Wed, Sep 05, 2018 - Page 13 News List

Nauru: From riches to rags

The once-wealthy island now barely survives on income from Australia’s detention regime and is pinning its economic hopes on undersea mining

The Guardian

Only part of that flowed to the economy of Nauru, as many of the functions needed to keep the reprocessing centers running are provided by fly-in-fly-out Australian firms.

But there are benefits. The Nauru government is paid resettlement fees, reimbursements towards the cost of its public services, jobs for locals and increased economic activity.


That now raises the difficult question of what happens when Australia leaves.

The dependence of Nauru on Australia and its offshore detention policies is revealed in Nauru’s own budget papers for 2018-19. Australia is responsible for directly providing at least two-thirds of Nauru’s revenue, which last year was US$167 million. It reported a balanced budget in 2017-18, spending all but a tiny slither.

Australian aid makes up a big share: US$26 million in 2018-19, even as Australia has sought to prune its aid spending overall. This is despite the Department of Foreign Affairs’ own assessments for 2016-17 that the core programs in education and health are failing to meet benchmarks.

The assessment on health slipped from amber to red.

But there are also big licks of money coming from visa resettlement fees (US$21 million), reimbursements to Nauru’s department of justice and border control (US$8.2 million), and fees to the Nauru Regional Processing Center corporation (US$14 million), which provides local staff.

Australians coming and going from the island have breathed new life into Nauru Airlines, the only way to reach the island, while port charges are up and a major upgrade of the port, funded by the Asian Development Bank and Australia, is under way.

Government spending has tracked up at the same pace as revenue, leaving the island vulnerable to a sudden change in circumstance. The Nauru government knows that the boom is coming to an end.

“Uncertainty remains regarding the numbers of refugees remaining on the island and the operation of the regional processing center,” the budget papers say. It is forecasting a 3 percent contraction this financial year.


In the short term, Nauru might get a bigger slice of the pie as Australian companies leave and hand over to the Nauru Regional Processing Center Corporation in October.

But after that the future is precarious.

Most of the utilities, mining and even the shops and supermarket are controlled by Nauruan state government companies that did not file financial statements in time for the budget papers, so it’s hard to say what shape they are in.

Eigigu, which runs the supermarkets, hotels and shops, is in dispute over its hotel in the Marshall Islands, which is closed.

Mining of remnant phosphate deposits has slowed to a dribble. Nauru Rehabilitation Corporation (NRC), which took over mining operations in the last few years, is handing it back to Ronphos, the government-owned phosphate company, from July 1.

In 2018-19 it is budgeting on making just US$22 million from phosphate but will spend US$27.5 million mining it, the budget papers say. The deficit is being funded by a loan from the Taiwanese government and only a quarter of the new equipment needed has been purchased.

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