Kiwiblog

The Herald report:

Foreign Affairs Minister Murray McCully has been accused of acting vindictively towards overseas aid agencies which criticised his changes to the direction of the aid programme earlier this year.

Labour’s associate foreign affairs spokesman, Phil Twyford, said funding had been cut to the Council for International Development (CID), an umbrella organisation of aid groups, by $650,000 over the next two years.

However, Mr McCully’s spokesman said Mr Twyford was not correct. No final decisions about the funding had been taken and the figures quoted were indicative at this stage.

I’d ask why the Government is funding the CID at all? Shouldn’t it be funded by its 94 members?

One would think that Labour would support spending overseas aid money on well overseas aid, rather than lobby groups in Wellington.

Mr Twyford said he expected the minister to say that he wanted to spend the money overseas instead of in New Zealand.

“The funding of CID is a tiny fraction of the $32 million NZAID spends each year on aid delivered by NGOs.

“It builds the professional and administrative capacity of the NGOs so they can be more accountable for taxpayer funds.”

The cuts threatened to undermine the NGOs’ efforts to be more effective and accountable, Mr Twyford said.

Don’t you love the double speak here. Twyford (the parliamentary spokesperson for aid NGOs) claims that the taxpayer has to pour money into the CID so that NGOs are more effective. In my experience the removal of taxpayer subsidies is what causes NGOs to be more efficient.

Two good articles on MFAT and NZ Aid. Fran O’Sullivan has a look at MFAT and what the (yet to be announced) appointment of John Allen means. Fran says:

The commission’s panel was encouraged to look at the top MFat job in an “expansive way” and select a new chief executive who could (and this is the most important point) provide leadership for New Zealand – not just the Foreign Affairs Ministry – to help propel a much more aggressive approach offshore.

Fran says it is about getting less silos and better co-operations from not just MFAT, but also NZT&E, Immigration Service, Education NZ, and Tourism NZ.

Meanwhile in the Dom Post, Nick Venter looks at NZ Aid:

He starts with why NZ Aid was made semi-autonomous:

Eight years ago an independent review of New Zealand’s  aid programme raised major  concerns about the way aid  money was distributed.

The reviewers reported that the Foreign Affairs and Trade Ministry, which administered the aid programme, regarded aid as “an instrument of foreign policy”, that almost a quarter of the total aid budget of $250 million was spent on tertiary education scholarships – despite poor completion rates and the failure of many students to return home.

The ministry had used $500,000 of aid money to relocate the Samoan Department of Lands, Surveys and Environment so a new New Zealand high commission could be built, that the ministry used its development agency as a “dumping ground for non-performers” and that there was no “formal documented system of analysis or defined criteria used for determining the annual allocation process”.

McCully says:

“You don’t make changes like this if you don’t have to,” he said. “But in terms of the audit reports that have been brought down and some of the examples that I have looked at, over months now, I made up my own mind that I wasn’t going to carry the can for those things.”

Mr McCully has publicly questioned NZAid’s priorities, the amount of money it puts into “unproductive” regional bureaucracies, the size of its staff (281) and the proportion of the aid budget spent on internal overheads (about 8 per cent), but concern about accountability persuaded him to put it back under the umbrella of the ministry.

He says the agency, headed throughout its existence by former diplomat Peter Adams, wrongly assumed that being a semi-autonomous body entitled it to operate outside the normal state sector controls. “NZAid looked at the word autonomous and ignored the word semi.”

One of the consequences was that NZAid did not tell the ministry things it needed to know, “sometimes involving large amounts of money or serious matters of national interest”.

McCully also seems to think overheads were too high:

Mr McCully said he had also been concerned by NZAid’s response to questioning of its overheads. “I was annoyed to find that we were running overheads that were about 8 per cent of the total budget and that NZAid regarded themselves as being immune from any sort of scrutiny in that respect.

At a time when I was putting MFAT through the wringer, I was being told that NZAid were not open to that degree of scrutiny because we just gave them a bulk number and they decided how much of it was going to be overheads . . . . When I said, ‘Okay, presumably that will go down quite a lot when the budget goes up to $600 million,’ I was told, ‘No, it will go up to 9 per cent.’ I said, ‘How is that?’ They said, ‘That is just what we have decided.’ “

The story also focuses on what the goal should be:

He is also sharply critical of Mr McCully’s decision to abandon the poverty alleviation focus favoured by other Western governments as well as the International Monetary Fund and the World Bank.

