2.1
This chapter recognises input from inquiry participants on areas of opportunity to strengthen relationships given pre-pandemic, current, and envisaged future challenges post-pandemic.
2.2
The key themes which appeared in evidence are outlined:
Pacific island countries share similarities but there is considerable diversity between them, and relationships in the region are complex;
The region is a contested space with various foreign interests;
Australia is a key and trusted partner in development assistance and humanitarian support; and
A recognition of shared challenges and security needs in the region— including mitigating climate and natural disaster impacts and navigating COVID‑19 ramifications on health and economies—and the way forward.
Diversity and range of development partnerships
2.3
Existing links and partnerships within the region are as complex and diverse as could be expected with the shared experiences of history and the geostrategic challenges across the vast region.
2.4
The Australian Government’s development assistance, disaster responsiveness and coordination efforts in the Pacific region are primarily delivered through the ‘Pacific Step-up’ framework, which was announced in November 2018 to bolster Australia’s engagement in the region.
2.5
Australia’s Step-up is just one of many international strategies employed by foreign governments in the Pacific region—it is a ‘rediscovered’ and contested space. However, compared to other foreign states (excepting New Zealand), Australia is a geographic near neighbour and the region’s prime development assistance partner:
…we have committed a record $1.44 billion in development assistance to the Pacific in 2020-21, to help our partner nations address their greatest concerns and embrace their greatest opportunities.
2.6
Australian non-government activity in the region has also intensified ties in recent years and broadened the reach of engagement across the Pacific public services, businesses, churches, academia and the community generally. Through the Pacific diaspora—particularly via faith-based partnerships, sporting links and pastoral care for Pacific island labour mobility initiatives in Australia—personal connections and economic linkages have been reinforced.
2.7
The reciprocated assistance by Pacific island communities via donations and with direct help during Australia’s catastrophic 2019-20 fire season have deepened ties and ‘an increasing sense of partnership and reciprocity’ as reflected by Colonel Goina, Defence Attaché to Papua New Guinea (PNG):
The high commissioner mentioned the support PNG provided to Australia during the bushfires. I must say that it was an honour and a privilege for the PNG [Defence Force] Kumul Force to come down here. … This was the first time in our history that the PNG [Defence Force] sent a command force to come and assist the people of Australia. It has always been the other way around, with Australia coming and helping us with disasters in PNG. That contribution was very much valued—and we were honoured.
2.8
In turn, in addition to the region facing the pandemic threat and its economic fallout, Australia’s humanitarian response following Cyclone Harold and later Cyclone Yasa has further cemented the partnership to face shared challenges:
When crises strike, we have responded to requests for help with substantial humanitarian assistance for response and recovery—most recently for COVID‑19—and assistance to Fiji, Solomon Islands, Tonga and Vanuatu after Tropical Cyclone Harold in April 2020.
2.9
Following the inquiry’s last hearing in October 2021, the Australian Government provided support, on request from the Solomon Island’s Government, during civil unrest when a series of peaceful demonstrations turned violent from 24 November 2021. The Australian Federal Police and Defence Force were deployed to assist under the Australia-Solomon Islands Bilateral Security Treaty 2018 which replaced the Regional Assistance Mission to Solomon Islands (RAMSI). RAMSI commenced in 2003 and ceased in 2017 when Australian personnel were no longer permanently stationed in the Solomon Islands.
2.10
In February 2022, Australia provided prominent assistance in the relief effort in Tonga following the tsunami devastation caused by the nearby undersea volcanic eruption of Hunga Tonga-Hunga Ha’apai on 15 January 2022.
2.11
Mr Curtis Tuihalangingie, Deputy Head of Mission, Kingdom of Tonga expressed his appreciation for Australia leading disaster relief efforts:
We also have to recognise Australia's efforts to assist us with natural disaster and humanitarian assistance. Australia and New Zealand are always the first ones to be there. We recognise that, and I'm sure Their Excellencies and my fellow diplomatic colleagues here would support me in recognising that there's no doubt, there's no question, around the current effort and way Australia is helping us. When there is a natural disaster, Australia, followed by New Zealand, is always there. We appreciate that and we think that it is important for us to share that.
