Dennis Shanahan – It used to be a proud boast of Australian troops on the ground in East Timor in the latest security assignment that they had never fired a shot. Not one; not into the air and certainly not at people.

Other UN forces were considered trigger-happy and some all too ready to fire unnecessary warning shots. All of that has changed and Australian troops have reverted to the role they had before East Timorese independence: muscling up to rebellious factions and shooting, in anger and fatally. It adds to the image of politics being played out in East Timor (and elsewhere) at the point of an Australian gun.

It is a sad commentary on events in East Timor that Australian soldiers, so long a symbol of safety, independence and security, are being subjected to anti-Australian protests in Dili. This is not to criticise the military serving in a difficult and political hothouse atmosphere. Australia's professional soldiers are undoubtedly among the best in the world in a variety of ways but, good as they are, they are not the sole answer to the arc of instability that stretches from East Timor in the northwest through Papua, Papua New Guinea, Solomon Islands, Fiji and now Tonga.

The problems in this arc are obvious: tiny nation-states unable to survive economically; high unemployment, especially among young men; disproportionate military influence in a democracy; endemic corruption; Third World standards in services such as water and power; and a susceptibility to international crime and terrorism.

But what were problems in Indo-Pacific states for decades have undergone a dramatic strategic reassessment since 2001. Failing states are a strategic global concern in the war against transnational crime and terror. What's more, Australia's long-dormant view of the Pacific has changed under the Howard Government from one of benevolent paternalism and neglect to one of active intervention, which has led to the downfall of governments and more troops and Australian Federal Police officers being committed to the Pacific than to Iraq and Afghanistan combined.

The success and basis of Australia's military intervention in East Timor and the Solomons were based on the military view of a "big footprint". A relatively large mass of highly professional soldiers simply scares the daylights out of local roughnecks and ruffians and restores order. Unfortunately, that has been the beginning of the long-term problem for Australia, not the solution.

Australian troops have had to return to East Timor and the Solomons. Unrest in East Timor, uncertainty in PNG, guerilla war in Bougainville, coups in Fiji and social disorder in Tonga have been temporarily quelled by an Australian presence but never entirely resolved.

That's the point; we can't simply keep returning our soldiers and federal police to war zones or areas of civil disorder and rely on their professional capabilities to restore calm. The fact is Australia is the South Pacific superpower and the brutal reality is the Government has begged off further troop increases in Iraq and possibly Afghanistan on that basis.

On his recent trip here, US Joint Chiefs of Staff chairman Peter Pace said he believed Australia had "made an enormous contribution to Iraq" and thought "Australia should be very proud". But his second observation was that Australia had taken on the role of a regional power, relieving the US of such a duty in the South Pacific. It was a complimentary remark about a complementary role.

This, then, is the reality: Australia's neighbours are unstable; Australia is the power in the region most capable of delivering assistance; Australia is getting strategic credit for its role in the Pacific; and it is in Australia's interests to have stability. Furthermore, although military and police intervention are necessary to establish order and build a climate for the construction of a modern, working and economically viable democracy, it is not enough. If Australia is the main power in a region of instability and economic failure, it has to behave like one: it is time for Australia to develop a Marshall Plan in the South Pacific.

Although necessary, the military commitment is expensive and will remain so each time it is made. The European Union as a group and individual nations, such as France, are providing aid to the South Pacific. But there needs to be a sympathetic framework to stop endemic corruption and inefficiency wasting millions in aid.

As with the aftermath of the tsunami in 2004 when Australia set up a $4 billion reconstruction fund for Indonesia – a fund with tight fiscal controls and Australian oversight – there is surely an argument for a similar arrangement with the Solomons, Fiji, PNG and Tonga, and to a lesser extent, because of its potential gas income, East Timor.

When the Treasury is rolling in money to the extent that $6 billion can be found almost overnight for Brendan Nelson's Super Hornet fighters or $10 billion can be offered for a once-only deal to the states that share the Murray-Darling Basin, the funding of a regional future fund can be found.

Not only can and should it be found, but the longer-term savings and advantages for Australia make it a worthwhile investment for the 21st century.

Yes, good governance is a priority, but asking nations to provide a corruption-free environment without putting the individuals in place and training them beforehand is unrealistic. Australia was sympathetic to Indonesia after the tsunami and now has an extensive aid-reconstruction system that is not as demanding as the World Bank or as wasteful as a UN program.

Australia has been right to insist on conditions with Indonesia and negotiate with East Timor on gas rights, but there has to be a place for trying to replace military expenditure with funding for professional training, long-term loans and infrastructure.

Just this week the Australian defence forces spent more than $10 million recovering a crashed helicopter and the body of an SAS trooper who had been assigned duties during the latest unrest in Fiji, a sad and costly by-product of our readiness and requirement to intervene in the Pacific.

As Opposition foreign affairs spokesman Robert McClelland said recently: "A short-term military response to the manifestation of these problems only applies a Band-Aid. A longer-term commitment isrequired to address the underlying problems."

Instituting a Marshall Plan for the Pacific instead of an additional $6 billion for fighters may be a longer-term commitment.