“Economic development is an important contributor to poverty alleviation, but it’s a means to an end, not an end itself.

“The key to poverty alleviation is benefiting those most in need. Traditionally the elites benefit when money is pumped in with an economic development focus. You achieve poverty alleviation through investment in education, health, literacy and governance.”

Mr McCully, who has described poverty alleviation as a “rather nebulous concept”, says the success of the new focus will be measurable in, among other things, improved trade statistics.

“It is unacceptable that we should be exporting a billion dollars worth of goods to the Pacific and having empty ships coming back here. It shows that we are spending too much of our money on stuff that might help alleviate poverty this year but it does not do anything about next year and the year after.”

One thing is for sure – all eyes will be focused on NZ Aid for the next few years.

Josie Pagani, a former Comms Manager at NZ Aid, writes on aid politics:

Foreign Minister Murray McCully is close to announcing a u-turn in New Zealand’s aid. He wants to move our aid away from its goal of reducing extreme poverty, back towards a less defined goal of “economic development”.

I would hope the two goals are complementary, not in opposition to each other.

The difference between “poverty alleviation” and “economic development” in some of the poorest countries is not a bright line. How are you meant to set up your own business and trade your way out of poverty when you can’t read and write, and you have no clean water and no roof over your head?

I would advocate that aid which provides shelter, food and water is part of economic development as you can’t have people contributing towards an economy without these things.

This proposed change in our aid represents misguided politics. It has been pitched by Mr McCully as a struggle between the non-government organisations like Oxfam and World Vision, who want the focus to remain on poverty reduction; and those who support business, and economic development instead.

This is a false dichotomy.

It’s true, there is some silliness in the aid community. Some aid experts don’t believe in growth – that’s why you end up with incomprehensible policy areas called “pro-poor-growth”.

This is one of the things I like about Josie – she is willing to concede “silliness” rather than pretend everything is perfect with the status quo.

It took years of political effort to make poverty reduction the focus of aid. The goal holds rich countries accountable.

For example, it stops countries like Portugal or France using aid to protect the Portuguese or the French language in their former colonies. That might be a great idea, but it isn’t aid.

But Mr McCully couldn’t say that encouraging the French language in Cote d’Ivoire isn’t contributing to economic development. The focus on poverty also holds the governments of poor countries accountable for using aid to actually reduce poverty. Signing up to a goal of “poverty reduction” is more likely to prevent the kind of situation in Ethiopia a few years ago – then, Prime Minister Meles Zenawi used funds to set up a trucking business (“economic development”) to deliver food across the country.

The company was owned by his own family, and tended to deliver food only to Zenawi’s home region of Tigray, while other parts of Ethiopia went hungry.

I would hope that NZ Aid wil avoid giving money to corrupt politicians, regardless of its mission. Mind you, in the Pacific it is probably near impossible. I recall the Austrian DFAT briefing that described one Pacific Premier as having a nickname of Mr 10% as that was his cut on all government contracts.

We give aid because we are good global citizens, doing our part to make a difference for the most desperately poor in the world.

Mr McCully should keep the focus strongly on poverty reduction, and keep NZAID as a dedicated agency with an undiluted focus on doing our bit towards that very important goal.

I wonder if there is not some sort of compromise here, such as an aim of “poverty reduction through economic development” as that would cover the Minister’s worry that the cirrent goal is too wide, and also cove the concerns of Pagani and others than not all economic development alleviates poverty?

UPDATE: I should point out (as should have the Herald) that Josie was No 3 on the party list for the Progressive Party at last year’s election.

Denis Welch blogs an interesting reminder:

With regard to the argument over foreign minister Murray McCully’s decision to pull the semi-autonomous NZAid program back under the umbrella of Foreign Affairs, that tinny sound you can hear is Labour being hypocritical in its attacks on the move.

In the course of research for my book on Helen Clark I interviewed Matt Robson, the Alliance MP who was disarmament minister and associate foreign affairs minister 1999–2002. He told me that he and Clark ‘clashed mightily over the setting up of NZAid, to the point of warfare. She backed Foreign Affairs keeping the aid division with only a few minor changes.

