Sunday Star Times

15 July 2006

New Zealand's aid contribution is still causing arguments a week after Bob Geldof condemned it. Who is right? Anthony Hubbard reports. Sir Bob popped his ferret in the chookhouse and the squawking hasn't stopped. The government, accused of a "pathetic and disgraceful" aid effort, seems to be taking it personally.

It has called Geldof wrong, unfair, inconsistent and uninformed. It has also accused him of coming from Ireland.

While publicly dismissive, in private it must feel the sting. After all, two Labour cabinet ministers used Geldof-type arguments in 2004 when they persuaded their colleagues to increase the aid budget.
Their cabinet paper - released under the Official Information Act to the Sunday Star-Times last week - said New Zealand was not doing its bit on foreign aid. This is essentially the Bob Geldof position minus the colourful insults.

Phil Goff and Marian Hobbs said New Zealand's low ranking on the aid ladder put its international reputation at risk.

"New Zealand prides itself on being a good international citizen, through promoting the highest standards in human rights, championing a rules- based multilateral system and actively helping those less fortunate through official development assistance (aid)," they said.
"In respect of this last, this self- perception does not stand up to close scrutiny, as New Zealand is not pulling its weight, relatively speaking."

They pointed out that New Zealand's level of aid put it 16th out of the 22 countries in the OECD, the rich countries' club. Cabinet duly agreed to increase the aid budget, a fact that it is now trumpeting in the battle with Sir Bob.

But, in fact, New Zealand has since slipped further down the ladder, to 18th. New Zealand has increased its aid, but other wealthy countries have increased theirs even more. If the arguments hurt in 2004, they must hurt even more today.

And they undoubtedly do hurt, especially when they come from Bob Geldof. He can still draw blood, despite his age, his bad hair and his dishevelled domestic life.

The old grey rocker blurts on the world stage, so when he attacked the Clark government, the world heard. It was especially embarrassing for Helen Clark, the champion of liberal internationalism.

Here was Mr Liberal giving her the works. It was as if George Bush had ticked off Don "Gone by Lunchtime" Brash. No wonder the government bit back.

Foreign Affairs Minister Winston Peters said Geldof had his facts wrong. What about New Zealand's other contributions, he asked, such as the millions of dollars sent in remittances to Pacific countries?
"So what? It's irrelevant what individuals do," says Rae Julian, executive director of the Council for International Development, an umbrella group for aid organisations. "We're comparing governments to governments."

And when you make this comparison, she says, Geldof is right: the level of aid is disgraceful.

Finance Minister Michael Cullen told Green MP Keith Locke in Parliament last week that New Zealand's aid figure of 0.27% of gross national income "is actually almost exactly the weighted average for the OECD countries that give aid".

But this, says Locke, is misleading. The weighted average is skewed toward the bottom end, dominated by the United States and Japan - enormous economies and miserly donors of aid.

It's not only the Green MP who thinks this. The 2004 cabinet paper included a blunt cable from Don MacKay, New Zealand's permanent representative at the UN.

"As you know, using the weighted average for comparative purposes is misleading (in New Zealand's favour), as the mediocre (aid) performance of the United States brings this down."

When measured against the average country effort or median of 0.41% in 2003, MacKay noted, "New Zealand's performance looks much less positive". MacKay's point still holds, when the median has gone up further, to 0.42%.

Phil Goff, in a patsy question for Cullen last week, asked if the 21% increase in the aid budget last year "gave us, in fact, the highest-ever level of official development assistance in this country's history?" Cullen warmly assured him it did.

But aid agencies say this too is irrelevant. What matters is not the dollar amount, but the proportion of the country's wealth spent on aid. On this measure, New Zealand is among the lowest donors.
Cullen says increasing the aid budget to 0.7% of gross national income - the international target that New Zealand has for many years accepted as a goal - would cost another $700m.

"No doubt we would all like to do more, but I must say also that whenever we increase aid I get a lot of letters asking why I am not spending that money on hip replacement operations, new roads, or something else."

Julian agrees that an extra $700m is a serious sum,"but we're not talking about spending that much money overnight. We're talking about moving steadily up to reach that total by 2015."

