Australia to spend $25 million on infrastructure financing program in South Asia

Australia will spend $25m on an infrastructure financing program in South Asia, entrenching the Coalition’s turn toward challenging Chinese funding.

Australian Foreign Minister Marise Payne speaks to journalists in New Delhi, India. Picture: AP

Australia will spend $25 million on an infrastructure financing program in South Asia, entrenching the Coalition’s turn toward challenging Chinese funding by using its aid program to help build roads and bridges abroad.

Foreign Minister Marise Payne, who is in New Delhi for a regional geopolitical conference, said the initiative will encourage the use of public private partnerships and better governance standards when financing infrastructure.

The United States and Australia have been concerned increased lending by Chinese banks in the Pacific, Southeast Asia and South Asia as part of Beijing’s Belt Road Initiative threaten to pull more countries into its orbit.

The US government has attempted to warn regional countries against Chinese financing by pointing to the example of Hambantota port where Sri Lanka borrowed heavily to build the facility, was unable to repay the loan and then was forced to hand China a 99 year lease in exchange for debt relief.

With Pacific nations also taking loans from Chinese banks, in November last year Scott Morrison said the Australia will set up a $2bn infrastructure financing facility for the Pacific.

Senator Payne in a speech on Wednesday to the conference — called the Raisina Dialogue — said that the program will be about increasing the standards of infrastructure projects.

“A particular aim of the South Asia Regional Infrastructure Connectivity initiative will be to deploy Australia’s expertise in these sectors and leverage our comparative advantage in infrastructure policy and financing — such as in infrastructure financing and public private partnerships,” she told the conference.

“Collectively, we also need to continue our work on maintaining the broader standards of governance which help deliver quality infrastructure, such as fighting corruption and having strong judicial systems and accompanying legal frameworks.”

A government source said the program will not directly fund projects, but will be about advising countries on how to structure deals.

The source said the program will focus on Bangladesh, Bhutan, India, Nepal and Sri Lanka.

Already, according to Austender, the government has handed $117,250 to former World Bank employee and infrastructure finance expert Sanjivi Rajasingham to advise on the project for a year.

They have also given Bluebird Consulting run by development consultant Jessica Kenway a 12 month, $39,059 contract to work on the project.

Senator Payne also touched on Australia’s official-level semi-regular talks with Japan, the US and India dubbed “the quad” and greater co-operation with the Indian Ocean Rim Association.

Australian Chamber CEO, James Pearson, backed the idea of increased funding for regional infrastructure investment.

“Major powers are active in the region. For example, there are already several Chinese Belt and Road projects underway in both Asia and Africa,” he said.

“Minister Payne is right to demonstrate that Australian interests are not only economic but also have national and regional security implications.”

The program will start on July 1 and the $25 million in funding spans four years.