So the change was pushed through by the Alliance, and resisted by Labour. Just like Kiwibank which Labour opposed at first.

Various Aid NGOs have set up a campaign website, to lobby against possible changed to NZ Aid mooted by Foreign Minister Murray McCully.

Their website and campaign is called “Don’t corrupt Aid”. That is (in my opinion) a tactical blunder to use such inflammatory language. If they think that will help convince key Ministers.

But regardless of their silly title, what are the issues. There appear to be three:

1. Should the aim of NZ Aid be “poverty elimination” to “economic development”?
2. Should aid policy be independent of foreign policy?
3. Should NZ Aid remain a semi-autonomous body or be fully reintegrated back into MFAT?

Now the NGOs lobbying for their point of view are all massive recepients of funding from NZ Aid, so there is a certain amount of vested interests at work.  And not all aid NGOs are supporting the campaign – I note the Red Cross is not a participant. Anyway to the issues:

Poverty Elimination vs Economic Development

I think this issue is much ado about nothing. Both are about the same thing – helping citizens of less developed countries having a higher standard of living. You eliminate poverty through economic development. No one has ever found any other way to do it.

Murray McCully has said you could throw dollar notes out of a helicopter and call that poverty elimination. Now he never said this is what NZ Aid is doing (his critics who claim this are being dishonest) – he said the goal is too wide, as it would allow that.

So really I just see it as saying we want poverty elimination through economic development.

Some of the NGOs claim economic development will mean the money goes to wealthy elites, instead of the poor. They seem to be caught up in socialist rhetoric.

Aid Policy vs Foreign Policy

Let me let you into a secret. No matter what the Government says publicly, aid policy is always tied into a country’s foreign policy. Look at what AusAid says:

The aim of the program is to assist developing countries reduce poverty and achieve sustainable development, in line with Australia’s national interest.

Why is most of our aid money spent in the Pacific? Because that is where it most serves our national interest. If were not worried about NZ’s national interest, we would then pick the country most in need, and give them 100% of our aid budget. There is a reason we spread it around various countries and regions.

So when the campaign says aid policy should not be “corrupted” by foreign policy, it is nonsense. Every government on Earth “corrupts” their aid that way. Some may not admit it, but they all do. And frankly it is bizarre to suggest we should give money out in a way where we ignore NZ’s interests.

Should NZ Aid remain semi-autonomous?

Here is where I largely agree with the NGOs. I am open to persuasion, but it seems to me you can achive what you want (in terms of new focus) without doing a full merger back into MFAT. I suspect the costs will be significant, it will mean many staff spend all their time on structural and systems changes instead of actual Aid delivery, and may dilute focus.

NZ Aid is not fully autonomous. It’s Director is appointed by the MFAT Chief Executive, and if there are concerns about whether NZ Aid is taking into account foreign policy goals sufficiently – then that can be dealt with by way of instruction and delegations to the Director of NZ Aid.

Having said that, I am open to persuasion, and look forward to seeing what the SSC reviews say are the costs and benefits.

I meant to cover this earlier, and Murray McCully’s newsletter is a good reminder:

Revelations this week that NZAid has provided $121,500 of taxpayers’ tsunami relief cash for the Tamil Rehabilitation Organisation (TRO) raise serious questions about both the aid and security policies of the Clark Government. The TRO has for some time been widely regarded as a funding front for the Tamil Tigers, outlawed as a terrorist entity in most like-minded jurisdictions, but not in New Zealand. The TRO, too, has increasingly been targeted by authorities, and its operations suspended in several countries. So why is New Zealand so far out of step? …

NZAid paid over a cheque for $121,500 in tsunami relief funding to the Tamil Rehabilitation Organisation (TRO) back in 2005. But even then NZAid should have been on notice that the TRO was regarded as a fund-raising front for the Tamil Tigers terrorist activities.

In 2005, the British Charities Commission removed the TRO’s charitable status because it had “not been able to account satisfactorily for the application of funds.” On 1 October 2006, the Swiss Police arrested the TRO Secretary at the French border carrying 18 million Euros in cash, destined for the Tamil Tigers.

It’s nice we can do something for the Tamil Tigers. The spirit of giving.