As Anthony Albanese’s election euphoria fades, the hard work of his second term has begun. And there’s probably not much that’s more difficult than navigating his meeting with US President Donald Trump at the G7 in Alberta Canada.
Mr Trump demonstrated his lack of deep knowledge of Australia in his post-election phone call, saying he didn’t know the ‘other person’ who ran (Peter Dutton) and remarking Mr Albanese was ‘very respectful’. That tells us we don’t have a lot of deep credit in Trump bank.
That makes it harder to deal with Trump’s more demanding and less reliable America. It’s possible the Albanese-Trump meeting might just be handshakes and smiles, but hope isn’t a great plan. Things that were unthinkable to hear from our American ally in past decades are essential for Mr Albanese and his team to consider as they prepare.
At its simplest a more demanding America looks at Australia as a defence actor and wants more as the price of continued cooperation. From Washington’s perspective, Australian defence spending is a proxy for Australia’s contribution to the alliance, measuring whether Australia is—or isn’t—free riding on America’s own spending and power. The news here isn’t good.
Marco Rubio and JD Vance have focused on European allies’ defence spending. But at this year’s Shangri La Dialogue, Pentagon chief Pete Hegseth made it simple for America’s Pacific allies, saying ‘NATO members are pledging to spend 5% of their GDP on defense, even Germany. So it doesn’t make sense for countries in Europe to do that while key allies in Asia spend less on defense in the face of an even more formidable threat’.
America spends around 3.4%–3.5% of its GDP on defence. Poland is spending around 4.7%. Of America’s key Indo-Pacific partners, Australia and others look anaemic by comparison: South Korea is spending around 2.8% of GDP, Japan 1.6% of GDP, and Australia 2% of GDP.
Japan is able to say that it’s doubling its defence spending from 1% to 2% and point out that 2% of the world’s fourth-largest economy’s GDP is real money. South Korea’s long-term higher military spending has delivered real military and industrial capacity.
Australia has no credible argument for devoting such a low share of national wealth to our security needs, particularly as we now plan to not just have the conventionally-equipped military we’ve maintained for decades but add enormously expensive nuclear-powered submarines. Telling Washington we intend to do that by spending 2.3% of GDP by 2035 will only solidify US assessments that we’re not serious about our own defence — and that we plan to keep free riding on US taxpayers.
Deputy PM Richard Marles has met Pentagon chief Hegseth twice this year, each time assuring him Australia is ‘very much up for the conversation’ about raising Australian defence spending.
Like Elvis, Donald Trump will want ‘A Little Less Conversation….a little more action’.
Mr Albanese’s problem is that this won’t work with Donald Trump. Nor will repetition of mantras like ‘historic increases’ that don’t look real when numbers get involved. He’ll just want to hear Mr Albanese announce a number now. Trump’s deal making antennae will make him impatient with vague words. Like Elvis, Donald Trump will want ‘A Little Less Conversation….a little more action’.
Beyond budgets, a more demanding America might do other things. Extra payment for US military and intelligence presence and activities in Australia is a possibility. That would look like overturning the cost-sharing agreements on things like the US Marine Corps and US bombers presence in our north.
It could involve renegotiating the cost-sharing aspects of AUKUS or the timing of Virginia-class submarine deliveries to Australia. Renegotiating AUKUS is credible for two reasons. First, the US faces growing challenges meeting its own submarine needs. These become acute in the 2030s, right when Australia wants US subs. The second reason is that the AUKUS ‘deal’ was negotiated by Joe Biden, and Mr Trump sees every other deal Mr Biden made as worse than one he could negotiate.
Even the financial aspects of the joint Australian–US facility at Pine Gap could be on the menu. Ending the Chinese company’s lease of Darwin port might be a requirement of the new administration, because it limits Darwin’s use as a place for military cooperation.
The most obvious policy option for Australia to get in front of all those ‘micro-deals’ is to raise defence spending to at least 3% of GDP in this term of government before being coerced into doing so. That’d demonstrate we’re an equally committed contributor to our defence as America is.
As to the idea that national pride is best served by not increasing our defence spending because the US has suggested it, 3 per cent of GDP looks like what we’ll need just to fund the military that’s already on our books. So, it would simply be acting in our own interests, however hard finding the money might be.
Mr Albanese’s Albertan encounter with Donald Trump might start to provide the call to action on our security we’ve been missing so far here at home.
This article was first published in the Australian Financial Review.