Defence will get an extra $50 billion over the next decade as part of a shake-up of the Australian military, as plans to acquire F-35 fighter jets have been put on ice.
Unveiling a national defence strategy and $330 billion investment program in a major speech on Wednesday, Defence Minister Richard Marles revealed an additional $5.7 billion would be spent over the next four years.
He outlined an increase on spending on ships and ship building as part of what he said was the largest growth in military spending since 1949.
"History will judge us not by what we say, but by what we do, and you can only do if you properly fund," Mr Marles told the National Press Club.
The strategy follows the release of a defence strategic review a year ago, which found the Australian Defence Force was no longer fit for purpose.
The spending boost will take defence funding to 2.4 per cent of GDP by 2033/34.
The government will make cuts to other defence programs under a $22.5 billion "reprioritisation" over the next four years to help pay for drones and long-range strike missiles.
This is set to include a $3 billion cost saving by delaying the possible acquisition of a fourth squadron of F-35 aircraft under the Joint Strike Fighter program.
The rise of China and its growing influence in the Indo-Pacific region along with other threats had created the most challenging strategic environment since World War II, Mr Marles said.
A further $1 billion will be spent over the next four years on long-range strike, targeting and autonomous systems.
Three hundred million dollars over the next four years will be pumped into drone and counter-drone capabilities, with the defence minister pointing to their use in the Ukrainian war.
Annual funding for defence will surpass $100 billion in a decade's time.
The strategy also calls for a widening of the eligibility criteria for the defence force to bolster recruitment.
This includes potentially allowing non-Australian citizens to sign up, and encouraging defence personnel to serve longer through retention initiatives.
Mr Marles said there were about 600,000 New Zealanders living in Australia which was "an obvious place to look" for recruits.
"There is certainly an interest around the Pacific in respect of that," he said.
In a swipe at commentators who suggested Australia was going to be playing a "big part" in a potential regional conflict, Mr Marles said that position "genuinely lacks wit".
"There's no analysis in that, because we will never be a peer to the United States or China, but that's not what we're trying to do," he said.
The defence minister said in a much less certain world Australia needed transformational capabilities so the nation could resist coercion and maintain its way of life.
The funding boost comes at the cost of planned upgrades to defence facilities in Canberra, worth $1.4 billion, which will instead be reinvested in bases including in northern Australia.
The acquisition of two large support vessels for the Navy has been deemed "no longer a priority" and will not be carried out, saving $120 million.
Opposition defence spokesman Andrew Hastie labelled Mr Marles weak and said he failed the "leadership test".
"The minister reverted to vague, bureaucratic language in talking about Australia's national security and defence spending," he said.
"Under a Dutton government, there will be clarity around threats to Australia, our strategy to defeat them, and defence funding will be higher than the Albanese Government."
Greens defence spokesman David Shoebridge said the $1 billion for long-range strike, targeting and autonomous systems was not evidence of a strategic switch, but was akin to "throwing loose change at a problem".
