PNG escapes AusAID cuts

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PAPUA New Guinea will escape the effects of intended cuts to AusAID by the Australian government led by Prime Minister Tony Abbott.

This was revealed in talks between Treasury Minister Don Polye and Australian Treasurer Joe Hockey when they met during the APEC meeting in Bali, Indonesia last week.

Polye said in Port Moresby yesterday Australia’s rearranging of its aid policy would not affect PNG’s aid grant from Australia. 

He said the slight changes in the policy approach would not affect the degree of Australian aid to PNG. PNG receives A$500 million (K1,184 million) annually through the programme. 

Polye said it would be the same for additional financing of A$1 billion for the asylum deal. 

He said there would be no changes next year to the financial arrangements and structure agreed to by Prime Minister Peter O’Neill.    

Polye said he would further discuss with Hockey the possibility of the AusAID programme investing in larger impact projects rather than spreading funds thinly on many small projects.

O’Neill also welcomed the review of the AusAID programme.

“AusAID has become a huge bureaucracy and we have made it known for some time that aspects of their operations in PNG have been disappointing,” he said.

“This move by the Abbott government will address this, and we welcome the announcement. We are confident a substantial part of aid to PNG will be maintained.”

Polye has discussed infrastructure financing through the private-public partnership model with Hockey.  

“We agreed to discuss the issue further on how to integrate and use private funds in government-focused areas.”

In Australia, AusAID is bracing itself for sweeping staff cuts after Abbott ordered it be absorbed into the foreign affairs department.

According to a SBS report, AusAID director general Peter Baxter had already resigned after Abbott flagged the merger as part of a bid to cut “duplication and waste” across the public service.

Abbott said AusAID, which administered Australia’s A$5 billion official aid programme, would be integrated back into the department of foreign affairs and trade.

The move will enable the aid and diplomatic arms of Australia’s international policy agenda “to be more closely aligned”.

One senior AusAID official said the agency’s roughly 1,300 Canberra-based staff would be bracing for wholesale change.

“I would say a lot of people are going to be out of work.”

The move comes after the coalition declared it would stop the planned growth of the aid programme, effectively stripping it of A$4.5 billion over the forward budget estimates.

The National