The US harms its image in the Pacific with aid cuts and tariffs

USAID cuts and tariffs will harm the United States’ reputation in the Pacific more than they will harm the region itself.

The resilient region will adjust to the economic challenges and other partners will fill gaps, but what will last is the memory of being a non-factor in the Trump administration’s foreign policy. The sentiment might not last forever, but the US must pursue reputational damage control. In the meantime, Australia needs to ensure that it’s not the only partner covering the US’s absence.

The Pacific is not even an afterthought in the stream of announcements and changes that have come under the new Trump presidency in the US. With sweeping cuts to USAID and tariffs threatening global supply chains, there are plenty of challenges on the horizon.

Some may argue that the US wasn’t doing much in the Pacific outside of Micronesia to begin with, and in many ways that is true. But even if it could have been much larger and more effective, the support from the US has had value. Its withdrawal is a hard pill to swallow for those it will directly affect.

The decision to freeze funding to USAID came in February, with more than 80 percent of USAID programs (worth more than US$50 billion) to be cut. Climate, refugee and sexual health programs were high on the hit list.

According to the Lowy Institute’s Pacific Aid Map, the US has been the fifth-biggest funder of the Pacific—behind Australia, China, Japan and New Zealand—providing around 7 percent of all development funding in the past decade.

Some have claimed that most USAID money to the Pacific goes through Australian NGOs. But of USAID’s recent US$249 million annual contribution, $75 million (around 30 percent) was in partnership with Australian NGOs—far below a majority. USAID has provided tangible support in pivotal programs that will be sorely missed.

Uncertainty around the future of USAID-funded projects for HIV/TB and Malaria is already affecting Pacific communities. Programs improving accessibility to climate financing for Pacific island countries are at a tipping point, and key gender-based violence initiatives that provide workshops on domestic violence, women’s empowerment and mental health are in limbo.

In response, Australia has redirected some of its aid from multilaterals to more direct action. But Australia does not have the capacity or resources to simply take over where the US left off, nor should it. Australia must find a way to get other partners to help fill the gap, whether through new minilateral partnerships or increasing its effort in multilateral initiatives.

Donald Trump’s Liberation Day tariffs have made things worse for the US. Most Pacific island countries received the baseline tariff of 10 percent, but Fiji, Vanuatu and Nauru all received higher tariffs. The US has suspended the higher tariff rates as it seeks to bring parties to the negotiation table, but for Vanuatu and Nauru, the amount of goods exported to the US is small anyway.

OECD data shows that in 2023 the US received 3.29 percent and 0.57 percent of Vanuatu and Nauru’s exports respectively, amounting to a few million dollars. Fiji would be hit the hardest: the US is its top export destination, receiving 31.8 percent of Fijian exports. The value in 2023 was more than US$366 million. On ABC Radio, Fijian Deputy Prime Minister Biman Prasad slammed the tariffs, calling them ‘unfair and disproportionate’.

In making these tariff decisions, the US hasn’t considered its partnership with Pacific island countries or accounted for potential implications. The tariffs may not directly spell doom for many, given the availability of other export destinations. But countries are concerned that the flow on effects to global supply chains will affect tourism and increase import costs.

While the consequences of these tariffs are hard to predict, we can be confident of one lasting effect: the memory of a careless and inconsiderate US.

So far, many leaders see these decisions as the actions of an individual, rather than a state, but trust has still suffered. The US has previously clawed its way back into relevance, but even if it can do so again, the lesson will not be forgotten: the US could, at any time, step away from the region.

For Australia, a little distance from the US wouldn’t hurt, particularly as China will likely tar the two countries with the same Western brush, as it has been doing for years. Australia must also look to partners such as Japan, India, South Korea and the European Union to test their appetite for stepping up regional support. Though sometimes overlooked, these actors have all contributed to the Pacific and sought to deepen engagement in the past decade. Their value should not be underestimated.

At the end of the day, the US is doing greater harm to their reputation than to Pacific nations. While we should be wary of an unpredictable US administration, we should not underestimate the resilience of Pacific island nations.

If New Zealand wants to restate terms with Cook Islands, it should step up support

New Zealand wants to renegotiate its free association agreements with Cook Islands to secure increased transparency in its foreign partnerships. To do so, New Zealand will need to step up its own support and can learn a thing or two from Australia.

