Former Defence Chief Warns that AUKUS Agreement May Drain Military Budgets

Australia’s commitment to acquiring nuclear submarines through the AUKUS pact, estimated to cost up to $368 billion (US$239.8 billion) by the mid-2050s, poses a risk of diverting vital military spending, warned former Chief of the Defence Force Sir Angus Houston.

Addressing the U.S. Studies Centre (USSC) Sydney, he emphasized that the only way to prevent neglecting other military branches is for Australia to raise its defence spending to 3 percent or higher of GDP immediately.

Houston, who served as the Chief of Defence from 2005 to 2011 and co-led the recent Defence Strategic Review after retiring, described Australia’s current strategic situation as the most dire since World War II during the launch of the report.

The Review and its Integrated Investment Plan outlined a budget of $55.5 billion for 2024/25, increasing to $67.9 billion by 2027/28, equivalent to approximately 2.2 percent of GDP.

Australia has committed to boosting annual defence spending over the next decade to $100 billion by 2033/34, reaching 2.4 percent of GDP—still below Houston’s recommended threshold.

“[President-elect Donald Trump] might suggest increasing the GDP defence spend to 3 percent, which I believe is not unreasonable,” remarked Houston.

Despite external demands, Houston advocates for proactive measures to reach that level of spending.

If not, the expense of procuring and constructing nuclear-powered attack submarines through AUKUS could consume a significant portion of the defence budget, leading to the depletion of other military capabilities, according to Houston’s concerns.

“That presents a challenge for us, and I don’t think either side of the government in Australia has fully grasped that,” he added.

New Threats, Alliances, and Technology

Houston highlighted an urgent need to address emerging threats, alliances, and technology that have evolved since his retirement during his discussion at the USSC.

“The situation has deteriorated,” he remarked. “At the time, the only major conflict was in Ukraine. The alignment of North Korea, China, Russia, and Iran poses significant challenges. The outlook is quite bleak.”

He expressed particular concerns over China’s activities in the Indo-Pacific region and the lack of transparency regarding Beijing’s military buildup.

Houston pointed out the frequent incidents in the South China Sea involving aggressive actions by Chinese vessels, as well as the CCP’s growing influence in the South Pacific.

“There are offers being extended to small island nations for policing assistance from Beijing. We might wake up to requests for basing rights, which would pose a serious challenge for Australia,” he warned.

Furthermore, Houston stressed the proliferation of missiles as a growing concern, noting that even groups like the Houthis are now launching missiles, highlighting the need to address the accessibility of missiles and drones in the region.

Support From Other Experts

Several participants at the USSC forum echoed Houston’s apprehensions.

Michael Green, CEO of the Centre, predicted that the new U.S. administration will enforce stricter measures on nations deemed to be underfunding their defence.

“No U.S. allies will be exempt from meeting the two percent GDP defence spending threshold,” he cautioned. “Even close allies like Canada and European nations will face expectations to increase their defence expenditures.”

Former Australian ambassador to the U.S., Arthur Sinodinos, concurred with this sentiment.

“The incoming U.S. administration will demand that allies and partners increase their defence spending, and it is in Australia’s best interest to do so,” he stated. “We need to emphasize to the USA that they need us.”

Additionally, Dennis Richardson, former Secretary of the Department of Defence and the Department of Foreign Policy and Trade, emphasized the importance of nuclear-powered submarines as an enhancement to the Australian Defence Force’s capabilities.