In brief
The 2026-27 Federal Budget contains measures aimed at “enhancing defence capability, preparedness, and resilience”.
Key takeaways
The 2026-27 Federal Budget provides for new and increased investment in defence. The 2026 National Defence Strategy provides an additional AUD 53 billion over the next ten years through direct government investment and plans to leverage private sector funding. The Government’s intentions are to: (1) increase the Australian Defence Forces’ (ADF) ability to deter and respond to threats; (2) build a more self-reliant ADF for the future; (3) strengthen Australia’s sovereign defence industrial base; (4) increase coordination with Australia’s regional partners. New and increased investments include:
2026 National Defence Strategy and Integrated Investment Program
- The Government will provide additional funding of AUD 6.8 billion over four years from 2026–27 (and AUD 35.6 billion over ten years from 2026–27) to support the delivery of the 2026 National Defence Strategy and Integrated Investment Program to enhance Defence capability, preparedness and resilience.
- This measure includes part of the AUD 12 billion investment committed by the Government during 2025–26 Mid-Year Economic and Fiscal Outlook (MYEFO) to deliver the Henderson Defence Precinct. It will also contribute towards total increased investments of AUD 14 billion over the next four years and AUD 53 billion over the next decade to deliver the 2026 National Defence Strategy.
Nuclear-Powered Submarine Program – continuation of government resourcing
- The Government will provide AUD 863.8 million over four years from 2026–27 for continued support to the Nuclear Powered Submarine Program. Funding includes:
- AUD 711.9 million over four years from 2026–27 for the ongoing operation of the Australian Submarine Agency, to manage the delivery of Australia’s Nuclear‑Powered Submarine Program, including the continuation of the Nuclear Graduate Program.
- AUD 51.7 million over two years from 2026–27 for the Department of Foreign Affairs and Trade to provide policy and international law advice and diplomatic support for the Nuclear‑Powered Submarine Program.
- Funding packages for a number of projects focused on nuclear safeguards and security regulation.
- The Government will also provide AUD 218.4 million over eight years from 2026–27 for continued support to the Nuclear Powered Submarine Program directed at measures for housing, growing and training a sovereign qualified and highly skilled workforce to support the Nuclear Powered Submarine Program.
Enhancing defence cooperation in the Indo Pacific
- The Government will provide AUD 600 million over four years from 2026–27 to deliver initiatives to realise the benefits of the Papua New Guinea (PNG) – Australia Mutual Defence Treaty and expand Defence infrastructure investments in the Pacific and South East Asia. Funding includes:
- AUD 421.6 million over four years from 2026–27 to be held in the Contingency Reserve to support regional engagement through initiatives under development with partner governments to be considered in a future economic update.
Australian Naval Infrastructure equity injection
- Building upon the 2025-26 MYEFO measures, the Government will provide Australian Naval Infrastructure Pty Ltd (ANI) with an equity injection over four years from 2026–27 to support construction of the Nuclear Powered Submarine Construction Yard in South Australia.
A copy of the Federal Budget papers can be found here.
Charlie Berro, Associate, Jeremy Hyman, Head of Communications, and Sky Friend, Business Development Consultant, have contributed to this legal update.