Australia boosts Pacific spending and pledges new commitment to 'our patch'

Australia's Prime Minister Scott Morrison in the House of Representatives at Parliament House in Canberra on Oct 22, 2018.
Australia's Prime Minister Scott Morrison in the House of Representatives at Parliament House in Canberra on Oct 22, 2018.PHOTO: REUTERS

SYDNEY - Australian Prime Minister Scott Morrison on Thursday (Nov 8) announced a A$3 billion (S$2.99 billion) package to boost ties with Pacific island nations amid growing concerns about China's growing influence in the region.

Declaring a "new chapter" in relations with the Pacific, Mr Morrison unveiled plans to establish a A$2 billion infrastructure bank to issue grants and long-term loans for telecommunications, energy, transport and water projects. He also plans to establish a locally-based Australian Defence Force team, which will travel to the Pacific - when invited - to undertake training and engagement with other forces.

In a speech at a military base in Queensland, Mr Morrison said a strong, stable Pacific region would assist Australia's security and economic growth.

"Australia has an abiding interest in the South-west Pacific that is secure strategically, stable economically and sovereign politically," he said.

"This is our patch. This is our part of the world... We are connected as members of a Pacific family."

Mr Morrison also announced plans to open new diplomatic missions in Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands. This will mean Australia has a presence in each of the country members of the Pacific Islands Forum.

He also committed A$1 billion to Australia's export financing agency to support investments in the Pacific.

Australia has long regarded the South Pacific as a crucial focus of its foreign policy. Canberra is the largest source of aid in the region and seeks to maintain close relations with leaders and communities in nations such as Papua New Guinea, Fiji and Vanuatu.

But China's growing ties, including substantial low-interest loans to some countries, have prompted concerns in Canberra that small nations such as Vanuatu or Tonga may fall into a debt trap and are unable to repay loans and may become politically indebted to Beijing.

According to an analysis by the Lowy Institute, China committed about US$1.8 billion (S$2.5 billion) in aid to South Pacific islands between 2006 and 2016, much less than Australia's provision of US$7.7 billion.

Mr Morrison's announcement on Thursday came days after a similar scheme was proposed by Australia's opposition leader Bill Shorten, who said if elected, he would set up a bank to support loans to Pacific island nations.

 

Mr Morrison suggested Australia had failed to do enough to shore up ties in the region, saying he was seeking to ensure a "step-up" in relations.

"While we have natural advantages in terms of history, proximity and shared values, Australia cannot take its influence in the South-west Pacific for granted," he said. "And sadly I think too often we have."

Australia's announcement comes ahead of Chinese President Xi Jinping's visit to Papua New Guinea next week for the Asia-Pacific Economic Cooperation summit.

But Mr Morrison attempted to play down suggestions that the new measures in the Pacific were aimed at China.

"We are getting on with business with China," he told reporters.

The announcement came as Australian Foreign Minister Marise Payne visited China in what had been described as a "thaw" in relations.

The two countries have endured turbulent ties following Canberra's introduction of laws late last year to curb foreign interference - measures that were seen as aimed at Beijing. In the aftermath, China froze Australian ministerial visits for about a year.

Ms Payne, the first Australian foreign minister to visit China in more than two years, met her counterpart Wang Yi on Thursday.

Mr Wang said he believed Australia and China could cooperate in the South Pacific.

"China and Australia are not competitors or rivals but cooperation partners," he said after meeting Ms Payne.

They met just hours after Australia revealed that it was likely to block the A$13 billion takeover by a Chinese firm of Australia's largest gas pipeline business. Canberra said it was concerned about "undue concentration of foreign ownership by a single company group".

Mr Wang signalled that Beijing was committed to continuing the recent thaw in relations.

"While China and Australia do not always agree, it is vitally important that we always match our words with actions," he said. "We are confident Australia will translate its positive will of growing relations with China into actual actions."

Ms Payne later told reporters: "We've realistically acknowledged today that in a relationship as dynamic as ours... there will be from time to time differences."