Japanese Prime Minister Fumio Kishida visited Perth to meet with his Australian counterpart, Anthony Albanese, at the weekend. It was the pair’s fourth in-person meeting this year.

One of reasons for Kishida’s visit was reciprocating Albanese’s summit-level visits, as he had already flown to Japan twice since his election (for the Quad leaders’ summit in May and the recent state funeral of former prime minister Shinzo Abe).

Still, Kishida’s visit goes beyond diplomatic courtesy and has strategic implications for not only bilateral relations between Canberra and Tokyo, but also the broader security dynamic in the Indo-Pacific.

There were two primary issues that the two leaders discussed. One was energy supply ^[1] from Australia to Japan. Japanese electricity prices have risen by 20–30% ^[2] this year due to Russia’s invasion of Ukraine and the depreciation of the Japanese yen. Kishida made a promise ^[3] to the Japanese people to reduce the burden of electricity bills in a speech earlier this month. Australia is the largest supplier ^[4] of liquefied national gas and coal for Japan, accounting for 59% and 39% of its import of those commodities, respectively, and ensuring a continuous energy supply was an important political goal for Kishida.

The other major topic was increasing momentum for bilateral security cooperation. The two leaders agreed on a renewed and expanded security partnership for the first time in 15 years. The previous declaration ^[5], signed in 2007, focused more on non-traditional security issues such as terrorism and the proliferation of weapons of mass destruction, and human security concerns such as disaster relief and pandemics.

The new declaration clearly targets traditional security matters. As Japan’s ambassador to Australia Shingo Yamagami said in a recent interview ^[6], the security environment in the Indo-Pacific has changed dramatically since 2007. Based on shared concerns, the new declaration ^[7] boosts intelligence sharing, especially on geopolitical challenges posed by China, and increases military cooperation based on the reciprocal access agreement ^[8] signed in the beginning of this year.

The new declaration, which stands solidly on the two countries’ cumulative history of security cooperation, will set up higher ground for a so-called quasi-alliance ^[9] between Australia and Japan, as well as for trilateral and quadrilateral cooperation. This well-crafted declaration will enrich the discussion over Japan’s recently released national security strategy and key defence documents that are slated to be revised by the end of this year.

However, whether the two countries can realise the aspirations of the new declaration will depend on how substantially the Kishida administration can change Japan’s defence policy ^[10]. The immediate testament will be the amount of any increase in the Japanese defence budget. Kishida has been influenced by fiscal realists ^[11] at home. One symbolic discussion is which items ^[12] should be included in the defence budget; the government has said it will aim for the aspiration among NATO members to spend 2% of GDP on defence but has included the coastguard and research and development ^[12] in that figure. Former vice defence minister Shimada Kazuhisa criticised the move as ‘using baking powder’ to make the budget look bigger than it was.

Australia spent more than double Japan’s spending in terms of per capita defence budget ^[13] and defence budget per GDP ^[14], though Australia’s overall defence budget ($54 billion) is smaller than Japan’s ($82 billion). While Japan has increased its defence budget in the past 10 years, the percentage of the total national budget spent on defence has been consistently around 5% and even slightly declined from 5.4% in 2009 to 5.2% in 2021. This means that the Japanese government has never seriously prioritised increasing the defence budget over other items, but rather has continued to allocate a similar-sized slice of the whole cake despite the deteriorating security situation.

Japan’s to-do list is not just limited to its defence budget, however. Australia regards countering foreign interference ^[15] in a whole-of-society way that includes universities, for example, while Japan still primarily focuses on economic aspects, such as sophisticated technologies and critical infrastructure. There’s no sign that the Kishida administration wants to ignite debate over a long-awaited anti-spy law ^[16], which significantly expands the space for intelligence cooperation between Japan and the Five Eyes countries of Australia, Canada, New Zealand, the UK and the US, or fundamentally change the concept of Japan’s ‘exclusively defence-oriented policy’ (senshu bouei). The only potential improvement under that policy was the possibility it would enable unrestricted strike capabilities for the Japan Self-Defence Forces, though that was later watered down ^[17] to ‘counter-strike’ capabilities. These sorts of measures need political will more than they need funding.

In terms of military-related R&D, Australia is moving ahead under the AUKUS agreement with the UK and US, while many Japanese experts have warned ^[18] of the danger of Japan’s domestic defence industries becoming extinct. Although Japan has loosened a self-restrictive export control on weapons and completed ^[19] the first-ever major equipment transfer to the Philippines this month, most Japanese defence companies exclusively sell their products to the JSDF. Retired admiral Yoji Koda Yoji also points out ^[20] the risk of simply seeking domestic procurements due to a lack of technological development and the potential availability of more suitable overseas options.

Whether Japan can fulfil its diplomatic promises to Australia and other countries rests on the success of domestic reforms. Currently, an experts’ council ^[21] for ‘comprehensively considering defence as national power’ is examining how to substantially improve Japan’s defence capabilities. They are expected to come up with policy recommendations by next month. Japan’s international partners, including Australia, which has made a significant statement with the signing of the updated security declaration, should carefully watch what the Kishida administration actually implements.