An Australian human rights activist, Kate Durham, says Australia's policy of detaining asylum seekers and refugees on Nauru has fuelled anti-Australian sentiment among the islanders.
Ms Durham, who has just returned from Nauru, says Australia's policy has led to confrontations between locals and Australians working at the Nauru detention centre.
She also says Nauruans are living in increased poverty because of the decline of public services.
Ms Durham claims this is because the local government focuses on the business of detaining asylum seekers rather than caring for its own people.
"I witnessed violence against Australians with people saying we hate all whites. I saw windscreens smashed and Australians escaping being beaten up all because these people are earning 5-thousand a week to add new elements to these awful camps, while the people there are not earning those wages. The banks are frequently shut, there is a shortage of water, power goes off in the middle of the day, telecommunications is a huge problem."