Offshore refugee processing funding allegations: How did we get here?

Jul 28, 2023
Refugees on a big rubber boat in the middle of the sea.

The Sydney Morning Herald and The Age have published serious allegations about millions of dollars of Australian government funding for Offshore Processing Centres finding their way through contractors to bank accounts controlled by South Pacific politicians. This comes on top of a history of criticism by the Auditor-General on how providers were selected and contracts managed by the Department of Home Affairs. The blocking of the Labor government’s “Malaysia Arrangement” by the Coalition and the Greens in 2011 was the strategic turning point that sent governments down the pathway to this sad destination.

When the Rudd Labor government came to power in 2007, the flow of maritime asylum seekers to northern Australia had ceased and it fulfilled its pledge to abolish the Howard government’s “Pacific Solution”. That meant if there was any resurgence of smuggled boat arrivals there would not be boat turnarounds at sea to Indonesia or use of the Offshore Processing Centres in Nauru or Manus Island, which had been heavily criticised as dangerous and inhumane at the time.

In the event, after a period without boat arrivals, people smugglers in Indonesia gradually started renewing the flow of asylum seekers to Christmas Island and northern Australia.

It was clear at the time that there would not be community acceptance of large, renewed flows of people coming to Australia irregularly in this way. The Labor government looked for answers that were more humane than turning boats around at sea or consigning asylum seekers to Nauru and Manus for years.

The Malaysian Government expressed a willingness to help. An “Arrangement on Transfer and Resettlement” negotiated with them provided for maritime asylum seekers (the majority of whom were transiting Malaysia on the way to Australia at the time) to be returned to Malaysia by air and to have their future resolved there. Asylum seekers transferred to Malaysia would have access to refugee determinations by the United Nations High Commissioner for Refugees (UNHCR) and international resettlement opportunities (but not in Australia) if they were found to be refugees. They were to be able to live freely in the community as opposed to the detention involved in the Pacific solution. There would be some access to work opportunities and education for children. The arrangement was considered broadly acceptable by UNHCR. As a gesture of good faith, the Australian government agreed to resettle a considerably larger number of refugees already in Malaysia who had not attempted to come to Australia by sea.

The expectation was that maritime asylum seekers would no longer pay for passage from Indonesia to Australia if transfer to Malaysia was the automatic outcome.

The corruption risk of Nauru and Manus did not exist because, with asylum seekers living in the community in a major city, there would be no large Australian contractual presence delivering billions of dollars of (so called) garrison services, security et cetera.

The Malaysia Arrangement was never implemented. It ran into legal difficulties. It was opposed by community organisations who wanted free access of maritime asylum seekers to Australia. A bizarre alliance of the Coalition and Greens (think of the current housing fund legislation) blocked legislation that would have enabled it to proceed.

As the numbers of maritime asylum seekers rapidly grew, there was now intense political pressure on the Labor government to resume use of the key elements of the Pacific solution, including use of Offshore Processing Centres in Nauru and Manus.

The Gillard Government-commissioned Houston Expert Panel on Asylum Seekers effectively re-validated the use of the Nauru and Manus Offshore Processing Centres. Labor reluctantly went down the path they had previously rejected.

But things had changed since the Howard government.

Under the Pacific Solution, the Offshore Processing Centres had been managed by the International Organisation for Migration (IOM), a highly reputable multilateral organisation with extensive experience in managing migration related services across the globe. As such, it had the capacity to offer a fair degree of resistance to efforts to “cash in” on funds flowing to the centres. However, the IOM suffered reputational damage, including criticism from member states and non-government organisations, for its involvement in the centres and made it clear that it would not continue running them.

With the U-turn to offshore processing centres in 2012, that left Labor, briefly, and subsequently the Coalition, with the need to engage purely profit driven organisations with no truly relevant experience. The amounts on offer were to run into billions of dollars.

The situations in each of Manus and Nauru were different, but there were troubles from the outset and a parade of contractors. Management of the centres was also going to be more difficult because the Coalition government was not offering the relatively quick resettlement pathways for refugees out of the centres, including to Australia and New Zealand, which had been offered under the Howard government.

Early contractors included G4S, Wilson security and Transfield/Broadspectrum, the latter two withdrawing from the role in 2017, reportedly as a result of reputational damage.

Contracts then went to less well-known organisations such as Paladin and Canstruct. Arguably, they all were a great deal more susceptible to pressures than IOM. No doubt the National Anti-Corruption Commission (NACC) or the AFP will look into the allegations.

But the sad reality is that the Labor government has no real alternative to managing any future maritime asylum seekers through boat turnarounds and the unsavoury backup of the Nauru Offshore Processing Centre. Finding non-controversial contractors to maintain facilities will remain difficult as well as avoiding attempts from individuals to cash in on the large funds flowing to the remaining contingency centre on Nauru.

Nothing like the missed opportunity of the “Malaysia Arrangement” is likely to present itself again. Nor will the holy grail of genuine regional responsibility-sharing arrangements for management of forced migration in the region, although organisations like ASEAN or the Bali Process could play a part if there was a political will to do so.

It is a positive that a mainstream media outlet has publicly exposed these issues.

For a couple of decades the mainstream media has had difficulty moving beyond individual “scandals” to joining the dots to identify underlying strategic issues.

For that reason, they missed the strategic significance of the “Malaysia Arrangement” and the consequences of its being blocked, falsely credited the Morrison government for “stopping the boats”, were unable to focus on the resolution of the legacy asylum seeker caseloads in Australia and the regional processing centres, the regional and global explosion of forced migration or the fact that the Australian immigration system as a whole was “broken.”

Once again, media revelations suggest that the Department of Home Affairs’ record is not looking too good. Perhaps it is also time for the mainstream media to focus on whether experience has shown that the massive Department of Home Affairs construct, with its overwhelming focus on security matters, can possibly run Australia’s immigration functions with all their complexities or whether this is better left to a freestanding Department of Immigration.


The repeated lie that Morrison stopped the boats. An updated repost from March 11, 2021

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