Rowan Callick on Australia Rediscovering the Pacific

Blog Rowan Callick On Australia Rediscovering The Pacific01

These are testing times for Canberra to be orchestrating a renewed interest in the Pacific by Australia’s key institutions.

Australia has always been short of capital, and until recently, of people too. How much more so the Pacific Islands — which require investment if they are to provide the living standards to which islanders today rightly aspire.

Canberra has reawakened to this challenge, as a result of the discovery of the Pacific by Beijing, as President Xi Jinping pushes Chinese institutions, including in this case local governments, to ­develop networks and clients throughout the Asia-Pacific.

The Australian opposition has also in recent times accorded the Pacific a much higher level of priority, coming up with its own plans for helping boost its prosperity.

But it’s disappointing that this has unfolded almost as if nothing had been known about the islands — which include Papua New Guinea, our closest neighbour.

I have many books and reports produced over the past 25-30 years by Australian and regional institutions about Pacific issues. For instance, in 1993, the National Development Centre of the Australian National University published under a “Pacific 2010” project. A “doomsday scenario” I painted in one of them has in part already come to pass.

It’s great that Prime Minister Scott Morrison took the initiative to visit Fiji and Vanuatu recently.

But Australia has some catching up to do. Senior Chinese political and business figures have been visiting the Pacific Islands regularly, such as the party secretary accorded a special role in building China-Pacific links — and the presidents of several of China’s largest state-owned corporations.

Labor leader Bill Shorten said he would set up a government-backed infrastructure investment bank for the islands.

Morrison responded with the announcement of an Australian Infrastructure Financing Facility, plus an extra $1 billion for the Export Finance Insurance Corporation to help support Australian involvement in the Pacific.

The high commissioner to New Zealand, Ewen McDonald, has been appointed to head the new Office of the Pacific, which is expected to turn such ambitions into reality. He is expected, said Foreign Minister Marise Payne, to “seek out new opportunities and avenues for commercial co-operation, as well as improved leveraging of commercial funds”.

That would require working with the Australia Pacific Business Council and its national cousins for PNG and Fiji.

These councils are already working alongside the Pacific Islands Forum to foster a Pacific Infrastructure Financing Initiative, which aims to create more commercial partnerships.

It seeks to create assets rather than debt such as much current infrastructure financing does.

This latter body would incorporate contributions from the steadily growing funds within the island countries themselves.

Helping strengthen our commercial ties is crucial. While Canberra may have retreated in recent decades, Australia has not. We remain the top source of imports to PNG, almost double those from China, and to Fiji we are just behind Singapore and New Zealand, again ahead of China. We are number one in imports to Kiribati, and second in Vanuatu.

Clearly, the government and opposition, the business groups and the Pacific Islands Forum are more or less on the same page in terms of fostering a body to encourage investment.

Now it’s important not to let this momentum dissipate as we enter election mode in Australia.

The extent of the challenge is illustrated by what’s happening — or not — in Solomon Islands, which is holding a watershed ­national election in March.

This is the largest of Taiwan’s six diplomatic allies in the Pacific, five of which face elections this year (also Tuvalu in March, Nauru in July, Marshall Islands in November and Kiribati in December), setting up an interesting test as to the eagerness of China to build its support base in the region.

The islands region now comprises an important quotient of Taiwan’s remaining allies. Despite recognising Taipei rather than Beijing, many Solomons MPs have been invited to visit China, and links are strengthening.

Axiom, an ASX-listed company, provides a good example of the need for persistence in the face of many obstacles, if firms are to step up their regional role, and for diplomatic and financial support.

The firm’s principal, Ryan Mount is an Australian who now lives in the Solomons where he has been working for eight years after a financial markets background in Sydney. His wife is a Solomon Islander.

His company has a mining lease at San Jorge island near the centre of the archipelago, and it is aiming to produce its first nickel ore by the end of this quarter, with most of the product heading either to Japan or China.

The first pit was completed by the end of 2018, and stockpiling is starting — the ore lies close to the surface, thus easily stripped — and port construction is being finalised. “We’re spending more than anyone else in the region on our environmental protocols,” says Mount, and on ensuring the site is rapidly rehabilitated.

Axiom’s biggest shareholder is Melbourne Jeffrey Markoff, and its second-biggest is the development company of the landowners of Newcrest’s Lihir mine, in PNG’s New Ireland — providing much positive cross-referencing to ensure high standards.

Since the Regional Assistance Mission to Solomon Islands finished 18 months ago after 14 years, costing Australia $2.8bn, the country has faced a battle against corruption, including a couple of Asian-owned ventures mining and logging at an apparent loss since they pay no tax.

And after conducting exploration on leases at Kolosori on Isabel, near San Jorge, Axiom continues to have to battle to win a mining lease there, with a Hong Kong-registered firm appearing to gain the support of Mining Minister Bradley Tovosia.

These are the nitty-gritty ­battles being fought out in the region whose outcome will decide whether islanders will gain from responsible investment, and the extent of Australia’s role.

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