Australia will spend almost $2 billion(US$1.3 million) on improving relations with Pacific island nations as it seeks to counter China’s growing influence in the region.

As well as spending $1.4 billion(US$947 million) over the next four years to expand security infrastructure and criminal justice co-operation in the Pacific, the government will increase the number of Pacific islanders migrating to Australia and provide extra support for short-term workers.

This will come on top of a previously announced U.S Green Card-style lottery scheme that will offer permanent residency for up to 3000 Pacific islanders.

Described by the government as a “transformational package of support” for the Pacific, the funding comes on top of an extra $900 million(US$608 million) in Pacific aid announced in the October budget.

China signed a wide-ranging security pact with the Solomon Islands last year that alarmed policymakers in Canberra and entrenched the belief that Australia needed to do more to ensure it remains the security partner of choice in the Pacific.

The focus on extra money for “statecraft” reflects the view that traditional development assistance alone will not cut it, given China’s extensive spending on loans and grants in developing nations.

While details of specific projects are yet to be announced, the money will likely be spent on upgrades to Pacific defence facilities, new military hardware, weapons for police officers and improved cybersecurity.

The budget includes a significant increase to Australian Federal Police (AFP)partnerships in the Pacific to support local law enforcement and criminal justice initiatives.

The government will also give an extra $377 million (US$255 million) over the next four years to the Department of Foreign Affairs and Trade (DFAT), which Labor said became depleted and demotivated under the previous Coalition government.

The government plans to spend $50 billion on defence this year, taking defence expenditure above the crucial threshold of 2 per cent of gross domestic product (GDP) as the AUKUS nuclear-powered submarine programme makes its first appearance in the budget.

Defence spending is set to rise to $57.6 billion(US$38.9 million) annually within four years and lift above 2.3 percent of GDP in a decade as the government secures a fleet of eight nuclear-powered submarines under the AUKUS programme.

As announced following the defence strategic review, the government will spend $9 billion (US$6 billion) on the submarine program over the next four years, plus billions of dollars on long-range missiles, hardened defence infrastructure and $50,000 (US$33,803) bonus payments to help retain Defence Force personnel.

“The Albanese government has made no secret that we are willing to make the hard decisions in order to get the best outcome for our Defence Force,” Defence Minister Richard Marles said.