Following the announcement of an agreement between the island nation and China this week, New Zealand’s foreign affairs minister, Winston Peters, on Wednesday said his country and Cook Islands needed to ‘reset’ the relationship and ‘re-state the mutual responsibilities and obligations’. He stressed that consultation and transparency was most important.

His stance seems to raise the possibility that New Zealand will seek a power of veto over Cook Islands’ agreements with other countries.

But New Zealand must be careful not to overstep when Pacific sovereignty is at stake: every Pacific island nation is entitled to engage with foreign partners, including China. But Wellington also has a right to ensure that its support to Cook Islands is not jeopardised by engagement with other foreign partners.

This week the Cook Islands government released an action plan for its comprehensive strategic partnership with China. New Zealand is uncomfortable with the Cook Islands government’s lack of consultation with Wellington before the agreement. The deal’s inclusion of cooperation around sea-bed mining, diplomatic missions, maritime cooperation and humanitarian aid must be putting New Zealand even more on edge.

The plan identifies priority areas including economic resilience, environment, cultural exchange, social well-being and regional and multilateral cooperation. It reiterates Cook Island’s commitment to its One-China policy.

Seabed mining, noted as a ‘national priority for the Cook Islands’, remains a key motivator for Cook Islands Prime Minister Mark Brown. The section on maritime cooperation also contains opportunities for cooperation on hydrography, geospatial and foreshore protection, maritime support and attendant infrastructure. This support could provide excuses for increased visits and engagement by Chinese security forces. Disaster management cooperation also strays into New Zealand’s defined role but will likely be limited by distance and emergency response times.

China already engages with Cook Islands at several regional-level forums on fisheries and foreign affairs. But the two countries now commit to bilateral ‘discussions’ before any regional meetings hosted by Cook Islands that China is to attend. China has also been supporting Cook Islands infrastructure development for years, building a court house, police headquarters, sports stadium, school and water supply network. However, not all support has earned favour, with some projects requiring substantial repairs after China’s substandard work.

The action plan notably lacks the security strings that much of the world was worried about. Although Brown promised no security deals, Wellington may still fear the slow-growing Chinese presence and influence that may accompany activities in the plan.

Brown now faces domestic upset. There was a popular protest of over 400 people in the capital (more than one in 40 people in the nation). Opposition party members have filed a motion of no confidence. They are frustrated that the deal is jeopardising the partnership with New Zealand.

In free association with New Zealand, Cook Islands is self-governing, but New Zealand assists in defence, disaster relief and foreign affairs. The 2001 Joint Centenary Declaration is a non-binding agreement to consult with New Zealand on national security issues, but Pacific security has changed dramatically in the past 20 years.

This is where New Zealand can learn from Australia’s new approach.

Over the past two years Australia has redefined competition in the region. Agreements with Nauru, Tuvalu and Papua New Guinea have given Canberra some degree of power to prevent other foreign countries from entering the same security or infrastructure space.

But it hasn’t come cheap.

In Nauru, Australia will provide $100 million in budget support over five years and ensure physical banking services in the country. Under the Nauru-Australia treaty, both countries must agree to any foreign engagement in Nauru’s security, banking and telecommunications sectors and consult on any engagement in critical infrastructure.

Similarly, in Tuvalu, the Falepili Union treaty states, ‘Tuvalu will mutually agree with Australia any partnership, arrangement or engagement with any other State or entity on security and defence-related matters’. In exchange, Australia is helping address Tuvalu’s climate threats and offering a special visa pathway.

Australia and PNG have just announced plans to restart negotiations on a treaty-level agreement. This follows Australia’s investment in a future PNG National Rugby League team.

In these agreements, Australia has highlighted the lasting value it will provide and has made it clear that foreign competition in the same space will prevent Australian support from reaching its potential.

If New Zealand doesn’t want Cook Islands engaging with China in certain sectors, including those outside traditional security, it will need to show commitment to developing those areas and delivering what Cook Islands needs. It can start by investing more in maritime security and infrastructure and addressing climate threats.

Stepping up in Cook Islands won’t solve all of New Zealand’s issues in the Pacific, with tensions still high in Kiribati and other leaders looking on cautiously. But they can at least start with taking care of their realm.

State-Sponsored Economic Cyber-Espionage for Commercial Purposes

The Australian Strategic Policy Institute (ASPI) has launched the world’s first capacity-building initiative dedicated to raising awareness about the threat of economic cyber-espionage in key emerging economies across the Indo-Pacific and Latin America.

