2026 for defence spending boost

Deputy Prime Minister (DPM) and Defence Minister Richard Marles used the Defending Australia Summit in Canberra this week to drop more hints on a second term increase in defence spending. Prime Minister Anthony Albanese has been under pressure from the US to increase Australian defence spending to 3.5 per cent of GDP or about $40 billion more a year. But the Prime Minister has said Australia will determine its defence spending based on capability need. DPM Marles told the conference the government believed it could save billions of dollars from the sale of defence land which was surplus to requirements and no longer used by defence. DPM Marles said this could be better spent on the broader defence budget. The audit of defence real estate was ordered as part of the 2023 Defence Strategic Review. DPM Marles has put new assistant minister and former national security adviser to Kevin Rudd, Peter Khalil in charge of producing a government response to the audit. DPM Marles also said Australia’s level of defence spending which currently sits at just over 2 per cent of GDP would be reviewed ahead of the release of the new National Defence Strategy which was due in 2026. On current trends Labor is set to spend an extra $57 billion in boosting defence spending to 2.33 per cent of GDP or to around $100 billion by 2033-34.

Trump-Albanese meeting NATO play

Prime Minister Albanese was considering attending a June 24-25 NATO Summit in the Netherlands to meet face-to-face with the US President. The move follows Mr Trump’s decision to quit the Group of Seven (G7) nations summit in Canada, early to deal with the Middle East crisis, ensuring a planned meeting with Australian Prime Minister Anthony Albanese did not eventuate. Mr Albanese in a press conference at the summit held ahead of Mr Trump’s early departure, said he was looking forward to meeting the US leader to discuss Washington’s ongoing commitment to the AUKUS agreement as well as lobbying for the lifting of tariffs imposed on Australian exports. Mr Trump on the other hand was expected to ask Australia why it had not acceded to a request from Defense Secretary Pete Hegseth to boost defence spending to 3.5 per cent of GDP, to counter the China threat. The US is also conducting a 30-day review of the AUKUS agreement to see if it fits in with “America first’’ principles. This triggered a chorus of alarm in Australia from defence analysts over whether the Trump administration wanted to wind the deal back or abolish it altogether. The most vulnerable tenet appears to be the agreement for the US to sell Australia 3-5 Virginia class conventionally armed nuclear-powered submarines from 2032, amid concerns the US will not have enough submarines for its own needs. This is despite Australia providing A$4.6 billion to support US submarine production. Opposition Leader Sussan Ley was critical of the Prime Minister for relying on talks on the sidelines of an economic and security conference for such an important first meeting. At least it appeared UK Prime Minister Keir Starmer was able extract an ongoing commitment to AUKUS from the US president during their meeting on the sidelines of the G7.

EU-Australia defence pact

Prime Minister Anthony Albanese has touted the opportunities for Australian defence industry in pursuing a defence and security pact with the European Union. Mr Albanese told a press conference on the sidelines of the G7 summit in Canada this week that the EU and Australia had agreed to begin negotiations on an agreement. Mr Albanese nominated areas such as defence industry, cyber operations and counter terrorism as areas where further cooperation could be developed. Mr Albanese said he hoped the agreement would open the way for procurement opportunities which were of benefit to Australian and European industry. Australia and the EU/NATO have been working closely together on supporting Ukraine, while European powers such as the UK and France have acknowledged the importance of the Indo-Pacific. The announcement came after Mr Albanese met with European Commission president Ursula von der Leyen and European Council president Antonio Costa at the summit. Mr Albanese also during the visit met with NATO secretary general Mark Rutte who has been calling on European nations to lift defence spending to 5 percent of GDP to support Ukraine and counter the growing threat from Russia.

Hanwha bid for Austal stake

Treasurer Jim Chalmers says a decision on whether Korean defence giant Hanwha can increase its stake in successful Australia maritime exporter Austal is likely in early September. Austal is a major shipbuilder in Australia and is part of the construction for major US Navy vessels such as the US nuclear-powered Virginia class submarine, which Australia is set to buy under the AUKUS pact. Treasurer Chalmers told Sky News this week that the Foreign Investment Review Board was still compiling its advice on the bid. He said the statutory deadline for decision was the first week of September, so the government still had the matter under consideration. Dr Chalmers said he was not going to pre-empt the FIRB’s advice, but it was obviously a sensitive decision, and the government would come at the decision in the same methodical, consultative way it considered all big decisions on foreign investment.

Alarm on welder shortage

The peak body for the welding profession – Weld Australia has issued a stark warning on a continuing shortage of skilled welders. CEO of Weld Australia Geoff Crittenden warns the AUKUS program is at serious risk unless more urgent action is taken to address the welder shortage. Mr Crittenden said Australia did not have enough welders to meet its own naval needs, let alone build submarines for Australia. He said US industry was also grappling with a similar workforce crisis. He said the US was producing just 1.2 submarines a year—far short of the 2.3 per year needed to meet its own requirements, let alone fulfil the AUKUS transfer to Australia. The American Welding Society estimated the US will need to fill 330,000 welding positions by 2028. He said in Australia; it was estimated industry would be up to 70,000 welders short by 2030. Mr Crittenden said Weld Australia had long called for a national strategy to address Australia’s own welding workforce shortfall, including stronger investment in TAFE, an overhaul of the national TAFE welding course, and the establishment of a Shipbuilding Welding Academy. Mr Crittenden welcomed the Australian Submarine Agency’s investment in a world-class submarine training facility in South Australia as a crucial step forward saying it was encouraging to see the government backing this once-in-a-generation endeavour with serious infrastructure. But the reality was Australia was starting from behind and Weld Australia was committed to working with the ASA and TAFE nationally to ensure the shortage of welders was addressed.