Since January this year, Australians have watched from afar as a new administration in Washington has fundamentally changed the foundations of global security, alliances, diplomacy, and defence burden-sharing that has dominated the post-Cold War era. The second Trump administration has executed a domestic and international shock-and-awe campaign. This extended to European security in March during the Munich Security Conference. The ultimate manifestation of this was the recent NATO summit. Despite some unedifying, fawning language from European leaders, the alliance’s members have accepted that they must play a larger role in their own security, including increased military and civil-defence spending.

The current American attention to the defence spending of its allies has its roots in US administrations well before Trump’s first term. In 2011, then US Secretary of Defense Robert Gates, described how:

the blunt reality is that there will be dwindling appetite and patience in the US Congress – and in the American body politic writ large – to expend increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defence.

As such, Trump’s attention and that of his national security team were always bound to drift from Europe to the Pacific. It recently has. In June this year, the US Secretary of Defense Pete Hegseth stated that Australia should increase its defence spending. In the past decade, many defence and security experts in Australia (including me) have made the same case for increased investment in defence. However, the sentiments of Hegseth and the US administration will have major ramifications for the future security of Australia and Australians’ perceptions of their ally.

The 2024 National Security Strategy described Australia’s security challenges as the most complex and challenging since the Second World War. The environment has deteriorated even further since then. China has become more assertive diplomatically and militarily. It has conducted its largest-ever joint exercises around Taiwan in the past two years, and, as a show of force earlier this year, conducted its first naval task group circumnavigation of the Australian continent. As this year’s Defence of Japan document, published by the Japanese government, described it: ‘Unilateral changes to the status quo by force and such attempts represent a serious challenge to the existing international order. The international community is facing its greatest trial since the Second World War and entering a new era of crisis.’

In some respects, however, Australia is in a better position than Europe. While the Pacific region contains three authoritarian regimes that seek to change the global status quo, China and the Pacific region are the priority for the US government and its military efforts. Nonetheless, the military and cognitive threats posed by authoritarian regimes in Australia’s region, the sullen complacency of the Australian polity, and the new demands, tariffs and posture of the Americans mean that Australia is now at the precipice of a very major shift in its national security circumstances.

The last time Australia faced such a situation was in the wake of the fall of Singapore in 1942. This transformative military defeat closed the book on the prewar imperial defence strategy. It saw Australia shift its major security alliance from Britain to America. Over the succeeding 80 years, this had an enduring impact on Australian national security affairs, including its military spending, force structure and operational deployments. On the verge of another major strategic shift, what should Australia do?

First, Australia does not have another great and powerful friend, with whom it shares common values, that it might turn to should the US alliance sour. While there is an allure for some in armed neutrality, this would necessitate far more defence spending than that being demanded by the American administration. Replacing US intelligence, military cooperation, priority access to US military technology, and the extended US nuclear deterrent would require at least two or three additional percentage points of Australian GDP to be spent on defence. Therefore, Australia must stick close to America but appreciate that all dimensions of that relationship are now up for renegotiation.

This is one of the challenges facing those producing Australia’s 2026 National Defence Strategy. They must urgently plan for the development of a revised policy for working with America and Australia’s many other regional security partners.

A fundamental weakness in the wider Australian national security debate is the fact that Australia’s defence strategy is not rooted in a national security strategy. Unlike many of its allies, Australia has no published national security strategy; this should be rectified as a priority. It should incorporate the reappraisal of alliances and security partnerships discussed above, but must also ensure that the defence of Australia is a truly national undertaking. Most importantly, a national security strategy should serve as a broader discussion with the Australian people about the perils the nation is facing, what the nation needs to do, and what resources are required, potentially including large increases in defence spending.

The Australian Defence Force (ADF) is small and getting smaller because of the combined impact of static budgets and the growing impact of the nuclear-powered submarine budget. The budget stasis, inflation and force structure imbalances of money being shovelled at the submarine project must be addressed as a matter of urgency If this situation is not resolved, by 2030 Australia won’t yet have nuclear submarines, but may also not have a ready or lethal conventional military capability either.