Through a series of research reports, case studies, and learning materials, this initiative highlights how economic cyber-espionage is not just a concern for advanced economies—it is a growing risk for emerging economies like India, Brazil, and Indonesia, which are rapidly digitizing their industries.

Download report.
Download report.
Download report.

What is Economic Cyber-Espionage?

Economic cyber-espionage refers to the state-sponsored theft of intellectual property (IP) via cyber means for commercial gain. As nations undergo digital transformation, securing knowledge-based industries is critical for economic security. However, many countries—especially those with lower cybersecurity maturity—are increasingly vulnerable to cyber-enabled IP theft.

In the modern economy, local businesses that trade internationally, critical national industries, and start-ups as well as universities, research and development organisations and public services rely on secure data, digital communications and ICT-enabled systems and applications.

But trust and confidence in the digital economy is threatened by the practice of some states that deploy offensive cyber capabilities against industries, organisations and individuals in other states. Those who operate in environments with lower levels of cybersecurity maturity are particularly vulnerable to fall victim to cyber-enabled theft of intellectual property.

Project Activities and Findings

This project has included a series of workshops and engagements in India, Southeast Asia, and Latin America, bringing together officials and experts to discuss cyber threats that endanger national economies and innovation sectors.

For this project, ASPI has also published three reports, which can be downloaded on the right.

  1. State-sponsored economic cyber-espionage for commercial purposes: Tackling an invisible but persistent risk to prosperity (2022): Highlights how state-sponsored cyber-espionage has intensified, with more targeted industries and universities now based in emerging economies
  2. State-sponsored economic cyber-espionage for commercial purposes: Assessing the preparedness of emerging economies to respond to cyber-enabled IP theft: Evaluates the readiness of 11 emerging economies—including Argentina, Brazil, India, Indonesia, Malaysia, Mexico, the Philippines, Thailand, and Vietnam—to counteract cyber-enabled IP theft.
  3. State-sponsored economic cyber-espionage for commercial purposes: Governmental practices in protecting IP-Intensive industries: Reviews how governments around the world are responding to the threat of economic cyber-espionage and considers how states are employing, among others, legislative, defensive, and reactive measures.

On 15 November 2022, ASPI also issued a Briefing Note recommending that the G20 members recognise that state-sponsored ICT-enabled theft of IP remains a key concern for international cooperation and encouraging them to reaffirm their commitment made in 2015 to refrain from economic cyber-espionage for commercial purposes.

Videos and Podcasts

Explore the videos and podcasts we have produced to help you make sense of economic cyber-espionage.

Project Team

This team is led by CTS Deputy Director Bart Hogeveen and CTS senior analyst Dr. Gatra Priyandita. We thank the support and contributions of other serving and former ASPI staff, including Urmika Deb, Dr. Ben Stevens, Dr. Teesta Prakash, and Shivangi Seth. This project involved input from researchers from across the world, including those in South Asia, Southeast Asia, and Latin America. We thank them for their contributions.

The Pacific needs greater cyber resilience as malicious actors break into networks

Samoa and Papua New Guinea’s recent experiences with cyber intrusions are the latest reminders of the urgent need for enhanced cybersecurity resilience in the Pacific. What’s needed is capacity building and coordinated response initiatives.

On 11 February Samoa’s Computer Emergency Response Team (SamCERT) issued an advisory warning about APT40, a Chinese state-backed hacking group operating in the region. Days later, reports emerged that Papua New Guinea had suffered an unattributed cyberattack on its tax office, the Internal Revenue Commission, in late January.

SamCERT’s advisory marks the first time a Pacific island country has formally attributed a cyberattack to a China-linked group. While the advisory does not directly name China, it identifies APT40 as the perpetrator behind the cyber intrusion and provides a link to the Australian Signal Directorate’s website that details APT40’s connection with the Ministry of State Security, China’s foreign intelligence agency.

The advisory also warns that the hacking group conducts ‘operations directed at sensitive networks administered by Pacific Island nations’. While this reflects a growing awareness of foreign cyber influence in the Pacific, it also shows the caution that smaller nations exercise when publicly attributing cyber threats to state actors.

APT40, classified as an advanced persistent threat, conducts cyber operations by infiltrating networks and maintaining access. By loitering, it can monitor activity, collect data and carry out more sophisticated attacks targeting high-value accounts, including those of government officials.

