Australia and Indonesia are looking toward closer collaboration in the event of future threats. Photo: Bianca De Marchi/AAP PHOTOS

Australia and Indonesia will sign a defence treaty that commits the two nations to regularly consult on security matters.

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Prime Minister Anthony Albanese and Indonesian President Prabowo Subianto announced the agreement on Wednesday.

The deal is a "major extension" of the strong relationship between the two nations, Mr Albanese said, while at the Royal Australian Navy Base at Garden Island in Sydney.

"This is a watershed moment in the Australia-Indones

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