2.12
The sentiment of closer ties fostered through mutual adverse events was reinforced at the inquiry’s September 2020 roundtable hearing with Pacific island heads of mission:
COVID-19 is like a black cloud ...And like every black cloud, it has a silver lining. For us it has brought Solomon Islands closer than ever to our development partners …Logs, our main export, and the revenue generated from them were already declining, even before COVID-19 was declared a pandemic. But with COVID-19 the economic contraction on businesses and households just went from bad to worse. It would be difficult for the [Solomon Islands] government to do all of the heavy lifting here, and I'm glad Australia has also committed A$5 million to support the government's economic stimulus package.
2.13
The Committee’s roundtable hearing enabled the various Pacific island countries to learn each other’s views on current matters. The approach followed from the Whitlam Institute’s submission which focussed on the report Pacific perspectives on the world which stressed the important elements of foreign relationships with Pacific island people:
Appreciation of culture and diversity, mutual respect, reciprocity and trust are the things that Pacific islanders value most in relationships.
2.14
DFAT also stated that Australia’s role in the Pacific Islands Forum reflects its commitment to addressing shared priorities and challenges in the region—including climate change; adaptability responses and disaster resilience, and the health and sustainability of the Pacific Ocean.
2.15
In November 2021 the Australian Government announced that it doubled its climate finance commitment to $2 billion for developing countries over 2020-25. The new commitment increases the allocation for the Pacific from $500 million to $700 million to be spent on:
Climate adaption and resilience;
Disaster preparedness; and
Renewable energy projects.
2.16
Australian COVID-19 recovery assistance for the Pacific islands also recognises these shared priorities and commitments, including, for example:
The $140 million Asia-Pacific Climate Finance Fund will leverage private sector investment in low emissions, climate resilient solutions for the Pacific and South-East Asia.
COVID-19 repercussions
2.17
Less than 18 months after the Step-up announcement the World Health Organisation declared the COVID-19 global pandemic. While Pacific island countries exhibit great diversity, most have narrow, and as such, precarious economies:
Pacific island countries face a range of development challenges including small domestic markets and narrow production bases, weak regulatory and private sector capacity, low savings and investment rates, as well as high trade and business costs. They also have young, fast growing populations that need opportunities and jobs.
2.18
Pacific island countries with these features and ‘micro-state’ countries have particularly suffered in this period, as summarised by the Lowy Institute:
No amount of luck or foresight could help the Pacific avoid the economic devastation trailing in the disease's wake. Pacific economies are dependent on the outside world—be it through tourism, commodities, trade, migration or aid. COVID-19 has disrupted all these economic ties and brought ruin to Pacific economies.
2.19
The ramifications of the virus (despite very low cases in most South Pacific island countries until late 2021) were summarised in the After COVID-19 (Volume 1) report by the Australian Strategic Policy Institute:
Estimates of job losses are devastating for Vanuatu (40 per cent) and Fiji (25 per cent) and significant for Palau and Samoa (Hartcher 2020). Even if the [Pacific Island Countries and Territories] tourism-based economies hadn’t closed their borders, the flow of tourists into the region has been cut off at source. Airlines aren’t flying and cruise ships aren’t sailing. Similarly, travel and quarantine restrictions by destination countries have affected remittances and trade income. The pandemic-induced economic malaise has affected demand for the region’s exports. Reduced trade is threatening food security, as many islands depend on imports for food.
2.20
The pandemic has served to exacerbate the existing weaknesses in Pacific island environments, and highlight the economic and export diversity between them. For example, DFAT observes:
…the pandemic will likely have a severe economic impact in our region, in particular for those countries that rely heavily on tourism and commodity exports.
Australia’s COVID-19 recovery response
2.21
The essence of the recovery response is to focus on those most pressing matters from an array of priorities. As highlighted in the Partnerships for recovery COVID-19 development response, the prosperous world economies had initially been hardest hit in 2020, but the World Bank forecast in June 2020 that the developing countries, including those in the Pacific region, would feel the effects intensely. In January 2021 the World Bank’s assessment of the health of the global economy was that vaccine deployment and investment was the key to sustaining recovery, with ‘incomes likely to stay low for an extended period’. In relation to developing countries, and relevant to the Pacific island region, the World Bank stated:
Although the global economy is growing again after a 4.3 per cent contraction in 2020, the pandemic has caused a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period.
