Australian Economy

Australia must do all it can to help

For many Australians, Sri Lanka is associated with cricket, or conjures images of beautiful beaches, hilltop tea plantations and culinary delights. After 2009, when the almost three-decade civil war ended between the majority Sinhalese and Tamils, the island nation became an economic success story and a popular tourist destination.

That rosy picture has been replaced by confronting footage from the capital, Colombo, of anti-government protesters occupying the presidential and prime ministerial residences after months of demonstrations. Shortages of food, cooking gas, fuel and lifesaving medicine have left many struggling to survive, prompting social unrest and violence brought on by the worst financial crisis the nation has faced since it gained independence from Britain in 1948.

A protester runs for cover after soldiers fired tear gas during street violence in Colombo last week.

A protester runs for cover after soldiers fired tear gas during street violence in Colombo last week.Credit:Getty Images

Much of the blame for Sri Lanka’s economic collapse is being directed at the ruling dynasty of the Rajapaksa family, which has dominated Sri Lanka’s politics for the past 20 years. Brothers Gotabaya and Mahinda Rajapaksa are credited with ending the civil war but faced allegations of human rights abuses at the time.

During Mahinda’s presidency from 2005 to 2015, the nation took on enormous debt to develop infrastructure that, in the main, has delivered little or no economic benefit. China has driven several major projects, such as a barely used new airport in the Rajapaksas’ home electorate of Hambantota and a 269-hectare area of reclaimed land in the capital that was billed as a new financial centre to rival Singapore and Dubai but is still just a construction site. Other poor policy decisions have tipped the country over the edge, as our correspondent Chris Barrett wrote recently, including populist tax cuts that denied the government a quarter of its income, followed by an ill-conceived, overnight ban on artificial fertiliser which drastically cut export income from agricultural goods.

When the pandemic struck, revenue from tourism evaporated and the nation’s economy stalled, leaving it with little means of repaying the $51 billion it owes abroad. The Sri Lankan rupee has plummeted and inflation has risen beyond 40 per cent. With the nation effectively broke, it was no longer able to buy essential supplies such as energy and food.

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While the Rajapaksa brothers have been in and out of power, during the past few years they held the two most powerful positions: president and prime minister. Gotabaya was forced to flee the country this month and stepped down as president after his residence was overtaken by protesters. Mahinda resigned in May as prime minister.

To stave off the worst of the economic collapse, several nations have offered financial aid, including Australia, which gave $50 million last month for urgent medical and food supplies. But it needs to do more.

The Australian Border Force and Sri Lanka’s navy have stopped at least 10 vessels in recent times, as Sri Lankans try to flee the deteriorating financial conditions. Home Affairs Minister Clare O’Neil flew to Sri Lanka last month to meet senior government officials to discuss combating people smuggling. O’Neil said Australia would give Sri Lanka’s navy priority access to fuel and was ready to expand intelligence sharing and border protection assistance, including installing tracking devices on more than 4000 Sri Lankan fishing vessels.

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