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CANBERRA, Australia (September 25, 2002 – AAP)---Australia on Tuesday warned Papua New Guinea that continued economic and political reforms are necessary if the country is to arrest its steady slide into chaos.

In a new document overhauling Australia's development priorities, aid agency AusAID listed PNG as both its largest assistance partner and its greatest challenge.

With the population of Australia's nearest neighbor set to double to 10 million by 2025, reducing poverty in PNG is a mammoth task, despite Port Moresby receiving more than A$ 300 million (US$ 163,857,000) a year from Australia, the agency said.

"We need to be realistic about our aid involvement in PNG," AusAID cautioned in the document.

"Development outcomes are challenging to achieve and will only be realized over the long term, and only with leadership and sustainable commitment by PNG itself.

"While Australia is ready to play a supportive role, the key to future progress is a continued commitment by PNG's leadership to the recent financial, economic and political reform agenda."

Foreign Minister Alexander Downer told Parliament the overhaul of aid policy would build on Australia's strong development assistance record.

Major successes in recent years, he said, included land mine clearing in Cambodia, Vietnam's continued transition to an open economy with Australian expertise and China's elevation to the World Trade Organization.

"We have helped China's accession to the WTO by training more than 1,700 officials in trade policies and practices that are expected to generate an additional one to two per cent annual GDP growth," he said.

Mr. Downer said in the future Australia aimed to better target aid, while continuing to encourage good governance in problem countries, particularly in the Pacific.

"This does not mean taking a hectoring approach or behaving like a colonial power," he said.

"It does mean supporting efforts to grapple with appropriate approaches to good governance issues and offering incentives for them to do so."

But the Australian Democrats said they were disappointed that the government had not used the opportunity to improve Australia's aid spending beyond 0.25 percent of GDP -- the lowest level in 30 years.

"Australia still fails to meet a United Nations quota of 0.7 percent of GNP for international aid programs," aid spokesman Aden Ridgeway said.

He said many of Australia's aid recipients also had appalling human rights records, while Nauru had received a 195 percent funding boost to take asylum seekers off Australia's hands.

"The Democrats fail to see how this fits in with any goal of promoting sustainable development or good governance," Senator Ridgeway said.

Opposition foreign affairs spokesman Kevin Rudd said Australia should be a world leader in reducing global poverty and should increase its efforts to bring about the UN Millennium Development goals.

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