Our luck has run out
Defending the nation means making hard budget choices.
Treasurer Jim Chalmers wants to be seen as a safe custodian of the national balance sheet, but dismissing calls to increase defence spending because he doesn’t want to engage in the hard work of finding savings elsewhere is just lazy.
It’s also intellectually dishonest.
Ruling out the need for an increase in defence spending speaks to Chalmers’ fundamental misreading of the strategic moment Australia finds itself in.
It also represents a political unwillingness – or inability – to explain to voters why defence must be a bigger priority – a blind spot for the Treasurer, it would seem.
No one is pretending this is an easy sell for voters. Australians are doing it tough: inflation may be easing, but cost-of-living pressures remain.
Most voters would understandably rank this above missile stockpiles or naval procurement timelines – especially when the national finances are in such a mess.
But responsible government isn’t about picking just one priority, such as social spending, on which Labor spent a fortune announcing policies ahead of the election. Good government is about being able to walk and chew gum at the same time.
Yes, Australians need cost-of-living relief, but we also need to secure the nation – and that means making room in the budget for increased defence spending.
Tax reform that broadens the base and tackles wasteful concessions, alongside tough decisions to rein in spending in areas where it’s over the top, would help facilitate defence needs.
Chalmers insists that Australia doesn’t need to spend more on defence, as if we can outsource our security to the United States indefinitely. It’s a dangerously naïve assumption, especially with Donald Trump back in the White House.
He’s made his views clear: allies who don’t pay their way shouldn’t expect protection. That was said about NATO, but the logic applies globally too.
Why would Australia be exempt? We didn’t secure tariff exemptions.
The U.S.-Australia alliance is not a blank cheque. If we want the Americans to come to our aid in a crisis, we need to demonstrate that we’re not free-riders.
Hosting U.S. forces and buying defence equipment isn’t enough. We have to show we’re doing more. Otherwise, we risk becoming precisely the kind of ally Trump, and much of the Republican establishment, derides.
The broader context makes this even more pressing. We live in a region marked by strategic uncertainty. China is more assertive than ever in the Indo-Pacific, challenging international norms and steadily expanding its military footprint.
North Korea remains erratic and armed to the teeth.
The rules-based order Australia has long relied on is fraying. Deterrence isn’t about having good intentions, it’s about capability – which costs money.
European nations have started to grasp this. After Russia’s invasion of Ukraine, they moved quickly to boost defence budgets. Many are now meeting or exceeding the NATO benchmark of two per cent of GDP, reversing years of underinvestment.
Australia, despite all the talk about the deteriorating strategic environment, is doing little more than treading water. The AUKUS submarine plan might eventually bear fruit, but that’s a long-term project.
The threats we face are not on a 20-year timeline; they are more immediate. Besides, Trump has put cancelling AUKUS on the table – if Australia doesn’t pull its weight.
More money for defence means reordering priorities. It isn’t a discretionary line item; it’s a core function of government. Pretending otherwise is either wilfully ignorant or politically cowardly.
And let’s not pretend we can’t afford it. If the tough job of fixing the finances is prioritised, we can. Billions flow each year into programs that are poorly targeted or bloated. There are savings to be found.
Defence doesn’t win elections in the modern era. It’s not an emotional hip-pocket issue. But that’s precisely why it requires leadership of the kind we’re not seeing from Chalmers and presumably Albo too – unless the Treasurer is speaking out of turn.
The new frontier
Fresh off the debate about lifting defence spending, there’s another front Australia can’t afford to neglect: digital infrastructure.
The two issues aren’t as far apart as they might seem; in fact, they’re deeply linked.
Whether it’s defending our borders or securing our data flows, the same principle applies: If we don’t step up, someone else will – and we’ll be left exposed.
Ask a random group of Australians what Stargate is, and most will default to that sci-fi show they may have watched in the early 2000s if they had Foxtel.
But the real Stargate – the trillion-dollar digital infrastructure project backed by Trump, Silicon Valley giants and Japan’s SoftBank – might just shape the future global economy.
It’s not fiction; it’s the 21st-century equivalent of laying railway lines or wiring the nation for electricity. And we’re just not keeping pace.
At home we’ve just seen Amazon announce a $20billion investment in Australia. It’s an eye-catching headline, to be sure, but still just a drop in the ocean compared to what’s happening elsewhere. South Korea has already announced more than $60billion worth of new data centre investments in 2025 alone. Malaysia attracted $35billion last year. India, Indonesia and even Vietnam are ramping up the pace, too.
If we want to remain economically competitive and strategically secure, we need to attract more of this investment – and fast. That means building high-quality, scalable data centres, laying domestic cables and localising AI infrastructure.
These aren’t just technical upgrades; they’re the building blocks of tomorrow’s prosperity. They help lift productivity, support innovation and create new opportunities for Australian businesses.
And when the next global shock hits – be it conflict, cyberattacks or financial contagion – these investments become national security assets.
We are currently far too dependent on data infrastructure that lives overseas. As Israel discovered recently, one of the first casualties of modern conflict is connectivity.
China has already developed submersible drones designed to sever subsea cables. If a crisis were to emerge in our region, banking, communications and core government functions could all be jeopardised – unless we act now to secure digital sovereignty.
Yes, it’ll cost money. But, just like defence, this is a matter of priority, not affordability.
Chalmers has floated the idea of a productivity roundtable to address our sluggish investment pipeline. That’s a start, but we’ll need more than roundtables if we’re serious.
Chalmers often invokes Paul Keating – the subject of his PhD thesis – as his policy north star. If he really wants to follow in those footsteps, he’ll need to think just as big.
Keating and Bob Hawke floated the dollar and tore down tariffs. That gave us 30 years of growth and unprecedented prosperity.
The digital economy is the new frontier, and digital infrastructure is the foundation.
A class act
Finally, Australia lost one of its sailing icons this week.
Hugh Treharne wasn’t just a brilliant tactician on Australia II; he was a good bloke.
He had an instinct for wind shifts, race tempo and reading the water that couldn’t be taught.
Treharne was absolutely central to Australia’s historic America’s Cup win in 1983, but he never made it about himself. That just wasn’t his style.
His humility, combined with a sharp intellect and calm under pressure, defined him on and off the water. Vale.