Defence Minister Richard Marles and his German counterpart Boris Pistorius said on Thursday the two nations would look to set up a framework to make it easier to host each other's militaries in their countries.
In addition to pursuing a status of forces agreement, the ministers also agreed to co-operate on space.
Speaking at the National Press Club following the announcement, Mr Pistorius said both countries needed a clear-eyed vision of the challenges and threats ahead and how to address them.
"What you (Australia) certainly need, is like we do too ... the courage and the resolve to speed up as quickly as possible," he said.
Mr Pistorius said Germany was reconsidering conscription and like Australia, the nation's "mindset" remained the biggest challenge.
"We need to wake up the society," he said.
Germany will reach its new defence spending target of 3.5 per cent by 2029, Mr Pistorius said.
At the joint press conference with Mr Marles, Mr Pistorius spoke about the importance of not carrying all eggs in one basket as European nations looked to reduce their reliance on the US.
"What we all are learning now is to diversify our relations, to reduce our dependencies, and to broaden the view ... on the world and what is going on," he said.
"If we don't stay committed, if we don't stick together, nobody else will do so."
Australia and the European Union reached a long-awaited free trade deal earlier this week during a visit by European Commission President Ursula von der Leyen, following several years of tough negotiations.
Pacts on defence and research co-operation were also signed.
The US-Israeli war on Iran has called into question Washington's reliability as a security partner under the Trump administration.
Asked if Australia still supported the war, Mr Marles said the government backed efforts to prevent Iran from acquiring a nuclear capability.
He pointed to the large Australian expat population in the United Arab Emirates and the nation's partnership with the region, which hosts Australian troops.
"Australia's national interest lies in the defence of the Gulf states, and that's the interest that we are pursuing," Mr Marles said.
Mr Pistorius said Germany did not want to get sucked into a war it had not been consulted on.
"To make it crystal clear, what we need now is this diplomatic solution as soon as possible," he said.
"We need the end of shooting and killing."
Mr Pistorius urged people to keep talking about Russia's full-scale invasion of Ukraine as the war progressed into its fifth year.
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