The politics of aid: Elizabeth Chan comments on New Zealand's overseas aid provision nearly a year on from the government's decision to reabsorb NZAID into the Ministry of Foreign Affairs and Trade.

• Author: Chan, Elizabeth
• Position: New Zealand's International Aid & Development Agency - Essay

With nearly a year having passed since the merging of NZAID back into the Ministry of Foreign Affairs and Trade, it is possible now to appraise the impact of the changed institutional arrangements. The hasty and premature reorganisation has had a negative effect, diminishing the importance of aid provision without necessarily improving either NZAID's accountability to the taxpayer or the efficiency of its programmes. NZAID's restructuring has only served to confuse its focus on poverty alleviation and to dilute its independent brand as a specialist development organisation. A more effective reformation of NZAID would be to reinstate it as a strengthened semi-autonomous body.

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It has now been nearly a year since NZAID was stripped of its status as New Zealand's foremost specialist aid agency and relegated to the position of yet another 'business unit' within the Ministry of Foreign Affairs and Trade. A reappraisal of NZAID's new institutional arrangements is therefore timely. Critically analysing the issues surrounding NZAID's reorientation towards private sector economic development, I argue that NZAID's reabsorption within MFAT has diminished the importance of aid provision without necessarily improving NZAID's accountability to the taxpayer nor the efficiency of its programmes. The restructuring of NZAID has only served to confuse the agency's focus on poverty alleviation and to dilute its independent brand as a specialist development organisation. Drawing on comparative analysis of overseas aid agencies, I propose that a more effective reformation of NZAID would be to reinstate it as a strengthened semiautonomous body.

The government's reform of NZAID seemed both hasty and premature. At the time of reform, NZAID was still an agency in its infancy, established only in 2002, and it had not yet had time to develop its full potential. It had been created in response to criticisms that the previous New Zealand overseas development aid programme lacked clarity of purpose, accountability and continuity in development-focused personnel. NZAID's semi-autonomous status within its host department, MFAT, was meant to address these challenges; and according to ministerial as well as OECD reviews, NZAID had performed 'very impressively'. (1) Despite vocal public outcry, the government decided to fold NZAID back into MFAT. Although Minister of Foreign Affairs Murray McCully insisted that widespread consultation on the matter had been conducted with various national stakeholders, evidence suggests that the opinions of the non-governmental organisation sector and academia, as well as the cautionary advice of the Treasury, had not been fully taken into account. Not all the options for reform had been properly considered.

McCully justified this change by asserting that New Zealand's aid budget was not a 'sacred cow.., beyond the stewardship of the government' and pushed for greater governmental control over New Zealand's overseas development assistance programme. Key changes included the removal of NZAID's right to give separate advice on assistance matters to the Minister of Foreign Affairs, the closer alignment of foreign policy with aid-giving, and a shift of focus in aim from poverty alleviation to sustainable economic development.

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Scathing criticisms

McCully's most scathing criticisms of NZAID were its lack of accountability to the taxpayer, as well as the apparent inefficiencies of its programmes. Claiming that NZAID's aid budget was administered in an 'undemocratic fashion' because it was subject to the influence of 'so-called development specialists', he argued that public money had been used to fund an 'unproductive bureaucracy'. (2) In return for greater power and control over overseas development assistance decision-making, the government would be prepared to hold itself accountable for inefficiencies in aid-giving operations. Indeed, McCully insisted that elected office holders were in a better position to take responsibility since politicians, unlike 'faceless aid bureaucrats', were held to account at the ballot box.

However, it does not necessarily follow that because NZAID was semi-autonomous, it lacked accountability to MFAT and, in turn, the taxpayer. As a semi-autonomous body, NZAID was held accountable to the Secretary of Foreign Affairs, who was also accountable to the Minister of Foreign Affairs for MFAT's performance as a whole. The State Sector Act 1998 and the Public Finance Act 1989 make chief executives (of whom the Secretary of Foreign Affairs is one) responsible for the management and performance of semi-autonomous bodies which form part of the host department. Furthermore, NZAID and MFAT's relationship was reinforced through...