Pacific Islands’ debt, Chinese Influence in the Pacific
Interview with Catherine Graue, ABC Pacific Beat
10 January 2018
SUBJECTS: Pacific Islands’ debt, Chinese Influence in the Pacific
CATHERINE GRAUE: Minister this is some heavy criticism of China and what are your major concerns about the aid it gives and the loans it gives to Pacific countries?
Good Morning Catherine.
One of the things that is very important in the Pacific is debt sustainability. This is a significant concern which threatens economic stability which countries have worked hard to maintain. The point that I am making is that burdensome debt can divert scarce public resources from more important needs such as health and education. We work very closely with partners and donors and in some areas very, very co-operatively with China. But it is essential for partners and donors to work together to ensure the sustainable management of existing public debt and to ensure that for our Pacific Island countries that debt has to be economically productive. This is the point that I’m making, that concessional loans such as those given through The World Bank and ADB can make credit significantly more affordable for Pacific Island countries and provide very important economic opportunities. So, that’s the point that I am making. It’s really important for investment to be productive that it actually has some economic dividend and this is really what I have seen having spent many trips out into the Pacific. Particularly out in, not just in the main areas, but also in the country areas where I have visited.
CATHERINE GRAUE: Some could argue that perhaps this is evidence of China moving in where Australia is not. The Opposition here in Australia has claimed the inadequacies of your Government pacific policy has established a national security blind spot that has allowed China to move in.
CONCETTA FIERRAVANTI-WELLS: Well I totally reject that. One only has to see the work that we have been doing and most especially the recent announcement in the White Paper about “stepping up.” As our Defence White Paper has indicated the stability and security of our region is second only to the defence of Australia. The Foreign Policy White Paper which was released in November dovetails into this and clearly articulates the Turnbull Government’s commitment to stepping up Australia’s engagement in the Pacific as one of our highest foreign policy priorities and in line with Prime Minister Turnbull’s announcements at the 2016 and 2017 Pacific Island Forum Leaders Meetings. Work is well underway to intensify and sharpen our economic security and people-to-people engagement in the region and we do that through a multitude of ways through our aid investments. We are working every day with Pacific Island countries to bolster their environmental resilience, strengthen their emergency responses, disaster preparedness, and to improve governance, education, health and gender outcomes.
CATHERINE GRAUE: What in particular though with these concerns that you’ve raised the article quotes that you say you don’t know what the consequences are when Pacific Nations have to pay back some of these Chinese loans and exactly what deals are they have been forced to or agreed to make when they have signed off these partnerships with the Chinese government? What help does the Australian government provide in helping Pacific Nations do this and make the decisions that are sensible?
CONCETTA FIERRAVANTI-WELLS: Well our whole aid program, Catherine, is geared towards a whole range of different things and our aid investments are very much focused in relation to improving governance, education, health and gender outcomes. The point that I am making is simply this: that burdensome debt can divert scarce public resources from more immediate needs such as health and education. So, we are now working and we have signed last year a pact with the banks to work much more cooperatively together. As I have said, concessional loans such as those that are given through The World Bank and ADB can make credit more significantly affordable and provide important economic opportunities for countries. Now, the expansion of The World Bank and ADB’s loan book to the Pacific is very important because it will afford the opportunities for the banks to have visibility of the existing loan books of the countries and to assess the viability and the sustainability of repaying those loans. Now, we want to avoid at all costs the reputational risks of supporting programs, projects and investment that fail or leave unwanted legacy. We don’t want buildings in the Pacific that do not have some productive outcome that doesn’t provide some sort of economic benefit. That is the point that I’m making, that we work and we work cooperatively with China and we encourage China to utilise its development assistance in a productive and effective manner. In other words we just don’t want to build something for the heck of building it. We just don’t want to build a road that doesn’t go anywhere. We want to ensure that the infrastructure that you do build is actually productive and actually going to give some economic benefit or some health benefit or some education benefit to the people of our region.