The Lowy Institute’s executive director, Michael Fullilove, says Australia should be prepared to take a more forthright stand with President Trump, and to help craft a new international group of middle powers.

In a speech titled “After the Midterms” to be delivered on Tuesday, Fullilove also warns Australia may need to increase its defence spending beyond the present commitment and urges the government to reverse some of its cuts to aid.

The address, released in advance, sets out principles for “a larger, more creative” Australian foreign policy in the Trump era.

Fullilove suggests the time will come when Trump will put the Australian government on the spot. “When it does, Scott Morrison or Bill Shorten should stand up for Australian values. They needn’t troll the president but neither should they defer to him,” he says. “My advice to leaders is: don’t do something you will regret later”.

Advocating that Australia push for a new concert of middle powers, Fullilove says these should be countries that “like us, have an interest in supporting the international order and capabilities to help do so”.

“It is past time to institutionalise a group of like-minded middle powers – a "coalition of the responsible’”, he says.

“Australia has a distinguished history of institution-building – from the United Nations and ANZUS to the Cairns Group and APEC – where our interests and values required it and the creativity of our leaders enabled it. We should draw on that history now”.

Australia should also “thicken our connections to other countries that matter to us,” he says.

“That means doing more with regional powers including Japan, South Korea, India, Indonesia and Vietnam – but also with like-minded extra-regional powers such as the UK and France.”

Arguing for Australia to bolster its capabilities, Fullilove says: “We should not be one of those countries that opines furiously on international developments but refuses to stump up for a serious defence force – countries that speak loudly but carry a small stick”.

While welcoming the present bipartisan target of spending 2% of GDP on defence, Fullilove says that in future a credible Australian Defence Force may cost more than that. “For Australia, the era of cheap security is over,” he says.

Fullilove also says that “along with a muscular ADF, we need a better resourced diplomatic corp and a generous aid program”.

He says that since 2014, aid spending has fallen in real terms from about $5.5 billion to about $4 billion. “As a proportion of gross national income, Australian aid has fallen to its lowest point in half a century. We have cut our aid budget too far. We should undo some of these cuts”.

Fullilove says Australia should “call out challengers to the international order” from wherever they come.

It should itself be “an exemplar in following international rules and observing international agreements.” Thus “the last thing” Australia should do is walk away from the Paris climate agreement (as some Coalition MPs and conservative commentators advocate).

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.