Australian Prime Minister Scott Morrison yesterday announced a A$3 billion (S$2.99 billion) package to boost ties with Pacific island nations amid increasing concerns about China's growing influence in the region.
Declaring a "new chapter" in relations with the Pacific, Mr Morrison unveiled plans to establish a A$2 billion infrastructure bank to issue grants and long-term loans for telecommunication, energy, transport and water projects.
He also plans to establish an Australian Defence Force team which will travel to the Pacific - when invited - to undertake training and engagement with other forces.
In a speech at a military base in Queensland, Mr Morrison said: "Australia has an abiding interest in the South-west Pacific that is secure strategically, stable economically and sovereign politically.
"This is our patch. This is our part of the world... We are connected as members of a Pacific family."
Australia also plans to open new diplomatic missions in Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands. This means it will have a presence in each of the country members of the Pacific Islands Forum.
Mr Morrison also committed A$1 billion to Australia's export financing agency to support investments in the Pacific.
Australia has long regarded the South Pacific as a crucial focus of its foreign policy. Canberra is the largest source of aid there and seeks to maintain close relations with nations such as Papua New Guinea, Fiji and Vanuatu.
But China's growing ties, including substantial low-interest loans to some countries, have raised concerns that small nations such as Vanuatu and Tonga may fall into a debt trap, in which they are unable to repay loans and may become politically indebted to Beijing.
According to the Lowy Institute, China committed about US$1.8 billion (S$2.5 billion) in aid to South Pacific islands between 2006 and 2016, much less than Australia's provision of US$7.7 billion.
Mr Morrison suggested Australia had failed to do enough to shore up ties in the region. "While we have natural advantages in terms of history, proximity and shared values, Australia cannot take its influence in the South-west Pacific for granted," he said. "And sadly I think too often we have."
Australia's announcement comes ahead of Chinese President Xi Jinping's visit to Papua New Guinea next week for the Asia-Pacific Economic Cooperation summit. But Mr Morrison tried to play down suggestions that the new measures were aimed at China. "We are getting on with business with China," he said.
The announcement also comes as Australian Foreign Minister Marise Payne visited China in what had been described as a "thaw" in relations.
Ms Payne, the first Australian foreign minister to visit China in more than two years, met her Chinese counterpart Wang Yi yesterday. Mr Wang said he believed Australia and China could cooperate in the South Pacific.
They met just hours after Canberra revealed that it was likely to block the A$13 billion takeover by a Chinese firm of Australia's largest gas pipeline business. Canberra said it was concerned about "undue concentration of foreign ownership by a single company group".
Mr Wang signalled that Beijing was committed to continuing the recent thaw in ties, adding: "We are confident Australia will translate its positive will of growing relations with China into actual actions."
Ms Payne said: "We've realistically acknowledged today that in a relationship as dynamic as ours... there will be from time to time differences."