Australia's Minister for International Development, Concetta Fierravanti-Wells, has fired a warning shot to the region that "aid is not charity" and that taxpayers expect aid expenditure to benefit their own country.
It followed an unexpected request from Australia's nearest neighbour and biggest aid recipient, Papua New Guinea, to convert our $558 million annual aid program to direct budgetary assistance for the PNG government.
As the Turnbull government prepares for a May budget that will again seek to rein in the deficit, Senator Fierravanti-Wells declared a "changing political paradigm" around aid spending, alluding partly to the rise of One Nation.
"There are certain elements of the political spectrum that do not believe that we should be spending money on overseas development," she said in an interview with Fairfax Media.
"We owe it to the taxpayers to ensure that we are spending our aid money in a way that provides a direct benefit to them."
Foreign Minister Julie Bishop said PNG's request would be considered as part of an upcoming review of Australia's aid regime in that country. But Senator Fierravanti-Wells rebuffed the idea, noting it had been rejected previously.
"We will look at that, but suffice to say that in the past this request has been made and in the past this request has not been acceded to," she said.
It is also understood PNG officials were told in no uncertain terms during this month's bilateral ministerial talks in Madang that a return to direct budget support would not find favour with Australian taxpayers or the government.
Australia used to cut cheques to its former colony but abandoned that approach in the early 1990s due to endemic corruption in the nation of eight million people.
The aid budget became a political football under former prime minister Tony Abbott, sustaining a series of cuts which the government blamed on Labor's fiscal mismanagement. Aid spending now lingers just above 0.2 per cent of gross national income, compared to the United Nations' target of 0.7 per cent.
Expenditure is now set to grow at an annual rate of 2.5 per cent and Senator Fierravanti-Wells said, to her knowledge, there would be no change to previous projections in this year's budget.
But she said there were "better ways of doing things", including encouraging innovation and private-sector involvement.
"Aid is not charity. We refer to it as aid but it's actually overseas development assistance. That's what it is - helping countries to develop and to get on their feet and to end up building their own systems," Senator Fierravanti-Wells said.
"The bigger picture is confidence in the system and ensuring the Australian public does understand where their money is being spent, why we're spending it in particular areas and more importantly, what is the direct benefit to the Australian public of that spending?"
Senator Fierravanti-Wells said that while PNG was pulling its weight "in some areas", the efficacy of its co-operation with Australia remained "an issue".
Stephen Howes, director of the Development Policy Centre at the Australian National University and former chief economist of AusAID, said he was open-minded about returning a portion of aid expenditure straight into the PNG government's coffers.
But he acknowledged "concerns about corruption have not gone away", particularly in light of PNG's 2014 decision to abolish a major anti-corruption body.
