AUSTRALIA pledged an extra $450 million in sweeteners to Papua New Guinea to settle refugees – but most of the money is yet to be spent and could evaporate with the closure of the Manus Island detention centre.
The inducements Australia offered in 2013 included an expansive new hospital, the deployment of 50 Australian police to bolster the local force, roadworks, and upgrades to the PNG university and law courts buildings.
Foreign Minister Julie Bishop has conceded the future of this additional aid to PNG must now be re-negotiated.
Australia has also boasted it spent additional $16 million in aid money on Manus Island – on top of the cost of building the detention centre – after PNG signed up to the so-called 'Pacific solution'.
PNG prime minister Peter O'Neill had said in 2012, when first agreeing to host the Manus Island centre, the decision was not a question of finances.
"This is a regional issue; we're not interested in making money out of it," he said at the time.
But PNG politicians are now blaming Australia for failing to live up to its end of the Manus Island bargain, with most of the proposed building projects stemming from the refugee deal only in the planning stage and far from completed.
In one case, Australia had agreed to $8.5 million in "design work" for the Madang - Ramu highway on the PNG east coast, but the local transport minister this month said Australia had failed to lay asphalt on the rugged 195 kilometre highway, which is crumbling under land slips.
The deployment of 50 Australian federal police had an initial four-year budget of $132 million but nominally has two years to run.
"Most funding under the [Manus Island] agreement has not been spent," said Australian National University aid expert Stephen Howes.
"The PNG government will still claim that funding. They delivered three years of the detention centre, not expecting the asylum seekers to remain so long."
The project under most immediate threat appears to be the $400 million refurbishment of an asbestos and termite-ridden hospital in the country's second largest city of Lae.
Australia had agreed to pay $207 million towards half the cost for a new hospital, but Fairfax Media this month revealed a budget collapse in PNG stopped the local authorities matching the commitment.
An expensive masterplan, delivered only last year at unknown cost, is now being redrafted. Australia already spent $17.5 million on urgent repairs in 2013 after the hospital was declared to be in a "state of emergency", and another $10 million or so has been spent on site works.
But the $150 million pledged for construction is yet to be put out to tender.
Mr O'Neill made a point on Wednesday when announcing he would shut down the detention centre on Manus Island of welcoming any refugees to settle in the country, a commitment likely to be used to show PNG has lived up to its side of the deal with Australia.
Professor Howes said the decision of the PNG supreme court to rule the Manus Island detention centre unconstitutional made it unlikely Mr O'Neill could be persuaded with extra aid promises from Australia to keep the centre open.
"This is an unpopular deal in PNG," Professor Howes said. "I don't think aid is that important for him to use up political capital to go against the court."
The deal with PNG was known as a "joint understanding" with Australia. A spokeswoman for Foreign Minister Julie Bishop said the government was still working through the implications of the supreme court decision and Mr O'Neill's statement.
"The Australian and PNG governments will work together to determine the future of the regional processing centre on Manus Island and a decision on the [joint understanding] will be made at the conclusion of that process," the spokeswoman said.