2.22
The World Bank identified as particularly important policy actions in developing countries:
In the longer run …policies to improve health and education services, digital infrastructure, climate resilience, and business and governance practices will help mitigate the economic damage caused by the pandemic, reduce poverty and advance shared prosperity. In the context of weak fiscal positions and elevated debt, institutional reforms to spur organic growth are particularly important.
2.23
Australia’s ‘recovery’ statement acknowledged an Oceanic partnership effort in tackling the current and expected lingering impacts of the pandemic in the broader region. Similarly, while the Committee was grateful for the dedicated inquiry participation and the submissions received during what was, at the very least, a troubling year, it has agreed to currently focus on pragmatic and deliverable areas of improvement.
2.24
The Committee chose to focus on building on gains and maximising the success of initiatives that are practical to implement and can be feasibly implemented during the post-COVID recovery phase. These opportunities focus on priority needs as raised in evidence and which were included under the key Step-up categories. The topics were relevant pre-pandemic, but have been significantly amplified twelve months on.
2.25
The Committee saw merit in some proposals in evidence to expand areas with a high probability of success or ability to mitigate risks. Not all of these were considered for action in the current climate but some are included here as an acknowledgement of a worthy proposal for the medium term.
2.26
Initiatives raised in evidence, and discussed in this chapter, were suggested to bolster good governance, technology, communications, health, and migration pathways—these areas may also intersect.
2.27
The Committee has also reflected on the evidence received from a holistic viewpoint, noting that the key thematic recommendations which emerged in the evidence included labour mobility, attitudes to climate change, market access issues (as reported in the Committee’s ‘activating trade and investment inquiry’), and a particular emphasis on the incorporation of local Pacific islander participation in development initiatives. The inclusion of locally-led planning and delivery in development opportunities is discussed in chapter 5.
Impact and timing of vaccine program in recovery efforts
2.28
Whilst high-priority roll-outs of COVID-19 vaccinations had commenced in many Northern Hemisphere countries by January 2021, the road ahead to secure both the health of people and sustainable economies in the Pacific is expected to be long and costly.
2.29
The Australian vaccination schedule was due to commence in late February 2021 and the Pacific island schedule (as supported by the World Health Organisation’s COVAX initiative and Australian and New Zealand support) followed. The package also included holistic support, including training and mobilisation of health workers, transport of the vaccine to remote areas, health information systems, community education campaigns and providing technical expertise. Australia’s COVID-19 vaccine doses shared from Australia’s supply and procured by Australia for partner countries through a partnership with UNICEF had totalled 2 003 070 in Pacific island countries by 1 February 2022.
2.30
Dr Stuart Minchin, the Director-General of the Pacific Community, reported to SBS Australia that vaccinating the region is ‘critical’ to getting back on track and that:
This region has felt the impact of COVID-19, perhaps not as acutely as a health crisis, but very acutely in terms of the impact on their economies. … Anything that the population can do to facilitate the opening up of travel and opportunities to rebuild economies is going to be welcomed both by the governments and by the people themselves.
2.31
As such, even though there are current impediments to the implementation of most initiatives, getting the most feasible and practical measures in train as soon as possible, and within specified timeframes, is important.
2.32
The ills of the pandemic have also provided an opportunity for some mutual insights and understanding and potential growth opportunities, as discussed by the High Commissioner of Samoa:
This pandemic has certainly played havoc with every economy on the globe. The fact that 10 countries out of the 12 that are COVID-free, like Samoa, doesn’t make it any easier, but the fact is that we are a price-taker. There are also the constraints at the moment in terms of movement of people, with regard to the impact on tourism, and, as well as that, our exports. It brings to mind how we could go forward in terms of the new norm that we are facing in activating trade and investment.
