MARLES RAMPS UP DEFENCE; ENERGY PACT
Defence spend poised to rise to three per cent of GDP
Deputy Prime Minister Richard Marles has announced an additional $14 billion over four years and $53 billion over the decade to fund an upgraded Integrated Investment Program (IIP) in Defence. Mr Marles and Defence Industry Minister Pat Conroy said the additional funding would lift Defence spending to three per cent of gross domestic product by 2033, under the NATO measure. Complementing the IIP, the Government unveiled a new biennial National Defence Strategy, aimed at promoting greater national self-reliance, a stronger sovereign defence industrial base and greater co-ordination with regional partners. The IIP prioritises an enhanced undersea warfare capability, more lethal maritime capabilities, expanded long-range strike capabilities, integrated air and missile defence capabilities, multi-domain autonomous and uncrewed systems, counter-uncrewed air systems, and a resilient and secure multi-orbit satellite communications. Mr Marles linked the updated NDS and IIP to the establishment of the Defence Delivery Agency and reforms to the Defence Estate.
‘Middle powers’ facing greater defence load, says Marles
Meanwhile, the Deputy Prime Minister says Australia’s status as the world’s largest island nation, with the third-largest maritime domain, poses a unique defence challenge. Mr Marles told the National Press Club that the nation’s industrial base was relatively small, at 5.7 per cent of GDP, a factor historically addressed through a partnership with a major power. But the current strategic environment was challenging old assumptions: middle powers that did not take on more responsibility for their own security would be more exposed to coercion and face greater limits on their sovereignty. The Defence Minister said, however, that a greater focus on Australian self-reliance should not be confused with military self-sufficiency, and the US alliance would always be fundamental to the nation’s defence. In this context, Mr Marles noted that almost 80 per cent of the defence budget was now spent in Australia, and direct employment in the defence sector had grown by 14.5 per cent since 2022.
PM strikes energy, fertiliser deals with Malaysia, Indonesia
Australia and Malaysia have agreed to work together to improve bilateral energy security, committing to open, rules-based trade in energy products. Meeting in Putrajaya, Prime Minister Anthony Albanese and Malaysian PM Anwar Ibrahim formally resolved to promote open and stable trade flows between the two countries, including for essential energy supplies. Meanwhile, the PM has struck an agreement with Indonesia to facilitate the importation of 250,000 tonnes of additional agricultural-grade urea for Australian farmers. Urea is a nitrogenous fertiliser, and Mr Albanese said the deal would help to supply around 20 per cent of the remaining fertiliser needed for the current planting season.
Budget shake-up ahead for NDIS
Federal Treasurer Jim Chalmers has confirmed that next month’s Budget will contain a major shake-up of the $50 billion National Disability Insurance Scheme. Dr Chalmers said the NDIS was growing too fast for Australians to afford, with the scheme forecast to cost about $62 billion by 2028-29; more work was required to make it sustainable. The Treasurer also foreshadowed changes to the superannuation performance test, including to remove barriers to some types of investment.
Defence industry contributing $12 billion to economy
Australia’s defence industry contributed $12 billion to gross value added (GVA) in the national economy in 2024-25, latest figures show. The Australian Bureau of Statistics estimated that the defence industry’s economic contribution rose by 1.2 per cent, produced from around 5,100 domestic businesses. Around 63,500 people were employed in the defence industry sector, down by 2.6 per cent, with professional, scientific and technical services accounting for 42 per cent of GVA. New South Wales businesses contributed $3.2 billion, ahead of Victoria, $2.4 billion, and the Australian Capital Territory, $2.1 billion.
Australia-UK MOU to lift superannuation, pension investment
Federal Treasurer Jim Chalmers has signed a memorandum of understanding with his United Kingdom counterpart to further increase superannuation and pension capital investment between the two countries. Dr Chalmers signed the partnership with UK Chancellor of Exchequer Rachel Reeves in Washington DC, with the goal of expediting capital flow to support economic growth and reduce barriers to cross-border investment. Australia’s superannuation pool of $4.5 trillion is the fourth-largest in the world, while the UK’s pension market is the second-largest globally, holding assets of more than $5.7 trillion.