Foreign Affairs

Greater transparency needed in Pacific aid programme

An inquiry into the Government's flagship Pacific aid policy backs up the importance of New Zealand's development work in the region, but as Laura Walters reports, the committee is calling for increased transparency and better public communication

A Parliamentary inquiry into New Zealand’s aid in the Pacific has reaffirmed the importance of the Pacific Reset, but calls for greater transparency and policy cohesion.

Last June, the Foreign Affairs, Defence and Trade Select Committee launched an inquiry into New Zealand’s aid in the Pacific. After some delays, due to Covid-19, the committee reported back on Friday.

Committee chair Simon O’Connor said the inquiry affirmed the importance of New Zealand establishing relationships with its Pacific neighbours which built on shared history and were based on mutual respect and trust. 

The committee made 15 recommendations, including a call to improve the transparency of the aid programme and better communicate its challenges and successes with the public.

“Requests for New Zealand to strengthen transparency about individual investments and the ministry’s strategies and policies was a key theme we heard during our inquiry,” the committee’s report said.

“Submitters consistently expressed frustration with a lack of publicly available information about New Zealand’s ODA [official development assistance] investments.”

Several submitters referred to the Ministry of Foreign Affairs and Trade’s (MFAT) score in the 2018 Aid Transparency Index (IATI). 

At the time, MFAT received a rating of just 31 out of 100, ranking 42 out of 45 agencies. 

The ministry said over the past two years it had introduced a new aid management system to manage finances and decisions, enabling it to provide more consistent and accurate data.

It said the lack of published data had impacted its rankings.

MFAT officials said it had also begun publishing data about individual investments more regularly, and with more detail. Since February 2020, it has also made documents covering country strategies available to download from its website. 

As a result, New Zealand’s IATI ranking had significantly improved to 77.6 out of 100. New Zealand moved up the ranks to 13 out of 47 donors.

MFAT also pointed to other indices, such as the Quality of Development Assistance (QuODA Index), which groups a range of aid quality measures into four themes: maximising efficiency, fostering institutions, reducing burdens, and transparency and learning. New Zealand ranked first in this index, but the committee noted IATI was the ranking most widely recognised.

The ministry said it was pleased with this progress, but acknowledged its efforts on transparency needed further work.

MFAT said its new approach would ensure the ministry could continue to improve and provide greater levels of transparency to its partners, the international development community, and the New Zealand public. 

One submitter to the inquiry recommended MFAT shared its country strategies, four-year plans and the inclusion action plan with the public.

The committee recommended MFAT continued to strengthen the transparency of the country’s aid, with the target of maintaining the IATI score at 75 or higher.

As well as prioritising work that enabled a clear outline of projects, timeframes, and outcomes to be made publicly available.

"Publicly highlighting the deep link between New Zealand’s prosperity, security, and identity and the Pacific Islands region is critical to build a social licence.”

The committee said transparency was raised as an important part of ensuring cohesion of priorities between MFAT and the NGOs it funded to deliver programmes.

Cohesion of policy and priorities across other government departments, and between New Zealand’s foreign aid policy in the Pacific and its domestic policies were areas the inquiry identified as needing further focus.

Related to MFAT’s need to improve on the transparency of its Pacific aid programme, the inquiry also found more work needed to be done in communicating the challenges and successes of the development work to the New Zealand public.

Submitters highlighted the need for a clearer narrative about New Zealand’s aid interventions in the Pacific and how they interact with the sustainable development goals (SDGs) prioritised by Pacific partners.

The need for the ministry to broaden public understanding and support (often referred to as ‘social licence’) for how and why it worked in and with the Pacific was a recurring theme during the inquiry, the report said.

“Submitters recognise that publicly highlighting the deep link between New Zealand’s prosperity, security, and identity and the Pacific Islands region is critical to build a social licence.”

Different research found that most Kiwis supported, and were interested in, New Zealand’s aid efforts in the Pacific.

But there were gaps in information and understanding.

The ministry’s own 2019 research (the first perceptions study conducted since 2007) found there was majority support for aid, but noted that access to information about aid and support for aid had dropped since 2007. 

