Australia's decision to deploy fighter jets and military personnel to the Middle East could cost the budget an extra $400 million a year.
The Australian Defence Force is poised to send up to eight F/A-18F Super Hornet aircraft, refuelling and control aircraft, as well as about 600 special forces and logistics and other experts.
Treasurer Joe Hockey said the full cost of the mission to take on Islamic State extremists would be outlined in the Mid-Year Economic and Fiscal Outlook.
"Defence has the capacity to absorb a significant amount of these sorts of costs but after that, it does come out of the rest of the budget," Mr Hockey said.
"But ultimately you can't put a price on protecting human beings and that's what we're doing.
"This is a humanitarian mission in the first instance."
A senior analyst at the Australian Strategic Policy Institute (ASPI), Mark Thomson, estimates the mission's price tag could be about $400 million a year.
An ASPI report released this year put the total defence budget at $29.3 billion, or 1.8 per cent of gross domestic product.
The cost of the ongoing Afghanistan deployment, which mostly involves training the Afghan national army, was $350 million.
Since 1998, Australia has spent more than $16.5 million on military operations and overseas deployments, with Afghanistan costing $9.3 billion.
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