Budget 2025: Government Moves $1 Billion in Defence Spending Forward—But Is It New Money?

Guided weapons manufacturing, an AUKUS submarine base, and a frigate program are among the initiatives set to be announced by Richard Marles during the budget.

Australia's Minister of Defence Richard Marles (C) and Minister of Defence Industry Pat Conroy (R) announce the accelerated delivery of Australia's first High Mobility Artillery Rocket System (HIMARS) at the Australian International Airshow in Avalon in Victoria, Australia on March 24, 2025. William West/AFP via Getty Images

The Australian Labor government will bring forward $1 billion in defence spending, which will be announced in the federal budget on March 25.

The revelation came during an impromptu press conference with Defence Minister Richard Marles as he visited the Avalon Air Show.

Australia and other allies are under pressure from U.S. President Donald Trump to increase their defence spending.

While Marles made a $500 million down payment on the $368 billion AUKUS submarine deal in February, the government are keen to ensure they lift defence spending well over the 2 percent of GDP benchmark following comments by Elbridge Colby, the nominee for undersecretary of defense for policy.

However, with an election looming over every decision and the government under pressure to alleviate the cost of living, significant new spending on defence would have left the government with less to hand to grumpy voters, so instead, Treasurer Jim Chalmers will announce an increase in defence spending over the forward estimates (three years ahead) of $10.6 billion—but it’s actually part of a previously announced $50 billion boost over a decade.

So by taking money from future budgets and spending it now, Chalmers and Marles will be hoping the right signals will be received at the White House, while the domestic focus is on whatever relief is offered to voters.

“Part of the $10.6 billion sees bringing forward an additional billion dollars, and that’s because of the need to accelerate Australia’s capability development,” Marles said.

Guided Weapons, a Submarine Base, and the First Frigate

The money will be spent on boosting Australia’s military capability, including the local manufacture of guided weapons, the construction of an AUKUS submarine base, and a frigate-building programme.

Marles said the bringing forward of $1 billion in spending would ensure the first stage of the Submarine Rotational Force–West base at HMAS Stirling in Fremantle would be ready in 2027, when up to four United States and one British-commanded nuclear-powered submarines are set to begin rotating through Australia’s biggest naval base under AUKUS.

It would also ensure “the beginnings of the manufacture of guided missiles in Australia this year” and the country would take possession of the first general purpose frigate “this decade.”

Marles remained upbeat on the AUKUS timetable despite many doubters, including former Liberal leader Malcolm Turnbull.

“Through the acquisition of the Virginia class submarines, we will have a new Australian-flagged submarine not in the early 2040s [as was planned by the previous Liberal government], but in the early 2030s,” he said.

“And that goes a long way to closing the submarine capability gap which we inherited from the Liberals.”

Asked about the new High Mobility Artillery Rocket Systems (HIMARS) launcher vehicles that started arriving in Australia on March 24, Marles said the units would enable the Army to project missiles in the tens of kilometres “in a highly protected and mobile way.”

The HIMARS can be deployed on an aircraft or a ship, and can then move across land so fast that “those who are detecting the source of the fire, that source is no longer there,” Marles explained.

“This is transformational in terms of the Army’s ability to fire missiles, both in terms of range and in terms of mobility.”

The minister said people opposed to large-scale defence spending, such as those who disrupted an arms expo in Melbourne last year, “are very much a minority.”

“A very small number of people trying to disrupt this, not by virtue of putting out there their ideas, but simply by engaging in acts of vandalism and disruption, which is what we have seen, is actually appalling behaviour,” he said.