"The High Commissioner of Papua New Guinea to Australia, today warned Australian politicians to observe international protocols and courtesies when discussing relations with other friendly sovereign nations and not impugn the dignity of our leaders who are attempting to assist Australia in this very complex regional and international issue of Asylum Seekers," the statement said. PNG's Prime Minister Peter O’Neill and Kevin Rudd sign up for the new asylum deal. Credit:Glenn Hunt The media release, issued by High Commissioner Charles W Lepani, did not name Mr Abbott or specify any other politician it was aimed at. But it came after a day of political argy-bargy in Australia over controls on Australia's foreign aid to PNG. The prospect of greater foreign aid to PNG is linked to Mr Rudd's deal, last Friday, to send all asylum seekers who arrive in Australia by boat to PNG. Mr Abbott said on Tuesday the Rudd government appeared to have "subcontracted out to PNG the management of our aid program at least in that country".

"Now it seems we are basically just handing over cash to the PNG government. Australian aid should never be a free gift to a foreign government," he said. PNG High Commissioner Charles Lepani's letter urging Australian politicians to "observe international protocols and courtesies" when discussing leaders of other nations. Mr Abbott's deputy and foreign affairs spokeswoman, Julie Bishop, said PNG Prime Minister Peter O'Neill seemed to believe Mr Rudd had agreed to hand over "absolute and total control to Papua New Guinea". "In relation to the half a billion dollars that is provided to PNG, which is estimated to be $507 million next year, how is that money to be allocated and what say does the Australian government have over issues such as accountability, governance and transparency?" Ms Bishop said on Tuesday. The attack came after Mr O'Neill boasted on Monday that he had achieved a "realignment" of the country's aid program from Australia with the PNG government setting the priorities.

Following the PNG High Commission's statement on Wednesday, Julie Bishop sought to emphasise the Coalition's issue was with Mr Rudd's truthfulness, not with the PNG government. "Our concerns are with Mr Rudd's behaviour and his failure to be open and honest about what he has promised under this arrangement." Mr Rudd confirmed on Wednesday the government would adjust development assistance "to support our friends in Papua New Guinea". But he described Mr Abbott's claims about cash grants to PNG as a "wild political assertion in order to obtain political office". "What he said was that the Australian government was providing unaccountable cash grants to the government of Papua New Guinea," Mr Rudd said during a visit to a Melbourne school.

"That is a bald-faced lie ... Every single dollar that we provide any country in the world through development assistance cooperation is done on the basis of that bilateral agreement, which we monitor the implementation of, to ensure that it is spent on the right purposes: hospitals, schools and the rest." The Australian National University's leading PNG/foreign aid specialist, Professor Stephen Howes, told Fairfax Media's Breaking Politics program it was normal to have dialogue between the country giving the aid and the country receiving the aid. Professor Howes said Australian aid had largely been focused on maintaining existing infrastructure such as roads, but PNG wanted the aid to be targeted towards building new infrastructure. Debate over the PNG deal came as Indonesian authorities searched for survivors after the sinking of an asylum seeker boat off the coast of Java believed to be heading for Australia. Indonesia's Search and Rescue Agency said on Wednesday 161 people were rescued of which 115 were adults and the remainder were children. At least four were confirmed dead. The fatalities are believed to include young children.

Mr Rudd said the tragedy underlined the need for his hardline new policy to deter boat arrivals. Loading Mr Abbott argued Mr Rudd had started the problem by unwinding the Howard government-era Pacific Solution in 2008 and only the Coalition could be trusted to deal with the issue. Follow the National Times on Twitter