As the federal government prepares to hand down its pandemic-delayed national budget in October, it will be looking for areas in which spending can be cut.
When the pressure's been on in the past, the international development assistance program has been an easy target and, given the significant belt tightening and staff cuts in the Department of Foreign Affairs and Trade, one can assume that it's again under review.
Despite the undoubted pressures at home in the wake of Covid-19, it's to be hoped that the government accepts the need to maintain our development assistance to Papua New Guinea and the South Pacific. Revise and restructure it most definitely, but any significant reduction would send a terrible message to our neighbours, virtually all of whom are struggling fiscally and economically, as well as socially.
The extent of the crisis varies from country to country and, so far, Covid-19 infection rates have been low in the South Pacific. But lockdowns, travel bans and related factors are having a devastating effect.
Of primary concern are our closest neighbours, Papua New Guinea, Vanuatu, Solomon Islands and Fiji, but we also have to look at the impact on other small regional nations such as Tonga, Samoa, New Caledonia and the Cook Islands.
At over $1 billion, our total development assistance to the South Pacific is a significant part of our national budget. But there are real non-fiscal reasons why it must be protected, at least for the current financial year.
The first is the dire economic and social conditions in our key neighbours. Travel between Australia and these countries is off the agenda for this year, if not much of next year.
Tourism is vital to Fiji's economy and very important to Vanuatu, Samoa and Tonga. If travel between these countries and Australia and New Zealand continues to be barred, the consequences for their tourism and business sectors will be truly horrendous.
Our aid program to the smaller South Pacific nations needs urgent revision to help industries that are directly affected by the virus and Australia's border closures. Australian investment in the tourism, hospitality and service industries in these countries is not insignificant, and our assistance will help both our own investors and the thousands of people they employ throughout the region.
The needs of PNG and Solomon Islands are less tourism related. There are 5,000 Australian businesses operating directly and indirectly in PNG, and many hundreds more in Solomon Islands, the Cook Islands, Samoa and Tonga. Most, if not all, will be struggling to survive and it will get worse before it gets better.
The federal budget is still three months away, which is enough time for DFAT and other government agencies to engage with Australian businesses operating in the region and discuss what practical and reasonable support can be given to them and to their employees to sustain their operations for as long as is necessary.
The tight restrictions on travel will make it difficult to maintain our existing development assistance programs at least for the balance of this financial year. Many of those programs relate to health, education and social welfare.
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