Australia is pushing defense spending far beyond its former target of 2% of GDP, as Canberra focuses on the rising threat from China and ignores the fiscal effects of the COVID-19 pandemic. Spending in the current fiscal year, which ends June 30, is surging 9.1%, with a further rise of 6.6% planned for 2021-22, according to a budget announced in October. These nominal (current-money) increases understate real growth because the government expects falling prices across the economy in those years. But even as China becomes more aggressive in its international relations, the rapid growth of Australian spending will produce little additional capability this decade, in part because much money will be thrown into programs that will see deliveries of frigates beginning in the late 2020s and submarines in the 2030s.
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