This group and this method of operation are not new. Australia, the United States and New Zealand have all previously attributed cyberattacks to APT40. In the Pacific, Palau is the only country that has openly accused China of targeting its digital infrastructure, but didn’t issue technical attribution. Samoa’s willingness to publicly acknowledge this threat is a step towards greater cyber transparency in the Pacific and encourages more open discussions among regional leaders and cybersecurity experts.

Beyond the immediate implications of cyber espionage, these incidents highlight the broader hybrid threats Pacific nations face. Malicious actors often exploit weaknesses in cyber hygiene, including in server exploitation, phishing campaigns and web compromises, to gain initial access to networks. The intersection of cyber operations, economic dependencies and diplomatic sensitivities creates a complex security environment for the Pacific. While raising awareness of cyber threats is crucial, strategic communication must be handled in a way that fosters regional cooperation and builds cyber resilience without unnecessarily escalating geopolitical tensions.

Australia has worked with Pacific nations to enhance their incident response capabilities, provide technical assistance and facilitate information sharing. It has supported initiatives such as the Pacific Cyber Security Operational Network and the Cyber Rapid Assistance to Pacific Incidents and Disasters team. Samoa’s ability to issue a public advisory is, in part, a testament to such capacity-building efforts.

In contrast, Papua New Guinea communicated poorly following a cyberattack on its Internal Revenue Commission that paralysed tax administration functions and potentially exposed sensitive financial data. The commission first characterised the 29 January attack as a ‘system outage’, reflecting deeper structural challenges in the region’s cyber resilience framework, such as infrastructure gaps and bureaucratic red tape.

While it’s ideal for organisations to be transparent about being victims of a cyberattack, this requires a level of cyber maturity. Doing so effectively would require a level of technical capability and strategic communications preparedness to manage public awareness and response that many of these institutions in the Pacific have not yet built.

Governments in the Pacific recognise the importance of cybersecurity. PNG launched its National Cyber Security Strategy in 2024 joining several other countries who have published or are drafting their own. But many still face limitations in resources, technical expertise and infrastructure.

Pacific nations and international partners need to prioritise strengthening national computer emergency response teams and fostering regional cooperation. Enhancing incident detection and response capability, as well as promoting intelligence sharing across borders will help mitigate future cyber threats.

Arguably, Australia’s strategic investments in the region’s digital infrastructure, including high-capacity subsea cables, are important to digital transformation in the region. But transformation is outpacing cybersecurity preparedness, creating a widening gap that exposes critical institutions to cyber threats. Support must be matched with comprehensive and sustained cybersecurity capacity-building programs that raise Pacific nations’ agency—not just token efforts.

Although Australia has committed to building cyber capacity across the region, its support should extend beyond government networks to include businesses, critical infrastructure operators and civil society. Long-term resilience will come from increasing public awareness, developing a skilled cybersecurity workforce and integrating cyber resilience into national security strategies.

At least, Australia needs to gather like-minded partners, such as Japan, France and India, to coordinate investment in Pacific cybersecurity, ensuring that the region is equipped with the necessary tools and expertise to counter the growing sophistication of cyber adversaries.

Blake Johnson

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Stepping up military support to humanitarian assistance in the Pacific

On October 3 the South Pacific Defence Ministers Meeting (SPDMM) endorsed the establishment of the Pacific Response Group (PRG), a novel multinational military cooperation initiative that will seek to address the need for more efficient and effective cooperation between Pacific militaries to deliver military support to Humanitarian Assistance and Disaster Relief (HADR).

In the coming years, the PRG will have to address challenges surrounding the potential expansion of the group and its mission, including into areas like stability operations, and Australia will need to commit greater resources to ensuring that it successfully adapts to the region’s needs. It is important that the thinking, consultation and some of the planning for that starts now.

Any decisions regarding the PRG will be made by SPDMM members as a collective, but each member state will have its own perspectives on the group’s development. This report provides 12 recommendations focused on areas including resourcing, encouraging a whole-of-government support, and expansion of the group in size and in scope. The report is intended to inform policymakers in Australia as a contributing member of the PRG, but many of the recommendations could also be valuable for, and hence adopted by, other members of the group.

A summary of the recommendations contained in the report are as follows:

Recommendation 1: PRG members states should consider the need for an expansion of the PRG beginning as soon as the 2025/2026 high risk weather season and must be able to deal with concurrent disasters.

Recommendation 2: The end goal of the HADR component of the PRG should be dedicated forces from each military able to be readily deployed in immediate response to natural disasters in the region.

