Stepping up Australia’s Pacific Step Up during COVID-19

Illustration of map of the South Pacific with staked coin piles representing Australian and Chinese currency
Source: Natalie Leung (2019). CNN,

Rhiannon Arthur

Australia’s recent COVID-19 Response Package for the Pacific is welcome news for a region battered by the economic impacts of the COVID-19 pandemic. But Australia must look at extending it beyond its two-year sunset clause if Australia is serious about reaffirming its leadership in the increasingly contested Indo-Pacific.

In early October, the Australian Government announced in its 2020 Federal Budget that it will provide $304 million in temporary funding to the Pacific and Timor Leste as part of a COVID-19 Response Package. The once-off supplementary funding will go towards delivering critical economic support to the region, which has suffered substantial economic shocks from the COVID-19 pandemic. The Australian Government has made it clear that the funding is momentary, with a two-year life span, and is separate from Australia’s $4 billion Overseas Development Assistance (ODA) laid out in the budget. Given the recent year-on-year cuts to Australia’s foreign aid budget, this extra funding commitment is a welcome gesture from the Government.

Fortunately, Pacific nations have largely been spared the severe health impacts of COVID-19 suffered elsewhere. However, as remittance and tourism-dependent nations, the region has been heavily impacted economically with the disruption of international travel. According to the ANU’s Development Policy Centre’s Pacific COVID Economic Database, Fiji’s post-COVID GDP is expected to contract 20.9 per cent, while the GDP of Vanuatu and the Solomon Islands are set to decline 9.8 and 6.0 per cent respectively. Notwithstanding the even more deleterious threat of climate change on Pacific nations, in the words of Fiji’s Prime Minister Frank Bainimarama, “COVID-19 is clearly the job-killer of the century”.

While this extra Pacific aid commitment will make some headway in addressing the COVID-induced economic devastation to the region, it falls far short of what is needed. What the region needs is greater economic support, in combination with targeted diplomatic engagement over a series, not just a couple, of years. If the Australian Government is serious about mitigating and responding to the severe economic impacts of COVID-19, on top of countering China’s growing influence in the region, it is within Australia’s interests to mount a serious reinvigoration of its ‘Pacific Step Up’.

First launched in 2016 by Prime Minister Malcolm Turnbull, the ‘Pacific Step Up’ campaign seeks to increase Australia’s engagement with the Pacific. The aim of the campaign is two-fold; strengthen Australia’s Pacific partnerships, and as a corollary, counter China’s increasing influence in the region. Up until recently, Australia has maintained unquestioned leadership and dominance in the region, and hasn’t had to think too seriously about competing with another vying power in its ‘sphere of influence’. As Hugh White articulates: “Australia’s sphere of influence in the South Pacific has become threadbare, depending for its credibility on the fact that no one has tried to challenge it”.

But China’s recent scaling up of aid spending and its increasingly assertive actions in the South Pacific have put Australian policy makers on alert. According to the Lowy Institute’s Pacific Aid Map, China is the fourth largest aid donor to the region, eclipsed only by Australia, the World Bank and New Zealand. The Government has clued into the fact that it needs to increase its engagement within the region, but recent aid cuts and a reduction of its diplomatic footprint abroad at the expense of an increased defence budget may be short-sighted.

In order for Australia to support a region economically devastated by the pandemic, and counter China’s influence, Australia must look into stepping up its ‘Pacific Step Up’. First, this means guaranteeing increased and substantial COVID-specific fiscal support to the region beyond the two years. It is obvious that the pandemic’s reverberating effects will be present long into the future, and so a long-game approach is essential. A financially battered region is as much a problem for the Pacific as it is for Australia. It also means including Pacific nations in the slated Trans-Tasman travel bubble. Lowy Institute’s Jonathan Pryke points out just how important resuming air travel will be for Pacific countries, suggesting resumed air travel, not aid, will help Pacific islanders find their feet again.

Finally, it means expanding Australia’s diplomatic engagement with the region. As America’s Pacific influence continues to wane and China’s visibility increases, Australia needs to leverage its diplomatic footprint and show more leadership on issues of high pertinence for pacific islanders. As Hugh White elucidates, while China may have deeper pockets than Australia, making acquiescing to Chinese influence more tempting for Pacific leaders, Australia can use multilateral fora to show leadership on issues facing the region. This may mean listening to Pacific islanders’ greatest anxiety - global warming- which remains the Pacific’s single most pressing security threat this century, well before COVID-19 and China’s increasing regional assertiveness.

All of this suggests that Australia still has some way to go in engaging meaningfully with the region. But it is achievable. As Jonathan Pryke alludes: “While China has far greater resources to bring to bear, Australia and New Zealand have far deeper resolve.” Australia has a long history of engaging with the region, and has strong relationships with most of its Pacific neighbours. While the economic impact of the pandemic should be impetus enough for Australia to bolster its engagement with the region, there are also much greater geopolitical issues at play. Increasing Australia’s engagement with the Pacific is as much about altruism as it is about driving Australia’s “enlightened self-interest”.


Rhiannon Arthur is a recent Master of International Relations graduate from the University of Melbourne. Previously, she completed a Bachelor of Arts (Asian Studies) and a Diploma in Languages (Indonesian). Rhiannon is passionate about deepening Australia’s understanding and appreciation of Asian and Pacific languages, cultures, politics and social issues.

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