Our response to China's influence in PNG continues to fall well short

Last week the federal government announced a small, one-off commitment of funds to Papua New Guinea that is in line with what I have been campaigning for on On Line Opinion.

But as I will outline here, sadly another event just highlights how our response to China's growing influence in Papua New Guinea is totally inadequate.

The Minister for Foreign Affairs and the Minister for the Pacific committed an additional $53 million to two projects in PNG. The announcement was short on detail, but one aspect of it is welcome.

The Australian Government will DIRECTLY FUND church health services in PNG with about half of the commitment. The direct funding of non-government entities is something I have been advocating enabling Australia to bypass the PNG political and bureaucratic system.

The amount being given represents a fraction of the cost of church run hospitals and health services across Papua New Guinea. The churches receive limited PNG Government financial support and in recent years even that support has been delayed in being delivered.

The churches are estimated to provide health services to about half the rural population of PNG and 40 per cent of the total population. Put simply, a broken health system would be catastrophic without the work of the churches in the community.

But an announcement also last week – one which received much wider publicity in the PNG media – really demonstrated just how inadequate is our overall response to China's growing influence in PNG.

The $53 million equates to around K120 million. It is a grant, not a loan, with the other half going to primary school education. Those funds will be distributed by the PNG Government. That is a worry. One hopes the actual spending will be monitored by DFAT.

While DFAT and the High Commission were patting themselves on the back for this announcement senior PNG Ministers were lining up to announce yet another loan deal with the People's Republic of China.

PNG Water, a state owned entity, committed to a Port Moresby water project that will cost K450 million – or more than three times Australia's generous grant announced almost at the same time.

Here is the big difference. The China deal is a loan from the Exim Bank. The interest rate and repayment terms were not released – when it comes to China loans they never are.

This project was originally talked about in 2018 but did not proceed. It seems to have been dusted down quite recently – with no environmental or economic impact assessments as conditions of it.

So in just one week a worthy Australian Government grant to our nearest neighbour is completely swamped by yet another suspect PRC loan –a loan PNG Water and the PNG Government simply cannot afford to repay.

Australia's total development assistance provision for Papua New Guinea as outlined in the federal budget is over $550 million. The total amount will be in grant or specific project form – not loans.

In just two deals in recent weeks loans agreed to by the PNG Government with China – with work to be undertaken by Chinese contractors and funded by loans – total $2.8 billion! The latest is the Port Moresby water project. Recently the PNG Government signed up to a China loan worth at least $2.6 billion for the Ramu Two hydro power project.

At the same time, China, through its embassy in PNG, has pushed out as many positive stories as it can on yet another suspect project – this one sadly funded by the Asian Development Bank.

I have written about the airport upgrades program before – around $10 million each for 20 airport upgrades across the regions.

The reason why the PRC Embassy has been so active is obvious. Criticism is growing on the quality of the work being undertaken – all by PRC contractors. I am gathering more evidence on that so watch this space in the weeks ahead.

Sadly, here is the simple truth - our support for PNG is principally in grant form – just what PNG needs. But it is wholly inadequate in responding to the increasingly aggressive China push to tie up just about all infrastructure spending in Papua New Guinea.

Our initial response was supposed to be the "Pacific Step Up" programme delivered through the Australia Infrastructure Financing Facility for the Pacific first announced in late 2018.

Instead of deterring China there is no doubt it has fired up the PRC Embassy in PNG. The number of projects – all loan funded and carried out by Chinese contractors – is on the increase. They cover infrastructure, education, and communications in particular.

When you look up the Australian Infrastructure Financing Facility website just one PNG project is listed the Markham Valley Solar Project. Details are few, and there is no actual funding outlined.

While DFAT and AIFF continue to dither over details including the actual letting of a construction tender China pushed through the PNG Government and PNG Power the Ramu Two project which is the same general local location as the Markham solar project!

When you look at the AIFF website, just five projects have been "approved" across the Pacific and Timor Leste.

The projects listed are no doubt worth, but when compared with what China has been pushing through they really pale into insignificance.

I am sorry to advise readers we are losing the battle. And China knows that we are!

Our response simply has to move from small though welcome projects to a "big picture" approach. I have written about just some "big picture" projects in recent weeks including Australia taking over the nation's major hospitals, starting with the Angau Hospital in PNGs second city Lae.

Another "big picture" approach should include offering to take effective control of agricultural rehabilitation and development. The agricultural sector on which the majority of Papua New Guineans depend for food and income is in an appalling state.

China has promised to undertake a number of "agricultural development" projects but so far it has been all talk and not much action.

Agriculture is an area where Australia can make a significant impact and do so with the support of the "grassroots" of Papua New Guinea.

And if we do we can directly challenge China. Directly and significantly!

Funding major hospitals and the rural health services they supply medicines and key personnel will be costly. So will any commitment to the rehabilitation of the agricultural sector and its expansion. I would add to agriculture the fisheries sector which China is ruthlessly targeting.

In summary, my concern and pessimism about China's influence in Papua New Guinea is growing. And my despair at Australia's overall response continues to grow as well.

Last week should have been a good week with a small, though welcome, policy change with the distribution of around $25 million directly to church run hospitals and health centres.

But that was totally swamped by yet another suspect loan deal with the PRC and the Exim Bank which Papua New Guinea simply cannot afford.

Australia's policy is simply not delivering anywhere adequately.

It must be urgently and comprehensively reviewed. I worry that where it really counts in Canberra either no one is listening or it is all just too hard.