‘Pacific bubble’ proposal
2.33
The concept of a ‘Pacific bubble’ was first proposed in early 2020. Countries within this geographic region had very low COVID-19 community transmission and a ‘bubble’ would allow international borders between Australia and the Pacific island countries to remain open. This was seen as a means of supporting the most tourist reliant Pacific economies in a relatively low-risk way, to allow Pacific islander access to education and employment pathways in Australia (and New Zealand) and to better enable remittances to flow to those heavily reliant on this income source.
2.34
Hesitation was voiced about health system limitations in a ‘Pacific bubble’:
It is unclear when tourism will be able to resume, however any discussion around a ‘travel bubble’ that includes Australia and Pacific countries must have the health of Pacific communities as the highest priority – there are concerns that overstretched and underfunded healthcare systems of Pacific countries will be unable to cope with outbreaks of the pandemic.
2.35
The Committee was reminded of the catastrophic impacts on the region were the virus to take hold while the Lowy Institute emphasised the grave consequences of Pacific region borders remaining shut:
Every bit of support from Australia and others, including China, will be necessary to stop a lost decade of development in the Pacific. While that support may help stem the bleeding, the only thing that will be able to stop it will be for borders to reopen between these COVID-free countries and Australia and New Zealand.
Adapting and supplementing Pacific support
2.36
The Department of Foreign Affairs and Trade (DFAT) notes that the ‘new depth of Pacific partnerships delivered through the Pacific Step-up has positioned Australia well to support regional responses to the COVID-19 pandemic’.
2.37
It has also resulted in the Australian Government refocussing its Pacific development efforts. Firstly, the review into the new international development policy, initiated in 2019, of which DFAT received 53 submissions, had been temporarily halted:
In the current circumstances, where the Australian Government is focussed on the domestic and international response to COVID-19, we have paused work on a new international development policy. Our immediate development focus is on working with our region to respond to the crisis.
2.38
However, the submissions to the Government’s review were used to inform the formulation of a COVID recovery response development strategy for the Indo-Pacific:
Australia has pivoted its development program to support a regional response to the COVID-19 pandemic. The strategy underpins our vision of a stable, prosperous and resilient Indo-Pacific in the wake of COVID-19.
Partnerships for recovery
2.39
The new Partnerships for recovery strategy was released in late May 2020, after half of the submissions to the Committee’s inquiry had been received. As such, while the original Step-up program somewhat morphed during the inquiry, the Committee received limited feedback on the $1.44 billion Pacific COVID-19 support measures which are ‘building on our Pacific Step-up…helping to support economies, build resilience and enhance regional stability’. Save the Children Australia commented in support of the speedy two year support horizon, but with reservations for the future:
In this context, the Australian Government’s new Partnerships for Recovery strategy rightly focuses on an urgent time horizon of the next two years, prioritising local partnerships and multilateral cooperation to enable a rapid, health-focused response. This is correct for the short term. Yet, it leaves critical questions unanswered for the medium‑to-longer-term, including how to respond to geopolitical and economic circumstances that will push large numbers of people into poverty, potentially for many years, as the strategy itself correctly recognises.
2.40
The repositioned program retains the same broad outcomes as the Step-up, with priority action areas: health security, stability and economic recovery, and protecting the most vulnerable, including women and girls. The primary submission from DFAT was received at the end of June 2020, referring to the Official Development Assistance (ODA) change as:
We are redirecting our development assistance program and Pacific Step-up initiatives, bringing forward funding for critical health services and working with our partners to help mitigate the economic impacts. We are also helping to plan for recovery.
2.41
The Lowy Institute’s submission stressed the dire economic situation these countries face in the wake of closed borders:
The grim reality is that most Pacific nations will not be able to bounce back from the economic and social devastation and without ambitious and urgent outside assistance will be set on a permanently lower economic and development trajectory.
2.42
The Lowy Institute’s submission also suggested Australia spearhead a significant scale public investment recovery package over the medium term, financed ‘through a mixture of grants and concessional lending through the [Australian Infrastructure Financing Facility for the Pacific]’.
2.43
Professor Richard Herr suggested a recovery option in the region which focussed on infrastructure investment utilising local input:
Make close consultation on localising plans and using local labour an essential focus of development plans.