Recommendation 3: PRG member states should consider ways it can guarantee capabilities for PRG use in the high-risk season from Australia, New Zealand and France for much needed transport, including maritime and air assets.

Recommendation 4: The Australian government should acknowledge that the PRG is not designed to address all of Australia’s domestic HADR demands so should consider other solutions to bolster its domestic disaster response.

Recommendation 5: The Australian government should consider how a whole-of-government approach can actively coordinate across departmental initiatives so that the PRG, and other initiatives, can make the best contribution to regional environmental security concerns.

Recommendation 6: SPDMM member states participating in the PRG should address the potential for the inclusion of police units or paramilitary from countries such as Solomon Islands and Vanuatu in the future.

Recommendation 7: The PRG should think ahead and consider outlining a role for SPDMM observers such as Japan, the UK and the US in supporting the group without changing its core makeup. This could include financial support for transport, maintenance or infrastructure and supplies.

Recommendation 8: Australia should be willing and ready to support the expansion the PRG mission as desired by its member states to address instability through a coordinated multilateral response, provided this is desired by other members of SPDMM.

Recommendation 9: If there is an expansion of the mission to include stability operations, Australia should lead the way in the development of a multilateral security agreement that formalises the PRG’s approach to stability operations in any SPDMM member state.

Recommendation 10: Together, PRG members should publicly push-back against any narratives that suggest this initiative is competition driven and remind other states that successful security initiatives inevitably lead to a reduced need for other external support. Australia should also be more transparent about its concerns with a greater Chinese security presence in the region.

Recommendation 11: Australia should encourage some of the region’s key partners to support the PRG with supplies, funding and – if needed – additional vessels and aircraft for transport.

Recommendation 12: If, in the future, the PRG is requested to support alongside Chinese security forces, Australia must combat potential narratives pushed by China of welcome cooperation and partnership between Australia as a PRG-member and China in the region that legitimise a Chinese security presence while respecting the sovereign decision making of recipient countries.

Budget: ASPI’s experts give their views

The Albanese government has unveiled its third budget. Our experts across defence, cybersecurity and technology, the Pacific, climate and critical minerals give their first impressions of what the budget has to offer—and what’s missing.

 

Bec Shrimpton, director of defence strategy and national security

The budget fails to bridge the gap between rhetoric and reality, according to the government’s own National Defence Strategy and the Integrated Investment Program.

The stand-out problem for which there is no funding—or program—solution is people and workforce. Defence personnel numbers are set to be below target by around 5000. Relaxing medical requirements and eligibility criteria cannot go near filling this gap, let alone move numbers towards the projected force we require—and that the capabilities being acquired will require.

Defence is absorbing a significant amount of costs related to the implementation of the Defence Industry Development Strategy and the submarine workforce, and there remains an unexplained gap between project cancellations, rescoping or delays, and the requirements of the IIP.

The budget does not fund necessary lines to build preparedness. There is almost no money going into capability that will be delivered in the forward estimates, and little to offer Australian industry in sustainment either in the coming years. This will see even more of the industry go offshore, pivot away from defence or go under.

This budget risks entrenching mistakes of the past and failing to learn lessons from what is happening in the world right now. It does not make necessary decisions or investments but delays them. Meaningful spending, genuine reform of project management, new and more agile approaches to contracting and investment in research and development, are all necessary to get off the path we are on, which has hollowed out existing capability and puts preparedness at risk as we head into an increasingly dangerous time.

The budget does not back the NDS, nor properly fund the IIP. The gap between strategy and resources is growing. Funding the foundations of Defence—including industry and workforce—is essential to deliver on the promises of the NDS, as is ensuring sustainment, training and competence. The budget indicates that certain capabilities will not be operational, or will experience significant drops in operational days across a range of platforms. This indicates real problems again with personnel, sustainment and capability lifecycle management.

Important links between the Defence budget, education, industry and others are implied, but unfunded in either the defence budget or other portfolio budgets.

 

Mike Bareja, acting director of Cyber, Technology and Security

The cybersecurity-related items are largely around improving cybersecurity of specific agencies, such as Services Australia, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the National Disability Insurance Scheme and the Department of Parliamentary Services.

This is mostly increasing low levels of cyber maturity and filling major gaps in security posture, not making us world-leading.

