The Albanese government has unveiled its third budget. Our experts across defence, cybersecurity and technology, the Pacific, climate and critical minerals give their first impressions of what the budget has to offer—and what’s missing.

 

Bec Shrimpton, director of defence strategy and national security

The budget fails to bridge the gap between rhetoric and reality, according to the government’s own National Defence Strategy and the Integrated Investment Program.

The stand-out problem for which there is no funding—or program—solution is people and workforce. Defence personnel numbers are set to be below target by around 5000. Relaxing medical requirements and eligibility criteria cannot go near filling this gap, let alone move numbers towards the projected force we require—and that the capabilities being acquired will require.

Defence is absorbing a significant amount of costs related to the implementation of the Defence Industry Development Strategy and the submarine workforce, and there remains an unexplained gap between project cancellations, rescoping or delays, and the requirements of the IIP.

The budget does not fund necessary lines to build preparedness. There is almost no money going into capability that will be delivered in the forward estimates, and little to offer Australian industry in sustainment either in the coming years. This will see even more of the industry go offshore, pivot away from defence or go under.

This budget risks entrenching mistakes of the past and failing to learn lessons from what is happening in the world right now. It does not make necessary decisions or investments but delays them. Meaningful spending, genuine reform of project management, new and more agile approaches to contracting and investment in research and development, are all necessary to get off the path we are on, which has hollowed out existing capability and puts preparedness at risk as we head into an increasingly dangerous time.

The budget does not back the NDS, nor properly fund the IIP. The gap between strategy and resources is growing. Funding the foundations of Defence—including industry and workforce—is essential to deliver on the promises of the NDS, as is ensuring sustainment, training and competence. The budget indicates that certain capabilities will not be operational, or will experience significant drops in operational days across a range of platforms. This indicates real problems again with personnel, sustainment and capability lifecycle management.

Important links between the Defence budget, education, industry and others are implied, but unfunded in either the defence budget or other portfolio budgets.

 

Mike Bareja, acting director of Cyber, Technology and Security

The cybersecurity-related items are largely around improving cybersecurity of specific agencies, such as Services Australia, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the National Disability Insurance Scheme and the Department of Parliamentary Services.

This is mostly increasing low levels of cyber maturity and filling major gaps in security posture, not making us world-leading.

The budget reflects a consistent focus on artificial intelligence from this government, and the next phase should be around transitioning the narrative from AI as an end in itself, to increasing data-sharing across the economy to power AI to help address real challenges like climate change and pandemics, and to power our economic growth into the future.

There’s $21.6 million over four years to ‘establish a reshaped National AI Centre (NAIC) and an AI advisory body’ in the Department of Industry, Science and Resources. There is also $15.7 million over two years to ‘support industry analytical capability and coordination of AI policy development, regulation and engagement activities across government’.

The $288.1 million for Digital ID shows government commitment to this initiative. The framework already has a strong focus on privacy and security, and this will hopefully go to fill some technical governance gaps.

There is also $466.4 million to ‘make PsiQuantum the anchor tenant of a quantum precinct located in Brisbane, Australia’.

This is a fantastic example of the ‘big bets’ Australia must take if we seek to be a real competitor in any critical technology.

 

Blake Johnson, senior analyst

The Government has committed a significant amount of money to enhancing and expanding Australia’s diplomatic presence across the Pacific, but it is worth noting a lot of this will be spent on upgrading and expanding infrastructure and ICT at posts.

Additional funding for the Australian Federal Police to continue its deployment to Solomon Islands Assistance Force in 2024-25 confirms that SIAF will continue beyond 30 June.

While there were improvements to Australia’s support in countering climate change in the region, outside of commitments to Tuvalu through the Falepili Union, more funding is still needed to help the Pacific address its highest security threat.

 

Mike Copage, project manager, climate and security policy centre

The Budget contributes a smart renewable energy strategy and investments: over $19 billion split across near-term clean energy deployments, and long-term incentives to catch up the development of clean energy technology, supply chains, and industries in Australia.

