Follow the dollars to see what worries Australia about China in the South Pacific.

The cash flows to Melanesia from an alert and alarmed Australia: the partnership ^[1] to electrify 70% of Papua New Guinea; a fibre-optic cable from Honiara to Sydney, and then a similar cable network around PNG; $2 billion to buy a phone network; $580 million for ports in PNG; and up to $1 billion to create a constant over-the-horizon radar view of Melanesia.

The Australian government’s Pacific ‘step-change ^[2]’ got going in 2016, quickly becoming the ‘step-up ^[3]’ because the bureaucracy preferred to see it as evolution not change. Australia has added an infrastructure dimension to its role as the largest aid giver in the islands. Canberra’s version of ‘dual use’ is where island needs meet our strategic denial instinct: infrastructure from us to stop China getting in.

China reminds Australia of abiding interests in our island arc ^[4]; as puckishly expressed by one of the great Oz correspondents in the South Pacific, Sean Dorney: ‘Thank God for China.’

Australia’s knowledge of its nearest neighbour, Papua New Guinea, is ‘abysmal’, Dorney judges ^[5], ‘and we are paying a price for our ignorance’.

Whether we’re paying for being ignorant or complacent or just otherwise engaged, the China challenge ^[6] has rung the changes in Canberra. The step-up revs up. Raw geopolitics opens the wallet to deny China: to serve Australia’s enduring needs by meeting island needs.

The latest effort is $580 million to upgrade ‘priority ports’ ^[7] in PNG. The combined grant and loan announced on 21 January is the biggest single investment ^[8] by the Australian Infrastructure Financing Facility for the Pacific.

The AIFFP ^[9] was announced in November 2018 and began work in July 2019. It’s one element of Canberra’s step-up effort to build system and structure—institutional heft as well as infrastructure—to move beyond whack-a-mole panic at every Beijing probe.

A similar institutional aim saw the creation in 2019 of the Office of the Pacific ^[10], in the Department of Foreign Affairs and Trade, ‘to enhance whole-of-government coordination and to drive implementation of our regional activities, consistent with the priorities of Pacific countries’. Perhaps the most remarkable thing about the Pacific office is that we didn’t create it until now. DFAT puts it diplomatic skills to work in Canberra.

The PNG port deal follows the October purchase of Digicel ^[11], which provides mobile and network services in PNG, Nauru, Samoa, Vanuatu, Tonga and Fiji.

Foiling any Digicel flirtation with China cost the equivalent of A$2.1 billion. Canberra threw in US$1.33 billion ^[12], via the federal government’s Export Finance Australia. Telstra put in US$270 million ^[13] but gets 100% of the equity, a commercial no-brainer ^[14] for the Australian telco. Government documents on the Digicel deal suggest a frantic on–off ^[15] effort at whacking that mole.

Australia is buying much communications hardware. Now it needs to think about the messages it sends, one reason why the Australian Broadcasting Corporation seeks to boost its regional presence ^[16] this year.

What do the dollars say about how Australia defines the China challenge?

An old Canberra line is that South Pacific governments can’t be bought but they can be rented. Today’s version is that China wants to do more than rent; it wants a lease.

The idea of China renting or leasing an island government is expressed in the phrase ‘elite capture’. The nightmare of such capture is China getting control of ‘dual use’ infrastructure, a civilian port with military uses. Canberra twitches every time Beijing casts its eye across ports in PNG, Vanuatu or Fiji.

Thus, in 2020, Australia announced the extension of the Jindalee ^[17] over-the-horizon radar ‘to provide wide area surveillance’ of Melanesia. By 2030, Australia aims to have a constant view of every ship and plane operating in the arc from PNG to Solomon Islands, Vanuatu and New Caledonia, probably reaching out as far as Fiji.

Responding to security priorities identified by the Pacific Islands Forum, Australia is funding the Pacific Fusion Centre ^[18], to bring together island intelligence and analysis on transnational crime, and across the realms of climate, cyber, and environmental and human security. The centre began work in Canberra in 2019 and opened its permanent Port Vila HQ in December 2021. The centre’s ^[19] director is from the Federated States of Micronesia and the associate director is from Vanuatu.

Much money and effort aims to lessen the chances of ‘strategic surprise’ in the South Pacific. A China surprise, a new base in the islands, was nominated by the US Indo-Pacific coordinator Kurt Campbell as ‘the issue that I’m most concerned about over the next year or two’. He was speaking this month at the launch ^[20] of an Australia chair at the Washington-based Center for Strategic and International Studies.

Campbell said the US had to lift its game in the South Pacific, to match what’s done by Australia and New Zealand: ‘But that’s an area that we need much stronger commitment. And I’m, frankly, looking to Australia as the lead here. And we, as the United States, have to be a better deputy sheriff to them in this overall effort.’

The dual-use dread reminds Australia of its fundamental interests in the island arc, where the two sets of needs meet. One is what the islands need for their own future. The other is what Australia wants and needs from the South Pacific.

The language of ‘Pacific family’ drives Australia’s Pacific pivot ^[21]. The idea of family more than justifies the flow of dollars. Yet just as development aid can be justified to the hardheads as the soft end of the defence budget, the dollars are driven by Australia’s own strategic need.