When Australian Prime Minister Anthony Albanese came under fire this week for proposing to maintain military spending at just over 2% of GDP, the criticism from hawkish commentators was swift, loud—and largely ahistorical. The calls for him from to hike the budget to more than 3.5% — supposedly to appease the erratic foreign policy whims of a second Trump presidency — are not just fiscally irresponsible. They are also based on a misreading of Australia's history, its present geostrategic environment, and its future national interest.
The AUKUS pact, which promises Australia a fleet of nuclear-powered submarines at an estimated lifetime cost of nearly US$400 billion, has emerged as a defining issue in the debate. It also represents, to many experts, a deeply flawed strategic gamble — one that ties Australia to the United States’ defence industry and long-term military priorities, at the expense of sovereignty, regional diplomacy, and domestic needs.
AUKUS: A Pact Born in Secrecy, Strained by Reality
Conceived behind closed doors and unveiled in haste in 2021, AUKUS promised strategic deterrence through deeper integration with the U.S. and U.K. military-industrial complex. But in the years since, it has become increasingly clear that the submarines promised under Pillar I — some to be purchased, others to be built — may never arrive on schedule, or at all. With the return of Donald Trump to the White House, even that uncertain future is now under review.
In June 2025, the U.S. Department of Defense initiated a comprehensive review of the AUKUS security pact This review, led by Under Secretary of Defense for Policy Elbridge Colby, aims to assess the alignment of the agreement with President Donald Trump's "America First" policy, i.e. whether the AUKUS agreement serves the strategic and economic interests of the United States under the current administration's policy framework. The review will also assess the capacity of the U.S. defence industrial base to fulfil the commitments of the agreement without compromising domestic military readiness, especially given existing challenges in submarine production. The financial commitments of partner nations, particularly Australia's investment in the U.S. defence sector, and determining if additional contributions are necessary to support shared objectives will also be reviewed.
The review has introduced a degree of uncertainty regarding the future of the AUKUS agreement. While Australian officials, including Defence Minister Richard Marles, have expressed confidence in the continuity of the pact, the outcome of the review could lead to renegotiations or adjustments in the agreement's terms.
Australia's current commitment to increasing its defence spending to 2.4% of GDP by 2033-34 has been noted, but the U.S. has indicated a desire for allies to raise their defence budgets further, potentially up to 3.5% of GDP. This financial aspect is a critical component of the ongoing discussions and may influence the final decisions resulting from the review.
The Pentagon's review is expected to conclude by mid-July 2025. The findings will likely inform subsequent negotiations and decisions regarding the implementation of the AUKUS agreement. Stakeholders from all three nations are closely monitoring the situation, recognizing the strategic significance of the pact in the Indo-Pacific region.
As the review progresses, the involved parties continue to engage in diplomatic discussions to address concerns and reinforce their commitments to shared security objectives. The outcome will not only shape the future of the AUKUS agreement but also set a precedent for international defence collaborations under evolving geopolitical dynamics.
Former President Trump’s announcement of that review of the agreement, far from being a threat, may offer Australia the circuit breaker it desperately needs. As Emma Shortis of The Australia Institute put it bluntly, “It was always a terrible deal for Australia anyway.” Polling from the same institute shows that 54% of Australians favour a more independent foreign policy over deeper alignment with the United States.
They may have a point. The U.S. has never guaranteed Australia’s defence. During World War II, General Douglas MacArthur, when commanding U.S. forces based in Australia, made it clear to Prime Minister John Curtin that the U.S. had “no sovereign interest in the integrity of Australia.” It saw the continent as a convenient launching pad for campaigns against Japan — not a partner to be protected.
Post-war, when Australia sought NATO-style guarantees, Washington refused. Even the 1951 ANZUS Treaty falls well short of the mutual defence clauses afforded to European allies. Over the decades, Australian leaders — whether in Borneo, East Timor, or Iraq — have routinely been denied direct U.S. military support for operations that allegedly served shared interests.
