Australia will assure the US its defence cuts in the May Budget have not harmed its "core" military capabilities, Julia Gillard says.
With US Secretary of State Hillary Clinton and Defence Secretary Leon Panetta in Perth today for tomorrow's AUSMIN meeting, the Prime Minister said talks would focus on defence co-operation.
But she said defence spending would inevitably be raised.
Ms Gillard said Australia had already spoken to the US about its so-called "fiscal cliff" which, if not resolved, would automatically trigger tax rises and program cuts, including a $US1.2 trillion savaging of US defence and security budgets.
"Defence spending by both nations is routinely part of AUSMIN discussions," Ms Gillard said.
"I think the US, from the G20 finance ministers' meeting that (Treasurer) Wayne Swan attended, is well aware that we, like the rest of the world, are concerned about the ramification of the fiscal cliff for the global economy.
"Yes, there will be a discussion of defence spending, but once again . . . nations make their own decisions about defence expenditure."
The Government has slashed the defence budget by $5.5 billion to 1.6 per cent of GDP, its lowest since 1938 and down from 1.8 per cent.
US defence figures, including former deputy secretary of state Richard Armitage, have questioned whether the cuts compromised Australia's ability to support the US in its "pivot" towards Asia.
US Assistant Secretary of State for East Asia and the Pacific Kurt Campbell is also reportedly concerned about the cuts, though US Ambassador Jeffrey Bleich said his comments were "misconstrued".
Ms Gillard said the Government made it clear the cuts would not affect its active deployments when it announced the changes.
"We talked clearly then about the core capabilities recommended by the White Paper, how they're going to be acquired," she said.
This included no reduction in the Afghanistan deployment.
Shadow defence minister David Johnston said it was a "scandal" that Australia was spending so little defending itself.