The Intel

When it comes to Australian development in 2026, I’m watching for complacency on the one hand, and opportunity for leadership on the other. If 2025 was an earthquake in global development, 2026 is about the aftershocks. They will reveal what shifts for Australia. The question is no longer just what broke. It is what that break means and whether Canberra has the nerve to respond.  

Last year’s pivots involving small budget reallocations were necessary. They were not sufficient for what’s ahead. Two signals matter most.

First, the visible mechanics. A settled ministerial team. Stable departmental leadership. Advisers finding their footing. That kind of institutional steadiness creates space for direction, not drift. The clues will be in Foreign Minister speeches, the May budget, the mid-cycle reviews of Development Partnership Plans, Parliament’s conflict prevention inquiry, and whether officials take seriously the gentle but pointed warnings of the OECD-DAC peer review. None of these will dominate headlines. But together, they will tell us whether Australia intends to maintain a developmental outlook in harder strategic times – I think we will.  

Second, the deeper wiring. Quietly, development cooperation is being recast as integration: Falepili-style treaties, comprehensive agreements, and more labour mobility. Assistance is becoming entwined with the pursuit of enmeshment. ODA and non-ODA spending sometimes sit uneasily together. The real test is whether this model delivers—economically, politically, developmentally—or is merely reduced to a geostrategic tactic.

The most significant challenge remains that the international affairs budget hovers at roughly 9 per cent of federal expenditure, as it has for a quarter century, despite a more demanding region. But, strikingly, for the first time in my career, I cannot see an anti-aid lobby shaping debate in Canberra.

That absence creates space. In 2026, development reform and imagination are needed and possible. Australia is often at its best responding to regional demand rather than domestic anxiety. That instinct—responsive, pragmatic, relational—may yet prove our strongest guide.

The trick in 2026 is what not to watch. I won’t be distracted by the daily spectacle of the Trump show, despite its outrageousness, cruelties and vulgarities.  

I’ll be watching if the Carney middle-power rally is sustained and whether Australia has the nous to join it. I’ll be watching if Europe can stand up to a rogue US administration and, just as importantly, move decisively to build new economic and security infrastructure and relationships.  

Will Carney’s astute observation that the rules-based order was often honoured in the breach to lead to policy changes on Gaza – on humanitarian access, on alleged war crimes, on settler land theft? Probably not, but I’ll be watching – and will not be silent.

I’ll also be watching the strategic response of ASEAN nations to unprecedented instability. That will be much harder to discern, more subtle and less announced. Look at what countries do, not what they say.

With the West in disarray, I’ll be watching signs that Chinese President Xi’s move on Taiwan might be imminent. Conflict is the biggest development killer of all, with the potential to set back progress by decades. For Australia, too, losing a third of our export income would cut living standards dramatically.  

The wildest card of all may be the international economy. Is the AI boom a bubble about to burst? Will a risk-driven flight from US assets plunge the dollar, drive up interest rates and debt and trigger a stock market rout? Rarely have risk and reward been so hard to evaluate. That doesn’t augur well and this time there’ll be neither the appetite, nor the resources for massive bailouts.  

We’re in uncharted territory. So baton down the hatches – and pray Artificial Generalised Intelligence is a few more years away! 1984 has arrived, but watch out for signs of 2001!

Pacific island countries are usually at the frontline of impending global threats, but in 2025, the region weathered economic downturns, diplomatic uncertainty and global conflicts better than most. Still, small economy island states are more vulnerable than most to the world’s ever-growing list of threats, and greater development support is needed. Against the backdrop of volatile trade markets, rising disaster costs and a crowded and unpredictable diplomatic environment, Australia’s regional engagement and ambitious agreements are being tested. In 2026, I’m watching to see whether these activities lead to durable outcomes.  

Agreements tied to mobility, budget support, and security cooperation are moving from design to delivery, and geostrategic competition in the region is shifting from influence and partnerships to resources and strategic footholds. Partners such as Vanuatu and Tonga will be watching their neighbours in Tuvalu, Nauru and PNG with interest in how these agreements uphold sovereignty and build resilience.  

At the same time, transnational crime and digital threats are increasingly consequential. Narcotics trafficking, cybercrime, and fisheries crime exploit regulatory gaps and the immense scale of maritime space, while mis- and disinformation is accelerated by generative AI, reshaping political debate, elections, and crisis response. These challenges blur the line between development, security, and governance, and will test whether regional cooperation mechanisms can keep pace with rapidly evolving threat environments.

Pacific Islands Forum dynamics reflect both solidarity and strain as leaders balance regionalism with intensifying bilateral engagement. Climate politics remains a defining pressure point, not only in global negotiations, but in the credibility of adaptation finance, loss-and-damage pathways, and delivery at the community level. Attention on this will ramp up as the region hosts a pre-COP31 leaders meeting.  

In the year ahead, what matters most is not the scale of Australia’s engagement with the Pacific, but whether Pacific countries can capitalise on the current moment to make durable gains in sovereignty, stability, and development on terms they help define.