Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

The Australia Infrastructure Financing Facilty for the Pacific has just not delivered

By Jeffrey Wall - posted Friday, 20 August 2021


It is almost three years since the federal government announced a major policy change to try and counter China's growing influence in our region, and to rebuild our own links and credibility with key regional neighbours.

The "flag ship" to deliver what was a welcome but long overdue initiative was the Australia Infrastructure Financing Facility (AIFFP), set up late in 2018. It was to co-ordinate a mixture of grants, loans and counterpart funding for infrastructure projects in the South Pacific.

The federal government made an initial commitment of around $2 billion, a figure I have repeatedly said is just inadequate especially given the extent of China's "Belt and Road" agenda in our immediate region and beyond.

Advertisement

As I have commented on numerous occasions the "roll out" of the Fund has been woefully inadequate – too slow, and too small!

My feedback, directly and indirectly, from business entities and others who have engaged with the AIFFP has hardly been positive. It is bureaucratic at best.

The time has surely come for the federal government to concede that the AIFF has just not delivered adequately on what was a worthy goal in 2018, and is today an even more urgent one. It should be abolished, and the government should go back to the drawing boards, and consult on a new model with business, churches, NGOs and the vast number of Australians with real life experience in our immediate region.

It will soon be three years since the AIFFP was announced. Let me be generous and give it six months to be fully operation, which takes its actual formation into early 2019. But that is still over two years ago.

In that time it seems that (and readers can access this on the AIFFP website – aiffp.gov.au -) just SEVEN projects have been approved! Two are in Papua New Guinea, two in Fiji, one in the Solomon Islands, one in Palau and one in Timor Leste.

It is difficult to accurately calculate the dollar value of the projects as a whole as a couple are joint ventures and one or two are just "studies".

Advertisement

But the total "spend" – or more accurately the total spending "promise" – would hardly exceed $200 million.

That may seem a substantial amount to some, but let me put it in context – measured against what China has secured commitments for during the same time under the Belt and Road program and China's escalating communications, education and other loan programs with our neighbours.

I will start with the two Papua New Guinea projects. The first is the Markham Valley solar plant. It is designed to boost PNGs very low rate of electricity delivery (currently about 15pre cent of the people have access to affordable electricity). The cost? Anyone's guess! That is according to the AIFFP website still under negotiation.

The second PNG project, which was recently announced with much fanfare, is a ports upgrading and rehabilitation program. It would seem the initial Australian funding will be around $75 million and it seems that over a 30 year period it might reach $400 million. But the first contracts for the work won't be issued until 2022!

Since the start of this year alone, the PNG Government and state owned businesses have signed up to infrastructure funding provided by China and its finance houses, notably the Exim Bank, worth at least $A1.5 billion…..the largest being the Ramu Two hydro power project which might be seen to be in competition with the AIFFP solar project, and dwarf it in size, and cost to consumers.

In summary, whatever the AIFFP has "committed" to in Papua New Guinea it is wholly inadequate when compared with loans provided by China on very restrictive terms – China contractors only to undertake the work.

I will now look at the Solomon Islands, which switched its diplomatic alliance from Taiwan to the PRC about the time the "Pacific Step Up" was announced. Australia has signed up to contributing to the Tina River Hydropower Transmission System designed to deliver more affordable power to the capital, Honiara, by the end of 2023.

A worthy project, yes, but the Australian contribution is just $29 million.

Since the Solomon Islands switched diplomatic relations, China state owned companies have won a swap of infrastructure contracts from the SI national government. These include a new international airport, bridges, and an upgrade of the national university.

To them can be added all the infrastructure work associated with the Pacific Games to be held in Honiara in 2023. The infrastructure includes a national stadium, and at least half a dozen other pieces of sporting infrastructure.

The all up cost, much of it funded by loans from the PRC that the SI Government will have to repay – surely in the hundreds of millions if not more than a billion?

This snapshot alone surely illustrates the utter inadequacy of the AIFFP funding, not to mention its bureaucratic processes. As an example of just how bureaucratic, there are reports the negotiation of the PNG maritime infrastructure funding took EIGHTEEN months to negotiate!

It is little wonder that China is totally undeterred by Australia's "Pacific Step Up" agenda.

My fear is that it will soon put some substance – timing and funding – to the MOU it has signed with the PNG and Western Province Governments for a major fishing industry facility on Daru, the PNG town nearest to Australia.

And it will massively lock in the PNG Government to loans that will be simply beyond the capacity of the PNG Government, and its agencies, to honour.

As I have repeatedly urged, Australia has to go "big and bold" when it comes to not just countering China's massive influence, but strengthening our own "national Interest" in our immediate region.

The agenda of the AIFFP is neither big nor is it bold! Frankly, it is an embarrassment for Australia in our immediate region.

It began as a good idea, with worthy objectives.

But it has failed totally to deliver with any sense of impact let alone urgency.

There is still time for Australia to counter China's grip on our immediate region when it comes to lending that is unaffordable, and in significant cases for projects that are just wasteful.

But time is running out.

Australia has done an outstanding job when it comes to assisting our neighbours meet the challenges posed by the Covid-19 pandemic. Our vaccinations contribution has been second to none, as has our support with specialist health services.

But when you look beyond the pandemic, the story is just not good enough.

There should be no embarrassment in admitting that a well-intentioned goal has fallen well short.

The AIFFP has failed. Abolish it, and back to the drawing boards with the advice and assistance of business, the churches, NGOs, and Australians with vast experience in Papua New Guinea and our immediate region!

  1. Pages:
  2. 1
  3. 2
  4. 3
  5. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

4 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Jeffrey Wall CSM CBE is a Brisbane Political Consultant and has served as Advisor to the PNG Foreign Minister, Sir Rabbie Namaliu – Prime Minister 1988-1992 and Speaker 1994-1997.

Other articles by this Author

All articles by Jeffrey Wall

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 4 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy