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The Home Affairs Department paid $80 million to Papua New Guinea’s government to look after the refugees left there when Australia’s offshore processing regime ended, but less than two years later that money has been spent.

Seven service providers to about 60 former Manus Island detainees are now threatening to stop looking after the men entirely, including the Pacific International Hospital, which provides mental and physical health services.

Refugees previously held on Manus Island, now in Port Moresby, in 2019.

A letter from the service providers to PNG’s Chief Immigration Officer, Stanis Hulahau, threatens to stop all accommodation, transport, security, food vouchers and immigration advice to the men from November 23 if the PNG government does not pay outstanding invoices.

The letter says the providers have “grave concerns regarding the ongoing viability” of the country’s refugee humanitarian program.

“We regret the necessity of such action,” says the letter, which was dated last week but only made public on Thursday, “but the many assurances we have received of payment being imminent has not yielded any result.”

The threat comes amid a dispute between Australia’s Home Affairs Department and the PNG government over who is responsible for funding the ongoing needs of the former Manus Island refugees.

The amount paid by Australia has never previously been disclosed, but sources who have knowledge of the details but are not authorised to speak publicly confirmed it was $80 million.

The money is part of hundreds of millions of dollars questionably distributed as part of Australia’s offshore detention program, and the revelation will put more pressure on the Albanese government as it digests a scathing secret report by ex-spy chief Dennis Richardson into the Home Affairs Department’s large-scale mishandling of contracts.

This masthead has already reported extensively on allegations of corruption in the offshore processing system, including that offshore processing contractor Paladin paid millions of dollars to a businessman who was associated with allegedly corrupt PNG officials as well as the Comanchero outlaw motorcycle gang.

In a statement, the Home Affairs Department said the Australian taxpayers’ money had been paid out in full by June 2022 to deal with what it called the “residual caseload” of refugees after the decade-long regional resettlement arrangement with Papua New Guinea formally ended on December 31, 2021.

There are people here who are totally out of their mind, mental issues, and if they kick them out from the accommodation I don’t know where they will end up.

The amount, which was part of a confidential agreement between the two countries, was enough to manage all the individuals in PNG to “self-sufficiency” and the “arrangement does not envisage ongoing funding”, the Home Affairs statement said.

The arrangement, made under former home affairs minister Karen Andrews, allowed “flexible budget management by PNG”, the statement said.

It was sufficient to settle people who wanted to live permanently in PNG or send others to third countries, it said.

A refugee who spent much of the past decade on Manus Island and is now living in Port Moresby said, “I think things will get much worse” if the service providers made good on their threats.

“It is getting very stressful in here,” said the man, who asked to remain anonymous to speak freely about his situation. “Some people are not feeling well. There are people here who are totally out of their mind, mental issues, and if they kick them out from the accommodation I don’t know where they will end up.”

Asked about Australia’s role he said: “I like Liberal because they’re not hypocrites – we know they hate us and do not want to help us. Labor is full of hypocrites. They say ‘we’re humanitarian’, but it’s been a year and we’ve got almost nothing.”

PNG official Hulahau has previously said the money from Australia had run out.

“If Australia wants the refugees to continue to remain in Papua New Guinea, then they have to fund the program, or we will shut the program and send the refugees back to Australia to manage,” he told The Guardian last month.

He has also previously denied there was any corruption in the government program. Hulahau was approached for comment about the latest threat from the service providers.

The Home Affairs statement said Australian and PNG officials were in discussions about the issue.

The hospital alone claims to be owed almost $40 million, and the seven service providers say in their letter they had not been paid since November 2022, only months after Australia says the final tranche of the funds was paid.

Refugee Action Coalition spokesman Ian Rintoul said it was Labor’s responsibility to fix the issue.

“Home Affairs Minister Clare O’Neil must act to provide the funds needed to support Australia’s refugees, even if she has to fund the service providers directly.”

A whistleblower within the PNG Immigration and Citizenship Services Authority recently claimed the residual program, the PNG Humanitarian Program, had been corrupted, prompting the country’s Deputy Prime Minister and Immigration Minister, John Rosso, to order an audit of the authority’s spending.

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