Last month the Trump administration created two challenges for Australia, and we are not responding well to either of them.
In the first instance, the Trump administration doubled its tariffs on imported steel to 50 per cent. This puts further strain on a struggling Australian steel industry.
The Federal Government responded with its tired complaints (saying that it is “not the act of a friend”) without any real plans to help protect Australian jobs.
Why does Australia complain so loudly when the US takes unilateral action against our interests but never complains when China does the same. For decades now China has abused the international trading system to subsidise its steel industry and taken market share from our domestic producers.
We have just two steel mills left, and despite being the world’s largest iron ore and coking coal exporter, produce half of our steel needs. Instead of complaining about what Donald Trump does why don’t we just put our own tariffs on steel so that we can return to self-sufficiency in steel production? That way we would not be impacted by what Donald Trump, or China, does on steel production.
In the second instance, the US Defence Secretary, Pete Hegseth has asked Australia to increase its defence spending to 3.5 per cent of GDP at the Shangri-La Dialogue in Singapore.
Two days later our Prime Minister said dismissively that “we’re a sovereign nation. And the idea that we, you know, respond to every comment that’s made as if it’s new, what we do is serious policy”. The PM went on to say that Australia is lifting its defence spending from 2 per cent to 2.3 per cent of GDP over ten years, well short of the request from the United States.
This financial year Australia plans to spend around $55 billion on defence. To lift our spending to 3.5 per cent of GDP we would need to increase spending by $40 billion a year in today’s dollars.
This is a lot of money, but it is small relative to the increase in the Australian Government’s spending since COVID.
In the last budget before COVID, the Australian Government spent $478 billion per year. In next financial year’s budget, we are set to spend $777 billion. An increase of almost $300 billion in just seven years.
To put this huge number in perspective, $300 billion amounts to $30,000 each year for every Australian household.
We would not increase defence spending by $40 billion overnight. But setting a medium-term target of 3.5 per cent of GDP in defence spending is affordable, especially if we got serious at cutting the other wasteful spending that has ballooned in the past few years like the billions we are spending on renewables.
Why are we putting the goal of net zero emissions above the goal of defending our nation?
In his speech to the Shangri-La conference, Pete Hegseth mentioned Australia seven times. He spoke about how the US is excited to partner with Australia on a new industrial strategy which includes plans for Australia to make radar systems, guided weapons and 155-millimetre ammunition.
The PM talks vaguely of a Future Made in Australia but why isn’t he embracing the chance to work with the United States to increase our defence manufacturing capability, when they clearly want to do work with us?
That would be another way to help rebuild our steel industry and direct it towards the purpose of helping our nation and our allies’ defence. It would be best if the PM would drop the stubbornness, recognise that times have changed since he was elected in 2022 and act in Australia’s best interests.
Hon Matt Canavan
Senator for QLD