An equivalent, if not much greater, level of commitment on climate resilience must be in next year’s budget to ensure the ‘Future Made in Australia’ program can survive climate impacts. There were helpful measures this year on water, drought, and disaster management—but much more is needed.

Once the National Adaptation Plan is released late this year, the next budget must lay out its climate resilience commitments. We remain on a dangerous climate track, and the window to prepare is closing before we’re stuck in a compounding cycle of costly disaster response.

 

John Coyne, head of the Northern Australia Strategic Policy Centre and head of Strategic Policing and Law Enforcement

This year’s budget shows that the government recognises that critical mineral market forces cannot assure resilient supply chains given market manipulation—and that this manipulation is multi-modal.

The $5.8 million for a critical minerals trade enhancement initiative is a good move, as is the $1 million for a pilot educational program to strengthen the capabilities of Australia’s critical minerals sector to detect, prevent and mitigate foreign interference.

Still, a greater focus on regulatory reform to provide for greater investment attraction is needed.

On defence, despite the reduced warning time and the fact that the Defence Strategic Review and the National Defence Strategy both reinforced the strategic importance of northern Australia, no specific mention is made of new funding for base hardening and resilient infrastructure.

New money for the Australian Criminal Intelligence Commission and AUSTRAC represent a sound move to deal with the national drug epidemic in terms of organised crime and money laundering. However, given that our national strategy in this space is six years old, perhaps it was time to fund a broad, organised crime white paper.

 

Malcolm Davis, senior analyst

As expected, prioritization goes to funding the nuclear-powered submarines and the navy’s fleet expansion after the Fleet Review, which means that certainly over the forward estimates, and probably over the rest of the decade, there will be little money for the air force or the army to acquire new capabilities. The broader assumptions about the economy in the budget may actually reduce money for defence in the coming years of the forward estimates, if ballooning deficits from 2025-26 and beyond and higher inflation put pressure on the government to reduce growth in defence funding.

Escalation of the war in Europe, a crisis across the Taiwan Strait, or uncertainty on the US role in the Indo-Pacific in a future after President Biden could easily and quickly derail the assumptions underpinning the entire federal budget—and with it, throw defence plans into disarray.

This is a budget that delays any significant increase in defence spending throughout the forward estimates—despite intensifying strategic and geopolitical risk. In effect, the government is betting big on nothing bad happening until the early-to-mid 2030s, in spite of all the strategic risk indicators flashing bright red, and in spite of guidance from the National Defence Strategy and the 2023 Defence Strategic Review reinforcing growing danger.

The decision to acquire the nuclear-powered submarines, and to boost the size of the navy after the Fleet Review means that other arms of the Australian Defence Force will not gain significant capability—and, based on shortfalls in workforce—may lose capability in readiness and sustainability terms. In effect, the submarines and naval expansion are prioritised and are consuming resources that could grow other aspects of ADF capability in air and land domains.

Long-range ‘impactful projection’ through the submarines and new strike capability are the priorities, but the amount of funds allocated through the forward estimates does not allow the latter to be significantly expanded within the remainder of this decade. And we won’t see the first of the nuclear-powered submarines until 2033 at the earliest. Given that one submarine does not make a nuclear submarine capability in reality—that won’t actually happen until later in the 2030s, once we have the three US Virginia Class boats (perhaps expanded to five), and we prepare for the AUKUS boats in the 2040s.

In effect, the government is claiming to boost defence spending, but the actual increases are just projected, not actual. They exist beyond the forward estimates and, as such, are highly speculative numbers that the current government—or a future government—can choose to revise, particularly if assumptions underpinning the 2024-25 budget aren’t realised, or international risks get in the way.

Defence isn’t a priority in this budget in comparison to other portfolio areas, but it is a crucial national responsibility for the government. This budget hopes for the best, and avoids making hard decisions to lift defence spending more quickly. However, hope is not a strategy.