Defence faces budget blowout with Aukus nuclear submarines to cost more than failed French project

A new report has also questioned whether the Australian defence force would be able to meet a target to increase the number of uniformed personnel by 20,000 over the next 20 years, given that it is averaging net annual growth of only 300.

The new defence minister, Richard Marles, has signalled that one of his top priorities would be addressing the capability gap between the existing Collins class submarines and the introduction of at least eight new nuclear-propelled submarines under Aukus.

The ASPI report said the new government would also have to assure itself that the planned force structure was aligned with what the government thought the ADF should be doing.

The report said rising inflation would not only affect household budgets, but would also put additional pressure on the defence budget by eating into planned increases in funding and reducing buying power.

The consolidated defence funding of $48.6bn in 2022-23 includes $16.3bn on acquisitions, $14.2bn on defence workforce, and $17.6bn on operating costs including sustainment.

It reflected annual growth of 7.4% in nominal terms and 3.8% in real terms.

The new government was expected to release a budget in October and the prime minister, Anthony Albanese, promised to ensure at least 2% of GDP was spent on defence. The finance minister, Katy Gallagher, has mentioned defence as one of the areas that is putting long-term pressure on the budget.