Australia’s Defence Spending Remains Unchanged After NATO Funding Boost

Deputy Prime Minister Richard Marles said Australia was not influenced by NATO’s commitment to increase defence budget to 5 percent.

Australian Deputy Prime Minister Richard Marles speaks to the press during the NATO summit in The Hague, Netherlands, on June 25, 2025. Pierre Crom/Getty Images

Australia will not increase its defence spending targets despite growing pressure from the Trump administration and NATO.

Deputy Prime Minister and Defence Minister Richard Marles, who is attending the NATO summit in the Netherlands, has confirmed that the Australian government will stick with its current defence budget plan for the foreseeable future.

According to the 2024-25 federal budget, the government is expected to raise defence funding from the current 2 percent of GDP to 2.3 percent by 2033-34.

However, in early June, U.S. Defence Secretary Pete Hegseth urged Australia to boost its defence spending to 3.5 percent of GDP as soon as possible to meet security challenges in the Pacific region.

While the government’s plan falls well short of the United States’ requirements, Marles claimed it represents the largest increase in Australia’s peacetime defence spending.

“We’ve gone through our own process of assessing our strategic landscape, assessing the threats that exist there, and the kind of defence force we need to build in order to meet those threats, to meet the strategic moment, and then to resource that,” he said.

“Now that is a story which is understood here, and we'll continue to assess what our needs are going forward. And as our prime minister has said, we will resource that.”

NATO Agrees to Raise Defence Spending

Marles’ remarks come as NATO leaders have agreed to increase their defence spending to 5 percent of GDP by 2035 after months of pressure from the Trump administration.

According to a statement, NATO members will spend 3.5 percent to fund core defence requirements and meet capability targets.

The remaining 1.5 percent will be invested in protecting NATO’s critical infrastructures and enhancing the bloc’s cybersecurity, innovation, and defence industrial base.

“No one should doubt our capacity or determination should our security be challenged,” NATO Secretary General Mark Rutte said.

“This is the stronger, fairer and more lethal Alliance that NATO leaders have begun to build.”

Following NATO’s announcement, Marles said it was the bloc’s own business.

“Look, obviously, a very significant decision has been made here in relation to European defence spending, and that is fundamentally a matter for NATO,” he said.

World leaders attend the NATO summit in The Hague, Netherlands, on June 24, 2025. Haiyun Jiang/Pool/AFP via Getty Images

While Australia is not a NATO member, the country’s move could risk drawing criticism from U.S. President Donald Trump, who has repeatedly stressed that America’s allies must contribute their fair share to collective security.

After Spain refused to adhere to NATO’s 5 percent defence spending target, Trump threatened to impose tougher tariffs on the country.

“You know they are doing very well. The economy is [doing] very well. And that economy could be blown right out of the water with something bad happening,” he said.

“You know what we’re going to do? We’re negotiating with Spain on a trade deal, and we’re going to make them pay twice as much—and I’m actually serious about that.”

Australia is currently trying to negotiate a tariff exemption with the Trump administration.

However, the country has experienced a setback after a scheduled meeting between Trump and Australian Prime Minister Anthony Albanese at the G7 summit in mid-June was cancelled due to the president leaving early.

It is worth noting that Marles did not meet with Trump nor Hegseth on the sidelines of the NATO summit, despite efforts to arrange a first face-to-face meeting of an Australian minister with the U.S. president.