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June 2, 2026
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LAURA JAYES: Welcome back. You're watching AM Agenda. The federal government has been accused of cooking the books. A breakdown of the latest defence spending shows that veterans' welfare payments and intelligence agency funding have been used to boost the headline figure. Joining me now is the Shadow Defence Minister, James Paterson. Did you FOI these, James?
SENATOR JAMES PATERSON: No, this was the good work of Ben Packham at The Australian newspaper, and it's produced a cracking front page today, really blowing apart Richard Marles' spin when it comes to defence spending. Of course, things like spending on veterans' pensions, and superannuation, and welfare are important, but we've never normally counted that towards defence spending, and now Labor is trying to do so to cover up for their failure to adequately invest in defence. I mean, they are even counting things like the Inspector-General of Intelligence and Security, which has an oversight function for our intelligence agencies, as part of defence spending. Now, unless the government is planning on deploying the IGIS to the front lines in a future war, I don't think that's really defence spending.
JAYES: OK, sure. But the government would argue that this is how NATO calculates their defence spending. So, when you're comparing like for like for the United States, whoever else wants to know, is that a fair argument?
PATERSON: Sure, but why weren't they upfront about this? I mean, the Deputy Prime Minister made this announcement in his address to the National Press Club about six weeks ago. It wasn't released then, just the headline number. It wasn't released in the National Defence Strategy. It wasn't released in the Integrated Investment Program. It wasn't even released in the Budget. It's had to be dragged out of them by Ben Packham at The Australian to finally get the truth of this. And it's giving a misleading impression to Australians that they're actually increasing defence spending, when the budget papers show that between this financial year and next financial year, defence spending will go backwards by about $800 million. It's a cut in real terms to defence spending at a time when Richard Marles says we're living in a more dangerous strategic environment than we ever have. So Labor really needs to match their rhetoric with action and fund the ADF adequately to meet the strategic moment that we're in.
JAYES: And you need to match your promises with how you're going to pay for it as well.
PATERSON: Yes, that's completely fair, Laura. And well before the next election, in the usual way, we'll be providing our costings to substantiate how we will meet our commitment of three per cent of defence spending in real terms, not pretend terms. And Angus Taylor has outlined some of the areas where we've identified savings already in terms of Labor's corporate welfare, their green welfare savings in the welfare program more broadly, with migration. But we'll be transparent and open about that before Australians have to vote.
JAYES: Okay, what's the gap between you and Labor in real terms?
PATERSON: We haven't made our final decisions about defence spending in terms of the ramp up. We've said what our target is, which is we think Australia needs to spend three per cent of GDP in real terms. We've got that from our best informed defence experts. But the way in which it ramps up over the forward estimates and into the medium term is enormously consequential for the budget impact, and we have not made those decisions yet.
JAYES: Okay, Paul Dibb this morning you would have seen is saying that we need to ramp up defence spending quite dramatically in order to be self-sufficient. Do you agree that we should be self sufficient?
PATERSON: Well, Paul Dibb is one of our most eminent defence experts, although presumably Richard Marles puts him in the category of other washed-up bureaucrats who can't be listened to because he's never been a member of the Expenditure Review Committee. I actually think we should listen to people like him. We should listen to Sir Angus Houston. We should listen to Professor Peter Dean. We should listen to so many other defence and national security experts who say that three per cent of GDP of real defence spending is what we need to defend ourselves in an uncertain world where we have a United States administration which is behaving unconventionally. The Trump administration is unlike its predecessors. It has a narrower vision of its own self-interest. It's been very clear that it is not going to do the same heavy lifting on upholding the international order and that its allies need to do more. And we need to act accordingly in our own national interests.
JAYES: So is Trump the new normal? Because, I mean, he's only got around, well, what is it, three years not even left on his term, and the constitution says he can't run again. I understand that with Trump, you assume nothing. But is the advent of Trump, Trump being the new normal, I assume that's going to cost Australia billions?
PATERSON: Well, I would say because the Trump administration is a second term of the Trump presidency, it can't be dismissed as a historical aberration. And depending on who his successor in the Republican Party is, they may be even more fervent believers in the Trump doctrine of America First than even he is. You know, JD Vance, his Vice President, for example, has been very clear about this for a long period of time that he believes that America does too much in the world. And so I think we have to plan for that reality because if it turns out to be true, if it turns out that's the direction America takes, then we need to be prepared to do more ourselves. We can't rely on America going back to a more conventional era where it did more of that heavy lifting internationally.
JAYES: Okay, let me ask about a few other things, if you don't mind, James. The Fair Work Commission has just handed down its decision on the minimum wage. About 3 million Australians have been given a 4.75% wage rise. Is that fair enough? Is it too much or too little?
