Hon Murray McCully
Minister of Foreign Affairs
Embargoed until 12.30pm, 1 May 2009 Media statement

Aid increases as NZAID changes focus

Poorer nations, particularly in the Pacific, will benefit significantly from changes to New Zealand’s approach to aid, Foreign Minister Murray McCully announced today.

“As indicated prior to the election, National has long held concerns about the effectiveness of New Zealand’s aid spending,” Mr McCully said.

“Following a review process, the government has decided to change the mandate of NZAID, the government’s aid agency, to focus on sustainable economic growth.

“Lifting people out of poverty depends directly on increasing economic growth and strengthening trade. No country in the world has achieved one without the other.

“The new mandate also puts the Pacific at the forefront of our efforts, with a greater share of the budget, although not to the total exclusion of other regions.

“Given that the objective of our aid should be to reverse the negative trends we see in the Pacific, current policies are clearly failing. Our money has generally done little to build strong economies providing jobs and the promise of a brighter future.

“Depopulation has continued at an alarming rate in parts of Polynesia; air and shipping services – the arteries for trade and tourism – are under threat and in decline, while substantial sums of aid are being fed into unproductive bureaucracies.

“With focussed and accountable support from New Zealand, many Pacific countries –especially those in Polynesia – have a real chance of turning around poor social indicators and years of stagnant growth.

“I am also announcing today that prudent increases over the next few years will see the aid budget reach $600 million in 2012/13.

“The aid increase announced today is smaller than that promised by the previous government, but it is realistic and sustainable in the current global economic situation.

“At the same time, in keeping with the current economic situation, the government’s international aid agency, NZAID, will be required to demonstrate greater value for money in its work, to ensure our aid is being used as efficiently as possible.

“NZAID’s semi-autonomous status within the Ministry of Foreign Affairs and Trade will be removed. The change is largely technical, but will improve the management and delivery of ODA through clearer accountabilities and responsibilities.

“Importantly, it also recognises aid is a key component of the Foreign Affairs portfolio, and thus needs to align, as much as possible, with our wider foreign policy interests.

“This will strengthen our international presence, and remove the risks inherent in running separate and potentially conflicting foreign policy and aid strategies,” Mr McCully said.

The aid budget was set at $471.9 million last year. It will increase to $500 million in this financial year, rising to $525 million in 2010/11, $550 million in 2011/12, and to $600 million in 2012/13.

ENDS