The budget reflects a consistent focus on artificial intelligence from this government, and the next phase should be around transitioning the narrative from AI as an end in itself, to increasing data-sharing across the economy to power AI to help address real challenges like climate change and pandemics, and to power our economic growth into the future.

There’s $21.6 million over four years to ‘establish a reshaped National AI Centre (NAIC) and an AI advisory body’ in the Department of Industry, Science and Resources. There is also $15.7 million over two years to ‘support industry analytical capability and coordination of AI policy development, regulation and engagement activities across government’.

The $288.1 million for Digital ID shows government commitment to this initiative. The framework already has a strong focus on privacy and security, and this will hopefully go to fill some technical governance gaps.

There is also $466.4 million to ‘make PsiQuantum the anchor tenant of a quantum precinct located in Brisbane, Australia’.

This is a fantastic example of the ‘big bets’ Australia must take if we seek to be a real competitor in any critical technology.

 

Blake Johnson, senior analyst

The Government has committed a significant amount of money to enhancing and expanding Australia’s diplomatic presence across the Pacific, but it is worth noting a lot of this will be spent on upgrading and expanding infrastructure and ICT at posts.

Additional funding for the Australian Federal Police to continue its deployment to Solomon Islands Assistance Force in 2024-25 confirms that SIAF will continue beyond 30 June.

While there were improvements to Australia’s support in countering climate change in the region, outside of commitments to Tuvalu through the Falepili Union, more funding is still needed to help the Pacific address its highest security threat.

 

Mike Copage, project manager, climate and security policy centre

The Budget contributes a smart renewable energy strategy and investments: over $19 billion split across near-term clean energy deployments, and long-term incentives to catch up the development of clean energy technology, supply chains, and industries in Australia.

An equivalent, if not much greater, level of commitment on climate resilience must be in next year’s budget to ensure the ‘Future Made in Australia’ program can survive climate impacts. There were helpful measures this year on water, drought, and disaster management—but much more is needed.

Once the National Adaptation Plan is released late this year, the next budget must lay out its climate resilience commitments. We remain on a dangerous climate track, and the window to prepare is closing before we’re stuck in a compounding cycle of costly disaster response.

 

John Coyne, head of the Northern Australia Strategic Policy Centre and head of Strategic Policing and Law Enforcement

This year’s budget shows that the government recognises that critical mineral market forces cannot assure resilient supply chains given market manipulation—and that this manipulation is multi-modal.

The $5.8 million for a critical minerals trade enhancement initiative is a good move, as is the $1 million for a pilot educational program to strengthen the capabilities of Australia’s critical minerals sector to detect, prevent and mitigate foreign interference.

Still, a greater focus on regulatory reform to provide for greater investment attraction is needed.

On defence, despite the reduced warning time and the fact that the Defence Strategic Review and the National Defence Strategy both reinforced the strategic importance of northern Australia, no specific mention is made of new funding for base hardening and resilient infrastructure.

New money for the Australian Criminal Intelligence Commission and AUSTRAC represent a sound move to deal with the national drug epidemic in terms of organised crime and money laundering. However, given that our national strategy in this space is six years old, perhaps it was time to fund a broad, organised crime white paper.

 

Malcolm Davis, senior analyst

As expected, prioritization goes to funding the nuclear-powered submarines and the navy’s fleet expansion after the Fleet Review, which means that certainly over the forward estimates, and probably over the rest of the decade, there will be little money for the air force or the army to acquire new capabilities. The broader assumptions about the economy in the budget may actually reduce money for defence in the coming years of the forward estimates, if ballooning deficits from 2025-26 and beyond and higher inflation put pressure on the government to reduce growth in defence funding.

Escalation of the war in Europe, a crisis across the Taiwan Strait, or uncertainty on the US role in the Indo-Pacific in a future after President Biden could easily and quickly derail the assumptions underpinning the entire federal budget—and with it, throw defence plans into disarray.

This is a budget that delays any significant increase in defence spending throughout the forward estimates—despite intensifying strategic and geopolitical risk. In effect, the government is betting big on nothing bad happening until the early-to-mid 2030s, in spite of all the strategic risk indicators flashing bright red, and in spite of guidance from the National Defence Strategy and the 2023 Defence Strategic Review reinforcing growing danger.

The decision to acquire the nuclear-powered submarines, and to boost the size of the navy after the Fleet Review means that other arms of the Australian Defence Force will not gain significant capability—and, based on shortfalls in workforce—may lose capability in readiness and sustainability terms. In effect, the submarines and naval expansion are prioritised and are consuming resources that could grow other aspects of ADF capability in air and land domains.

