Flush with Aussie cash, so why is Nauru so poor?
IN the neighbourhood known as Danic Location in Nauru, residents' children play in wrecked cars and wash in algae-filled water pooled outside their homes.
Years ago, when this tiny Pacific Island nation was one of the wealthiest in the world per capita, the suburb was the thriving home of hundreds of workers benefiting from the island's only natural land resource, phosphate.
But the last of the phosphate was scraped away at the turn of century, and these days the country is dependent on foreign aid - including billions poured in by Canberra since 2013 when it began processing asylum seekers who tried to reach Australia by boat.
"Before in Nauru the money came from mining, now the money comes from refugees," said Maruko, who runs a kava bar with her husband in the neighbourhood.
A visit by The Saturday Telegraph this week offers rare insight into life on the isolated, single-island nation where Australia's policy of stopping the boats has resulted in an economic turnaround.
Last year, Australia gave Nauru more than $26 million in aid - equivalent to 25 per cent of its gross domestic product - and will nearly match that amount this year.
Australia's Department of Foreign Affairs says the country of just 10,000 people has near full-employment and it has reduced debt - although it concedes infrastructure, the health and education systems, and public sector management are still lacking.
Visits and interviews with residents this week suggests the economic benefits of foreign aid are not trickling down to all residents.
Rubbish is piled in the streets of Location. Houses made of concrete and tin resemble sheds and have no running water. Land costs and rent are high. Residents complain the health and school systems are poor, and children roam the streets with rotten teeth.
One local who asked not to be named said he was paid just $6.50 an hour to work in security at one of the three refugee processing centres.
Still, the resilient residents praise the island lifestyle and their close-knit neighbours.
"It's really hard but I think we're just used to it, and it's a community," said Rose, a young mother, as she held her baby in Location.
"To me it's OK because my husband does fishing and I can sell some donuts. That's how we get by," said another resident, Tasa.
A five-minute drive from Location, representatives of 18 South Pacific nations were feted at their annual meeting this week with dinners and colourful ceremonies, including a 10-minute fireworks display.
Locals were called in from their regular jobs to help provide security for the four-day conference, and road blocks were erected for motorcades on the island's 19km main road.
The Nauru Government would not comment on the cost of the meeting, or the fireworks display.
It did not respond to questions about how much of the Australian money went directly to running the processing centres and how much was left over to benefit locals. Nor did it answer whether there was a plan for ensuring local jobs if the centres close.
Sydney University Pacific expert Prof John Connell said Nauru's limited natural resources left it with few options to build wealth for its people, and the dependence on foreign aid helped drive inequality.
"Nauru is a classic government island. If not employed in the government directly it is indirectly in the services supported by government wages," he said.
Education and Health Minister Charmaine Scotty told the Telegraph the country was rebuilding after an economic collapse blamed on government mismanagement and bad investments in the years after the mining boom.
"(We went) from being a people of more or less carefree, there was always something to buy in the shop, to virtually having nothing," she said.
But the country is improving, she said, citing a turnaround the number of children staying in school as an example.
"One of the things I'm glad to say is that education is finally having some success," she said. "We're finally starting to have that understanding it's OK to stay in school until you're 18."