The 2026 National Defence Strategy: Well designed, poorly timed?

---

Defence Minister Marles released the 2026 update to Australia’s National Defence Strategy (NDS) on 16^th April. This was the first update of the 2024 document, following the government’s commitment to move from ad hoc defence white papers to a biennial approach.

Together with the Integrated Investment Program (IIP), the NDS outlines how the government is addressing Australia’s most significant security risks and importantly provides priorities for defence investment. It represents the government’s position on balancing how much risk to national security it wishes to accept with how much risk it might reduce through investments in military capabilities.

The National Defence Strategy

To meet this challenge, three key characteristics of the 2024 NDS were:

• that the Australian Defence Force (ADF) needed to shift from a balanced force (able to address a range of contingencies) to a force that was focused on the most significant risks to Australia’s security;
• that the ADF would adopt a strategy of deterrence by denial, by developing strike capabilities with an implicit threat that strike responses would alter an aggressor’s calculus of risk and cost; and
• that Defence must achieve speed to capability by having efficient acquisition processes and by pursuing minimum viable capabilities.

Whilst not explicitly specified, the most significant risk that the government is preparing for is assumed to be a projection of force against Australia, primarily from its northern approaches. The 2024 NDS acknowledged the importance of all forms of national power and resilience to Australia’s security, and thus introduced the need for coordinated action under a concept of National Defence. This concept helped to address criticism of the lack of a national security strategy.

What’s different in the 2026 update?

The 2026 NDS takes an even more negative view of the strategic environment by noting that the trends driving deterioration have ‘broadened and intensified’, and with coercion and the use of force being ‘more prominent features of statecraft’. This assessment supports the continuing need for credible ADF capability and deterrence strategy. The 2026 NDS is similar to the 2024 version in form and substance – the chapter titles are the same, as are the intent and even much of the wording of the text. The 2026 NDS maintains the approach of a focused force and deterrence by denial, and the eleven identified capability investment priorities have not changed.

This stability of defence strategy is a positive. The 2024 NDS was built upon robust analysis and a logical approach to Australia’s circumstances. Strategy is strengthened through continuity in policy, which will improve the achievability of objectives over time. It also facilitates effective management of capability development and acquisition processes, which typically involve long lead times to introduce capabilities.

Thus, a key shift in the strategy is the expectation that domestic industrial capability will be able to be ‘scaled at the onset of conflict’ to mitigate risks in access to crucial systems and supplies. Interest will now swing to the imminent update of the Defence Industry Development Strategy, which will detail these expectations in the form of Sovereign Defence Industrial Priorities.

The other notable feature of the 2026 NDS is changes in investment to reflect lessons from recent conflicts in Ukraine and the Middle East. Specifically, the government increased funding for uncrewed systems, missile defence, and long-range strike weapons. Investments in uncrewed systems will continue to favour small numbers of high value systems such as Ghost Bat, however, the new NDS notes the risks associated with an over-reliance on small numbers of advanced capabilities – thus, in a very good move, the new IIP also includes investments in low cost uncrewed systems.

Funding of missile defence is also a welcome shift in the 2026 NDS, following criticism that this area of capability is crucial if Australia is to deter aggression. An integrated air and missile defence capability must be able to deal with both sophisticated and high quantity, low-cost threats; and importantly be able to distinguish between such threats in order to sustainably defend against them.

Guided weapon stocks and industrial capacity is a central contributor to Australia’s deterrence strategy and is also a core element of the efforts towards self-reliance through domestic industry. The new IIP includes a substantial increase of up to AUD15 billion additional funding towards Guided Weapons and Explosive Ordnance capability.

What about the US Alliance?

How the alliance would be discussed was a highly anticipated part of the NDS release, given a belief that the US may be contributing to uncertainty and disruption in the international order. The 2026 NDS has substantial emphasis on self-reliance as well as international engagement with regional and other nations (including through mini-laterals). Yet this is not at the expense of the alliance with the United States, which the NDS continues to characterise as Australia’s closest ally and principal security partner. A minor wording change from the previous NDS (which noted that Australia and the US share values and ideals) to the current version (which instead uses wording of shared interests) is too subtle to draw attention.

The way that the NDS manages this aspect of strategy is commendable. After all, no alliance, and certainly not one that is as enduring as the Australia-US relationship, should be ‘defined by the moment’. Additionally, the 2026 NDS notes that the US expects its allies to invest more in its defence; thus, efforts towards self-reliance and regional partnerships will actually help to strengthen the alliance, rather than detracting from it. Given Australia’s geography and limited resources, the Minister and the NDS have been very careful to explain the difference between self-reliant and self-sufficient, and thus maintain the essential position that alliances and partnerships are fundamental to our security.

