The federal government must back Australian companies and investors operating in the South Pacific

It has never been easy for Australian companies, and investors, to operate in our immediate region of the South Pacific.

Operating in the region can be very profitable, but there are also risks associated with it, especially when it comes to developing major resource projects, such as minerals and gas.

Papua New Guinea remains the major destination of our investment and business activity. The fact we were the colonial power probably just increases the challenges.

In recent years the challenges in PNG and the region have increased massively as a result of the heavy-handed intervention of China across the region.

Australia's response generally has been to increase development assistance, also known as aid and quite frankly, in terms of slowing China's growth and influence, it's a failed response.

It has especially failed because China has switched its priorities in the region. It has reduced untied aid simply because it is achieving the outcomes it seeks without aid.

China exerts it's influence through a mixture of trade, tied loans, the lobbying of politicians and senior officials, as well as direct engagement with the boards of government-owned corporations.

The key feature of China's tied loans is its insistence that all work, such as roads and communications, be undertaken by Chinese companies, and using Chinese skilled and unskilled workers.

The requirements on Australian companies, especially operating in PNG, to train Papua New Guineans, acquire local partners and meet reasonably onerous visa and work permit requirements are considerable. Almost without exception Chinese companies can get around these requirements, and not only in PNG.

That brings me to how Australia can support our companies, and investors and shareholders, in our region.

The history is far from encouraging.

The worst example occurred in the Solomon Islands a few years ago.