Budgeting for an Enhanced Ready Force
If the strategic environment is driving an enhanced need to bulk up the capabilities of the ready force, where will the money come from to do so?
And just as significantly, would recasting and reinforcing the fight tonight force with new means such as maritime autonomous systems change the approach to future force building?
Dr. Marcus Hellyer, Head of Research at Strategic Analysis Australia, delivered a comprehensive analysis of Australia’s defence spending challenges and cost-effectiveness considerations. His presentation covered three main areas: defence budget analysis, cost evaluation frameworks, and strategic recommendations.
Dr. Hellyer painted a sobering picture of Australia’s defence trajectory, arguing that current spending patterns prioritize expensive, long-term programs over the mass and agility needed for modern warfare. He called for fundamental reconsideration of what constitutes value in defence spending, emphasizing the need for cost-conscious responses that can deliver relevant capability in meaningful timeframes rather than exquisite platforms in distant decades
The problem begins with where the money is actually going. Of the $50.3 billion “unprecedented increase” in defence spending, all but $1 billion is allocated to just two maritime programs: nuclear-powered submarines and the General Purpose Frigate program. This represents a dramatic shift in defence priorities, with maritime capabilities now consuming 38% of total investment spending — more than land, air, and cyber capabilities combined.
“We’ve essentially created a fourth service with the SSNs,” Hellyer explained, noting that the submarine program alone is larger than the entire Air Force capital budget. When combined with other naval spending, maritime programs now outspend the Army and Air Force together.
This maritime focus might seem reasonable given Australia’s geography and the strategic importance of the Indo-Pacific. But Hellyer argues the current approach is fundamentally flawed. The $27 billion price tag for just three Hunter-class frigates, he suggests, “makes no sense whatsoever” outside the peculiar world of Australian defence politics.
Hellyer underscored that these expenditures won’t deliver meaningful capability for decades. Australia might receive its first domestically-built nuclear submarine around 2040 — if all goes well — after spending $100-150 billion. Meanwhile, the strategic environment continues to deteriorate.
The deeper issue, according to Hellyer, is Australia’s addiction to “exquisite platforms” delivered in tiny numbers over extended timeframes. While the Australian Defence Force pursues perfect solutions, adversaries have remembered a fundamental truth: in warfare, mass matters.
This reality is playing out in real-time conflicts. In the Red Sea, Houthi forces using relatively cheap weapons forced the United States to expend expensive SM-2 and SM-6 missiles in defensive responses — ultimately leading to what Hellyer describes as President Trump’s unilateral declaration of victory and withdrawal, essentially because the U.S. was running out of ordnance.
“I’m still struggling to understand how we think we’re going to achieve air superiority against anything resembling a peer adversary,” Hellyer observed, highlighting the fundamental mismatch between current procurement strategies and battlefield realities.
The problem extends beyond just acquisition costs. Operating expenses are skyrocketing across all platforms, with air combat aircraft showing particularly dramatic increases in cost per flying hour. Each new piece of equipment is more expensive to sustain than what it replaces, creating a spiral of rising costs and shrinking capability.
To fund these maritime megaprojects, Defence has had to cut $70-80 billion worth of other capabilities from its integrated investment program. Gone are air and missile defence systems, Navy tankers, and hundreds of infantry fighting vehicles. Even a fourth air combat squadron of F-35s was sacrificed to the maritime altar.
What remains, Hellyer argues, isn’t really a “focused force” — the government’s preferred term — but simply “what you’re left with once you’ve kicked all those other things out.”
Critically, nothing has been removed from the list of missions the government expects the ADF to accomplish, meaning Australia is asking its military to do more with less.
Hellyer highlighted the negative effect from what he called “zombie projects” — programs that represent future sunk costs the military hasn’t even spent yet. These commitments will lock Australia into expensive, outdated approaches for decades, creating what he terms “the dead hand of sunk costs” that constrains future decision-making.
While Australia pursues small numbers of expensive platforms, potential adversaries are taking a very different approach. Hellyer points to China’s electric vehicle production — 12 million units annually — as an indicator of what the country could achieve if it decided to mass-produce military systems.
“Large UUVs [unmanned underwater vehicles] are essentially underwater EVs, same level of complexity, same level of difficulty,” he explained. “They only need to take that much of that capacity and start producing uncrewed underwater EVs, and they will be able to produce not just tens, but hundreds of thousands of them.”
The implications are significant. Any strategically important body of water in the Indo-Pacific could soon be swarming with Chinese underwater drones, fundamentally altering the strategic balance. Meanwhile, Australia is spending hundreds of millions of dollars to acquire just 24 Group 3 drones — even as military planners acknowledge they might lose five per day in actual combat.
But for Hellyer, the rise of uncrewed systems represents more than just new technology — it’s a fundamental shift in how warfare works. Ukrainian forces have demonstrated that small, relatively cheap drones can sink ships, shoot down helicopters and fast jets, and conduct land strikes. These aren’t niche capabilities; they’re reshaping the battlefield.
“Do not look at uncrewed systems as a replacement for a manned platform,” Hellyer warned. “What they are doing is making your manned platform irrelevant or making it unable to operate effectively with acceptable levels of risk.”
This technological shift amplifies the cost-effectiveness problem. Australia’s adversaries are proving “much better at assessing cost effectiveness than we are,” using inventive, low-cost approaches to impose disproportionate costs on traditional military forces.
Hellyer’s critique extends beyond specific programs to challenge fundamental assumptions about military procurement. He distinguishes between three different analytical approaches: cost-benefit analysis, cost-effectiveness, and value-for-money assessment.
The key insight is that what constitutes “value” in defense spending is changing rapidly. In an era of potential wars of national survival rather than wars of choice, traditional metrics may be inadequate. Instead of seeking the most cost-effective way to hit a fixed number of targets, military planners should focus on sustainable mass, assured supply chains, and the ability to scale production rapidly.
“What’s valuable in an age of wars of choice is not the same as what’s valuable in an age of wars of necessity and national survival,” he argued. This suggests prioritizing affordable mass over exquisite perfection, assured supply during crisis over peacetime efficiency, and “good enough” capabilities now rather than perfect solutions in the distant future.
Hellyer’s analysis doesn’t offer easy solutions, but it does suggest some principles for reform. Australia needs to escape what he calls the “cult of bigger” and “cult of complexity.” The fact that the submarine program will create 20,000 jobs isn’t a benefit — it’s an opportunity cost representing 20,000 talented Australians who could be contributing to other critical needs.
The is a major challenge in Hellyer’s view of overcoming institutional momentum. Current programs have powerful constituencies, and changing course requires confronting uncomfortable truths about past decisions. But the alternative — continuing down the current path — may lead to a military that consumes enormous resources while becoming increasingly irrelevant to actual defense needs.
As Hellyer concluded his presentation: “When you combine the inventiveness of the Ukrainians, the determination of the Houthis and the scale of China’s industrial and technological base, we are going to be swamped.”
See also the following follw-up interview with Hellyer:
Dr. Marcus Hellyer on Breaking the Autonomous Systems Defence Employment Barrier