PAPUA New Guinea prime minister Peter O'Neill has warned the Australian government he will not back down on a plan to shift aid workers from employment with aid companies to direct contracts with PNG.
Mr O’Neill said he planned to use a regular ministerial meeting in November to force the overhaul of the status of all Australian aid workers in PNG in time to start the new system by the beginning of 2016.
"The posture of our government is not going to change," he said in an interview about the new plan which he said he had been pushing for some time.
He said the existing arrangement where aid workers are employed by third-party contractors, whether they are paid by Australia or international agencies, was undermining the integrity of the system and their long term commitment to PNG.
The proposed change unveiled by Mr O'Neill last month continues his efforts to exert more PNG control over what is Australia's largest single aid recipient country.
Mr O'Neill has been seizing more control over the aid projects and delivery since the Rudd Labor government ceded control as part of the aid increase which was part of the deal over the Manus Island asylum-seeker processing centre.
Now Mr O'Neill says it will save money to have all Australians who work in PNG government agencies operating under direct contracts with PNG.
He said: "We have been discussing this for quite a while now and it has come to no conclusion. We have to take a position. If they (Australia) don't wish to participate, it is up to them."
Australian National University development economist Stephen Howes has supported the shift in the way aid would be delivered saying that rather than being a radical change it would take the situation back to way Australians worked in PNG ministries in the distant past.
"It won't be easy, but it could be done, and it's time to change,” he said in a DevPol website post. “Many advisers have worked hard and some have been able to make a difference, but in general aid-funded personnel would be more productive if in-line."