Australia's 2026 Federal Budget

The 2026 Federal Budget has just been released. It totals $798.1b.

The international affairs budget, including defence, development, diplomacy, intelligence, and international policing, makes up $76.18b, or 9.54% of the budget.

Budget commitments across all policy areas are largely in keeping with existing trends. Single year variations in defence and diplomacy mean that this is a $1.45b nominal decline compared to last year.

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Two contextual drivers stand out when situating Australia’s international affairs budget.

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First, global defence spending continues to increase sharply. Notably, the United States has announced plans for a 42% increase in military spending, which does not include the additional costs of the war on Iran.

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Second, global Overseas Development Assistance (ODA) has suffered a historic contraction, declining by almost one quarter in 2025 and projected to decline further.

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Australian foreign affairs leaders regularly emphasise the increasing need to use all tools of ‘statecraft’ in pursuing Australia’s interests. The Lab’s interactive online database, BudgetLines, presents over 25 years of budget data for all of Australia's 'tools of statecraft', under the umbrella of Australia’s international affairs budget. This database and related analyses are the only place where this data can be accessed together at once.

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By comparing the numbers across these policy areas, we can analyse what Australia’s spending reveals about its priorities and understand how they have changed in the last quarter-century.

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In this brief, we look at what the numbers tell us this year.