Australia Shifts Foreign Aid Focus to Pacific and Southeast Asia Following US Reductions

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Key Points

Australia to shift $119 million in foreign aid to the Pacific
Three-quarters of Australian aid will be put into the Indo-Pacific
Australia is attempting to fill gaps left behind by US aid cuts

Pacific Island nations will get a larger chunk of Australia’s foreign aid budget as spending is refocused after the United States slashed its overseas aid agency.

Foreign Minister Penny Wong asked her department to compile a list of aid programs across the Pacific and Southeast Asia that would be impacted by US President Donald Trump’s gutting of foreign aid.

Australia will shift $119 million to prioritise immediate gaps created in essential health services and climate action, including an extra $5 million to maintain HIV programs in Papua New Guinea, Fiji, and the Philippines.

Three-quarters of Australian aid will be put into the Indo-Pacific, including $1 billion over five years to boost economic resilience, $370 million over three years to address the humanitarian crisis in Myanmar and $355 million over four years to respond to climate disasters.

Australia will spend just under $5.1 billion in development assistance in 2025/26, an increase of $136 million from the previous financial year, according to the new federal budget handed down on Tuesday.

The Trump administration has slashed tens of billions of dollars from the foreign aid agency USAID, which has impacted the Indo-Pacific, including a shortage of food for refugees who fled Myanmar.

Penny Wong in a black suit and white shirt, standing in front of an Australian flag.

The foreign minister had been critical of the former coalition government for cutting aid, saying it left a vacuum in the Pacific that China was able to exploit and reduced Australia’s standing as a partner of choice for island nations. Source: AAP / EPA / Neil Hall

The aid shift will come from three multilateral institutions, including reducing a payment to the Global Partnership for Education and deferring funds earmarked for a global fund to fight HIV, Malaria, and tuberculosis.

Planned increases in other development programs will also be delayed.

Safer World for All’s Tim Costello welcomed the small increase in aid but called for a bigger boost, saying Australia needed to step up in the absence of the US.

Millions of people would die when the US slashed pivotal measures like health programs, he said.

“Cutting aid leads to unrest, inequality, it leads to profound conflict,” he said.

Australian Council for International Development interim chief executive Matthew Maury said Australia has sent a clear signal that “we are not retreating from our region”.

But he said more could be done because “the need for aid around the world is greater than ever”.

Aid is now 0.65 per cent of the federal budget, and Mr Maury called on the major parties to provide a pathway to restore it to one per cent.

Australia will advocate for the Pacific and Southeast Asia to the US, Senator Wong said.