Australia’s offshore processing regime on Nauru will cost taxpayers nearly $220m over the next six months as it holds 107 people on the Pacific island.
Brisbane firm Canstruct International has been awarded a new extension – its eighth non-competitive contract extension – for $218.5m to provide six months of “garrison and welfare services” on Nauru. The company’s total revenue from island contracts over the past five years now totals more than $1.8bn.
It currently costs Australian taxpayers more than $4m a year to hold one person within the Nauru offshore regime – a little over $11,000 per person per day.
The government’s latest figures, revealed in Senate estimates, stated 107 people – 81 refugees and 26 asylum seekers – were still held on Nauru.
The 81 refugees have had their claim for protection formally recognised. Australia is legally obliged to protect them and they cannot be returned to their home country because they face a “well-founded fear of being persecuted”.
While no new asylum seeker arrivals have been sent to Nauru since 2014, the regime continues to cost Australia between $35m and $40m a month on average, the same amount it did when the detention centre held more than 1,000 people.
Canstruct’s tenure on Nauru has attracted significant regulatory and parliamentary attention.
The October 2017 “letter of intent” awarded to Canstruct International was worth $8m. Less than a month after this was signed, the company won a $385m contract awarded by limited tender, meaning there was not an open and competitive process to secure the initial contract.
The auditor general criticised the process, saying “it is not clear why the department could not have secured a replacement supplier using a more competitive procurement method”.
Since then, government figures show eight further amendments, all uncontested, have escalated the total cost to $1.82bn.
Questioning before the Senate has revealed other significant irregularities. The Guardian revealed in November that Canstruct International had just $8 in assets and had not commenced trading when it was awarded the contract.
A government-ordered “financial strength assessment” – conducted by KPMG to test the suitability of the company – was actually done on a different company.
The Canstruct group of companies, or entities associated with it, have made 11 donations to the Liberal National party in Queensland.
Canstruct International said it was contractually restricted from responding to a series of questions from the Guardian about the latest amendment.
A spokesperson for the department of home affairs said the Australian government remained committed to regional processing as a key pillar of Operation Sovereign Borders.
“In support of the government of Nauru’s management of regional processing arrangements, Canstruct continues to provide garrison and welfare services to the regional processing caseload,” they said.
“Australia is working with Nauru to establish an enduring regional processing capability in Nauru.”
The spokesperson said between 2008 and 2013, more than 50,000 people arrived in Australia by boat seeking asylum and an estimated 1,200 people drowned.
“We will never allow this to happen again. Operation Sovereign Borders has built a multi-layered system of: deterrence and disruption; detection, interception and returns, and; regional processing and third country resettlement.”
The shadow home affairs minister, senator Kristina Keneally, said more than four years had passed since the government had handed a lucrative contract to an alleged “shelf company” without a competitive tender and without “conducting basic due diligence on the company”.
“Since then, the Morrison government has had countless opportunities to renegotiate this important contract to get a better deal for taxpayers, or to put the contract through a competitive tender process,” Keneally said.
“Instead, it keeps extending the contract – paying this private company more and more money to do less and less work.”
The former New South Wales auditor general Tony Harris told the Guardian that Canstruct International’s contracts, and the process by which they had been awarded, required further examination.
“We can certainly say that the audit office ought to have commented on the KPMG report assessing the wrong company – the fact that it didn’t report on that suggests that it didn’t see it – that’s a major flaw in the report. But the ‘per detainee’ cost is so outrageous now, the audit office should be doing a report on it.”
Harris said while the audit office was constrained by time and resources, the expense of Australia’s offshore contracts – and their history of cost blowouts – justified further examination.
“I know the audit office has many worthy subject matters vying for its attention, but we have seen with this company and with Paladin [the shelf company awarded the equivalent contract in PNG] that the department has allowed, or been forced into, dealing with companies that have taken full advantage of their monopoly positions at the taxpayers’ expense.”
The Canstruct group helped build the Nauru regional processing centre and Canstruct International took over running the centre from Broadspectrum in 2017.
The Nauru processing centre became an “open” centre in 2015, allowing some movement outside the camp, and all refugees and asylum seekers were physically moved into the Nauru community in 2019. But the 107 refugees and asylum seekers held by Australia on Nauru cannot leave the island.
The processing centre has been plagued by controversy, including reports of alleged violence against asylum seekers and refugees, systemic sexual abuse of children, inadequate medical and psychiatric care, and a spate of acts of self-harm and suicides.
The Nauru files – a cache of leaked internal working documents written by staff and published in 2016 before Canstruct took over operations – detailed reports of alleged sexual violence against children as young as six, assaults, and systemic neglect. Separate statements from senior United Nations officials said the Nauru camp was “cruel and inhuman” and a violation of the convention against torture. Médecins Sans Frontières said the mental health suffering on Nauru was “among the most severe MSF has ever seen”.
