Our influence in Papua New Guinea continues to decline

Twice a year I endeavour to take the temperature of our wide ranging relationship with our closest neighbour, Papua New Guinea.

In recent years the trend has been worrying to say the least. My latest assessment is arguably the relationship is the worst it has ever been, and I need to outline the reasons why I believe that is the position. There is not one answer, and the reasons why our standing continues to decline make the task of rebuilding our influence more challenging than ever.

In recent years, a combination of some poor development assistance priorities has been a significant factor - we are just not getting enough "bang for our buck" especially as our annual development assistance grant - over $500 million - significantly outweighs assistance from any other country, including China.

In this column I have outlined various ways that can begin being rectified. Sadly, none have really been taken up, except limited direct financial support for the Christian churches.

I have almost zero confidence the federal budget in two weeks' time will rectify that, or even begin doing so. Sadly, overseas aid, or development assistance, has really declined in public popularity in Australia.

With an election now just two months away, there is Buckley's chance our development assistance to Papua New Guinea will undergo radical reform - or any reform - in the budget.

So a poorly directed, and in some ways wasteful, development assistance program, generous though it is, is not going to improve our standing in Papua New Guinea.

The second factor in recent years has been China's growing influence across Papua New Guinea. Sadly, despite the limitations caused by the pandemic, that influence has continued to grow. It might have slowed in growth, but it remains active, and in some areas aggressive.

The most aggressive area in the last year has been lending by China to PNG Power and the wider infrastructure sector. The most worrying aspect of the growth in tied lending is that without exception it lacks transparency.

As an example, when Australia lends money to PNG, either the government directly or to state owned corporations, the conditions are publicly disclosed - such as the term of the loans, the specific objectives, and the rate of interest that is charged.

None of the lending under Belt and Road or other PRC programs has even the remotest transparency. Put frankly, that leaves PNG enormously vulnerable.

It is difficult to calculate what is the total indebtedness the PNG Government and state owned entities have to China, let alone on what conditions. I have estimated it in in the region of $10 billion - but that is only an estimate.