Another part of Australia’s response to the new and more dangerous security environment is to finalise its planning for national mobilisation. This plan, which should also function as part of Australia’s strategic deterrent, must include expansion of indigenous industry for support to combat forces, and the manufacture of more munitions, drones, and drone and missile defences.  Plans to further mobilise people and the almost absent civil defence capability must also be an integral part of the plan to deter growing Chinese coercion against Australia and its allies. While full mobilisation is not yet required, some limited expansion in industry, the defence budget and the size and capability of the military is needed now.

This would achieve three key outcomes. Australia would have a more confident, sovereign defence posture. It would achieve what the US administration has asked all of its closest allies to do. And, finally, it would be a more resilient nation with regards to communications networks, energy, transport, medicines and food, trusted government institutions, public education, combating misinformation and developing effective state and federal co-ordination mechanisms.

Finally, a change in the risk-averse culture of government and defence must urgently take place. Defence capability and reform have stalled. According to the 2022 and 2025 portfolio budget statements, over the past three years, the Australian Defence Force has declined in size by approximately five per cent, causing readiness shortfalls across the force. Defence has, however, managed to significantly grow the number of public servants and the number of senior military officers by 15 per cent. It employs these senior managers in a complex ecosystem of constant committee meetings, slowing decision-making and expunging innovation from defence thinking.

At the same time, Australia maintains small numbers of expensive legacy military platforms while underfunding many of the innovative uncrewed systems that would give the ADF higher military capability. Ukraine has enlightened military institutions around the world in the design, manufacture, and deployment of uncrewed systems. Australia is years behind in such endeavours.

This strategic stasis exists in stark contrast to the adaptation that is taking place on the battlefield in Ukraine, and in the national security affairs, of countries in Europe and the Middle East. The potential adversaries of the West are sharing their best-practice knowledge in battlefield operations, defence industrial production, and strategies of misinformation, coercion, and sanctions avoidance. These adversaries are doing this at a speed incomprehensible to most Australian politicians and defence bureaucrats. This demands a new Australian defence leadership culture and promotion system to nurture risk-taking, make quick decisions, and forge better links between military operations and industrial research and production.

All this is predicated, however, on the assumption that the current trajectory of strategic competition and confrontation in the Pacific remains steady. Two seismic events might disrupt efforts by the Australian government to improve the overall lethality, deployability, size and sustainability of its military capability. These two events are a new strategic deal between Trump and Xi, and, in the absence of such a deal, President Xi deciding to conduct a surprise military operation against Taiwan before the 2027 deadline he set for the PLA to be prepared for such operations.

Recent reporting out of Washington DC has indicated that President Trump is seeking a major trade deal with China. As a consequence of this, the influence of China hawks in the Trump administration has declined. As a recent New York Times article notes: ‘The administration’s caution when it comes to China has been amplified by Mr Trump’s desire for an invitation to Beijing later this year… Howard Lutnick, the commerce secretary, has begun recruiting chief executives for a potential delegation.’

Such a deal, if it happens, could reduce Washington’s appetite to support Taiwan in any military contingency. In a worst-case scenario, it could see Trump and Xi agree to spheres of influence in the Pacific, which would be a strategic crisis for Taiwan, Japan and other American allies in the Pacific, including Australia.

On the other hand, a surprise PLA operation to seize Taiwan before 2027 could upend all of Australia’s assumptions about its national security and its defence planning. History is replete with examples of nations that have gone to war before their potential adversaries thought they were ready, including Russia in 2022. While a Taiwan invasion in the next year or so might be a low-probability event, it would have a very significant impact on Australia’s relationship with its key ally (America) as well as its major trading partner (China) and its future national security posture.

The 2024 US election campaign and years of Chinese belligerency have both served as ample warnings that challenging times for Australia are approaching. Australian governments across the political spectrum over the past decade have addressed strategic risks with minimal defence investments, hoping that the impending reckoning the nation faces would be avoided.

Notwithstanding the potential strategic surprises described above, the time has arrived for Australia to face up to its challenges as well as the full measure of its responsibilities as a wealthy democratic nation that exists in the face of powerful techno-authoritarian regimes. Only moral and intellectual courage from political leaders, and an urgent and open discussion with the Australian people about the profound costs of not acting, will see Australia through the likely perils ahead.