A Sound Strategy, Still Underfunded
- Jennifer Parker
- Apr 20
- 4 min read
20 April 2026 | Jennifer Parker
Does Australia have the capability to defend itself and protect its maritime lifelines? Under the current funding profile, the answer is no, we would be relying on the United States to do it for us.
The second iteration of the National Defence Strategy arrives against the backdrop of conflict in the Middle East already affecting Australia’s fuel, fertiliser, plastics supply and more.
The petrol pump is a visible reminder that, as an island nation with the world’s third largest exclusive economic zone, our critical vulnerability lies in our dependence on secure maritime supply chains to sustain the economy and our capacity to fight.
The strategy recognises this reality and reflects a more dangerous strategic environment. But despite the rhetoric and announced increases in defence spending, it is likely to remain a well-written document that is not properly resourced, cannot be delivered, and leaves Australia no safer.
Defence spending quickly becomes emotive. Some call for 5 per cent of GDP with little explanation of what capability that would buy. Others argue any increase comes at an unnecessary impact on health, education and housing. Neither view is serious.
At its core, defence spending is about risk. It is about whether Australia has the capability to defend itself and protect the flows of fuel, food, fertiliser and goods that keep the country functioning.
As we are learning in the current fuel supply crunch, the flow of these critical supplies are the foundations of economic stability and national power. Defence capability is, in effect, an insurance policy against conflict and coercion.
Put plainly, wars are becoming more frequent, and the chances of Australia being drawn into one are increasing.
And the risk is rising. In recent years there has been more state-on-state conflict than at any time since the Second World War.
The strategy itself notes that “international norms against the use of force and coercion are weakening, with more states already engaged in conflict at the start of 2024 than at any point since 1946”.
Put plainly, wars are becoming more frequent, and the chances of Australia being drawn into one are increasing.
The problem is not the strategy. It is the funding. As Defence Minister Richard Marles said in 2023, “strategy without money is just hot air”. He was right. Yet, that is where we find ourselves in 2026.
The government has committed an additional $14 billion over the next four years and $53 billion over the decade. That sounds substantial. It is not.
The claim that defence spending will reach 3 per cent of GDP by 2033 relies on a revised measure that includes items such as veterans’ pensions, which do not generate capability. Under traditional measures, spending sits closer to 2.3 to 2.5 per cent of GDP.
This is the first government in a decade to lift defence spending, which deserves acknowledgment. But the increase is marginal when measured against the capability required and the risks Australia now faces.
As a share of the economy, spending remains below Cold War levels, despite a far more complex and contested strategic environment.
The government has been keen to highlight its record compared with previous governments, which is a clear increase and improvement. But the strategy itself makes clear that the risk of conflict is significantly higher than it was even two years ago. Spending has increased. The risk has increased faster.
The test is simple: does Australia have the capability to defend itself and protect its maritime lifelines? Under the current funding profile and Integrated Investment Program, the answer is no, we would be relying on the US to do it for us.
A central theme of the strategy is greater self-reliance within the alliance. Yet, Australia’s Defence Force today has less capacity overall to operate independently and execute key missions than it did during the Cold War.
Despite the focus on the maritime domain, Australia still has just 10 surface combatants, about 70 per cent of which are ageing and of limited utility in modern naval warfare. Sustainment is constrained, with only two replenishment ships to keep the fleet at sea.
Reforms welcome
Protecting maritime trade is not simply a numbers game, but even on that measure the gaps are obvious. While Thursday’s announcements will improve mine warfare and seabed capabilities, on the face of things they do not appear to close the broader gap.
Much has been achieved over the past two years. There have been reforms to procurement, progress in domestic missile production and acquisition, and long-term plans to expand the navy through new surface combatants and nuclear submarines.
But as risk has increased, decisions should have been taken to accelerate the Hunter-class frigates, consider additional or upgraded Mogami-class vessels, expand replenishment capacity, and rapidly address mine warfare shortfalls. Those decisions have not been made, most likely due to resourcing constraints.
The strategy is sound, but it is not matched by the resources required to deliver it. The fiscal outlook is constrained, with inflationary pressures and even the International Monetary Fund calling for governments to rein in spending. That does not make this an easy ask, but it does not make it any less necessary.
However defence spending is measured, the question is capability. Do we have what is required to defend Australia in a more dangerous world? We do not. The plans announced on Thursday do not change that. Until they do, the strategy will remain constrained by funding, and Australia will remain exposed.
