Political observers are asking if Australian Prime Minister Tony Abbott's decision to postpone his trip to Bali next week is an indication that he is rejecting the olive branch offered by Indonesian President Susilo Bambang Yudhoyono?

He was invited to the Open Government Partnership Conference which would include a Tuesday meeting with Mr Yudhoyono. It would be the first time that the two national leaders would have met after the spying scandal that broke out the past few months in which Australian spy agencies were caught wiretapping the mobile phones of the Indonesian president, his wife and some cabinet members.

Canberra said that Mr Abbott postponed the trip to Indonesia because the federal government is in the final stages of budget preparation and had to deal with the Commission on Audit report released on Thursday.

A spokeswoman for Mr Abbott, said, quoted by The Sydney Morning Herald, "he Prime Minister is grateful for the invitation. Unfortunately the Prime Minister is unable to attend at this time and he hopes to visit Indonesia to meet with the President at a mutually convenient time."

Australian newspapers, however, link the decision to the interception of the first asylum seeker boat spotted between Ashmore Reef and Java which was intercepted by the Customs bureau of Australia on Friday. The boat's passengers include 11 women and 13 children.

A spokeswoman for the Indonesian president said Mr Yudhoyono was not offended by Mr Abbott's decision and added it would not affect the ongoing negotiation to craft a code of conduct in the light of the spying scandal.