2.44
The COVID-19 ODA response has led to a redirection of $205 million from existing development funding to Pacific and Timor-Leste to tackle the pressing needs of the ‘COVID recovery’. However, it has also meant that:
Some of Australia’s Step-up initiatives and other programs have had to be reoriented and adapted to address the priority needs of Pacific communities in this changing environment.
Committee comment
2.45
The Committee notes the significant impact COVID-19 is having on the health and economies of the Pacific islands region and recommends that COVID-19 response and recovery for the Pacific islands remains a key commitment in Australia’s development assistance program.
2.46
The Committee recommends that Australia builds on the Partnerships for Recovery to lead a large-scale, multi-year post-COVID-19 aid and recovery package within the Pacific islands region, focussing on transformative public investment through grants and concessional lending.
Framework for strengthening relationships
2.47
The Committee received an assortment of views on the Government’s development assistance approach in the Pacific islands, with some input on more specific aspects of development partnerships.
2.48
The Whitlam Institute’s Pacific Perspectives report highlighted the key messages which emerged from its research about building good relationships with the Pacific island region. The report distilled key Pacific islander views about fostering relationships with the region:
That quality relationships matter more than quantities;
That values, norms and ways of doing things matter; and
Australia is one of many potential relationships for Pacific islanders.
2.49
Point three above highlights the rising recognition in the Pacific island region of its own geostrategic significance which is ‘giving them more urgency and more confidence in working with international partners, chiefly other Pacific states, Australia, New Zealand and China’. The Pacific perspectives research was ‘motivated by a sense that, despite Australia’s Pacific Step-up, Australian engagement and investment across the region was not hitting the mark, particularly in the context of the rise in global interest in the region’.
2.50
At the Committee’s Pacific diplomatic roundtable the New Zealand (NZ) High Commissioner to Australia, Her Excellency Dame Annette King, explained NZ’s version of Step-up—‘Reset’—which similarly recognises the contested space in the region, and the need for a new mode of engaging:
To reinforce this, the Reset is underpinned by some key principles of engagement in the Pacific—understanding, friendship, mutual benefit, collective ambition and sustainability. We think it's important with this new approach because it also responds to the increased geostrategic competition in the Pacific.
2.51
Mr Pryke from the Lowy Institute emphasised how supporting the development of many Pacific island countries does not mean adhering to conventional channels of development:
…many of these Pacific countries are not going to follow a traditional economic development pathway. There are severe structural limitations around size and remoteness such that they can’t go from an agrarian society to an industrial, export-driven, service-model economy. It’s not going to happen.
2.52
Professor Howes made a similar comment regarding the Pacific islands’ development being unique:
I think budget support in general does make sense for the Pacific, because at least parts of the Pacific are always going to be dependent on aid. This is not like an Asian story where you can see that countries are going to graduate as Malaysia and Thailand have, and no doubt Indonesia and Vietnam will one day.
2.53
Mr Pryke explained that different countries have different priorities and as a result of this diversity some expenditure choices may not always seem ‘the most economically viable investment’ but that this approach is:
I think, the only approach to work in genuine partnership with these countries, through trust funds and through budget support.
2.54
Mr Pryke elaborated to say that, as a result, some risk is inherent in the lending approach that is required on Australia’s behalf where lending forms part of development assistance:
The reality is that, in those countries, aid is a structural component of economies and government revenue. That's the right approach.
2.55
Opportunities to strengthen relationships, given through this feedback, have been noted by the Committee and the key areas are identified in this chapter. These have been collated under the three ‘Blue Pacific’ aspirations which the Step-up objectives mirror (also aligned to the Partnerships for Recovery policy objectives):
Prosperity and sustainable economic development—(including trade, education, employment, infrastructure and investment);
Shared security and stability—(including climate and disaster resilience food, resources and energy security, governance and capacity building); and
Deepening people to people connections and inclusiveness—(including through churches, sporting linkages, civil society, the Pacific diaspora in Australia, depth and breadth of media presence in the Pacific and reciprocal cultural understanding).
2.56
The Committee has considered aspects of these three key areas in more detail in Chapters 3, 4 and 5, sequentially mirroring the Step-up objectives. Areas of focus considered by the Committee were those considered particularly pressing and which could be practically and feasibly implemented within foreseeable timelines.