Australia will spend A$500 million ($340 million) to improve the capability of its special forces troops, the first stage of a $3 billion, 20-year plan that the government said on Monday will enable a better response to security threats at home and abroad.
The spending comes after some high-profile security incidents in Sydney and Melbourne in recent years and as Australia seeks to play a more prominent role in the Pacific, where China is seeking greater influence.
"This is going to be a very important part of our commitment, the biggest single commitment to upgrading the capability of our defence forces since the Second World War," Prime Minister Scott Morrison told reporters at the Holsworthy Army base in Sydney.
Australia said last month it would create a new military unit to train and assist its allies in the Pacific.
Last week, a member of the government likened the West's attitude to the rise of China to the French response to the World War Two advances of Nazi Germany, drawing a rebuke from the Chinese embassy.
"It is in Australia's national interest to have an independent and sovereign Indo-Pacific where all the nations of this part of the world can engage with each other freely, according to international norms and the rule of law," Morrison said.
The government said Australia's spending on defence would reach 2% of gross domestic product (GDP) by the fiscal year ending June 2021 - which U.S. President Donald Trump has said should be the spending goal for NATO alliance members.
World Bank data showed Australia's military spending at 1.89% of GDP in 2018.
The increased investment - Morrison said on Monday the government would spend A$200 billion on defence capabilities over the next decade - is in line with an objective to focus on the Indo-Pacific region outlined in a Defence White Paper released in 2016.