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2019 forecast: Australia, New Zealand and Pacific Resets


2019 forecast: Australia, New Zealand and Pacific Resets

The ‘Pacific Resets’ launched by Australia and New Zealand (NZ) in 2018 have led to a significant increase the aid funding to the south Pacific region this year. Australia committed $722 million — including a major new infrastructure bank and massive electrification project in Papua New Guinea. NZ budgeted $492 million, a 10% increase as part of a wider expansion in the foreign affairs budget under the Jacinda Ardern-led coalition government. However, the pivot has not come without scepticism from some Pacific countries. Tuvalu PM Enele Sopoaga has heavily criticised Australia’s less than convincing stance on climate change, an existential threat for low-lying Pacific islands.

The resets are direct responses to China’s increasing strategic role in the Pacific — a traditional sphere of influence for both countries. Although Australia is still the largest spender in the region, the Lowy Institute estimates Beijing is catching up and has committed $4.3 billion in the Pacific since 2011, although only $1.8 billion has been spent.

The NZ pivot is a reflection of the foreign policy priorities of NZ’s centre-left coalition: the Labour government’s focus on climate change pairs naturally with a focus on the Pacific, while its nationalist junior coalition party has a history of anti-China sentiment. Australia’s centre-right government is also wary about China’s intent in the Pacific. Both countries view the south Pacific as their ‘backyard’.

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The Pacific resets are not expected to undergo major change in 2019, despite Australia’s general election scheduled for May. The opposition Labor party is leading the polls but given its aid-friendly posture in the past, it is likely to either maintain or even extend the aid boost. An incoming Labor government, generally more climate-friendly, would also improve Australia’s image among Pacific governments critical of the current conservative government’s pro-coal policies. Wellington’s Pacific reset will continue to focus on Polynesia, as it leads climate change advocacy on behalf of the Pacific — a role PM Ardern relishes.

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