime when it demonstrably hasn’t. The NDS names Deterrence by Denial as its cornerstone concept. The question worth asking is whether we’ve instead arrived at a strategy of fiscal denial.
If the necessary funding isn’t flowing for our current strategy, perhaps it’s time to adjust to peacetime constraints and redirect investment toward building genuine foundations for scale. Focus not just readiness on Day 1, but Day 90, Day 180, and every year thereafter.
Food for thought as always, Articles in the comments. And a well-earned tip of the hat to the ASPI team on 25 years of quality Defence budget analysis!
📷 via Department of Defence