The Papua New Guinea Trade Union Congress has warned of devastating economic consequences if
Australia's annual aid of nearly 240 million US dollars is withdrawn.
The National newspaper reports the TUC general secretary John Paska saying the union did not consider that the issues surrounding the stand-off between the two countries warrant the severing of diplomatic ties.
He says the sugestion that PNG cut Australian aid is ludicrous, irresponsible and completely out of line.
Mr Paska says it is a suggestion coming from people who are not in touch with reality.
He says PNG should have been working hard to achieve economic independence over the last 30 years but this has not happened because of the corrupt and irresponsible behaviour of many of the country's politicians.
He says until such time that PNG is economically independent, it is totally irresponsible for any government to be even thinking about cutting off aid.
Mr Paska says such a move would have a devastating impact on the country's health, education, infrastructure, law and order and rural development programmes.