Explained: Foreign aid in the Pacific

More than $714 million in foreign aid has just been ‘‘heavily prioritised’’ towards our Pacific neighbours. Foreign Minister Winston Peters says the funding demonstrates to the international community that New Zealand is serious in addressing global and regional challenges and helping people in need. It’s part of the so-called ‘‘Pacific Reset’’.

But where does that money go and what is it used for? Why do we provide aid in the first place?

A spokesman from the Ministry of Foreign Affairs and Trade (Mfat) said: ‘‘Foreign aid as we know it began after World War II as a means by which richer industrialised countries could support the social and economic aspirations of poorer countries which were gaining independence.

‘‘New Zealand’s aid began around 1950 when we started to provide scholarships and technical assistance to countries in Asia and the Pacific as part of the Colombo Plan. This widened particularly as Pacific countries gained independence and started to build their education and health systems and economic development.’’

New Zealand has been a member of the OECD Development Assistance Committee since 1960. It ensures our aid is recognised and reported globally and maintains standards of quality, accountability and transparency.

Why do we provide foreign aid?

The notes for Peters’ pre-Budget speech on foreign affairs state:

‘‘The Government acknowledges that the quantum sums for overseas development assistance are large so it is important to explain to New Zealand taxpayers why this investment is necessary for their wellbeing.

‘‘First and foremost, our identity is anchored in the Pacific and it is fitting and proper that we foster our fraternal bonds with our Pacific neighbours. What is good for them is good for us. We all know that if we look after each we are all better off, more prosperous, and therefore more secure.

‘‘Second, New Zealanders support development assistance. When last Foreign Minister a UMR survey showed 76 per cent of the public supported giving overseas assistance ... Support on both sides of the Tasman reinforces a shared sense of altruism but it is also good economics because prevention is better than cure ... development assistance helps to maintain a safer and more prosperous New Zealand over time, saving money that would otherwise be required in future defence budgets or in border control.

‘‘We strongly believe in being part of a Pacific that is free from military competition, a Pacific that remains free from the shafts of strife and war that affect many other parts of the globe. Put simply – if we’re not there some other influence will be.

‘‘Identity, security and long term investment are joined by a moral dimension underpinning support for overseas assistance. It’s about doing what is right ... Overseas development assistance is therefore a proper extension of looking after family, in this case New Zealand’s wider family of Pacific Islands. It is also good economics.

‘‘That is what differentiates New Zealand’s approach from those who seek to influence by fostering economic dependence. That is not and will never be the New Zealand way.’’

What are the different reasons for giving aid?

Massey University Wellington’s senior lecturer in Pacific security, Dr Anna Powles, said Peters was right in many of his comments.

‘‘Development assistance to the Pacific is fundamentally important because we are part of the Pacific and it is a reflection of our values and our partnership with the region and our commitments as well – we have international commitments towards supporting countries through development assistance.

‘‘On a domestic side, it’s important because we have a growing Pacific population ... and we have strong domestic links, familial, cultural, ethnic and business links with the Pacific as well.

‘‘We also have constitutional responsibilities to the Cook Islands, Niue and Tokelau as well as with Samoa.

‘‘So we have these political, constitutional reasons, we have development commitments, we have the reasons of national security as well – a stable, prosperous Pacific is good for New Zealand security.’’

One benefit was the more aid New Zealand provided in humanitarian support now, the less taxpayers would have to contribute down the track.

But, Powles said, we were still ‘‘not even close’’ to the percentage the country should be spending on aid.

How has aid changed?

Powles said: ‘‘Development assistance has evolved over the past 20 years in terms of how it is spent.

‘‘We no longer provide direct budgetary support except in some instances. But you see it being spent on large infrastructure projects, which China does frequently.

‘‘We provide support to multilateral institutions, we provide through building capacity of civil society organisations, through building democratic resilience across sectors within the Pacific Island countries.

‘‘So development assistance is provided in multiple different ways and generally its a sectoral approach ... whether it be gender, governance, democratic resilience, law enforcement .. the judicial system, anti-corruption – those kind of areas where countries like New Zealand focus their assistance – climate mitigation, things like that.

How much do we spend?

The following summarises our total aid spending in the past four years, including what proportion went to the Pacific.

❚ 2014/15 total aid programme actual expenditure $513m. Of that $300m went to the Pacific.

❚ 2015/16 total aid programme actual expenditure: $534m. Of that $322m went to the Pacific.

❚ 2016/17 total aid programme actual expenditure: $531m. Of that $281m went to the Pacific.

❚ 2017/18 total aid programme forecast expenditure: $647m. Of that $401m forecast to the Pacific.

Of the countries we give aid to – not just in the Pacific – Vanuatu gets the most, followed by the Solomon Islands and Papua New Guinea.

The education, health and population sector gets the biggest chunk of the money, followed by production, other social infrastructure and economic infrastructure.

Mfat said the geographic focus for New Zealand aid was our Pacific neighbourhood. We invest close to 60 per cent of our development funding within the Pacific region.

In all, our aid programme reaches more than 150 countries through partnerships with international aid organisations and multilateral agencies, including for humanitarian action in response to disasters and conflict, according to MFAT.

A MFAT spokesman said: ‘‘Aid is integral to a raft of global agreements, most recently the 2030 Agenda for Sustainable Development and the 2015 Addis Ababa Action Agenda.

‘‘Aid is also critical to other agreements where negotiations have had to address burden sharing across richer and poorer countries.

‘‘An example is the Paris Agreement on climate change where developing countries have made commitments to mitigate emissions together with developed countries (including New Zealand) to provide financial assistance.’’

A case study

New Zealand has had a long-standing partnership with the Government of Solomon Islands’ Ministry of Education and Human Resources (MEHRD).

New Zealand has provided more than NZ$100 million to the Solomon Islands’ education sector since 2003.

That made it one of the New Zealand Aid Programme’s largest investments.

Initial assistance focused on rebuilding the education system after The Tensions period of civil conflict.

It provided sector budgeting, education infrastructure, curriculum development, school grants, financial management and teacher training.

The current package is targeted at improving literacy.

According to Mfat, the partnership has resulted in: a 25 per cent increase in primary school enrolments; new schools and classrooms; gender parity – with equal numbers of boys and girls now receiving an education; improved literacy and numeracy rates by more than 30 per cent; 2000 primary school teachers receiving training and more than 900 schools receiving education materials.

‘‘MEHRD is increasingly able to manage and run its own systems and rely less on external support,’’ a Mfat spokesman said.