Defence spending and AUKUS are hot issues

Prime Minister Anthony Albanese faces a likely meeting in Canada with US President Donald Trump with the future of AUKUS, defence spending and US tariffs all on the line. The stakes for the Australian Prime Minister could not be higher. The US fired its latest shot in putting pressure on Australia to lift defence spending to 3.5 per cent when it announced this week that it would review the AUKUS program. This led to speculation as to whether the announcement was simply a gambit to get Australia to lift its defence spending or it would lead to cuts to AUKUS or its abolition altogether. The US has certainly dropped some hints that it doesn’t believe one aspect of AUKUS is achievable and that is the promise to sell Australia three to five Virginia class nuclear powered conventionally armed submarines from 2032. The argument the US undersecretary for Defence Elbridge Colby advances is that the US can’t produce enough submarines to supply those promised to Australia. That is despite Australia promising under AUKUS to contribute $A4.6 billion to boost the production of submarines in the US. The second factor is Australia has been ambiguous about whether it would deploy its Virginia Class submarines to any US led conflict against China over Taiwan. But given Chinese President Xi Jinping wants his forces to be ready to take Taiwan by force by 2027 it may come before the transfer of the submarine capability to Australia occurs. Prime Minister Anthony Albanese immediately rebuffed calls to lift spending to 3.5 per cent of GDP. Such a lift would mean Australia spending around $40 billion extra a year on defence. Prime Minister Albanese suggested Australia would not just pluck some GDP figure out of the air and defence spending was dependent on determining the capabilities needed and putting aside money to pay for it.

AIDN position on US AUKUS review

AIDN this week released a position statement on the US AUKUS review urging all three AUKUS governments not to undermine the growing defence cooperation between the three partner countries. The statement goes on to state that Australian small and medium enterprises (SMEs) have made significant financial, technical, and workforce investments in anticipation of participating in the AUKUS enterprise. These companies are actively forging long-term partnerships with their American and British counterparts and are critical to building Australia’s sovereign industrial capability and expanding the nuclear-powered submarine shipbuilding capacity of the trilateral partners. Should the AUKUS initiative be scaled back or stalled, the consequences for local industry would be severe, undermining not only the viability of those businesses but also Australia’s ability to contribute meaningfully to our shared strategic objectives. AIDN calls on the Australian, US, and UK governments to reaffirm their commitment to AUKUS and provide certainty for industry. In particular, AIDN urges the US Government to ensure that any review process results in strengthened, not diminished, defence export collaboration and SME participation across all three nations.

Canberra seeks US tariff relief

US tariffs are another topic on the agenda if Prime Minister Albanese gets a one-on-one with the US President in Canada and they have plenty to talk about. Donald Trump only recently 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 some 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. Deputy Prime Minister and Defence Minister Richard Marles has said the Albanese government continues to lobby Washington over the tariff issue.

Tasmania goes to the polls

A political crisis engulfing the Rockliff Liberal Government in Tasmania will see the State go to the polls on July 19. The development came after Tasmanian Liberal Premier Jeremy Rockliff faced a no-confidence motion in the parliament. The no-confidence motion was lost 18-17 and means Tasmania will go to the polls for the second time in just 15 months. The motion was launched by Labor Opposition Leader Dean Winter and supported by the Greens and the crossbench. Mr Winter said the no-confidence motion was justified because the government had mismanaged the State budget amid burgeoning State debt, bungled the Tasmanian ferry replacement and also mismanaged the controversial AFL stadium project. Mr Rockliff responded by labelling Opposition Leader Don Winter a wrecker who would be responsible for an unnecessary election.

Australia-US missile agreement

The Albanese Government has enhanced the Australian Defence Force’s long-range strike capabilities and support for domestic defence industry, with the establishment of a new cooperative program with the United States for the Precision Strike Missile (PrSM). An Australia-US MOU provides the ADF access to PrSM munitions and establishes PrSM as a cooperative program between Australia and the United States. This opens the door for Australian industry participation in the PrSM supply chain, including for locally manufactured components and sub-components. The MoU also provides options for future domestic manufacturing and maintenance of PrSM in Australia, with negotiations on options expected to commence later this year. PrSM is a next generation surface-to-surface missile that can deliver potential effects at longer ranges, providing enhanced lethality to Defence’s integrated and focused joint force. The missile can be fired from High Mobility Artillery Rocket System (HiMARS) launch vehicles. The first of these vehicles arrived in Australia in March 2025, giving the Australian Army a world leading strike capability.