The Costs of Dependence
Critics of Albanese’s current defence posture argue that only U.S. military support can shield Australia from a looming Chinese invasion. But there is no credible evidence that China seeks to invade Australia. During World War II, Japan — then a far more aggressive and expansionist power — rejected the idea as logistically impossible, even when Australia’s population was just seven million.
Today, with 26.66 million citizens, advanced surveillance systems, and a manufacturing base capable of producing long-range drones, missiles, and even sea mines, Australia has far more capacity to mount a credible defence without relying on U.S. firepower or expensive imported platforms. In 1942, the country ramped up production of munitions, aircraft, and warships within months of facing existential threats. By the end of the war, domestic industry had produced more than 2,000 combat aircraft.
The threat landscape has changed, but not necessarily worsened. Ukraine’s ongoing war has demonstrated that small, inexpensive, and smart technologies — autonomous drones, remote sensors, shoulder-fired missiles — can inflict enormous damage on far larger forces. Australia would be better served investing in a modernised, nimble “Defence of Australia” doctrine using cost-effective tools rather than mega-projects like nuclear submarines, which offer little near-term utility and have questionable survivability in the age of hypersonic missiles.
A Sovereignty Surrender?
AUKUS has also triggered deep anxiety about sovereignty. The integration of U.S. and U.K. technologies, personnel, and command structures into Australia's defence forces risks diluting Canberra’s ability to act independently. Senior U.S. officials and lawmakers retain veto power over crucial technology transfers and operational decisions. As former Prime Minister Malcolm Turnbull noted, “The agreement is perfectly constructed for the U.S. to pocket Australia’s money and never deliver a submarine.”
With Trump’s renewed presidency marching the U.S. towards isolationism and authoritarianism, the core values on which AUKUS is supposedly based — democracy, stability, trust — look increasingly frayed. Trump has demonstrated a willingness to use military force against domestic protestors, has repeatedly undermined multilateral alliances, and shows no desire to shoulder foreign defence burdens that don’t serve direct U.S. interests.
Asia-Pacific Posturing: A Dangerous Game
In the meantime, Australian policymakers continue to provoke rather than deter regional conflict. Surveillance flights drop sonar buoys into the South China Sea; exercises simulate defence of Taiwan — despite Australia’s stated position that Taiwan is part of China. Such behaviour may please American war planners but does little to enhance Australia's security.
Defence Minister Richard Marles’ support for operations that practise invading China’s coastal regions and his rhetoric about “defending the rules-based order” increasingly resemble Cold War sabre-rattling. Yet there is no coherent explanation from his office — or from the wider defence establishment — of what strategic benefit Australia derives from such entanglements.
The True Cost: What Else Could Be Done?
Australia has already transferred half a billion dollars (U.S.) towards the AUKUS program, with no submarines and no guaranteed delivery. (As part of the AUKUS deal, Australia will also provide more than $4.5 billion to bolster America's submarine industrial base) Walking away from the deal might forfeit that payment, but it would free up over $368 billion in future savings. That money could revolutionise social spending: delivering quality public housing, repairing healthcare systems, and funding education for generations.
Spending more than 2% of GDP on defence, particularly on projects with long timelines and questionable strategic return, carries a massive opportunity cost. For a nation facing climate change, housing affordability crises, and healthcare gaps, every misallocated billion counts.
A Chance to Rechart the Course
Donald Trump may have inadvertently offered Australia the exit it needed: a politically acceptable way to reassert its independence without being accused of betrayal. If Albanese seizes the moment, Australia could return to a defence posture rooted in regional diplomacy, technological pragmatism, and sovereign control.
In doing so, it would not retreat from the world but step more confidently into it, choosing strategy over spectacle, sovereignty over submission. The true strength of a nation lies not in the size of its submarines, but in the wisdom with which it wields its power.
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