Peter Adams: McCully's record on aid needs questioning

Foreign Minister Murray McCully oversaw a decline in the aid budget, relative to national income.
LAWRENCE SMITH/FAIRFAX NZ

Foreign Minister Murray McCully oversaw a decline in the aid budget, relative to national income.

OPINION: With Murray McCully's departure from Foreign Affairs, it is time to review the good, the bad and the ugly in his administration of the aid program so that his successor can achieve effective spending without a high ratio of mistakes. A review is also needed because of the self-congratulatory myths that McCully has been perpetuating.

He recently boasted that multilateral bodies, like the World Bank, will be "popping champagne corks" in celebration at his departure. McCully was right to criticise them if he saw waste and too much bureaucracy, but his antagonistic approach is unlikely to have worked. In fact New Zealand aid going to multilateral organisations has been a mere 2 per cent lower during McCully's tenure than in the decade before. New Zealand has not withdrawn from any organisation of importance, still pays its dues and participates in their governance processes. That is because they do a pretty good job. 

Another myth is that the New Zealand aid program did not prioritise the Pacific before he took charge. Tell that to his predecessors Don McKinnon, Marian Hobbs and Winston Peters. Aid to the Pacific averaged over half of total aid in the decade preceding the Key Government. It reached 60 per cent by 2009, before McCully had been Minister long enough to make a difference. Over his term the annual average did rise to 63 per cent, with wealthier Pacific Islands like the Cooks getting increases at the expense of poorer countries like Solomon Islands. But an increase of a few per cent is hardly the transformation McCully claims. It could have been more had aid not become more dispersed with new projects in Africa, the Middle East and the Caribbean, driven largely by diplomatic and commercial motives. 

The Pacific could also have benefited more as a priority recipient if the aid volume had kept pace with New Zealand's economic growth. It didn't and the ODA/GNI (Official Development Assistace/Gross National Income) ratio declined from 0.3 per cent in 2008 to 0.25 per cent in 2016.

Using aid to garner diplomatic support and commercial benefit resulted from McCully putting national interest at the forefront of aid decisions. New Zealand dairy and other agricultural expertise was pushed in countries where it was less than optimal technically or in terms of cost - for instance, a very expensive dairy project in Myanmar. Contestable funding programs were re-shaped to enable for-profit private sector enterprises access to aid funds. Trade relations were lubricated with sweeteners, such as bringing Asian business leaders to NZ for ten days, ostensibly for "training".

The outcomes of a national interest approach are usually sub-optimal. Mixed motives produce mixed results. Effective development must be the primary goal of aid funding. If New Zealand is effective then we will benefit from good relations, an improved Asia-Pacific neighbourhood and diplomatic support when we need it. But those considerations must remain secondary, or we risk the misallocation of resources and second-best outcomes.

Under McCully the aid program has had a relevant focus on renewable energy, fisheries and tourism promotion in the Pacific, as part of a strengthened focus on economic development, where spending has doubled. (It is notable, however, that spending on social development is still larger.) Were the right economic development projects chosen and were they cost-effective? Only a review will tell. On the face of it there have been some successes: solar power in Tokelau and the Cooks and coordination of significant funds from other donors for renewable energy. Others areas, such as the expensive investment in the Munda airstrip in Solomon Islands and some of the fisheries and tourism expenditure, are more questionable.

In the complex world of development nobody gets it right all the time – witness New Zealand's own challenges in relation to Northland or South Auckland. Enabling communities to escape poverty and participate productively in society requires good partnerships, planning, people and patience.  

McCully came to office suspicious of experienced people, especially if they were officials, and impatient to get on with his vision rather than heed international lessons. For example, despite clear evidence that the education and health of women and girls is crucial to the well-being of families and villages, he ignored the importance of gender. His preference was for "big ticket" infrastructure items rather than people-focused development.

Development NGOs, who were effective "extenders" of the official government program especially in the difficult area of community development, were initially marginalised and highly functional arrangements for humanitarian assistance undermined. Fortunately lessons seem to have been learnt here and some lost ground has been made up. 

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McCully's approach has been claimed to provide "a hand-up, not a hand-out". The question needs to be asked: which is more likely to provide a genuine "hand up" – a people-focused aid program based on trusted partnerships, with poverty alleviation as its primary goal and effective development as its outcome, or a top down, "I know best" approach to selecting projects and providers driven in large part by "national interest"?

Only an independent review will tell. In an age when reality can be drowned by "truthiness" and "alternative facts", it is important to examine what was successful and what was not. Allowing McCully's myths to go uncorrected is to malign the past and distort the future. 

Peter Adams was a senior diplomat and executive director of NZAID from 2002 to 2009. 

 - The Dominion Post

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