Defence spending a hot issue

Prime Minister Anthony Albanese faces a likely meeting in Canada with US President Donald Trump after initially rebuffing a US call for Australia to immediately increase its defence spending. Mr Albanese is expected to meet the US president on the sidelines of the Group of Seven nations meeting next week. In a meeting at the Shangri La Dialogue with Deputy Prime Minister and Defence Minister Richard Marles, US Defence Secretary Pete Hegseth urged Australia to lift its defence spending to 3.5 per cent of GDP. Such a lift would mean Australia spending around $40 billion extra a year or almost $100 billion a year on defence. DPM Marles immediately said Australia was open to the conversation with the US and allies on lifting defence spending. Washington also issued a statement saying it wanted to see the increase as soon as possible. The move followed a speech in which the US Defense Secretary warned all allies needed to lift defence spending to meet the threat from China and a possible invasion of Taiwan. However Prime Minister Albanese was at odds with Minister Marles. He suggested Australia would not just pluck some GDP figure out of the air and defence spending was dependent on determining the capabilities needed and then putting aside the money to pay for it. Prime Minister Albanese said the Albanese government had already put an extra $10 billion into Defence over the forward estimates and would add almost $60 billion over the decade. The Labor Government has faced persistent calls to increase defence spending including from AIDN which called for an increase although not without further procurement reform to provide more opportunities for SME’s. Liberal Shadow Minister for Defence Angus Taylor also called for an increase in Australia’s defence spending. The Coalition promised ahead of the election that if it won government, it would increase spending from the current 2 per cent of GDP to 2.5 per cent by 2030 and aspire to 3 per cent within the decade. Luminaries who have called for a lift in defence spending include former Labor Defence Ministers Kym Beazley and Joel Fitzgibbon, former Defence Secretary Dennis Richardson, and former Defence Force Chief and Air Chief Marshal Sir Angus Houston.

Defence cash strapped

Defence Force Chief Admiral David Johnston told a thinktank conference in Canberra this week that the defence budget was under pressure with choices to be made on spending priorities. Admiral Johnston expanded on his comments during a panel to suggest that Defence would always provide government with a frank assessment of the capabilities and budget needed to meet the challenges of a threatening strategic environment. Though Admiral Johnston did not make a direct appeal for greater defence spending he was making an appearance at the annual Australian Strategic Policy Institute conference in Canberra. The thinktank was criticised by Prime Minister Albanese after it released a report ahead of the conference calling for a spending increase, warning that the ADF was ill-prepared for a near-term conflict. The Defence Chief warned that for the first time since World War II, Australia needed to consider Australia as a homeland from which to conduct combat operations.

Trump ups steel and aluminium tariffs

US President Donald Trump has raised tariffs on steel and aluminium imports to 50 percent in a move which will provide a further blow to the defence sector. Australian steel and aluminium exports to the US have faced a 25 percent hike since mid-March but Mr Trump announced the higher tariff level from June 4. Trade Minister Don Farrell described the latest hike as “not the act of a friendly country’’. Australia imported about 2 per cent or $800 million a year in steel and aluminium to the US, prior to the first round of tariffs. Undoubtedly removing tariffs including the 10 per cent across the board general tariff the Trump administration has imposed will be top of Prime Minister Albanese’s agenda when he is expected to meet the US president on the sidelines of the G7 summit in Canada. Mr Albanese has offered to review the biosecurity arrangements which have kept US beef imports out of Australia for several decades, since the outbreak of Mad Cow disease ahead of the expected meeting. AIDN has warned higher global tariffs triggered by the Trump administration are harmful to Australia-US defence trade. AIDN has called for the US and Australian governments to mitigate the negative impact of tariffs and not allow them to disrupt essential defence trade. DPM Marles has said the Albanese government continues to lobby Washington over the tariff issue.

Final federal election result

The Federal election is all but over. The Coalition has lost the last seat that was in doubt in the Lower House to a Teal Independent. Nicolette Boele wrestled the long-term Blue Ribbon, North Sydney seat of Bradfield from Liberal candidate Gisele Kapterian, according to the Australian Electoral Commission (AEC). Though the Coalition has 40 days to lodge a challenge with the Court of Disputed Returns if it is unhappy with the final result. The vote was so close in the final seat that it had to undergo a full recount. Ms Boele won in the end by just 26 votes. The result ends the Liberal Party’s 76-year hold on the Sydney seat. The seat was held by former Liberal Communications Minister Paul Fletcher. The final seat call means Labor finishes with 94 seats, the Coalition 43, Independents 10, Greens 1, Katter’s Australia Party 1, and Centre Alliance 1, in the 150 seat House. The swing to Labor was 3.1 per cent, the outcome seeing Labor picks up 55.2 percent of the two-party preferred vote and the Coalition 54.2 percent.

And in the Senate

All State Senate counts have now also been declared by the AEC. The Coalition has lost five Seats, three to Labor and one seat each in NSW and Western Australia to One Nation. However, Labor also picked up the bonus of a Greens Senate seat in WA where Greens Senator Dorinda Cox defected to Labor post-election. In the new Senate Labor will hold 29 seats, the Greens 10 still giving the two parties the numbers to pass legislation on which they can agree. The Coalition will have 27 seats. There will be ten other crossbenchers in the 76 seat Senate, including four One Nation Senators. ACT Independent David Pocock has been re-elected as has Jacqui Lambie from Tasmania. Victorian UAP Senator Ralph Babet continues in office having been elected in 2022. The other three Senators have departed from the party for which they were elected in 2022. These are former WA Labor Senator Fatima Payman, former Victorian Greens Senator Lidia Thorpe, and former Tasmanian Jacqui Lambie Network Senator Tammy Tyrell. The new Senate will take shape from July 1.