The cost of Defence has been published every year since 2002. The series has, year after year, assessed what governments said they would do against what the books showed. The 2026 edition is published in a different strategic environment from any of its predecessors. 

Australia’s 2026–27 Defence Budget commits the Commonwealth to spending approximately $181.9 million on defence every day. This report examines the Australian Government’s progress with, and spending on, the 2026 National Defence Strategy and the updated Integrated Investment Program. It asks the cent on the dollar arithmetic question. 

Australia’s strategic environment has not eased since The cost of defence: ASPI Defence budget brief 2025–2026. China continues to lift its military investment at a pace few of our regional partners can match. Russia’s war in Ukraine has not ended. Conflict in the Middle East has flared and subsided and flared again. The United States continues to recalibrate the terms of its alliances. Rearmament is underway in Europe, the Middle East and the Indo-Pacific.

Key findings

• Workforce is the binding constraint.
• Sovereignty is a long-term trajectory, not the present state.
• Sustained operations require resilience that the program hasn’t yet built.
• Cross-capability investment priorities integration is the system-level challenge.
• Defence is buying a future and is doing so by accepting that the Australian Defence Force (ADF) will be able to do less today.
• The strategy is set; the institutional follow-through is the test.