Foreign Affairs funding boosted by $1b with no clear plan

It was announced before this year’s budget that Foreign Affairs funding would be increased by nearly $1 billion, seen as a major policy win for Winston Peters (who is Minister of Foreign Affairs).

Documents obtained by Newsroom show that Treasury officials warned Peters’ ministry that there was no clear plan how the money would be spent – $1b foreign affairs boost against Treasury advice

Budget documents released by Treasury highlight the complex negotiations between Finance Minister Grant Robertson and Foreign Affairs Minister Winston Peters, with discussions over the final dollar figure for MFAT funding going down to the wire.

A nearly $1 billion increase for foreign policy and international aid, including $715 million for New Zealand’s official development assistance (ODA) budget, was one of the Government’s major pre-Budget announcements.

However, Treasury documents show Peters initially wanted upwards of $1.5b, while Treasury recommended almost none of it be funded.

A Treasury briefing provided to Robertson in March ahead of his first Budget bilateral with Peters said the minister wanted an extra $1.2b over four years for the ODA budget.

He also wanted an extra $280m for MFAT’s capital budget, with the requested increase for operational spending redacted.

The ministry did not have a clear idea of the full cost of their capital projects or what strategic choices needed to be made, and was preparing on a long-term investment plan which would give the Government a better idea of what was needed.

The Treasury advice said a request for an extra 60 full-time staff was not backed up with evidence of its value, while there was a “weak strategic case” for reopening the Stockholm embassy, given the low level of trade links and the ability to manage the relationship within MFAT’s existing network.

Peters asked Minister of Finance for $1.5 billion and got nearly $1 billion.

After Robertson’s first meeting with Peters, he indicated to Treasury that he supported a “cash injection” for ODA, as well as funding some of MFAT’s cost pressures.

Treasury also recommended providing capital funding for the new Stockholm post and money for an additional 12 staff – some way short of the 60 Peters asked for and the 50 he eventually received.

Discussions over the final foreign affairs package came down to the wire, with an email sent on April 4, days before Robertson had to sign off on a final version of the Budget Cabinet paper, noting he was still locked in discussions with Peters and Prime Minister Jacinda Ardern.

A few days later, Robertson’s office contacted Treasury saying there had been a late agreement to move money out of the APEC hosting budget and put it towards the ODA funding.

This appears to show how much sway Peters had over Labour.

Peters said Treasury’s argument against the funding was “frankly not in the interests of our country”, given an effective 10-year funding freeze for MFAT.

“The underfunding had started to bite, undermining our ability to maintain New Zealand’s independence as an international actor projecting our distinct values.”

It was “shocking” that New Zealand’s ODA had dropped as a share of gross national income from 0.3 percent to 0.23 percent, Peters said, weakening the country’s hand in the Pacific “at the very time the region has become a more crowded and contested strategic space”.

There were funding pressures all over Government. NZ First managed to negotiate some major boosts in Foreign Affairs, plus the $1 billion per year for Shane Jones’ Provincial Growth Fund.

Peters also got tax concessions for his friends in thoroughbred racing, and intends using the Provincial Growth Fund to boost racing further.

Greens got very little in comparison, albeit from a much weaker negotiating position and lacking negotiating experience.

Labour bumped a few things up, with major increases to Working for Families, the tertiary free fees scheme and Kiwibuild, but they had cited many other priorities like health, education, justice and prisons, and poverty, that have struggled with a lack of money.

4 Comments

  1. artcroft

     /  September 4, 2018

    Winnie will have a plan for that cash, and won’t regard it as any of Grant’s business where or how it is spent. Labour, who are in awe of Winnie’s competence, having none themselves, have of course rolled over on this.

    • Gezza

       /  September 4, 2018

      Labour, who are in awe of Winnie’s competence, having none themselves, have of course rolled over on this.

      Strong contender for Quote of the Week, imo, arty.

      On the face of it this allocation of baubles cash looks ridiculous. It’s not going to buy off any Pacific Island government faced with better or additional offers of assistance from China. They know how & when to work the aid system.

  2. Gerrit

     /  September 4, 2018

    Totally disagree that the Greens were in a weak position. They were in as strong a position as NZFirst but they gave it away. Some hard nosed negotiations should have been had but the Greens collapsed into their own morass.

    They painted themselves into the corner by ruling out any other partner to deal with except Labour, proir to the election.

    From that point on they were always a subset off and subservient to, Labour.

    Shaw was/is weak in that the Greens have no bargaining chips left now except the big Hail Mary one and that is to force the CoL into a minority government.

    A general election being not far from there on out.

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