The Australian Defence Force has released footage of its ground-based air defence system testing, just days after China tested an inter-continental ballistic missile in the South Pacific.

A live-fire test of the prototype defence system took place in June at the Woomera testing range, in the South Australian outback.

Both the Australian and American militaries were involved in the test, which saw a Standard Missile-2 launched.

Australian radar technology was used to track the missile and guide the interceptor, a non-explosive missile launched from the defence system to detonate the attacking missile mid-air.

The ADF is set to spend between $7billion and $10billion over the next 10 years building up a missile defence network across Australia.

Its planned network includes a new medium-range ground-based air defence system.

Last month's test was key to helping develop the system.

'[This exercise] is an Air Force-led Integrated air and missile defence activity designed to explore medium-range air defence capability options to inform capability acquisition decisions,' Air Marshal Stephen Chappell, the chief of the Air Force, said.

Defence Minister Richard Marles defended the large budget as crucial to protecting Australia from long-range missile threats. 

'This first of type live-fire test is a practical demonstration of how the Australian Defence Force is working with its partners and local industry to deliver crucial defence capabilities, growing our sovereignty and helping to keep Australians safe,' he said.

The new footage from the test comes just days after China tested its nuclear-capable intercontinental ballistic missile in the South Pacific.

State-owned media outlet Xinhua said the missile was launched with a dummy warhead as part of a 'military training program'.

Michael Shoebridge, director of defence and security think tank Strategic Analysis Australia, warned the test proved China's weapons could reach Australian shores.

'It looks like a 10,000km-range submarine-launched ballistic missile,' he said, adding that this type of technology has been developed in China since 2018.

'It can reach literally from Beijing to Brisbane with a bit to spare. It could make it to Sydney and it is nuclear capable.'

Mr Shoebridge hoped Prime Minister Anthony Albanese would prioritise closing the 'air and missile defence gap' in response.

'There are two reasons for concern,' Mr Shoebridge told the Daily Mail.

'First, it comes after the Chinese People's Liberation Army Navy did a live firing exercise between Australia and New Zealand last year, interrupting peaceful airline flights.

'China is expanding the reach of its security forces, notably its military, and as it grows its military power, it's expanding to have a global reach.

'Secondly, the Australian Defence Force has no capability to protect itself, let alone the Australian population or regional partners, from this kind of missile threat.' 

The Chinese test similarly prompted criticism from Pacific Nations along with Shadow Defence Minister James Paterson.

'I'm very concerned about the lack of Australia's integrated air and missile defence,' he told Channel 7.

'We don't have sufficient capabilities to intercept missiles like this if they were fired towards Australia.

'We are not investing fast enough or moving quick enough to have those capabilities.'