Australia will redirect more than $100m in foreign aid toward the Indo-Pacific region to urgently plug funding gaps after Donald Trump announced the US would cancel around $US54bn worth in overseas development assistance programs.
The official development assistance budget for 2025-26 will reach $5.1bn, an increase of $135.9m from 2024-25, but $119m will be reprioritised to support economic, health, humanitarian and climate responses in the neighbouring regions.
The foreign affairs minister, Penny Wong, said “hard strategic decisions” had to be made in after the Trump administration’s decision to pause US foreign aid funding pending a review.
The funding for three institutions will be affected during the 2025-26 financial year with the Albanese government reducing payments to the Global Partnership for Education and Global Fund to Fight HIV, Malaria and TB to $16.4m for the year.
Australia will also provide $13m less in its core funding contributions to the UN Development Program, with the government noting it will still give a total of $189.5m to UN agencies over 2025-26.
Three-quarters of the ODA budget for the year will go toward the Indo-Pacific region with $1bn over five years targeted at building economic resilience.
A $370m package over three years will go towards the humanitarian crisis in Myanmar, with USAid cuts resulting in food shortages.
Other assistance will go to regional health resilience for essential services for HIV and tuberculosis, for example, and to support climate action in the face of climate-related shocks.
Wong said the foreign development program was “central to ensuring the stability and security of our region”.
“In these uncertain times, we are ensuring more of Australia’s development assistance is going to the Pacific and south-east Asia, where Australia’s interests are most at stake,” Wong said.
“We’ve had to make hard strategic decisions and focus on where our development assistance can have the greatest impact.”
The minister set her sights on the opposition leader, Peter Dutton, who has yet to rule out any cuts to the development budget.
Guardian Australia reported on Tuesday that Liberal backbenchers are warning opposition leadership against cutting foreign aid to pay for a potential $15bn increase in defence spending and other big-ticket budget items.
Tim Costello, the national director of Christian aid advocacy group Micah, welcomed the funding increase but urged the Coalition to back the commitment.
“Aid saves lives,” he said on Tuesday night. “With USAid being absolutely smashed by Elon Musk and Donald Trump … some millions of people are going to die. That’s not metaphorical.”
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The peak body for aid and humanitarian bodies, the Australian Council for International Development, said the extra funding and reprioritisation sent a signal to the world that Australia was not retreating from the region.
“The stakes have never been higher in our region. Australia’s international development budget is at the heart of Australia’s response to an uncertain world – underpinning stability,” Matthew Maury, the council’s interim head, said.
“Any reduction in aid will be felt immediately creating both humanitarian and diplomatic costs, while allowing other nations to expand their influence in the region.
Trump ordered a 90-day pause in January to foreign aid programs to undertake a review of their effectiveness.
Marco Rubio, the US secretary of state, said in March the US government would cancel 83% of USAid programs after the review’s completion. US officials believe this totals around $US 54bn in assistance.
In response, Wong asked the foreign affairs department to assess the impact of Trump’s announcements and to determine which programs needed immediate funding.
An additional $5m was provided in 2024-25 to maintain HIV programs in PNG, Fiji and the Philippines after the US’s announcement.