Arms and the men
Australia’s strategic environment is more threatening than it has been since World War II. Despite public recognition of heightened threats and a declaration of ambitious strategic goals, the government’s defence funding and preparedness efforts fall short of what is urgently needed.
The National Defence Strategy released last year sets out a clear vision: a strategy of denial aimed at persuading adversaries that attacking Australia wouldn’t be worthwhile. It focuses on defending our northern approaches. This strategy requires a force that is not only technologically advanced but also ready and able to operate effectively right now.
ASPI’s report The Cost of Defence 2025-26, released on Thursday, highlights a worrying disconnect. Most major capability acquisitions for the Australian Defence Force – including the nuclear-powered submarines under the AUKUS partnership and a planned class of frigates – are scheduled for delivery well into the 2030s and beyond.
While these future capabilities are critical for long-term deterrence, they provide little immediate enhancement of our defence capability, preparedness or resilience. For the next few years, we’re left with a paper ADF that lacks the readiness and size to meet near-term threats.
The report also notes funding priorities heavily favour future acquisitions at the expense of maintaining and sustaining today’s force. Personnel shortages, limited munitions stocks and ageing infrastructure exacerbate this problem. Without rapid moves to acquire critical equipment such as integrated air and missile defence systems, long-range strike munitions, autonomous systems and weapons for knocking down cheap drones, the ADF risks being ill-prepared for current and emerging threats in the Indo-Pacific.
Apart from funding, the Defence Department faces serious internal hurdles that hinder its ability to deliver on strategic goals. Ten years after the 2015 First Principles Review, which aimed to simplify complex structures and improve accountability, Defence remains overly bureaucratic and risk-averse. Instead of streamlining, the department has added senior leadership layers, complicating decision-making and slowing procurement.
And the government still has not cleared obstacles in achieving an interagency, intergovernmental and whole-of-nation effort to prepare the country for potential crises and to build resilience into our economy and society.
Workforce shortages are another severe problem. The ADF has struggled with recruitment and retention, especially for personnel with science and technology skills vital for managing modern military systems and complex acquisition projects. Because mid-rank personnel are leaving the services so fast, the force is becoming hollow and less capable of sustaining operations.
Efforts to integrate permanent and reserve forces face cultural and logistic problems, and there is a growing shortage of skills in such areas as cyber security, acquisition management and engineering.
Cultural reforms aimed at fostering an inclusive and effective working environment have met limited success. Persistent issues around leadership consistency, workplace harassment and morale remain, and they in turn affect retention and operational readiness.
Australia’s defence industry is small, fragmented and struggling to keep pace with changing strategic demands. The 2024 Defence Industry Development Strategy aims to build a domestic defence industrial base that is more capable, resilient and innovative.
But our analysis reveals that industry faces great capacity and workforce shortages, particularly in engineering and technical trades. The cyclic nature of demand from the ADF, worsened by frequent reviews and shifting priorities, creates financial instability for companies and discourages private investment.
Australian defence procurement processes are often slow and risk-averse, limiting opportunities for small and medium enterprises and stifling innovation.
Defence is struggling to achieve a balance between achieving independent production capability and integrating with international partners (especially through AUKUS).
A particularly pressing concern is the slow progress of the Guided Weapons and Explosive Ordnance Enterprise, intended to achieve much greater domestic munitions production.
The inability to rapidly produce and replenish munitions leaves Australia vulnerable to supply chain disruptions in times of conflict.
Our report makes clear that Australia stands at a critical juncture. The government’s rhetoric about a once-in-a-generation defence investment is not matched by funding levels or organisational reform.
The budget is a lost opportunity to prepare the ADF for near-term crises and to build a resilient defence industrial base.
Australia’s strategic environment demands a defence posture that is agile, ready and credible – now, not just decades in the future. Our report provides a sobering assessment.
The government and Defence face a complex task. Meeting these challenges requires not only more resources but a cultural and structural shift towards efficiency, transparency and urgency. If Australia is to deter aggression, maintain its sovereignty and protect its interests in an increasingly contested Indo-Pacific, the time to act is now.
This article was written by Mike Hughes and Marc Ablong. It was published by The Strategist.
Marc Ablong is a visiting senior fellow with ASPI’s Defence, Strategy and National Security Program after a long career in the Departments of Defence, where he had key roles in developing two white papers, and in Home Affairs.
