Australia will spend more than $110 million (US$65 million) in a development package for Tuvalu as the two nations agree a landmark treaty will not hinder the Pacific Island nation’s ability to enter into deals with other countries.

In a show of Canberra’s commitment to the climate-impacted island, Penny Wong and opposition counterpart Simon Birmingham travelled to Funafuti on a bipartisan visit to discuss security and climate change.

Speaking at a state dinner on Wednesday night, Senator Wong said Australia would spend $50 million (US432 million) to help Tuvalu secure its first undersea telecommunications cable.

A further $19 million (US$12 million) would help extend the Tuvalu Coastal Adaptation Project, with another $10 million (US$6.57 million0 in direct budget support.

Senator Wong said Australia was “listening, consulting, responding” and wanted to be a good neighbour to Tuvalu.

Tuvalu’s Prime Minister Feleti Teo is expected to progress the Falepili Union this year.

Signed in November, the treaty was criticised for a section saying Australia must “mutually agree”” to any security arrangements the Pacific nation struck with other countries.

The section sparked concerns the agreement compromised Tuvalu’s sovereignty.

In a joint statement by Teo and Senator Wong, both countries agreed the treaty “”would not limit Tuvalu’s liberty to enter into diplomatic relations with other states”.

“We are committed to protecting sovereignty of both countries and commit to work together to operationalise the enhanced security relationship through friendly consultation and frank and honest dialogue,” they said in the statement.

Under the treaty, Australia will offer permanent residency to up to 280 people from Tuvalu every year due to the threat climate-fuelled disasters pose to the low-lying island.

The statement will say the two nations “recommit to the concept of mobility with dignity”, recognising people from Tuvalu deserve the choice to live elsewhere as the impacts of climate change intensify.

Senator Wong and Senator Birmingham will both meet with Teo and his cabinet to discuss the treaty.

Senator Wong said the funded projects would have a real impact on the Pacific nation.

“Australia has elevated our partnership with Tuvalu, underpinned by our historic Falepili Union,” she said.

Pacific Minister Pat Conroy said Australia would deliver on priorities to ensure long-term prosperity.

“Australia’s support will help Tuvaluans to continue to live and prosper in their territory, retaining their deep, ancestral connections to land and sea,” he said.

This is Senator Wong’s second visit to Tuvalu.

She will return to Australia on today.