PATERSON: Look, I never begrudge a pay rise for Australian workers, and I understand why, in Labor's high-inflation environment, this is necessary to stop Australian workers going even further backwards than they already have over the last four years. This is just about treading water, keeping them at the level that they've been at in recent years. But the core of the problem is out-of-control inflation, and we need to get that urgently under control because, over the long term, it's not sustainable to keep increasing wages at this kind of rate, because it's not sustainable to have inflation at this rate. That will ultimately lead to all Australians being poorer and probably higher unemployment. So the most critical task for the government is to take the pressure off the economy by controlling their spending, which has been out of control, and even the RBA has called them out for that. So they're not driving up inflation any further than they already have been.
JAYES: I spoke to a mortgage broker yesterday by the name of Tom Hawley, and he raised a really good point about the fact that before this Budget, Labor's policy was to have the 5% deposit scheme, so they were really encouraging people to stretch themselves to buy a home. Now they've handed down this budget at a time when we're in a price hike cycle, it has put pressure on the market, and then they're talking about the cost of housing. Or not declining, but going up at a less rapid rate. Those two things seem to be at odds with each other.
PATERSON: I am very worried about the young first-time buyers who've been induced to enter the market with only a five per cent deposit by the Labor Party in recent months, who are now likely to be in negative equity. That is, they are going to owe more on their house than their house is worth themselves. And if they had to sell because of a change in life circumstances or a loss of a job, they could find themselves with debt arising out of their purchase. They could find themselves further backwards than they were only a few years ago. That's why we have to be really careful with those kinds of demand-side measures. They can lead people to buying homes with very small deposits and put them in a very precarious financial position, particularly if housing prices fall further, as most of the commentators are saying they're going to.
JAYES: Okay, we've just seen our population tick over 28 million, indeed it is 28,000,220, here we go. This is a live clock, believe it or not. We have everything at our fingertips in terms of live. Is that too many?
PATERSON: Oh, look, I never begrudge a new Australian being born or someone making a commitment to our country, but I think the growth in population driven by out-of-control immigration over the last couple of years under Labor has been too fast, and it is putting enormous strain on our housing market, on our infrastructure and on our services. And this is a policy of choice. The one thing that the government has total control over is the number of people who come into our country every year, and Labor has allowed millions of people to come in on their watch in a way that is completely unsustainable. We need to get migration back down to more sustainable levels so that our housing market can catch up, infrastructure can catch up, and services can catch up, otherwise it's ultimately going to make all Australians worse off.
JAYES: Everyone reads the polling, James, and I certainly know you do. I speak to Red Bridge every weekend. We get some feedback from the focus groups as well. I think the big problem for the Liberal Party is that they're not talking about you, but they are talking about Pauline, and she only requires one name, a little bit like Bono or Madonna. This is what Paul Kelly had to say about the prospect here in 2026, looking at Pauline Hanson being Prime Minister.
[CLIP START]
PAUL KELLY: Pauline Hanson is not fit to be Prime Minister of Australia. She's not equipped to do the job. She can't do the jobs. Now I understand the jibe coming from people, she couldn't be worse than Albo. Well, I'm here to tell you, she could be a lot worse than Albo. She could be lot worse that Albo, and at some point, at some points, Australian common sense and resilience and capacity to assess politics has got to come into play, with some sensible assessments of the limitations of Pauline Hanson.
[CLIP END]
JAYES: Do you think Paul Kelly is right?
PATERSON: Well, Senator Hanson herself has said this week that she wants to be Prime Minister, and I think she needs to have the legitimate scrutiny that comes with that, and her party needs to have the legitimate scrutiny that comes with that. You know, it emerged this week that she's only attended 12% of Senate estimates hearings over the last decade. She has been missing in action for 88% of those hearings, and she's paid very well to turn up, to ask questions on behalf of her constituents. For an opposition or crossbench senator, Senate estimates is the place where you can do some of your best work. It's where I've had some of my best impact. And for her just to not bother showing up while still taking a salary for that, I think, reflects very badly on her and her commitment to her job. I also think, though, if One Nation is promising to form a government after the next election, they've got some questions they have to answer. Who would a Treasurer be in a One Nation government? Who would the Finance minister be? Who would the Defence minister be, who would the Foreign Affairs minister be? They have to fill a cabinet of 23 people, a ministry of 30 people. Who are the people that they would have running our country, and what sort of direction would they take it in?
JAYES: If you had to choose, James, let's play a game of would you rather. Anthony Albanese as Prime Minister or Pauline Hanson?
PATERSON: That's a very cute question and not one I'm going to entertain for obvious reasons, Laura. That is not my focus. I want a Coalition government after the next election made up of the Liberal and National parties.
JAYES: I thought you might say that. Okay, James, thanks so much for your time. Appreciate it.
PATERSON: Thank you.
ENDS