Nearly all the other OECD countries had pledged interim targets on the way to that goal. Australia, for example, had pledged to reach 0.36% by 2010. The Labour Party, in last year's election, had promised to reach 0.35% by that year. But since then it had not committed itself to doing so, and Cullen had argued that it could not do so without the agreement of coalition partners.

Julian doesn't buy this. Winston Peters has told her he supports an increase in aid, and so does coalition partner Peter Dunne, who last week called for a multi-party commitment to boost spending to 0.7% by 2015. He believed the parties could agree to a target of 0.5% by 2010.
Cullen's complaint about the coalition issue is just an excuse, Julian says. She agrees that the government has a responsibility to look after the needy in New Zealand. But "there aren't many New Zealanders who live on $US1 a day or less. And that's what we're talking about when we're talking about poverty in the world."

Locke says the government can't support the international target of 0.7% on the one hand and then plead that it is too poor to afford it on the other. Some other countries were richer than New Zealand,"but that's exactly why the international comparisons are not in dollar amounts but in terms of the percentage of your national wealth."
Last week Clark pointed to the Centre for Global Development's Commitment to Development Index, which considers not just aid but other policies deemed to help the Third World. The index includes, for instance, what barriers countries put in the way of Third World agricultural exports, whether it subsidises its own agricultural exports, and how many unskilled immigrants and refugees it accepts. The index puts New Zealand at sixth of 21 wealthy countries - a far higher ranking than for aid alone.

But Barry Coates, executive director of Oxfam, says Clark is essentially just changing the subject. "It's like saying that an All Black first five- eighths is a really good attacking player but he can't tackle."

The fact that New Zealand was on some measures a development- friendly country "does not absolve its from its responsibilities for aid". Aid, in fact, "reaches some parts of developing countries that other measures can't". It had a special and essential role in building the capacity of a poor country to grow and flourish.

And some aspects of New Zealand's trade policy, Coates says, are not helpful to developing countries. New Zealand has pushed for early opening of poor countries' markets, for instance. "It's very hard to name a single country that has developed without active government intervention to support the strengthening of its own domestic economy before it is opened up to international trade." New Zealand's hardline open market stance means it "gives with one hand and takes away with the other - and that's not being a good global citizen".

So why has the Clark-led government done so badly on aid?
Julian believes Clark is a genuine internationalist and that "she'd love to be able to stand up internationally and announce that New Zealand is going to get to 0.7% by 2014". She is puzzled that Clark has failed to push her government in that direction.

Others say it is like Clark's stance on the monarchy: she calls it absurd, but refuses to do anything about it. Similarly, they say, Clark has decided her priority lay with making sure her government spent large amounts on health and education, rather than aid.

Or is it just that there are no votes in aid? Former associate foreign affairs minister Hobbs says she won the battle to increase spending from 0.23% to 0.27%, "and if you think that was a minor battle then you don't know what cabinet is like".

The main problem, she says, is the intense competition for the government's money, especially in the high- spending areas of health, education, and infrastructure. "What you do in government is you have to work out the priorities, and that's what the conflict is. It isn't about being nasty, it isn't about saying aid is ineffective or useless, it's about saying, what are our priorities?"

The aid organisations like to cite a 2004 UMR opinion poll that showed 76% approved giving aid to poorer countries, with only 14% opposed. They argue that voters are generous and so politicians should not shy away from spending more on aid. The voters won't punish them.

But Hobbs says the pollsters should ask correspondents to make the kind of hard choices that faced governments. Asked whether they would fund higher aid spending by scrapping interest-free student loans, for instance, voters' replies could be "interesting". The aid lobby says this presents a false dilemma: that there is enough to fund more aid if the spending is increased bit by bit. Coates also suggests Cullen is chary about aid "because he wants money to spend on tax cuts".

But he says Labour could actually gain votes by leading the charge for more aid. Labour could sell itself as the leader of a small country willing to champion the fight against world poverty and injustice. This would appeal to New Zealanders' national pride and idealism "at a time when the Labour Party is trying to figure out how it can enthuse a younger generation of voters".