Long-range ‘impactful projection’ through the submarines and new strike capability are the priorities, but the amount of funds allocated through the forward estimates does not allow the latter to be significantly expanded within the remainder of this decade. And we won’t see the first of the nuclear-powered submarines until 2033 at the earliest. Given that one submarine does not make a nuclear submarine capability in reality—that won’t actually happen until later in the 2030s, once we have the three US Virginia Class boats (perhaps expanded to five), and we prepare for the AUKUS boats in the 2040s.

In effect, the government is claiming to boost defence spending, but the actual increases are just projected, not actual. They exist beyond the forward estimates and, as such, are highly speculative numbers that the current government—or a future government—can choose to revise, particularly if assumptions underpinning the 2024-25 budget aren’t realised, or international risks get in the way.

Defence isn’t a priority in this budget in comparison to other portfolio areas, but it is a crucial national responsibility for the government. This budget hopes for the best, and avoids making hard decisions to lift defence spending more quickly. However, hope is not a strategy.

Regional security and Pacific partnerships: Recruiting Pacific Islanders into the Australian Defence Force

The security and stability of the South Pacific and Australia are deeply intertwined. Australian Government policies have for more than a decade consistently prioritised the Pacific for international engagement, including in defence, development and diplomacy. The Australian Government’s ‘Pacific Step-up’, first announced in 2016, delivered a heightened level of effort by Canberra in the region, as did Australia’s strong support for the Pacific Islands Forum’s Boe Declaration. The Albanese government’s increased policy focus on the region, and on a coordinated whole-of-government approach to the Pacific, demonstrates the centrality of our immediate region to the Australian Government’s strategic planning.

Australia’s 2023 Defence Strategic Review (DSR) outlined the need for innovative and bold approaches to recruitment and retention in the Australian Defence Force (ADF), which is seeking to grow by 30% by 2040 but is not yet hitting existing recruitment targets. Budget figures released for 2023 show that ADF personnel numbers dropped by more than 1,300, or more than 2% of the total force. The Budget projections for 2024 to 2026 indicate that the government requires more than 6,000 additional personnel—in addition to replacing those lost through attrition in the next three years—to meet stated growth requirements. In the context of a competitive recruitment environment in Australia, especially for skilled labour, that trend indicates that the Defence organisation will struggle to meet forecast requirements using existing recruitment options and will need to seek alternatives. This challenge of competition for talent and to retain skilled workers is not limited to defence nor Australia. It is an economy wide issue, and global.

As a result, there has been an ‘on-again, off-again’ public debate about whether the Australian Government should consider the recruitment of foreigners into the ADF, with a specific focus on Pacific islanders. Obviously, such an initiative could help the ADF’s recruitment numbers, but, importantly, it could open up economic, skills and training opportunities for Pacific islanders. It could also provide a powerful cultural and practical engagement opportunity for the ADF, while also providing Australia with avenues to help shape the region’s security environment in positive and culturally relevant ways. Such recruitment—especially if it involves bilateral agreements between governments—would also put Pacific Island governments in a unique position to inform Australia’s security assessments and contribute to shared outcomes. Those outcomes could include enhanced regional interoperability, especially for humanitarian assistance and disaster relief (HADR) and supporting combined stability operations, and stronger two-way cultural and social engagement, bolstering familiarity and understanding between the ADF and Pacific Island countries (PICs). There are, of course, arguments against such recruitment. For example, the recruitment of Pacific islanders to fight for Australia could be viewed by some as ‘colonialist’ in a region understandably sensitive to that history. But this concern could be addressed through PICs retaining agency through bilateral arrangements. In addition, any scheme seeking to relocate workers to Australia could be seen as taking skills from a much smaller nation, and risking brain and skills drains. We look at these, and other, considerations in this report.

Below, we identify and assess the key recruitment and retention problems faced by the ADF that foreign recruitment, particularly the recruitment of Pacific islanders, may help to resolve. Our report then delves into various arguments for and against the recruitment of Pacific islanders into the ADF including background information that contextualises the current debate. Ultimately, there are many benefits to opening up pathways for Pacific islanders to serve in the ADF, with the clear caveat that any process to formally establish a program must be culturally and politically sensitive, be informed by detailed risk and impact assessment, and have strong monitoring and evaluation mechanisms in place.

