On 29 May, ASPI released its annual defence budget briefing, The Cost of Defence. 

Introducing the report, ASPI executive director Justin Bassi reflected on its aim of 'strengthening Australia’s long-term security, prosperity and sovereignty' and its responsibility to 'ask the hard questions' about the adequacy of defence resourcing. He further highlighted the need to view defence as a whole-of-government issue to effectively counter the growing security threats in the Indo-Pacific region:

The security challenges that Australia faces cannot, and should not, be borne by Defence and our armed forces alone. For too long, Australian governments have partitioned Australia’s security and failed to deliver a comprehensive approach to national security. ASPI has been vocal in calling for comprehensive national security planning, and now we reflect this by examining the government’s national security spending as a whole.

Director of defence strategy Mike Hughes and senior fellow Marc Ablong outlined that 'the government’s rhetoric about a once-in-a-generation defence investment is not matched by funding levels or organisational reform.' They described the defence budget as a 'lost opportunity' that could result in a lack of preparedness. They highlighted an over-prioritisation of funding for distant capabilities that may leave Australia vulnerable:

Most major capability acquisitions for the Australian Defence Force–including the nuclear-powered submarines under the AUKUS partnership and a planned class of frigates–are scheduled for delivery well into the 2030s and beyond.

While these future capabilities are critical for long-term deterrence, they provide little immediate enhancement of our defence capability, preparedness or resilience. For the next few years, we’re left with a paper ADF that lacks the readiness and size to meet near-term threats.

ASPI senior analyst Alex Bristow discussed consequences that inadequate defence spending may have for Australia, noting that 'where Australia drags its feet, its peers are shifting gears.' He warned that Australia was in danger of falling behind its partners and allies if it couldn't raise defence spending to a level commensurate with regional threats:

Like Europe, we must relearn the tragic lesson that deterring a bully is cheaper, in lives and national treasure, than fighting one. Australia is not spending enough, fast enough, to keep the bullies at bay.

Since its release, the report has sparked nation-wide conversations on defence spending, many of which took place at our 2025 Defence Conference on 4 June. Admiral David Johnston, Chief of the Defence Force, offered his insights during a panel on national preparedness and national support for defence:

I would say Defence is fully expending its budget at the moment. That’s a good thing, as we’ve uplifted our acquisition delivery, workforce is improving, our view of what we need to do around readiness. That does put pressure on a budget that we have to make choices on.

The conclusion of Justin Bassi's foreword encapsulated the purpose of The Cost of Defence:

It has never been more important for experts inside and outside the public service to speak truth to power frankly and fearlessly in order to give decision-makers the strongest possible suite of options. We do not expect all readers to agree with our positions. Indeed, we welcome debate and disagreement in the hope that Australia will be stronger, more prepared and more resilient for the challenges we confront now and will face in the future.