BY MATTHEW CARNEY
THERE ARE FEARS THAT FOREIGN AID to Australia's South Pacific neighbours could be in for a chop in Tuesday night’s budget and experts say that would leave the door open to an ever increasing Chinese influence in the region.
Australia has committed to a doubling of its aid budget to about $8 billion by 2015, but there is concern the budget could slash that target.
Professor Stephen Howes, director of International and Development Economics at ANU, says the government could even scrap the plan altogether.
"There is also speculation that the government, if it hits the pause button this year, will push back the 2015 target or that they might abandon it altogether," he said.
Regional experts fear that could give China's growing influence even more room to move.
From the tiniest atolls to the bigger island states of the South Pacific, China is throwing its largesse around.
Fergus Hanson, from the Brookings Institute in Washington, has done four reports into China's aid program in the region.
"If we take a starting point of about 2005 to the present, China has increased aid from a relatively modest amount - roundabout $30 million a year - up to around a level of around $200 million a year," he said.
"It's got quite a large diplomatic presence. There's different reports that say it's got the most number of diplomats on the ground in the countries that it covers."
What also worries regional observers is that much of China's engagement is now delivered in the form of soft loans.
Fergus Hanson says this can hamper development rather than promote it. "In the case of a country like Tonga, for example, you're talking about 30% of the country's GDP is actually accounted for in soft loans pledged by China," he said.
"One consequence could be we're pushed to help these countries get out of their debt situation. So I think that would certainly be something we'd want to avoid; having to help repay Chinese loans."
Professor Howes led the Government-commissioned review into foreign aid last year.
He concluded that the South Pacific had the highest strategic value for Australia and recommended significant aid increases.