Australia boosts defence, Pacific diplomacy spending in budget

Australia on Tuesday pledged increased defence spending and efforts to firm up diplomatic ties with neighbouring Southeast Asian and Pacific nations as it seeks to counter China's growing economic and strategic influence in the region.

Prime Minister Anthony Albanese's first budget since his centre-left Labor government was elected in May lifts funding for defence by 8% in the fiscal year ending June 2023 and to more than 2% of gross domestic product through to mid-2026.

Additionally, the government included a previously announced A$1.4 billion in overseas assistance, which features A$900 million for Pacific island nations and A$470 million for Southeast Asia.


Concerned about China's growing influence among Pacific island nations, Canberra has sought to improve relations with its smaller neighbours, many of whom have criticised Australia's past lack of action around climate change and rising sea levels.

Western nations expressed alarm earlier this year when China signed a security pact with the Solomon Islands, although Honiara says the deal does not allow for a military base on its territory.

Amid worsening relations with Beijing, Canberra and Washington have partnered in two multilateral blocs to counter China's influence: a group known as "the Quad", which includes Japan and India, and AUKUS, which includes the UK.

"In managing relations with China, we will pursue our objectives in a calm and consistent manner," the foreign ministry said in budget papers on Tuesday. "Where we can, we will engage constructively with China to address shared challenges like climate change. Domestically, we will work with key stakeholders to build resilience and social cohesion."

The government will also appoint a special envoy to Southeast Asia and establish a Southeast Asia office within the foreign affairs department to coordinate whole-of-government efforts across the region.

In a push to improve regional relations and address critical labour shortages in Australia, the government will grant 3,000 permanent visas to families of migrant workers from Pacific nations.