One submitter believed that awareness was increasingly related to disasters and emergency responses, rather than sustainable development and policy issues. 

The committee recommended the Government explored further ways to engage the public in better understanding the existing ODA programme and its value to not only the Pacific, but New Zealanders as well.

The public desire for increased information, tied in with another finding of the inquiry: that more could be done to engage with New Zealand’s Pacific community about how development efforts impacted them.

While there were a range of areas that the committee identified as needing further work, it largely reaffirmed the direction of the coalition’s flagship Pacific Reset policy.

The Pacific Reset was coupled with the Government’s first major foreign policy spend after coming into power.

The Pacific Reset was the coalition's first direct push-back against China, and the money that backed it was the 52nd Government's first major Budget spend. Photo: Sam Sachdeva

Ahead of Budget 2018, Foreign Minister Winston Peters announced the $714.2 million for the country’s ODA, over four years.

It was also the Government’s first overt push back against China’s recent, but aggressive, move to increase its strategic influence in the Pacific Region.

While National initially framed the big ODA boost as “$1 billion for diplomats”, National MPs on the Foreign Affairs and Trade Select Committee backed the inquiry’s overall finding that the Government’s Pacific aid programme was important, and that there should be a continued increase in ODA spending.

The Pacific Reset money boosted New Zealand’s ODA spending from 0.25 percent of gross national income (GNI) in 2016, to 0.28 percent of GNI in 2018.

Budget 2019 provided an additional $128m, maintaining ODA at 0.28 percent of GNI. And this year’s Budget provided additional funding of $55.6m.

This would bring ODA to almost 0.33 percent of forecast GNI in 2021, due to a combination of additional funding and a reduced forecast for New Zealand’s GNI. 

While this development assistance budget was significantly higher than it had been in a long time, it remained well below New Zealand's international promise to spend 0.7 per cent of GNI on overseas aid.

Currently, the majority of New Zealand’s aid money was spent in the Pacific, and based on OECD reporting from 2020,New Zealand was now the second largest donor in the region, providing 14.3 percent of ODA to the Pacific.

This compared with Australia (36.8 percent), Japan (8.7 percent), the United States (8.1 percent), and France (3.2 percent). The proportion from the World Bank increased to 12.5 percent, while European Union institutions account for 6 percent.

The OECD data does not include China because it is not an OECD Development Assistance Committee member. 

But data from the Lowy Institute shows that from 2015 to May 2020, China provided $537.061m in grants to the Pacific. In the same period, it provided $5.271 billion in loans to the Pacific. 

“Pacific Island countries are experiencing economic shocks given their dependence on global supply chains and reliance on tourism."

All of New Zealand’s development money is delivered as grants, not loans.

But the recent emergence of relatively new donors in the region, such as China and Indonesia, has increased the issue of debt sustainability. These donors largely gave loans (rather than grants), and recently the IMF and World Bank assessed that 11 Pacific countries were at high or moderate risk of debt distress - when a country is experiencing difficulty servicing its debt.

MFAT and the Parliamentary inquiry have both highlighted how Covid-19 is further impacting on the economic challenges facing Pacific Island nations.

“Pacific Island countries are experiencing economic shocks given their dependence on global supply chains and reliance on tourism. Remittances are also expected to sharply reduce as the global economy contracts and unemployment increases,” the committee’s report said.

Even countries with no recorded cases had been forced to close their borders in an effort to keep Covid-19 at bay.

In April, MFAT said about two-thirds of its development activities had been affected by the virus in some way, and it was working on a range of responses, including stopping, reassessing and adapting, or re-phasing projects on an individual basis. 

The committee’s inquiry also recommended an increased focus on inclusive development, with an approach based on human rights; further focus on gender-related and youth inclusion; and the continued effort to mainstream climate change into aid initiatives.

The committee also called for continued work on improving genuine partnerships with Pacific nations, and framing New Zealand as a member of the Pacific whānau with consideration of shared history, rather than viewing it as a traditional relationship between donor and recipient.

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