Australia has maintained its development assistance for the Pacific with A$2 billion (NZ$2.2b) announced this week for the region.

The decision follows Treasurer Jim Chalmers' presentation of the federal budget in Canberra on Tuesday, ahead of the general election in May.

Chalmers outlined plans to redirect aid to Pacific and Asian countries due to United States President Donald Trump's significant cuts of tens of billions of dollars from the US Agency for International Development (USAID).

The $2b represents almost 40 per cent of Australia's Official Development Assistance (ODA) budget and aims to maintain Australia's position as the region's largest and most comprehensive development partner.

Of this, A$119 million (NZ$130.9m) from its foreign aid assistance package will be reallocated to the region to address gaps in vital programmes caused by a shortfall in the US' foreign funding.

Australia will also transfer A$5m (NZ$5.5m) to sustain HIV programmes in Papua New Guinea and Fiji.

PNG is set to receive a A$570m (NZ$627m) loan to help cover its budget shortfall, while the Solomon Islands will get A$146m (NZ$160.6m) over four years to expand its police force in response to the government's security agreement with China.

Three-quarters of Australia's foreign aid will be directed to the Indo-Pacific region. This includes A$1 billion (NZ$1.1b) over five years to enhance economic resilience and A$355m (NZ$368.5m) allocated over four years to address climate-related disasters.

In total, just under A$51b (NZ$56.1b) will be allocated for development assistance in 2025/2026, an increase of A$136m (NZ$149.6m) from the previous financial year, according to Chalmers.

Over A$300 million (NZ$330m) has been allocated over four years to address climate-related disasters in the Pacific.. Photo/Supplied

Aid allocations, NGOs react

The aid reallocation will come from three multilateral institutions, including a reduction in payments to the International Partnership for Education and the deferral of funds earmarked for the Global Fund to combat HIV, Malaria, and Tuberculosis. There will also be delays in other planned development programmes.

NGOs have welcomed the "small increase' but are calling for a bigger boost, emphasising Australia's responsibility to step up in light of the lack of US support in the region.

The Safer World For All movement, which includes Australian individuals, community groups, and organisations, warns that millions may suffer as a result of US aid cuts. The coalition of NGOs says cutting aid can lead to unrest, inequality, and conflict.

Australia's federal budget aid trajectory since 2012-2013. Source: ANU Development Policy Centre

The Australian Council for International Development has also urged the government to maintain its commitment to the region.

Australia aid represents 0.65 per cent of the federal budget, and NGOs are calling on all stakeholders to restore it to one per cent.

Foreign Minister Senator Penny Wong says the government will continue to advocate for the Pacific and Asia region.

She criticised the previous government for reducing aid to the region, claiming it created a vacuum in the Pacific that China was able to exploit, thus diminishing Australia's standing as a partner of choice for the island states.

Australia's Treasurer Jim Chalmers has allocated A$2 billion (NZ$2.2b) in his federal budget for the Pacific. Photo/Supplied

Defence spending

Defence Minister Richard Marles says Australia will expedite $1b in defence spending to boost its military capabilities, including the manufacture of guided weapons, an AUKUS submarine base, and a frigate programme.

Overall, defence spending is set to increase by A$10.6b (NZ$11.66b) over the next four years as part of an A$50b boost over the next decade. Marles believes this is the most significant increase in defence spending since World War II.

Of the $10.6b increase, part is designated for accelerating Australia's military capability and development.

"This will enable us to have HMAS Stirling and the Henderson Defence Precinct ready for the establishment of the Submarine Rotational Force West," Marles told the media. "This will enable us to move forward at a faster pace in establishing the Guided Weapons and Explosives Enterprise."

Australian Minister for International Development and the Pacific, Pat Conroy, and Fiji's Minister for Home Affairs, Pio Tikoduadua, at the Blackrock Camp Humanitarian Warehouse in Nadi. Fiji is among the winners of the aid budget. Photo/DFAT

While the experts say there are no surprises, Chalmers' fourth federal budget has introduced a surprise tax cut for Australians just before the election. He promises to lower the cost of doctor visits while targeting tax-dodging multinationals and illicit tobacco operations.

Other winners of the budget include those dealing with energy prices, workers changing jobs, aged-care nurses, the education sector, homebuyers, tradespeople, security agencies, consumers, the arts, and the St George Illawarra Dragons NRL team.

Among the losers are migration, consultants and the Australian Securities and Investments Commission (ASIC), smokers, supermarkets, the disability scheme, foreign home buyers, those involved in workplace misconduct, and individuals from Russia and Belarus.

Australians are expected to go to the polls on or before 17 May 2025 to elect members of the 48th Parliament.