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

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.