An Australian government minister, Joe Hockey, says Papua New Guinea government's decision to suspend a large Australian assistance programme will only hurt the PNG people.
The PNG government's Chief Secretary, Joshua Kalinoe, says 149 Australian police and civil servants already in the country under Australia's Enhanced Cooperation Programme will be allowed to stay.
But, he says no new personnel will be accepted until Canberra apologises for PNG Prime Minister, Michael Somare's, treatment by security officials at Brisbane Airport on March the 24th.
Mr Hockey says he finds PNG's stance astounding, adding that Australia was not in the business of throwing dollops of money at the Papua New Guinea government.
The Australian opposition says the PNG government should be more concerned with its looming health crisis.
It says Sir Michael's big challenge is what to do with the exploding HIV Aids problem right across PNG.
Meanwhile, a long-time critic in Papua New Guinea of the assistance programme with Australia says PNG leaders who are upset invited the treatment they're now complaining about.
The Morobe Governor, Luther Wenge, says the prime minister, the foreign minister, Sir Rabbie Namaliu, and the Treasurer, Bart Philemon, have all backed Australia's assertion that PNG is a potential terrorist haven.
"Bart Philemon and other senior ministers agreed with the Australians that Papua New Guinea was a terrorist country, then logically, one would conclude that they were saying that everyone in this country was a terrorist and [should] be checked the way they checked the Prime Minister. So, I said, when the Prime Minister was checked and they were crying foul, I said, 'Well, you're the fellow, you invited this."
But, Mr Wenge says Australia is breaching an international convention governing relations between sovereign states and must apologise to PNG over the security row.