US to Australia: Increase Military Expenditure to 3.5% of GDP
The United States is urging Australia to significantly increase its defense expenditures to reach 3.5% of its GDP “as soon as possible.” The request has been made by US Defense Secretary Peter Hegseth in a time of rising regional tensions and continuous security commitments under the AUKUS pact.
Washington perceives a rising Chinese threat, specifically from Taiwan, which prompts the US to pressure Australia to increase its defense budget. Hegseth’s statement clearly assumes that allied nations should increase their spending on shared security responsibilities.
Albanese Responds: Capability Comes First
The Australian Prime Minister, Anthony Albanese, also reacted by emphasizing an even-handed strategy. This was done speaking from drought-hit South Australia: “What you should do in defense is determine what you require and your capacity, and then fund it.”
The US is pushing Australia to increase its defense budget, but Albanese says strategic requirements—not targets—will guide the government. He reiterated Canberra’s commitment to reaching 2.3% of GDP in defense spending by 2033.
Defense spending is to increase by A$10 billion (US$6.5 billion), but even that is short of what Washington has demanded.
Fiscal Pressures and Domestic Priorities
However, other factors are putting pressure on the Australian budget, making it difficult to achieve defense budget goals. Natural disasters, such as the recent New South Wales floods and Cyclone Alfred, will cost billions in unplanned outlays, Treasury officials claim.
The US forces Australia to increase its defense budget at a time when budget pressures are rising. Economists are warning that rising to 3.5% of GDP would be A$100 billion (US$65 billion) every year—A$40 billion more than the current defense budget.
Matt Grudnoff, a senior economist at the Australia Institute, said an increase of this type would see Australia become the world’s ninth-largest defense spender. “We’d be bigger than France and Taiwan, and almost as large as the UK,” he said.
AUKUS Commitments and Submarine Investments
Australia’s strategic alignment with the US has led to unprecedented defense commitments, unseen in a century. Canberra will purchase US-made nuclear-powered submarines under the AUKUS deal with Washington and London for a projected A$368 billion (US$238 billion).
Despite these massive financial expenditures, the US pressures Australia to increase its defense budget. The AUKUS submarine program alone can reshape Australia’s defense industry base for decades to come.
Hegseth and Australian Defence Minister Richard Marles also talked about collaborating on building defense manufacturing in Australia, Pentagon officials added. The two agreed to expedite US military deployments and co-production under the alliance.
Domestic Analysis of Defence Industry Practice
At the same time, Australia’s arms exports are increasingly under the spotlight following the Israel-Gaza conflict. Street protests and court cases have flared outside arms plants and ports, challenging Canberra’s involvement in the export of parts used in conflicts abroad.
The US is exerting pressure on Australia to increase its defense budget, but public concerns about the ethics and transparency of arms production could slow the process. The Albanese government continues to try to balance international obligations with domestic political factors.
China and Taiwan Are Pivotal Flashpoints
The call for increased Australian defense expenditures has a lot to do with US attitudes toward China. US Secretary of State Marco Rubio threatened a near-term attack on Taiwan during the Shangri-La Dialogue.
Rubio expressed his seriousness in his statement. His remarks followed Hegseth’s call for allied countries to prepare for mounting security threats in the Indo-Pacific.
The US pressures Australia to increase its defense budget, mainly because of Beijing’s treatment of Taiwan. Australian Prime Minister Albanese, however, clearly stated that Australia has a long-standing bipartisan policy to uphold the status quo in the Taiwan Strait.
Conclusion
Strategic Autonomy vs. Alliance Expectations Washington is increasingly pressuring Australia to contribute to the defense burden as regional threats evolve.
Canberra has steadfastly maintained its position, asserting that it will determine its security profile based on national interests and capability requirements. The US is exerting pressure on Australia to augment its defense budget, yet the future requires striking a delicate equilibrium between fiscal prudence, strategic innovation, and alliance politics.
