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www.mccully.co.nz - 22 February 2008


www.mccully.co.nz - 22 February 2008 (#319)

A Weekly Report from the Keyboard of Murray McCully

MP for East Coast Bays


NZAID Flunks Audit

New Zealand’s overseas aid budget will this year hit $429 million, headed for $600 million in 2010. The critics in the aid community maintain the traditional refrain that this is too little, too late. But recent reports suggest that they would be better occupied focusing on the quality, not the quantity, of the current aid expenditure.

In late 2007, Parliament’s Foreign Affairs Committee commenced its annual financial review of NZAID. Such reviews are commenced with a report from the Audit Office, detailing their findings from the mandatory audit process. And last year’s review, the results of which became public this week, do not make for pretty reading. The Audit Office report identified a litany of serious deficiencies:

NZAID had “entered into contracts for services without having gone through a normal tender process,” had “failed to ensure the agency was not being funded for the same work by other donors,” could not produce “evidence to indicate whether or not NZAID had considered ‘value for money’,” and had departed from “what we regard as good practice around paying only on delivery of services, or, when paying in advance, only paying a proportion to minimise the risk of public money not achieving desired outcomes”.

The Auditors also criticised a lack of “ any provision to retain funds pending successful contract completion”, and identified an aborted contract where no attempt had been made to recover pre-payments.

Asked to explain, the NZAID officials argued that the pace of aid budget increases had given them speed wobbles. In fact, the report was truly damning, its criticisms going right to the heart of the organisation whose role is to deliver the assistance generously provided by New Zealand taxpayers to the intended recipients. And with more taxpayers’ money in the pipeline for next year, the Audit Office identified “major improvements” as being required, “to which the entity should give urgent attention.”

The great irony, of course, is that NZAID sits under the wing of the Foreign Affairs Ministry (MFAT) as an autonomous entity. The Audit report on MFAT itself was positively glowing. So, how could it be that an entity that was part of MFAT, until the current government decided to make it an autonomous being, could attract such a shoddy audit report, when its parent is, we are told, in pristine audit condition? Ammunition, to be sure, for those critics who saw the original split as an expensive exercise in political correctness.

More Critical Reviews

There was more bad news for NZAID last week when the Audit Office produced a performance audit of selected projects currently in the pipeline. The performance audits are part of a programme of regular reviews of government agencies for which the Audit Office has received additional funding.

The Auditors selected a sample of nine NZAID funding arrangements. They found “poor practice in six of the nine funding arrangements.” So, what sort of poor practice did the auditors find? Well, fundamentally poor practice, when you consider the nature of the NZAID work programme:

-“contractors being contracted before a search was carried out on the ACS database.”
- “management of conflicts of interest not being documented.”
-“contractors starting work before a contract was in place.”
-“contracts not being tendered when the contract value exceeded the stated limits.”
-“contractor fee rates increasing during the contract without a clear documented reason for the increase” and
-“contract variations for retrospective funding.”

In any government agency, these findings would be serious. In an agency whose sole business is the efficient administration of $429 million of aid monies annually, they strike at the heart of its reason for being.

NZAID Funds Radicals and Trouble-makers

Like nature’s innocents located at the worldwide headquarters of mccully.co, most New Zealanders will have fondly imagined that the aid monies generously provided by this country’s taxpayers are targeted at improving the lives of the World’s poor and dispossessed. And, at least in part, we would all be wrong. Leaving aside the sneaking suspicion that rather too much of our aid budget ends up indirectly in the hands of NGO bureaucrats, it is clear that some NZAID monies are ending up in the hands of the least deserving.

Take for example the 2002 donation of $2000 from the Council for International Development-administered NZAID NGO Travel Fund to well known leftist Professor Jane Kelsey for the purpose of representing the radical organisation ARENA at “The World is Not For Sale” meeting in Oslo. This was not, in an ordinary sense, a conference, but rather a gathering of extreme leftist forces from around the world for the purpose of disrupting the World Bank conference being held at that time. As a reasonably well-paid professor at a major New Zealand university, it might have been imagined that Ms Kelsey could afford to indulge her left-wing fetishes at her own expense, without stripping funds from the mouths of the World’s starving millions.

An inspection of the list of donations over the years demonstrates a propensity on the part of NZAID to dispense small amounts of taxpayers’ cash to such activists. That the recipients appear to be uniformly of a left-wing persuasion raises questions of judgment about the officials who dispensed the cash. That left wing activists are paying fancy hotel bills with cash intended to feed the World’s poor and hungry is something that must, in due course, be addressed.

Remaining Mysteries

A week of excruciating embarrassment has been endured by our Prime Minister and her Government. She, who last year climbed onto such a high horse on the subject of campaign finance disclosure, has been caught leading a party that misled New Zealanders over a $100,000 loan made by Owen Glenn. Mr Glenn will by now have departed these shores, but one small mystery remains:

In a 2005 interview with “Unlimited” magazine, Mr Glenn made reference to “my friend Bill Lloyd,” with whom he hoped “to build some luxury yauchts up here in Hobsonville.” Mr Lloyd, readers may recall, had been the controversial recipient of assistance from one Jim Anderton in the procurement of Defence land at Hobsonville.

Mr Glenn told his 2005 interviewer that Mr Lloyd had been “badly dealt by” in the matter. “…but it’s all been resolved through the good services of Mike Williams, the President of the Labour Party, who’s done a mammoth job,” said Mr Glenn.

So, just what sort of “mammoth job” was that?

Also intriguing were developments on Thursday when it emerged that Mr Williams had offered to resign as Labour Party President, which is strange.

Mr Williams is a director of Transit NZ, Ontrack (the state’s owner of the rail network), Genesis Energy, GNS Science (a Crown Research Institute) and the Auckland Regional Transport Authority – all of them public bodies.

Now it wasn’t Ms Clark that Williams misled over the Glenn loan – she knew all about it. It was the New Zealand public he misled. So surely it should not have been the Labour presidency that was the subject of his resignation, but rather the slew of public entities to which he has been appointed under the current regime?

ENDS

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