"There is militarisation of bases across the region".
"People need to be realistic about the activity", Dutton added.
"In a world of perpetual tension and dread, the drums of war beat - sometimes faintly and distantly, and at other times more loudly and ever closer", he told department staff in an Anzac Day message.
His Anzac Day message invoked the words of two USA generals and reflected on Australia's ANZUS alliance with the United States.
"The overarching message from government is that we need to be alert but not alarmed", she told Nine on Tuesday.
Australian officials and lawmakers were split on Pezzullo and Dutton's comments amid rising tensions with Beijing.
Australia's home affairs secretary has declared the global "drums of war" are beating and Australia must prepare for regional conflict.
Defence Minister Peter Dutton says Australia will, however, work to try to maintain peace.
The Australian Defence Minister warned of potential conflict between China and Taiwan in an interview with the ABC on Sunday, saying Beijing is very clear about its reunification goal. "I don't think it should be discounted", he said.
How have Australian politicians reacted to the remarks?. He cited USA wartime generals Douglas MacArthur and President Dwight Eisenhower, saying Australians should not forget the lessons of World War II and the subsequent build-up of Soviet military power.
Australia must reduce the likelihood of war, "but not at the cost of our precious freedom", Pezzullo said.
Foreign Minister Marise Payne announced last week that Victoria's Belt and Road Initiative agreement with Beijing had been cancelled under new foreign veto powers. The Chinese Embassy in Australia said in a statement the decision would "bring further damage to bilateral relations and will only end up hurting" Australia.
The spending is part of a previously announced Australian and USA government program to invest $2 billion on infrastructure works and facilities at existing ADF sites in the NT.
Australia-China ties have been steadily worsening since PM Scott Morrison urged Beijing previous year to allow an independent probe into the origins of the novel coronavirus, which was first registered in Wuhan, Hubei, in December 2019.
Chinese Foreign Ministry spokesperson Wang Wenbin on Monday urged Australia to abide by the one-China principle and prudently handle Taiwan-related issues. China has said that its vessels' presence in the South China Sea is normal and legitimate.
Earlier this week, Mr Dutton said the Chinese government was militarising ports in the region.