Australia faces a ‘guns or butter' problem: defence spending or social programmes?
Australia confronts a 'guns or butter' choice between a bigger defence budget and expanding national disability insurance and other social programmes, according to multinational banking and financial services company Rabobank, which calls for economic statecraft to navigate a risky regional security environment.
For now, the government is opting for 'butter', but it retains substantial fiscal headroom to bolster military spending when compared to peer economies, Rabobank economist Benjamin Picton said in a research note on Tuesday. The nation's debt is lower than that of counterparts as a share of its gross domestic product.
Australian officials have warned that the nation faces its most complex strategic circumstances since World War II. The government aims to pivot its military posture to deterrence, including via drones and missiles, to complement a planned fleet of nuclear-powered submarines due to be delivered in the 2030s under the
Aukus deal.
A Virginia-class nuclear-powered attack submarine of the type Australia is set to acquire from the early 2030s. Photo: US Navy
But Canberra is caught between the expanding military footprint of China, which is also Australia's biggest trading partner, and its traditional US ally that is seeking to check Beijing's expansion in the Asia-Pacific.
Picton pointed out the contradiction of Australia deepening military engagement with Washington via Aukus to deter China while trying to keep defence spending low enough to 'remain relatively inoffensive' to Beijing.
'This have-your-cake-and-eat-it-too approach carries risk that Australia will be forced into supporting US foreign policy interests against its own, while also being underprepared if a major conflict were to break out, or if the US were to revise its strategic doctrine in the Western Pacific,' Picton said.
As a result, Australia faces higher defence, social programmes and debt servicing costs which may put pressure on long-dated government bonds, Picton said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South China Morning Post
43 minutes ago
- South China Morning Post
Foreign ice cream is no longer cool in China. Here's why that matters
For years, Feng Hui, an operations manager living in Guangzhou, made a tradition of taking her daughter Claire to celebrate her birthday at a Haagen-Dazs store near her home. But this month, the 14-year-old had other ideas: she told her mother she wanted to spend her birthday at a popular local tea bar with her friends. 'Chinese teenagers now prefer domestic brands – they look great, and new products are coming out every month that tempt them to take selfies and post on social media,' Feng said. The birthday cake also got a makeover. Instead of a Haagen-Dazs ice cream cake – which used to be a byword in China for luxury and sophistication – Claire chose a custom-made cake from a local bakery featuring her favourite video game character. In her eyes, Haagen-Dazs is simply 'not cool' – a sentiment that is becoming common among young Chinese, reflecting broader shifts in the country's consumer landscape.
South China Morning Post
43 minutes ago
- South China Morning Post
Nvidia taps two young Chinese AI experts to strengthen research
US chip giant Nvidia has hired two prominent artificial intelligence (AI) experts who hail from China, underscoring the rising global recognition of talent from the mainland and their key contributions to the field's advancement. Zhu Banghua and Jiao Jiantao, both alumni of China's Tsinghua University, said on their respective social media accounts that they joined Nvidia, sharing photos of themselves with Jensen Huang, the founder and CEO of the company. Zhu, who received his bachelor's degree in electrical and electronics engineering from Tsinghua in 2018 and a PhD in electrical engineering and computer science from the University of California, Berkeley, in 2024, joined Nvidia's Nemotron team as a principal research scientist, according to Zhu's post on X from over the weekend. Zhu's LinkedIn profile showed that he has also been an assistant professor at the University of Washington since September 2024. 'We'll be joining forces on efforts in [AI] model post-training, evaluation, agents, and building better AI infrastructure – with a strong emphasis on collaboration with developers and academia,' Zhu said, adding that the team was committed to open-sourcing its work and sharing it with the world. Nemotron is a group at Nvidia dedicated to building enterprise-level AI agents, according to the team's official website. The team's Nemotron multimodal models power AI agents for sophisticated text and visual reasoning, coding and tool-use capabilities. Jiao, who received a PhD in electrical, electronics and communications in engineering from Stanford University in 2018 after graduating from Tsinghua with a bachelor's degree in electrical engineering, said on LinkedIn over the weekend that he joined Nvidia to 'help push the frontier of artificial general intelligence (AGI) and artificial super intelligence (ASI).'
South China Morning Post
44 minutes ago
- South China Morning Post
Hong Kong's opposition party folds, citing ‘immense political pressure' and ‘safety fears'
Hong Kong's opposition League of Social Democrats on Sunday cited 'immense political pressure' and 'safety' of its members in folding the party months before its 20th anniversary. 'We sadly announce that facing immense political pressure, and having considered all factors, especially the safety of our members and those who walk with us, we can only sadly announce our dissolution,' the party chairwoman Chan Po-ying said on Sunday. When asked to specify the 'political pressure' it faced, Chan said she could say nothing beyond the 'disbandment statement' the party prepared. The press conference at a Chai Wan industrial building was attended by Chan and six members, such as Figo Chan Ho-wun, Jimmy Sham Tsz-kit, Raphael Wong Ho-ming and Tsang Kin-shing. There was a heavy police presence outside the venue, with dozens of media outlets packing the small room. Reading the statement titled 'rather be ashes than dust' in a press conference, Chan said the party, established for 19 years, recently experienced a 'crisis where almost all of its leadership faced imprisonment due to civil disobedience'.
