Foreign Minister Kevin Rudd said on Thursday he had advised his PNG counterpart Sam Abal of the government’s decision to make big cuts in the ranks of the 487 Australian advisers working on PNG aid.

He said a review of the PNG-Australia Development Cooperation Treaty had found ‘widespread dissatisfaction with the aid program’ and the ‘capacity building through advisers model is not working’.

A string of negative reports about Australia’s PNG aid program have pointed to a pattern of waste through spending on consultancies and training, as well as exorbitant salaries.

In June, it was revealed that one aid adviser working in PNG was on a package of $55,000 a month. However, Mr Rudd did not provide details of which positions would be axed.

‘The review considered 487 positions. An outcome of this review is that PNG and Australia have now agreed that over one-third of positions will be phased out within two years,’ Mr Rudd said in a statement.

But the foreign minister said building up skills in PNG would be a high priority for Australia over the next decade, particularly as revenues from a liquefied natural gas project would boost the economy and require a skilled workforce.

Australia remained committed to assisting PNG with the effective delivery of the LNG project, and it would continue to work with the PNG government on addressing some immediate capacity gaps.

‘The Australian government is committed to strengthening the aid program and ensuring value for money across all the development assistance programs,’ Mr Rudd said.

Similar reviews were aimed at cutting waste in aid to East Timor, the Solomon Islands and Vanuatu, he said.

Jenny Howard Jones from the Sydney-based Lowy Institute said the sharp cut in the number of technical advisers was a positive move in a prickly situation between PNG and Australia.

‘Capacity building is still needed in PNG by all means, but the issue has been the proportion of aid to technical assistance,’ she said.

‘Both sides were frustrated with years spent on capacity building with little to show, and now with the doubling of Australia’s aid budget there will be greater scrutiny from parliament and the taxpayer to see value for their aid dollar.’

Assistance in areas likely to bring direct benefits, such as the massive ExxonMobil Liquefied Natural Gas project, was potentially a more effective use of advisers, she said.

Gary Lee of non-government organisation AID/WATCH said aid delivery still posed many problems.

‘We have been highlighting problems with the commercialisation of the aid budget and the over-reliance on technical assistance, which has contributed to much of aid money ending up in the hands of Australian contractors and advisers,’ he said.

Australia’s Overseas Development Assistance (ODA) will increase from $4.3 billion this year to $8.6 million by 2015/16, reaching a projected 0.5 per cent of gross national income.

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