Australia's Labor government has unveiled its 2026 National Defence Strategy, committing an extra A$53 billion to military capability over the next decade and an additional $14 billion over the next four years. Defence Minister Richard Marles presented the plan at the National Press Club in Canberra on Thursday, describing it as "the biggest peacetime increase in defence spending in our nation's history." Total funding across the defence portfolio will reach $887 billion through to 2035–36, with roughly $425 billion allocated to capabilities.

Under the traditional measure of defence spending, Australia currently spends around 2% of GDP, a figure that was already on track to reach approximately 2.3–2.4% by the early 2030s. The new strategy pushes that figure to around 2.4% of GDP under the conventional definition. However, the government has also cited a figure of approximately 3% of GDP — a calculation it describes as being measured "in NATO terms," which includes a broader range of defence-related expenditures beyond core military appropriations. Critics note that this wider accounting makes the headline spending figure appear larger than a narrower definition would suggest.

The announcement falls short of demands from US President Donald Trump, who has called on American allies to spend as much as 3.5% of GDP on defence to reduce dependence on the United States. Senior Pentagon officials, including Elbridge Colby, have specifically cited the 3% threshold when pressing Australia to do more. Australia is a key partner in the AUKUS agreement — a trilateral security pact with the United States and the United Kingdom — under which Canberra has committed at least $368 billion to acquire nuclear-powered submarines.

Among the strategy's key priorities is drone and counter-drone capability, with between $12 billion and $15 billion earmarked over the next decade, prioritising local manufacturing. The government also plans to use private capital investment to fund major projects "off budget," including a landmark upgrade of the Henderson defence precinct in Western Australia, a shipbuilding and submarine maintenance hub near Perth, where up to $25 billion in combined public and private spending is anticipated over ten years. Defence economists have raised concerns that off-budget financing can obscure the true cost of government programmes.

Marles framed the strategy as a response to a fundamentally changed security environment, arguing that long-held assumptions — including Australia's geographic remoteness and relative military superiority in the Indo-Pacific — are no longer reliable. "Australia faces its most complex and threatening strategic circumstances since the end of World War II," he said, citing the erosion of international norms, intensifying US-China rivalry, and rapid military modernisation across the region. The defence package is expected to feature prominently in Australia's federal budget on 12 May.