Australian report says Pacific aid fosters corruption in the public sector

An Australian think tank says there is a crisis of confidence in the aid Australia gives to the South Pacific, with growing evidence that aid fosters corruption.

The Australian Strategic Policy Institute says aid planners and deliverers are deeply affected by this crisis of confidence. The author of the paper, Roland Rich, says Australia should use the taxation system to motivate private sector investment in the South Pacific by giving companies a 150 percent tax deduction for work in the region.

Mr Rich, a former diplomat, says Australian aid is not lifting standards of governance, so it is time to take a new approach using private companies.

"What we are seeing in a lot of these countries is a completely skewed sort of economy, very much in the public sector hands," he said.

"And here we have an aid program - and its not just the Australians, but a global phenomenon - aid programs which basically feed into the public sectors of these countries with a little bit going to civil society.

"My contention is what we need to focus on are ways of strengthening the private sectors of these countries, and letting them play the role they must play in a successful society."

Mr Rich says the 150 percent tax deduction must carry conditions so it attracts big Australian companies to the South Pacific, not Australian conmen.

Source: ABC Radio