Budget 2022: Defence funds cut as China circles

The federal government has cut funding for Defence co-operation with regional partners as China forges a new security agreement with Solomon Islands.

Defence Minister Peter Dutton. Picture: NCA NewsWire / Gary Ramage

The federal government has cut funding for Defence co-operation with regional partners as China forges a new security agreement with Solomon Islands and works to strengthen its strategic foothold across the Pacific.

The budget papers released on Tuesday night reveal overall spending on Defence co-operation programs will fall from an estimated $236m this financial year, to a forecast $227m in 2022-23.

Funding for the Solomon Islands defence partnership is forecast to flatline at just $2.4m, while Defence support for Papua New Guinea is budgeted to fall by about $5m in 2022-23, to $49m.

East Timor, which is also being heavily courted by China, will receive about $9.7m in Defence support – a cut of about $1m.

The head of the ANU’s National Security College Rory Medcalf said while the numbers were minor in terms of the size of the overall Defence budget, “there is surely a strong case to increase them”.

“It’s hard to see the logic of reducing this effort at a time when the contest for influence is accelerating, and the strategic use of defence diplomacy has never been more important,” Professor Medcalf told The Australian.

Australian Strategic Policy Institute director Peter Jennings also expressed disappointment at the funding contraction, saying Defence co-operation outlays “should be trending up, not down”.

The cut was revealed on the same day Solomon Islands Prime Minister Manasseh Sogavare declared he was “ready to sign” a security deal with Beijing that would allow the establishment of a Chinese base in the country.

“We welcome any country that is willing to support us in our ­security space,” he told the Solomon Islands parliament. “There is no devious intention, nor secret plan. This is a decision by a sovereign nation that has its national interest at heart.”

Scott Morrison said on Wednesday that the Solomon Islands was the second largest of Australia’s aid recipients in the Pacific, and Mr Sogavare had conveyed his gratitude for that support.

“We’re concerned, of course, about the security impacts (of the China agreement),” the Prime Minister said.

“I’m pleased to hear that the Solomon Islands Prime Minister has said very clearly that under no circumstances would they be entertaining any naval base or presence on our doorstep, and that would certainly be against Australia’s national interests and the region’s security interests.”

Senior government sources said the marginal fall in Defence co-operation spending needed to be seen in the context of Australia’s record $1.85bn in development assistance to the region.

But Labor’s defence spokesman Brendan O’Connor said the timing of the cut couldn’t be worse.

“Given recent developments in the Solomon Islands, it is most concerning the Morrison government has cut millions on defence co-operation programs in the region,” Mr O’Connor said.

“This is a time to be working with our neighbours to shape the region we want, and delivering on defence capability, defence co-operation and assistance.”

Defence strategists have expressed disappointment that the budget continued a funding trendline originally set in 2016, before China’s dramatic military build-up and coercion of Australia. ASPI defence analyst Marcus Hellyer said the budget included no new measures to speed up the delivery of much-needed capabilities, such as new missiles or the $45bn Hunter-class frigates.

“Its megaprojects simply aren’t delivering relevant capabilities in meaningful time frames,” he said.