Australia's defence spending is expected to remain steady as a proportion of the economy over coming decades, as the region faces its biggest military build-up in the post-war era.
While the government committed in its response to the defence strategic review to raise military spending to 2.3 per cent of GDP by 2033/34, the Intergenerational Report said that figure was assumed to remain steady for the following three decades.
"The window of opportunity to deal with potential threats is narrowing as the pace of military modernisation in the Indo-Pacific region accelerates," the report released on Thursday said.
"In a fiscally constrained environment, the government will need to prioritise which national security measures best meet security needs to effectively respond in these challenging strategic circumstances."
The report noted a sharp deterioration in the global strategic environment over the past 10 years.
"Russia’s invasion of Ukraine, and rising geostrategic competition, has sharpened global tensions and disrupted the global economy."
Maintaining stability in the region over coming decades will also require greater investment and innovation in intelligence services, diplomacy, development assistance and trade, the report said.
