New Zealand Aid to Vanuatu post-cyclones Judy and Kevin. Photo: RNZ Pacific / Hilaire Bule
The New Zealand foreign aid programme is undertaking a line-by-line review of its activities.
It has intrigued academic Terence Wood from the Australian National University's Development Policy Centre, and he has been delving into the possible motivations behind the move.
He thinks the answer is in the May Budget, which shows New Zealand aid spending falling dramatically, by about 35 percent, in coming years.
Wood explained his thinking to RNZ Pacific.
(The transcript has been edited for brevity and clarity.)
Terence Wood: In the May budget, there were some actual stated cuts made to aid, but they were pretty small. It's only when you started to look at the projections for future years that you could see how much larger a fall, and that really had to do with falling climate finance, or at least climate finance that hasn't been budgeted for yet.
Don Wiseman: What are they doing with the climate finance?
TW: It hadn't been put into the budget for future years. At least a large chunk of it hadn't been budgeted for. And so, when you looked at projected aid budgets for future years based on the Treasury documents released on budget nights that had aid set to fall as a result of that.
DW: Okay, the foreign minister Winston Peters, has initiated a line by line review of the aid spending. Is that significant?
TW: Yes, I think so, particularly when you consider that in the past, Winston Peters really hasn't been a details man when it comes to the aid budget, he's the last sort of person you'd expect to initiate a line by line review. The fact that he has really raises the question, or why has he done this?
DW: Yes, although, again, that's possibly a reflection of the approach this government's taken across the board.
TW: Possibly, although Winston Peters rules the roost when it comes to foreign affairs, and so it must reflect either a real change in habits when it comes to Peters engagement with the aid programme, or the fact that there is some pressure, I suspect, on the aid programme to find cost savings, potentially to fund future climate finance promises.
DW: Going back a long way there has been this desire to have point seven of a percent, I think, of GDP as the amount of money a nation puts toward foreign aid. New Zealand got quite high a few years ago. But at the end of this exercise, with these cuts, it's going to be minuscule, isn't it?
TW: It'll be somewhere between point one percent and point two percent and we will be one of the least generous of all the OECD donor countries.
DW: A lot of New Zealand aid goes into the Pacific, and the Pacific has got a whole new focus on it these days, even more so than when Winston Peters was last foreign minister. Cutting the aid budget could potentially substantially undermine all that.
TW: Certainly, if I were the leader of Pacific country, I'd be asking myself what's going on here. New Zealand is proclaiming its friendship with us, and at the same time, it seems as if its aid budget is about to decline, or it seems as if it's climate aid, something that's really important to us in this region, is going to decline. What kind of friend would be doing this?
DW: The latest COP conference is underway right now. We presumably can expect some sort of announcement from the New Zealand government there. What are you thinking might come out of that?
TW: It's kind of complicated, but we make our climate finance promises on a four-yearly basis, and it won't be until the next climate COP that we will be scheduled to make a new promise. I wouldn't expect any big announcements in this year's COP, although it wouldn't be unusual for some sort of small promises to be made, particularly ones to do with the money that is already in the existing budget. It's easy enough to promise money that you already promised, but to do it again in a way that sounds like you're being even more generous than you are, but we'll have to wait until the next COP before we see exactly what New Zealand plans to do with its climate finance in coming years.
DW: I think you've suggested in a recent paper that this line by line review of aid is perhaps an attempt by the government to find some money to fund its climate promises.
TW: Yeah, well, that's one thing you can do, right if you want New Zealand's overall aid envelope to reduce, but at the same time, you want to make some promises to make it seem like you do care about climate finance, one thing that you can do is cut other aid projects, projects that aren't associated with climate finance, and then in their place you can launch new projects which are associated with climate finance. That way, the total amount of climate aid that you're giving doesn't fall, whilst at the same time, your overall aid budget does fall. So you can pay for your tax cuts or whatever.
DW: If New Zealand wants to cut back on some of its aid projects, what do you think they would go for?
TW: Well, I presume that's what the line by line review might be looking for, and who knows what sort of criteria they might be taking into account. They may be looking for underperforming projects that would be a sort of appropriate way of deciding where to close your aid projects. But on the other hand, they might be having a look at individual projects with the future, their geo-strategic significance, and how popular they are in recipient countries. They may just be looking at projects and making decisions on the basis of how easy or how hard they are to operate. That might be another way, and unfortunately, we haven't had enough information put into the public domain that get any sense of the sort of criteria that they might be assessing projects upon.