Australia says PNG asylum solution having an effect

Australia's new policy of resettling refugees in Papua New Guinea was already deterring boatpeople, the government said Monday as Prime Minister Kevin Rudd attacked people-smugglers as "merchants in death".

Rudd, facing an election this year, announced Friday that all asylum-seekers who arrive by boat will be sent to poverty-stricken PNG even if found to be genuine refugees under a deal signed with its Pacific neighbour.

Immigration Minister Tony Burke said indications showed the plan was already having the desired impact of stopping unauthorised boats, many of which have sunk en route in recent years, drowning hundreds of men, women and children.

"It's already having an effect," he told the Australian Broadcasting Corporation, adding that boats that arrived in Australian waters over the weekend had left prior to Rudd's announcement.

"We've seen the reports on the ground, both from people-smugglers... we've heard reports from people who've been considering getting on boats."

The immigration department said 81 Iranians who arrived over the weekend had been told they would not be resettled in Australia, and a number made clear they would not have made the trip if they had known of the new arrangement.

However, the tightening of Australia's approach to asylum-seekers has not entirely stopped the boats arriving.

Authorities were Monday called to search for a 12-metre Indonesian fishing vessel carrying about 30 people feared missing north of the Indian Ocean territory of Christmas Island.

It was later spotted from the air about 20 nautical miles northwest of the island and intercepted by a navy vessel.

Rudd, who was targeted by protesters bearing placards such as "No offshore processing" and "Refugees are welcome" outside a Labor meeting in Sydney, acknowledged the new policy concerned some members of the party.

"My response... was that our challenge here is to deal a fatal blow to the people-smuggling industry long-term," he told reporters.

"And you can't do that unless you go to the core reason this industry exists, which is... them offering people around the world the prospect of coming here to live."

Rudd, who dismantled the previous conservative government's hardline immigration policy after first coming to power in 2007, said the new response was ethical.

He highlighted drownings at sea, the proliferation of the industry and the fact that people languishing in refugee camps overseas were not being given a fair chance of resettlement in Australia.

"We have an ethical responsibility to look after people wherever we can, and that means that when people come to our shores, we look after them humanely, and through this approach (with PNG), we are doing precisely that," he added.

Australia, one of the world's biggest resettlers of refugees, currently takes an annual quota of 20,000 but this figure is being overwhelmed by those coming by boat, with more than 15,600 arriving since January 1.

Rudd said the possibility of raising Australia's refugee intake to 27,000 was still on the table, but he was signalling to people-smugglers that "your business model is busted".

"These folk are merchants in death and their business model needs to be dismantled, part of this policy response is to do just that," he said.

Anxious to stop the flow of unauthorised arrivals, Australia began sending asylum-seekers arriving by sea to remote Pacific camps on PNG's Manus Island and the small state of Nauru last year for processing.

The new policy means they will still be sent to PNG, but they will have no prospects for resettlement in Australia.