The United States has urged Australia to raise its defense spending to 3.5 percent of GDP as soon as possible, stressing the importance of increased support in the Indo-Pacific region.

“On defense spending, [Defense Secretary Pete] Hegseth conveyed that Australia should increase its defense spending to 3.5 percent of its GDP as soon as possible,” the Pentagon said in a statement following Hegseth’s meeting with Australia’s Deputy Prime Minister and Defense Minister Richard Marles on the sidelines of a recent defense summit in Singapore.

Australia currently spends about 2 percent of GDP on defense. Raising defense spending to 3.5 percent of GDP would cost Australia an estimated 100 billion AUD (approximately $67 billion) annually, about 40 billion AUD (around $27 billion) more than its current budget.

Responding to the call, Prime Minister Anthony Albanese said decisions on defense spending will be based on national needs. “What you should do in defence is decide what you need, your capability, and then provide for it,” he said Monday.

Albanese added that his government is already boosting defence spending by about 10 billion Australian dollars ($6.5 billion).

“We’re continuing to lift up,” he said, citing his government’s goal to raise spending to 2.3 percent of GDP by 2033.

During his speech at the defense summit, Hegseth highlighted NATO countries’ recent push to raise defense budgets closer to 5% of GDP—a target the Pentagon’s head of policy has repeatedly called the standard for U.S. allies in the Indo-Pacific.

“We ask, and indeed we insist, that our allies and partners do their part,” Hegseth said.

In response, Marles said that although Australia understands the U.S. position, its decisions will ultimately reflect national priorities. 

“We do understand where America is coming from and we’re up to the conversation,” Marles said. “But ultimately, the decisions that we make around defense spending are going to be driven by Australia’s national interest.”