World Economy

Some infrastructure investments may hurt vulnerable countries, Australian minister warns

Key Points
  • One Australian minister is attempting to raise awareness about the need for sustainable infrastructure development.
  • Speaking with CNBC, Australian Minister for International Development and the Pacific Concetta Fierravanti-Wells said infrastructure investments need to "have a productive outcome."
  • The Australian minister was in the spotlight earlier this year for accusing China of building "roads to nowhere" in the Pacific.
Australia minister: Pacific debts are becoming unsustainable

One Australian minister is raising concerns about the sustainability of infrastructure developments in the Pacific.

Speaking with CNBC's Oriel Morrison, Concetta Fierravanti-Wells, Australia's minister for international development and the Pacific, stressed the importance for infrastructure investments to "have a productive outcome" without imposing "unnecessary debt burdens."

Asked if Australia had aired its concerns to China, the major supplier of loans in the region over the past few years, she said her country works with Beijing in "various overseas development projects," pointing to a tri-lateral program on malaria in Papua New Guinea. Fierravanti-Wells has previously accused Beijing of funding "roads to nowhere."

"It's really important to take into account the vulnerability of Pacific island countries," said Fierravanti-Wells.

While the involvement of partners and donors to the region was welcome, she said, those investments need to examine the priorities of the Pacific and vulnerabilities of particular countries.

From Australia's perspective, Fierravanti-Wells said, it has committed "almost $4 billion" for overseas development assistance efforts in the form of grants that are focused on the Pacific in a "transparent, open manner."

"The issue, as I said, does come down to a general understanding and appreciation, in particularly the Pacific, a region that has a lot of vulnerabilities," she added, noting that small island states in the region are often located in remote locations with limited sources of revenue.

In reality, Fierravanti-Wells said, "it's one thing if it's development assistance in the form of a grant as opposed to a loan because of course loans carry with them terms, they carry with them conditions."