We then explore three options for the recruitment of Pacific islanders:

  1. Direct recruiting from the Pacific region into the ADF
  2. Closer integration and operation between existing Australian and PIC forces
  3. A broader partnership model drawing on lessons from the US’s ‘compacts of free association’ and from the UK’s defence recruitment initiatives.

We analyse key impacts that those options may have, both in the Pacific and for the ADF. The potential policy options offered aren’t exhaustive. However, they are plausible and represent different approaches (which could be combined) to achieve outcomes related to ADF recruitment and retention as well as to improved regional collective security.

A critical consideration in developing these options was a two-way flow of benefit: from the Pacific to Australia and from Australia back to the region. For example, we recommend that, where possible, Pacific recruits receive focused training in HADR, which would help build sovereign PIC capabilities and facilitate the application of learned skills upon recruits’ return to their home countries.

An important part of this research was ensuring that PIC military and security personnel were engaged and could feed into and shape the development of this research report, including the three options put forward for potential recruitment. This occurred in multiple ways. We collected feedback and perspectives through a dedicated roundtable discussion, in a series of interviews and then during the research process to ensure that this report was informed by regional, cultural and local considerations (see details regarding some of that data collection on page 16). The report captures five specific insights from the Pacific island military and security community that are relevant in considering the implementation of any of the three recruitment options.

Finally, we acknowledge that further research is needed to resolve the complexity of some of the policy and legal issues associated with the options suggested. We nominate some specific areas that warrant further investigation.

Smooth sailing? Australia, New Zealand and the United States partnering in–and with–the Pacific islands

Australia, New Zealand and the United States should help create an ASEAN-style forum for Pacific island nations to discuss security and manage geopolitical challenges.

The call for a dialogue, modelled on the ASEAN regional forum, is one of several recommendations to improve security partnerships and coordination in the region, reducing the risk that the three countries trip over one another and lose sight of the Pacific’s own priorities as they deepen their Pacific ties out of strategic necessity amid China’s growing interest.

While focussing on those three countries, this report stresses that wider partnerships should be considered, including with France, India, Japan, South Korea, the United Kingdom and European Union.

The report states that the three countries will have to get used to greater Chinese involvement in the Pacific, even if they don’t accept it, much less like it.

ICT for development in the Pacific islands

Information and communication technologies (ICTs) as an invisible driver of socio-economic change have long captured the imagination of politicians, policymakers and aid professionals alike. 

Since the first fibre-optic submarine cable connected Fiji 20 years ago, many reports and studies have been written about the potential that the introduction of ICTs in the South Pacific would bring for reaching targets of poverty reduction and economic growth. 

The internet, mobile devices and e-commerce have already penetrated the Pacific, configured to the political, economic and sociocultural context of the various island nations. 

This report takes a step back and zooms in on one aspect of that digital revolution: e-government. 

E-Government is defined as a set of capabilities and activities that involves the use of ICTs by government to improve intragovernmental processes and to connect with citizens, businesses and industry. 

Fiji was the first island to get linked up to the global network of submarine communications cables in 2000. In 2020, all major islands in the region are connected through one or more domestic and international fibre-optic cables. The region is connected. 

This report finds that the potential of ICTs to enable stronger governance, effective public service delivery and better government services is there. In all countries that are part of this study, critical foundational infrastructure is in place: 

  • Government broadband networks that connect departments, schools and hospitals have been established.
  • Central government data centres have been built, public registries are being digitised, and the introduction of national (digital) identities is currently being considered.
  • All Pacific island states have introduced relevant strategy and policy documents and have reviewed, or are currently reviewing, legislation related to data-sharing, cybersecurity and universal access.
  • All islands have an online presence that is steadily professionalising. Government (information) services are increasingly provided online, along with tourism information, fisheries data, geological data and meteorological forecasts. 

But there’s still a lot to be unlocked. 

Increased internet connectivity, the availability of mobile devices and online services and access to information are creating a greater demand from users to their governments. International donors similarly focus on the delivery of ‘digital aid’, using ICTs to provide international assistance more efficiently and effectively. 

This report asks the following questions: 

  • What capabilities have been established and are in place?
  • What are the current policy issues?
  • What can the international (donor) community do to enhance its support for the digitisation process of the Pacific island governments? 

The report reaches five main conclusions for the implementation of e-government and digital government initiatives, and it concludes with four recommendations for future programming of international support in the area of ICTs and e-government.