"It's about Australia's ability to work as an ally of the US" ... Richard Armitage. Photo: AP
THE US fears Australia's credibility as a military ally is at risk because of the big spending cuts announced in the federal budget.
US officials have raised their concern privately with Australian counterparts at multiple levels in recent weeks in Washington and in Canberra.
The cuts announced by the Gillard government in May would reduce Australia's defence budget from the equivalent of 1.8 per cent of GDP last year to 1.56 per cent.
This is the smallest since 1938, the eve of World War II, the Australian Strategic Policy Institute said.
The US is also cutting its defence spending, but this year will nonetheless spend the equivalent of 3.5 per cent of GDP.
Concern has been registered by the Obama administration, and a former top official of the Bush administration has accused Australia of seeking a "free ride" on the US, marking it as a bipartisan complaint about the cuts to Australian defence.
"Australia's defence budget is inadequate," said Richard Armitage, deputy secretary of state in the Bush administration.
"It's about Australia's ability to work as an ally of the US. I would say you've got to look at 2 per cent of GDP," which implies an extra $6 billion in spending annually. Planned spending is $24 billion this year.
"A large island nation like Australia, rich in resources, needs a robust military capability," Mr Armitage told the Herald during the Australian American Leadership Dialogue in Washington.
The commander of the US Pacific Command, Admiral Samuel Locklear, told reporters in Canberra last week that Australia's spending had fallen below the level the US expected of its European allies. He said the standard that Washington expected of its NATO allies was 2.5 per cent of GDP.
An official in the Obama administration told the Herald that the Australian cuts were especially jarring because they were occurring in one of the fastest-growing economies in the developed world.
Yet another administration official said Washington suspected the Gillard government was taking advantage of the US decision to deploy up to 2500 Marines south of Darwin, which was announced last November.
The rotating deployment provided a level of assurance that gave the government an excuse to cut the Australian defence outlay. But the US deployment was no substitute for Australia's own defence capability, he said, at a time of rapid military build-up in Asia.
Mr Armitage, who now runs a consultancy and sits on the board of the energy firm ConocoPhillips, said: "To be a credible ally, you have to be credible in your own defence, and you have to be seen to be credible by friendly and unfriendly alike."
The Gillard government cut defence more heavily than any other portfolio in its effort to return the budget to surplus.