The ASX closed near lows today, down 2.08% on lower-than-normal volume. All sectors were lower, with Materials taking a particularly big hit of 5.10%, and Industrials dropping the least with a 0.67% slide.
The Australian Labor Party has committed to boosting foreign aid to the Pacific by $525 million in an effort to strengthen Australia’s diplomatic and strategic relationships in the region, following widespread controversy about a security deal signed between China and the Solomon Islands.
Unveiled by Shadow Foreign Minister Penny Wong, Labor’s seven-point plan involves establishing a Pacific climate infrastructure financing partnership, addressing economic challenges in the Pacific and improving Australia’s agricultural worker shortage with changes to the Pacific Australia Labour Mobility Scheme’s Seasonal Worker Program.
The party is pledging to ramp up patrols to fight illegal fishing, boost regional broadcasting and “listen and act on Pacific island warnings of the existential threat of climate change”.
The latest in a slew of policy announcements, Labor has taken full advantage of the tensions generated from the Solomon Islands-China deal to criticise the government, claiming the new funding would "address the decade worth of development gains that have been lost due to the pandemic and Coalition cuts".
"We will work with our Pacific family to support specific projects that deliver real change in areas of health, economic growth, education, climate change adaptation and resilience," Senator Wong told reporters in Darwin.
Prime Minister Scott Morrison was unimpressed, taking aim at Labor’s promise to boost funding to the ABC in an interview with 2GB.
"They think the way to solve the problem with the Solomon Islands is to send in the ABC," Morrison said.
"I mean, it's farcical when their answer to solving the Solomon Islands program is to have Q&A in Honiara.
"I don't think that's a true reflection or an understanding of the challenges that we face. No Australian government has stood up more firmly to the Chinese government's coercion of our region and Australia and our government will keep doing that."
Those claims ring a little hollow given the US recently attempted to intervene in the Solomon Islands security deal and was unsuccessful in preventing it, although Prime Minister Morrison says that Solomon Islands Prime Minister Manasseh Sogavare has made assurances the island nation will not allow a Chinese military base.
China denies plans
China has again rejected speculation that Beijing intends to create a military base in the Solomon Islands following a security agreement between the two nations.
"The so-called Chinese military base in Solomon Islands is completely fabricated with disinformation by a few people with ulterior motives," China Foreign Ministry spokesperson Wang Wenbin told a news briefing on Monday.
While there is no mention of a permanent military presence in the security deal draft – which was leaked online last month – China does reserve the right to stop at Solomon Island ports for logistical replenishment.
More concerning, the draft document contains provisions for Chinese military and police intervention in the Solomon Islands.
Australian defence forces have historically served in a peacekeeping capacity for the island nation, assisting the local forces in maintaining calm during periods of unrest or crisis.
More than 200 ADF and police troops were deployed last year at the Solomon Islands’ request during protests in the capital of Honiara.
Protesters demanded the resignation of current Prime Minister Manasseh Sogavare, believed to be prompted by a 2019 decision by Sogavare’s government to switch diplomatic allegiances from Taiwan to China.
In hindsight, this controversial security deal is perhaps not entirely surprising.
The US has urged the Solomon Islands not to allow a Chinese military base in the country, offering an ambiguous warning that it would "respond accordingly" to any steps in that direction.
China Foreign Ministry spokesperson Wang Wenbin was unimpressed, criticising the secrecy around the recent AUKUS security deal.
"I note that the US and Australia have accused the framework agreement of China-Solomon Islands security cooperation of lacking transparency, but the trilateral security partnership between the US, UK and Australia (AUKUS) is precisely a backroom deal that is not open or transparent," he said.
"We are wondering when the US, UK and Australia will submit this partnership to regional countries, including the South Pacific Island states, for consideration?"
On the small cap front
Strickland Metals Ltd was up 5.97%
Oar Resources Ltd was up 5.88%