Getting defensive

One detail of the NDS that is notable is that much of the additional text in the new version is dedicated to explanations of what Defence has done to implement actions from the last NDS. In many cases, these are assertions that much had been done, without specific detail of achievements. In Chapter 2, there are vague statements about different departments leading coordination on national defence efforts, without any explanation about tangible achievements.

On the matter of achievements, the redefinition of the three epochs for force structure in Chapter 4 of the NDS is also distracting. The 2026 NDS has rephased the enhanced force-in-being to be mid-2026 to mid-2028 (it was previously defined as up to 2025), with the subsequent epoch of the objective integrated force compressing to 2028 to 2030 (previously 2026 to 2030). Without any explanation in the document, it invites scrutiny that Defence has yet to achieve the enhanced force-in-being as planned.

Upon launching the 2026 NDS, Minister Marles dismissed the advice of ‘think tanks, former generals, or washed-up bureaucrats’. While designed to pre-empt criticism of the strategy, such statements represent a dangerous approach for strategic policy, given that the quality of any policy is dependent on the scrutiny it receives.

Concerns about funding and urgency

The criticism of the 2024 NDS was primarily concerned with the quantum of funding not matching the rhetoric and urgent need to modernise, restructure, and increase preparedness of the ADF. While the overall funding of the IIP over the decade was substantially increased, the criticism focused on: much of the budget increases falls outside of the forward estimates; funding is diminished due to inflationary costs of defence equipment and the increasing domination of the budget by the future submarine project; and the timeframes for acquisition results in capability only being enhanced well into the 2030s.

The 2026 NDS sought to deflect these criticisms through the announcement of increases to the IIP budget by AUD53 billion. Yet, in general, the commentary since the release of the NDS update agrees with the direction of the strategy, but continues to question the speed that it can move with limited resources in the forward estimates. The specific funding and urgency concerns include that:

• a relatively small portion of the capital investment increase (AUD14 billion of AUD53 billion) is in the forward estimates – thus fuelling arguments about lack of urgency in capability enhancements;
• the government is seeking to utilise private financing to effectively increase the capital budget – this represents about 30 per cent of the capital investment increases, noting such arrangements will draw away from future Defence funding;
• proceeds from Defence estate divestments will not be realised for years – which may create short term uncertainties for the Defence budget;
• the use of the NATO approach to calculate defence spending as a percentage of the GDP does not represent an increase in funding and may seem disingenuous; and
• the Defence budget for the forward estimates (FY26/27 to 29/30) in the new NDS is less than 0.4 per cent greater than the same years in the 2024 strategy – which reflects a lack of increase by the new NDS in the forward estimates and implies that the AUD14 billion capital investment increase will need to come from other savings.

On this latter point, the growth in capital investment without an increase in the Defence budget could be explained by a combination of factors, including private financing and estate divestment proceeds. Additionally, the NDS presumes that personnel and sustainment costs will not increase to the same extent as capital investment. While this is an admirable aspiration, traditionally these costs rise proportionally; and inflationary pressures are likely to result in capital, sustainment, and personnel budgets remaining at historic proportions of a third each.

Reform

Both the management of costs and the ability to execute the IIP on time will rely upon the successful implementation of reform measures. The 2026 NDS focuses on three initiatives: reforming capability development and acquisition functions, enhancing delivery of the submarine program, and divesting property as per the Defence Estate Audit recommendations.

While these are important reforms, they are unlikely to support achievement of the strategy without two imperatives. First, simply consolidating capability development authorities under the VCDF organisation and acquisition under the Defence Delivery Group will not result in timely and effective introduction of new capability without accompanying cultural and process reforms that manage risks and prioritise delivery over process. Second, the Defence department (military and civilian) is top-heavy and with confusingly overlapping accountabilities, which demand a fundamental rethink of the organisational structure and command and control arrangements.

Conclusion

The main criticism that the government will continue to face in relation to the NDS is that forward estimates funding is insufficient to mitigate the most strategic risks that Australia faces. This is exacerbated by the insatiable cost of the nuclear-powered submarine program detracting from investment in other capabilities and the fact that many of the high expense programs will not strengthen the ADF until next decade.

Minister Marles notes that greater funding of defence to reduce strategic risks has to compete with other priorities and pressures. Hopefully the government has the balance right, but if the fuel crisis that Australia faced in 2026 is any indication, there is value in investing early to mitigate the risks that in hindsight may seem quite obvious.