Under the plan, which remains central to the new government's strategy, asylum seekers would be processed on Manus Island and resettled in Papua New Guinea.
But video obtained by SBS suggests the government of PNG was telling its own people a different story.
The Labor government had hoped the Manus Island detention centre would be a trump card in the campaign to stop the boats.
"People coming to Australia by boat will be sent to Papua New Guinea and permanently settled there. Paying a people smuggler is not a ticket to Australia," an ad run by the Labor Party before the election said.
But PNG government officials were telling concerned Manus Island residents something different.
"Resettlement does not mean that those found to be genuine refugees will be resettled in Papua New Guinea or they can become citizens at all," PNG government representative Clarence Parisau told a public forum with the Australian High Commission in late August.
"Those who are found to be refugees, they can be sent to another country, a third country. Those who are willing to take them, they can take them," said Mr Parisau.
Australian Deputy High Commissioner Margaret Adamson and a senior Immigration Department official were present at the meeting.
PNG suspended discussions with Australia during the election campaign after cracks emerged in the agreement.
The problem has now landed in the lap of newly sworn-in Immigration Minister Scott Morrison.
The Manus Island detention centre is still a key part of his strategy.
"There are some administrative impediments in the arrangement the previous government had put together with PNG", Scott Morrison told News Limited.
He refused a SBS request for an interview, but yesterday conceded there were some administrative impediments to the former government's plan.
His predecessor says comments made during the election campaign threaten the deal.
"Scott Morrison consistently said there was no agreement from PNG for people to be resettled there. It's now open to PNG to simply say that they agree with Scott Morrison," said Shadow Immigration Minister Tony Burke.
The problem is compounded by concerns over human rights inside the centre.
A resident who lives next door to the centre told SBS an asylum seeker recently attempted suicide in his front yard.
"He put a container above his head and doused himself with petrol. Then he tried to strike the match to cook himself, or burn himself. But the policemen grabbed hold of him," said Manus Island resident Lambert Salvo.
"They took the container and threw it back into my yard and took the man back inside the detention centre,"
There are almost 700 people in detention on Manus Island, and the centre's capacity is expected to be expanded by about 1,200 places in coming weeks.
Manus Island is crucial to the government's plans to stop the boats but it's now shaping up as a potential headache.
