Coalition urged to terminate Canstruct contract to end financial ‘black hole’ on Nauru


The government must end the “moral and financial black hole” on Nauru by ceasing its contract with Canstruct and returning those on Nauru to Australia in the wake of the New Zealand refugee resettlement deal, human rights groups say.

Asked on Friday whether it would end the Canstruct contract for “garrison and welfare services”, which has so far cost taxpayers almost $2bn, the government declined to answer.

But the home affairs department did confirm it is seeking to sign a new deal with private contractors to maintain an “enduring” offshore processing presence on the island.

The vast majority of those on Nauru – there are little over 100 people currently on the island – are now on a pathway to a third country. The Guardian also understands the New Zealand deal to resettle 150 refugees each year, for three years, will prioritise those on Nauru.

Canstruct’s contract is due to expire in June, but the Department of Home Affairs will not say whether the contract will be extended – at a likely cost of hundreds of millions of dollars – until all resettlements are complete.

The contract has so far cost taxpayers more than $1.8bn after repeated extensions.

The last extension, which funded Canstruct’s work from January to June, cost taxpayers $218m.

Amnesty International’s refugee coordinator, Graham Thom, said there was now little sense in continuing to extend the contract, given almost all of those still on Nauru would be resettled in third countries.

He said they should instead be returned to Australia while the resettlement process continued.

“Given that these people, the vast majority now, are on a pathway to a third country, we don’t know why they need to be kept on Nauru,” Thom told the Guardian.

“It seems rather pointless to increase the suffering for those people who voluntarily put up their hands to go somewhere else … why do you need to keep them on Nauru at great expense, when the plan is to ultimately mothball the centre anyway?”

Government figures suggest it is costing the Australian taxpayer more than $4m each year to hold a single refugee or asylum seeker on Nauru, or nearly $12,000 a day.

Canstruct was awarded the Nauru contract initially via a “letter of intent” worth $8m, and was then given contracts via limited tender.

The contract has repeatedly been amended to extend the company’s work on Nauru. Government figures show eight further non-competitive amendments to the contract, raising the total cost to $1.82bn.

Last month, the Guardian revealed that Canstruct, via its holding company, had made a $101m profit in 2020-21 – more than $500,000 for each of the fewer than 200 people held on the island.

Despite the New Zealand deal, the Australian government has signalled it sees a deterrent value in maintaining an “enduring regional processing capability” on Nauru, signing an opaque memorandum of understanding with the Nauru government late last year.

It is unclear whether that enduring offshore processing arrangement will involve Canstruct, but it will require private contractors, and the agreement does allow both countries to “develop confidential subsidiary arrangements to support the effective implementation of this MOU, including funding”.

The home affairs department said its deal with New Zealand “does not signal a change in government’s border protection policies”.

“The Australian government remains committed to regional processing as a key element of its response to maritime people smuggling through Operation Sovereign,” a spokesperson said.

The spokesman said the new arrangement with Nauru will require “regional processing contracts in Nauru” to remain in place.

“On 10 December 2021, the Department released a Limited Tender on AusTender titled, Facilities, Garrison, Transferee Arrivals and Reception Services in the Republic of Nauru.”

“The Department is undertaking a Limited Tender to multiple entities for enduring regional processing capability.”

Senator Jacqui Lambie revealed this week that she had struck a deal with the government to accept the New Zealand resettlement offer when negotiating her support to repeal the medevac legislation in 2019.

The Asylum Seeker Resource Centre advocacy director, Jana Favero, said it was “outrageous” that the contract kept being extended, despite the government knowing refugees on Nauru would be resettled to New Zealand.

Echoing Amnesty’s calls, Favero urged the government to bring those on Nauru to Australia while they were being resettled, allowing it to cancel the Canstruct contract.

“The cost, the harm, the lack of services has been well-documented, so in the face of the New Zealand deal, it shows us it was even more ridiculous,” she said.

“It begs the question why doesn’t the government, knowing the New Zealand deal will go ahead, knowing that most people will be transferred to New Zealand, why they’re not just being brought to Australia before that happens.

“It’s a moral and financial black hole.”

Canstruct declined to comment, citing contractual obligations.

The home affairs department did not respond to requests for comment.