Defence Minister Richard Marles laid out the path for Australia's armed forces for the next two years as he handed down the 2026 national defence strategy on Thursday.
An extra $14 billion will be spent on defence across the next four years, compared with estimates laid out in the 2024 strategy, partly through tapping the private sector, Mr Marles revealed in a speech at the National Press Club.
An additional $53 billion will be set aside for defence in the next decade.
Priority areas for the military include undersea warfare, boosting maritime capability, expanding the use of long-range strikes and greater use of air and missile defences.
The use of unmanned drones will also be expanded to protect Australian sites and military crews on land, air and sea.
Defence had already flagged billions of dollars would be spent in the coming years on drones, following their successful use in Ukraine and the Middle East.
Mr Marles said the strategy would focus on making the military more self-reliant and strengthening resilience in industrial bases.
Australia could no longer address its challenges by relying on a sole major power, although the US would "always be fundamental to Australia's defence", he said.
"Middle powers that don't take on more responsibility for their own security will be more exposed to coercion and face greater limits on their sovereignty."
A worrying shift in the global security environment - punctuated by a new nuclear arms race, a weakening prohibition on territorial conquest and rapid militarisation, especially by China - had accelerated since the 2024 defence strategy, Mr Marles said.
That necessitated the biggest peacetime increase in defence spending in our nation's history, he said.
Australia's share of defence spending would rise to three per cent of GDP by 2035, compared to a previous forecast of 2.33 per cent.
But this requires changing the way defence spending is calculated to the methodology defined by NATO, which includes military pensions and some civilian services.
It comes after the US pressured allies to increase spending to 3.5 per cent of GDP.
The strategy includes a new focus on national civil preparedness.
That means ensuring that in a crisis or conflict, the government continues to function, Australians have access to essential goods and services, social cohesion is maintained and there is capacity for surge support to defence operations.
Rather than shifting direction, the updated strategy moved Australia's defence focus further afield, beyond the archipelago to the continent's north and towards the South China Sea, Australian Strategic Policy Institute director of defence strategy Mike Hughes said.
"The new strategy recognises that by the time an adversary has reached Australia's northern approaches, the country already faces an unacceptably high level of risk," he said.
"The United States remains central to Australia's security, even as the strategy accounts for shifts in US global behaviour."
Opposition Leader Angus Taylor said the spending announcement amounted to creative accounting.
The coalition went to the 2025 federal election pledging to increase the defence spend to three per cent.
Mr Taylor said the three per cent target by itself, without using the broader NATO definition, was the only proper measure of military spending.
"That's the benchmark that puts us in a position where we can invest not just in the submarines that we need ... but also in the drones, the missile capability and in the people we need in our war fighters," he told reporters on the Gold Coast.
But the defence minister said the spending increase allowed for a more versatile military.
"Delivering this strategy is not only about investing more - it is about spending better," Mr Marles said.
