NZ’s aid 'true agenda' faces probe

By Megan Anderson: Pacific Media Centre

As Foreign Minister Murray McCully’s controversial reviews into NZAid are completed over the next month, questions are being raised over the true agenda of New Zealand work in the Pacific.

McCully has ordered two reviews into NZAid – one by the Chief Executive of Foreign Affairs, and another by the State Services Commissioner – in response to what the minister’s spokesman, James Funnell, says was “part of National’s election policy”.

The reviews have been criticised by non-government organisations, development studies academics and political observers as too hasty, too vague, too secret, and lacking the expertise needed for the complicated issues at stake.

Professor Crosbie Walsh, former director of development studies at the University of the South Pacific, says the minister and many advisers “know next to nothing about the countries to which New Zealand gives aid”.

Oxfam executive director Barry Coates says one of the main demands of the NGO-supported “Don’t corrupt aid” campaign is to open up McCully’s decision-making process.

Don’t Corrupt Aid is launching an appeal to the public against McCully’s reviews through their website, blog and Facebook campaign.

In late February, the minister expressed his desire to see NZAid make a policy change from the “old mantra of poverty alleviation” to a “clear focus on sustainable economic development”.

He also hinted at structural changes within NZAid and the Ministry of Foreign Affairs, aiming for “a much closer alignment between our aid and development activities and our overall foreign policy goals”.

Political agenda
It has been this, alongside McCully’s plans to change NZAid’s OECD-applauded focus of ‘poverty elimination’ to ‘economic development’, which is raising questions about New Zealand’s involvement in the Pacific.

At present, NZAID spends 53 percent of the overall $480 million annual budget they receive from the government in the Pacific.

Dr Roman Grynberg’s recent controversial comments on the Pacific Islands Forum (which accompanied his resignation as Director of Economic Governance at the Pacific Islands Forum Secretariat) raised a number of concerns on the political agenda of Australia and New Zealand aid.

He says McCully’s proposal to align NZAid closer to MFAT would mean NZaid would increasingly become a political vehicle for government aims.

Dr Grynberg says: “In the past NZ aid policy was seen as more independent than Australia, but if this shift occurs NZ aid will become the financier of other arms of government as Australian aid has become over time.”

“The move of both Australian aid and NZ aid closer to their respective ministries of foreign affairs has meant that both have increasingly become arms of government and part of the 'whole of government approach' to the Pacific.”

Dr John McKinnon, an honorary research fellow at Victoria University (who set up development studies there several years ago) is critical of McCully’s approach to NZAid.
“McCully seems to have a need to flex his muscles but unfortunately most of his muscles are in his head,” he says.

“Why should he be allowed to arrogantly and so hurriedly demolish an agency that has taken more than a decade through careful deliberation to start up?”

Reputation at stake
Dr McKinnon says McCully’s proposed changes to NZAid would do little for New Zealand’s reputation as a leader in government aid.

“I really think NZAid has done a good job in placing itself, as much as possible, outside a political arena and setting its principal goal as poverty reduction”.

“New Zealanders can feel proud of what the agency has achieved in enhancing our national profile as a nation that cares.”

Professor Walsh is less convinced by NZAid’s efforts in the Pacific.

“Poverty is a structural issue that can only be addressed by each Pacific government,” he says.

Professor Walsh says the complicated flow of aid passing from the taxpayer to Island bureaucracies, large foreign-owned firms, NGOs, and “the backflow of aid through the purchase of NZ goods and services and repatriated salaries and profits” make any real positive impact upon the Pacific difficult to come by.

Statistics suggest New Zealanders share Professor Walsh’s scepticism. A NZAid study from July 2007 found that while 76 percent approved of New Zealand government providing overseas aid, “confidence in the effectiveness of overseas aid, whether provided through NGOs or by government, was again limited” (compared to the 2004 study).

Just 39 percent thought New Zealand’s NGOs are helping the impoverished in poorer countries, while only 29 percent were confident in the effectiveness of government aid.

Coates says the implementation of McCully’s mandates would ultimately mean “New Zealand’s reputation will suffer in the developing world”.

Human rights
While Coates says it is important for NZAid to exert some political influence over the Pacific – such as political intervention on the side of human rights, “good governance”, and “getting substantial services to people” – he questions recent government plans to use NZaid money to subsidise Air New Zealand flights between the United States, Tonga and Samoa.

The subsidies would be provided with the purpose of maintaining and strengthening the Pacific trade and tourist link to the United States.

“We think that might be a good idea, but it probably shouldn’t be done from the aid budget,” says Coates.

“It’s all very well to give that sort of support…but that’s not the kind of aid that should be targeted to the poor.”

McCully’s plans to move NZAid towards what he calls a more “hard-headed” economic focus is also calling into question the direction NZAID is heading.

Dr McKinnon says: “Talk of giving priority to economic issues is just another way of saying we should use aid solely for our political and economic advantage.”

One of the reasons McCully gave for the move is the enormous inequality in trade between New Zealand and the Pacific.

Barry Coates calls it “a travesty”.

“There’s a massive trade imbalance,” he says.

While New Zealand exported $794 million to Pacific Islands Forum (PIF) members (excluding Australia) in the year ending June 2008, imports from PIF members totalled at just $237 million, with a trade imbalance of $546 million.

New Zealand exports to Fiji were $337 million, with imports at just $69 million, 0.2 percent of our total imports.

Pacific imports
McCully said last month: “I believe that over time measurable increases in imports from the Pacific will be an important gauge of the effectiveness of New Zealand's development efforts in the region.”

Coates, however, criticises some of New Zealand’s recent moves towards freeing trade with the Pacific. In particular, he highlights the recent Pacific Agreement on Closer Economic Relations (PACER) between the Pacific and Australia and New Zealand, which aims to ultimately establish free trade between all three parties.

“There’s a hard push from New Zealand and Australia for negotiations to start before the Pacific are ready,” says Coates.

Trade Aid general manager Geoff White points to the general murkiness surrounding having economic development as a goal for NZAid.

“While economic development will always be a big part of poverty elimination, unless you have poverty elimination as the focus, economic development can mean anything.”

“We think that aid has to benefit the recipient and not the donor”.

Spokesman James Funnell says people are reading too much into the comments the minister has made concerning NZaid.

On Friday, the Labour Party is due to co-host a summit in Wellington with the Progressives, the Greens, other parties yet to be announced, and NGOs, to discuss the future of NZAid as McCully’s reviews proceed.

Picture: Oxfam's Barry Coates ... trying to open up the decision-making process.

Megan Anderson is a student journalist on the Asia-Pacific Journalism course, AUT University.

Don't Corrupt Aid
Anzac stranglehold on the 'free' Forum
Crosbie Walsh's Fiji blog