Australia’s $4 billion program to fund new infrastructure in the Pacific lacks transparency, is failing to support the region's greatest needs such as climate adaptation/loss and damage and poverty alleviation, and risks driving extractive development in the region, according to a new report by environmental and human rights organisation Jubilee Australia Research Centre.
The report, Aiding the Pacific?: Investigating the projects of the Australian Infrastructure Financing Facility for the Pacific (AIFFP), is the first to examine the AIFFP since its establishment. The report makes the following findings:
- Some AIFFP projects are clearly driven by geopolitical considerations, especially the perceived need to counter Chinese influence in the region
- There is a lack of public disclosure of documents regarding both the social and environmental assessments and also the business case for the projects
- The AIFFP’s combination of grants (one quarter) and loans (three quarters) could contribute to increased debt risks for some countries
- AIFFP’s loan-based financing model biases it towards ‘bankable’ projects, which tend to favour extractive models of development
- The AIFFP has so far failed to adequately support meaningful climate adaptation for vulnerable communities in the region.
“Only about $5 million has been given to support climate adaptation in the Pacific – a small project to assist with flooding in Fiji. Yet across the Pacific there is a clear financing gap for locally owned, small scale climate adaptation projects such as building storm shelters, planting mangroves, and repairing seawalls. Rather than supporting these essential survival measures, the AIFFP is designed to focus on profit-driven megaprojects like ports and other transport infrastructure,” said Dr Luke Fletcher, Executive Director, Jubilee Australia Research Centre.
“We understand that Australia may want to provide grants and even loans to infrastructure projects in the Pacific given the increased strategic competition in the region of late. But taking money from the aid program to do this is perverse,” said Dr Fletcher. “Aid money should first and foremost contribute to poverty alleviation and increasing climate resilience. Any grants or government-backed loan finance flowing as a result of strategic competition in the region should be additional to the aid budget, not stealing from it.”
An independent review of the AIFFP was released last week, however it fails to assess whether the AIFFP’s projects are likely to lead to positive development outcomes in the Pacific, or to assess the extent to which its portfolio of investments is addressing the region’s most pressing needs.
Jubilee Australia Research Centre’s report calls for the AIFFP to be evaluated on whether it is delivering development impacts for people in the region, for improvements in its transparency and disclosure, and for AIFFP funding to be separated from and additional to the aid budget.