There’s a new Liberal-National Coalition government in Canberra, led by Tony Abbott. Jenny Hayward-Jones considers the implications for Papua New Guinea and the Pacific.

The Lowy Institute’s Jenny Hayward-Jones

A change of government in Australia always provokes debate in the Pacific Islands region about what might change. Australia is the region’s largest aid donor, primary trading partner, largest source of foreign investment, largest source of tourism dollars and its security provider. What happens in Australia matters to the region and nowhere more so than in Australia’s nearest neighbour, PNG.

In the case of PNG, we know quite a lot about what the newly-elected Abbott government intends to do.

New foreign minister

Foreign Minister-designate Julie Bishop has distinguished herself as Shadow Minister by focusing on understanding the dynamics of Australia’s nearest neighbour.

She believes the relationship with PNG to be one of Australia’s top foreign policy priorities. She supports the aid program but wants to put a bigger focus on the trade and investment elements of the relationship. She will seek to work closely with business. She is likely to visit Papua New Guinea more often than her predecessors.

Prime Minister-elect Tony Abbott telephoned PNG’s Prime Minister Peter O’Neill just days after his election victory, which is a good start.

Fiji sanctions to be reviewed

In the case of Fiji, the new government has said it will review the effectiveness of the Fiji sanctions regime and work with regional partners to negotiate with Fiji government to promote electoral reform. It wants to work with Fiji to normalise relations as soon as possible.

Under the Gillard Government, Australia provided assistance for the constitutional consultation process and introduced flexibility to the administration of sanctions on government officials travelling to Australia on official business.

It now seems certain that asylum seekers will continue to be sent to Manus in PNG.

With the promulgation of a new Fiji constitution, the time may be right to make another overture to Suva. Julie Bishop should work with counterpart ministers in the region and seek an early meeting with her Fiji counterpart, Ratu Inoke Kubuabola, to negotiate the terms of a new-look relationship. This might include, for instance, an attractive package of election preparation assistance and invitations to Fiji officials to visit Australia in return for Fiji’s approval of a new Australian High Commissioner.

The success of any new Australian approach, however, ultimately rests with Fiji Prime Minister Bainimarama, who has welcomed the election of the Abbott government.

Asylum seekers and aid budget cuts

For the region as a whole, two new policies—the Rudd government’s Regional Resettlement Arrangement with PNG and Nauru and the Coalition’s own aid budget cut announcements—have the potential to cloud what should be a story of continuity and expansion in the new Australian government’s approach to relations with Pacific Island countries.

It now seems certain that asylum seekers will continue to be sent to Manus in PNG. The Abbott government will need to address some of the concerns raised by the community on Manus and local businesses who have grievances about the implementation of the arrangement.

Julie Bishop has talked about introducing an aid-for-trade focus to the aid program and working more closely with business in implementing the aid program.

The government’s pre-election plan to erect a tent city on Nauru to house asylum seekers appears likely to meet local opposition as the Nauru government is keen to limit its asylum seeker intake to families.

The new government has yet to specify the targets of its projected cuts to its aid program. If its estimates were correct, $656 million in savings has to be found from the current financial year’s commitments.

Treasurer-designate Joe Hockey has suggested cuts might come from aid to multilateral organisations, which may mean country programs in PNG and the Pacific will be protected. But a good proportion of Australian aid to multilateral organisations like the United Nations, World Bank and Asian Development Bank is spent in the Pacific Islands, so they may still feel the impact of cuts.

Julie Bishop has talked about introducing an aid-for-trade focus to the aid program and working more closely with business in implementing the aid program. She may support the extension and expansion of the Enterprise Challenge Fund, or a similar approach that links the aid program to business across the Pacific Islands region.

‘Partner of choice’

Bishop is also committed to ensuring Australia is the ‘partner of choice’ for Pacific Island countries. She is concerned that other countries seem to attract more recognition from Pacific Island countries than Australia does, despite their smaller contributions.

The best way for the Abbott government to address its concerns about the poor recognition of Australia’s contributions to the region is to work with China and Pacific Island countries.

Pacific Island countries often credit China for being more flexible and generous than traditional donors in the aid it delivers in the Pacific. This perception has the potential to challenge Australia’s ability to shape developments in the Pacific Islands region.

My own research has shown that China lags way behind Australia in terms of the quantum of aid, investment and trade it has in the Pacific—China is in no way seeking to replace Australia as the dominant donor, investor or security provider to the region.

The best way for the Abbott government to address its concerns about the poor recognition of Australia’s contributions to the region is to work with China and Pacific Island countries to deliver the kind of development assistance that Pacific Island communities want.  This will help quell unfounded speculation about geo-strategic competition, contribute to better development outcomes and reinforce Australia’s positive role in the region.

Jenny Hayward-Jones is Director of the Myer Foundation Melanesia Program at the Lowy Institute in Sydney.