Prime Minister Julia Gillard met with PNG Prime Minister Peter O'Neill at Parliament House in Canberra on Wednesday.

Prime Minister Julia Gillard met with PNG Prime Minister Peter O'Neill at Parliament House in Canberra on Wednesday. Photo: Andrew Meares

Papua New Guinea Prime Minister Peter O'Neill wants an urgent refocusing of Australia's almost $500 million annual aid program, saying there was little to show for the billions of dollars AusAID has spent in PNG since independence 37 years ago.

''We welcome Australia's development assistance to our country, but we want the Australian aid to be more targeted towards the PNG government's own development plans and priorities,'' Mr O'Neill said in an address to the National Press Club in Canberra on Wednesday.

''To effectively deliver on these priorities would require a total realignment of the aid program, from small projects in a diverse range of areas to major infrastructure projects.

''I know there will be some in the aid program who will be horrified by this suggestion. But if we are going to make sure your aid genuinely supports our economic and social development and helps us guarantee our security and stability, we simply must make sure it is more targeted to align with our priorities.

''Our social indicators are still very low … Australian aid is too thinly spread. It has to be more targeted to major infrastructure like roads, airports and ports.'' On the question of asylum seekers, Mr O'Neill said he would like the detainees on Manus Island to be processed ''as quickly as possible, and those not found to be genuine refugees to also be repatriated to their home countries as quickly as possible''.

He also reiterated his government's displeasure with Australian economist Ross Garnaut, saying he was no longer welcome despite his 46-year-long involvement with PNG.

Mr Garnaut, until recently the chairman of PNG Sustainable Development Development Program angered the government with his comment that PNG politicians were keen to get their hands on the program's $A1.3 billion in cash and assets.Mr O'Neill said: ''As leader of the PNG Government, I cannot stand by and let him [Professor Garnaut] get away with saying the wrong things which are not true, which have damaged the reputation of PNG's leaders.''