PNG, Indonesia speak out about reintegration

THE two biggest recipients of Australian aid were relaxed yesterday about moving AusAID back to the Department of Foreign Affairs.

THE two biggest recipients of Australian aid - Indonesia and Papua New Guinea - were relaxed yesterday about the reintegration of AusAID into the Department of Foreign Affairs and Trade.

PNG Prime Minister Peter O'Neill threw his support behind the decision announced by Tony Abbott on Wednesday.

"We have made known our disappointment with aspects of AusAID's operations in PNG for some time," Mr O'Neill said.

"We are confident the changes Prime Minister Tony Abbott announced will address them, and his government will have our full co-operation in doing so."

A spokesman for the Indonesia embassy in Canberra said the administrative route through which the aid was derived within Australia was "something for the Australian government to decide".

"We appreciate Australia's aid, we certainly do. The thousands of schools that benefit help tens of thousands of families and hundreds of thousands of Indonesians, some of whom might otherwise have gone into a life of crime -- or burned forests," the spokesman said.

PNG will receive $507 million in Australian aid this financial year and Indonesia $647m.

AusAID has a budget up to five times that of DFAT's, and even after $656m has been trimmed by the new government from its $5.66 billion budget it will be one of the country's biggest spending agencies.

Robin Davies, associate director of the Development Policy Centre at the Australian National University, said for the past 40 years, AusAID - in various names - has had a separate identity, usually with its head reporting to the foreign minister on policy and to the DFAT secretary on administration.

Harold Mitchell Foundation executive director Stephanie Copus-Campbell said since AusAID reached its highest level of independence in 2010, it had been subject to the most political interference.

The former head of AusAID's program in PNG cited the campaign for a seat on the UN Security Council driving the extension of aid into Africa and the Caribbean.

DFAT secretary Peter Varghese told staff the restructuring would be led by a taskforce headed by DFAT first assistant Jennifer Rawson.

AusAID director-general Peter Baxter has stood aside and deputy Ewen McDonald has temporarily taken over.