China’s more flexible support better than Australia’s, says PNG

PNG Prime Minister Peter O’Neill and Chinese ambassador Xue Bing last Wednesday. Picture: THE AUSTRALIAN

CANBERRA – Papua New Guinea elites have branded Australia’s $541 million-a-year PNG aid programme as ­“paternalistic” and overly ­bureaucratic compared with what they say is “more flexible” and “more effective” support from China.

In interviews with senior PNG figures, Deakin and Sydney University researchers were told Australia’s influence in PNG had “diminished considerably” amid growing Chinese investment in the region under its Belt and Road Initiative. They heard concerns that Australian aid money “goes back to Australia” in expatriate wages and fees and despite genuine ­affection towards Australia, “there is animosity and anger about being lectured to”.

“Indeed, there was a view presented that while Australian aid was highly accountable and ­funded state institutions to improve governance and address corruption, such aid was highly ­paternalistic. (Australia says) ‘We give you money, you have to spend it this way’,” the researchers said.

The authors spoke to former politicians, public servants, army officers, social activists, financial advisers, university lecturers and students about their views on Australian and Chinese development support.

Chinese aid was considered by all of those interviewed to be primarily spent on infrastructure, with greater discretion for PNG’s leaders over how funds were spent.

“Chinese aid (is) more effective. Chinese aid is unconditional, no strings attached. The ­government can use this aid more flexibly,” one interviewee said.

There were concerns Chinese development money, much in the form of interest-free and concessional loans, could leave PNG deeply in debt and powerless to resist Chinese ­demands.

Some also worried that Chinese aid had “not trickled down”, and that the line between aid and business investment was blurred when dealing with China.

“Sometimes you wonder if you’re looking at aid-funded ­projects, or just pure commercial activities,” one interviewee said.

The study, to be published in the Journal of Contemporary China, is the first of its kind comparing perceptions of Australian and Chinese aid in the Pacific from the recipients’ point of view.

A version of the paper has been submitted to a parliamentary ­inquiry on the strategic effectiveness of Australian aid.

One of its authors, Deakin University professor Matthew Clarke, said the study showed Australian influence in the region was under threat from China, which was more willing to give political leaders in the Pacific what they wanted.

Professor Clarke said there was a growing sense that “Australia is no longer the only player in town”, and nations like PNG could play big donors off against each other.

The paper said International Development Minister Concetta Fierravanti-Wells’s attack on China-funded “roads to nowhere” in the Pacific, first reported by The Australian, reflected growing concerns in Australia and elsewhere that the global power balance had shifted in China’s favour.

PNG Prime Minister Peter O’Neill last week cut the ribbon on a $187 million electrical substation project in Western Highlands Province, funded by China’s Exim Bank. China has allocated the lion’s share of a $2 billion concessional loans facility, announced in 2013, to PNG.

Projects funded under such schemes are usually completed by Chinese contractors.

Australia invested nearly $160m on PNG economic growth projects in 2016-17, and $161m on “human development” initiatives, including health and education programmes. Another $113m was spent on “governance” programs to train local public servants.