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‘A little bit of maybe’ on easier Australian terms for infrastructure debt and new aid

Australia’s Assistant Treasurer says in the post-COVID environment Canberra is willing to re-examine its policies including loan concessionality, debt consolidation and aid allocations to Pacific Islands nations but is not giving any promises or firm commitments.

 

Michael Sukkar is attending the Forum Economic Minister Meeting which kicks off this morning. Australia has already reallocated well over A$100 million to assist Pacific Islands respond to the health, social and economic impacts of COVID-19. But those funds have been reallocated from the existing aid budget.

The next federal budget is due for delivery on October 6, and Sukkar says: “if we do seek to supplement aid or humanitarian assistance to our region, that will be done with the broad principles of the Pacific Step up and will be focussed primarily on our immediate Pacific region and neighbours.”

Sukkar expects discussion of the A$2 billion Australian Infrastructure Financing Facility at today’s meeting. He says eight projects have been approved, utilising a mix of grants and non-concessional loans, and has not ruled out revisiting the nature of those loans, as there is “great value to moving to concessional loans”.

“Whilst I don’t want to necessarily announce any change of policy, I think the broad view is that we have to be nimble as we possibly can and that means re-examining all pre-existing COVID programmes,” Sukkar told Pacific journalists yesterday.

“I think it’s safe to say that in a post-COVID environment the Australian government is willing to re-examine everything with fresh eyes… and the view is that with the infrastructure facility, more concessional loan rates or loan terms would be likely to unlock particular projects.”

The Minister said discussions about consolidating debt  in multilateral forums is “certainly gathering steam.” He also said the demand for Pacific island seasonal workers is likely to continue and the Australian government has done “some fairly important work in ensuring that appropriate quarantining arrangements  and protocols are established to ensure they can continue to come.”

“With the Pacific yet to experience COVID-19, we need to err on the side of caution to ensure that the COVID-19 doesn’t get a foothold.

“I think it would be a disaster with fragile health systems and other infrastructure for Australia to effectively be sending COVID into the Pacific through the Pacific island workforce,” Sukkar says.

Preparations are currently underway to send 120 ni-Vanuatu workers to the Northern Territory to help with the mango harvest and there are hopes in other Pacific nations that they will also be able to supply workers for upcoming harvests.

On tourism, Sukkar believes in the longer-term, travel bubbles are “an absolutely worthy way to go” but there is still a lot of work to do on protocols, and that no country in the world could say they have yet “perfected the art of contact tracing and ring-fencing before COVID-19 has the opportunity to spread like wildfire.”

“Until you really have perfected that, I think it is very hard to put in place a ‘bubble’. 

“But the concept of a bubble is really the only long-term solution and the only sense of certainty that we can all have in getting back to what is an economic engine room for the Pacific.”

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