"Not since at least the end of the Cold War has it been so easy to paint a disturbing picture of the global strategic landscape," Dr Thomson said on Thursday, citing the Islamic State terror group, North Korea, Russia's aggression and China's brinkmanship in the South China Sea.

"You'd think that it would be easy to make the case for robust defence spending," he said. "[But] just as there's a storm brewing on the strategic horizon, dark clouds are gathering on the economic horizon … Trouble is, each and every dollar can be spent only once."

Europe's anaemic economic performance, China's slowing growth and continuing uncertainty about a US recovery meant the global outlook remained "weak, uneven and fragile".

Asked how a more hawkish Australian response to China's territorial assertiveness would affect the need for defence spending, Dr Thomson said the government would simply have to balance it against improving the debt position "in case there's repeat of the global financial crisis".

On Wednesday, the nation's top defence official, Dennis Richardson, questioned whether 2 per cent of GDP – the defence spending target the government has set itself by 2023 – would be enough further in the future, given the sharp rise in military spending expected in Asia in the coming decades.