I think some people see this number in isolation and don't consider the relevant context.
Foreign aid and development programs are a core part of international diplomacy and geopolitics. In the last 10 years (under both Labor and Coalition governments) Australia has spent a combined total of around $45 billion (with a B) in foreign aid and development programs. Foreign Aid spending as a percentage of Gross National Income has actually been dropping in recent years.
Source:
Trends - Australian Aid Tracker
PNG has a long relationship with Australia but it's naive to think that all foreign aid by all countries worldwide is implemented purely out of the kindness of their hearts... there are usually strings attached, usually for security and business reasons.
If PNG announced tomorrow that they'd signed a security agreement with China... it would possibly mean that China would build a military base/s in PNG on Australia's doorstep. It would then likely follow that they would then be able to control, influence or have preferential access to PNG's large amount of natural resources (at the expense of Australia and Australian companies). There are also shipping lanes and PNG ports that could be susceptible to undue influence (see: Billions of dollars of Australian exports being stranded in Chinese ports in 2020 due to 'administrative decisions').
The Australian government could have changed nothing regarding PNG foreign aid and simply hope the above scenarios don't happen. But the long term benefits to the Australian economy in avoiding these scenarios would be far greater than the $600m total outlay for this project. Given the federal opposition's silence on this issue, I suspect they agree.
Again, the project is not guaranteed to be successful, but that is why the exit clauses are there.