Why Australian aid’s infrastructure fixation won’t be a boon for the Pacific

Author: Terence Wood, ANU

The need for infrastructure in poorer parts of the Pacific is obvious. Outside of urban areas, once-paved roads are now muddy tracks. On some islands, planes land on grass runways that are frequently closed by rain. In some places, small boats take hours to move cargo from ships moored off coasts deprived of wharves.

Australia has always devoted aid to the Pacific’s infrastructure needs. In 2013, a recent low point, Australia still spent US$70 million on infrastructure in the region. Other OECD donors haven’t neglected infrastructure either. OECD donor countries, alongside multilateral institutions like the World Bank, spent US$327 million in the Pacific in 2013.

The infrastructure focus of Australian aid to the Pacific is set to ramp up in coming years. This will come through grants — how Australia typically gives aid in the region — and, increasingly, through the provision of loans.

Infrastructure is needed in the less affluent Pacific countries. But Australia’s newfound fixation on infrastructure spending is not guaranteed to be beneficial. There are two reasons why: recipient context and donor motivations.

Aid is never guaranteed to succeed and tailoring aid to the recipient’s context is crucial. It is hard to spend aid successfully on infrastructure in poorly governed countries, such as Papua New Guinea and the Solomon Islands, the two largest Pacific recipients of Australian aid. Unclear property rights and governments too weak to exercise eminent domain make new infrastructure projects difficult.

Such challenges have hampered the development of the Tina River hydroelectricity project in the Solomon Islands, to give one example. It is also hard to get governments in poorly governed states to play the crucial role of maintaining infrastructure. Part of the reason why roads are in such a bad …continue reading