US asks Australia to raise defence spending to 3.5% of GDP

Australia’s prime minister said Monday that the government will first determine its defence capability needs before announcing any changes to defence spending, responding to a U.S. call for a higher budget.

U.S. Defence Secretary Pete Hegseth recently urged Australia to increase its defence spending to 3.5% of gross domestic product as soon as possible. Prime Minister Anthony Albanese emphasized that Australia will decide its defence priorities independently and noted that his government has already committed to accelerating A$10 billion in defence spending over the next four years.

“We’re continuing to lift up,” Albanese said, pointing to a 2.3% GDP spending goal set for 2033. The discussion came during a meeting between Hegseth and Australian Defence Minister Richard Marles last Friday, where they also talked about boosting U.S. defence capabilities in Australia and enhancing industrial cooperation.

Albanese, re-elected in May, has yet to meet with U.S. President Donald Trump and did not mention defence spending in this year’s national budget, saying a A$50 billion increase over a decade had already been announced.

Experts note Albanese wants any defence budget increase to be viewed as a sovereign decision, especially ahead of his anticipated meeting with Trump, where trade issues are also expected to be discussed.

Historically, Australia’s defence spending was around 3% of GDP in 1987 but fell to about 2% of GDP by 2025. Analysts say increasing the budget is necessary for Australia to maintain self-reliance amid regional threats, particularly from China.

Australia has pledged A$368 billion over 30 years under the AUKUS partnership to acquire and build nuclear-powered submarines, while also expanding missile acquisition and production.