Peters unveils billion-dollar foreign affairs boost

Foreign Affairs Minister Winston Peters at the Government's pre-Budget announcement on foreign affairs funding. Photo: Sam Sachdeva.

Foreign Affairs Minister Winston Peters has unveiled a nearly $1 billion boost for the Government’s foreign policy and international aid budget, arguing the funding is crucial for New Zealand’s security after a decade of underfunding.

A nearly $715m increase to our international aid budget, money for 50 extra diplomats, and the reopening of an embassy in Sweden were among the highlights from Peters’ pre-Budget announcement on Tuesday night.

Speaking to a crowd of diplomats, he said skilled diplomacy was “an essential part of protecting our vital national interests and securing domestic prosperity”.

“That voice has never been more important to protect our interests in a troubled world and support the family of Pacific nations who share our neighbourhood.”

Seeking to pre-empt criticism of the Government’s fiscal priorities, he said New Zealand’s foreign policy was “not divorced from domestic policy but married to it”, highlighting instability in the Asia-Pacific and the flow-on costs for border control and defence without prevention efforts.

Peters also mentioned increased competition for influence in the Pacific, in a thinly-veiled allusion to China’s growing role - raised by former US Secretary of State Hillary Clinton during her New Zealand visit.

The lynchpin of the announcement was $714.2m over four years for New Zealand’s official development assistance (ODA) budget, which Peters said had fallen from 0.3 percent of gross national income (GNI) to 0.23 percent under the last government.

“This left New Zealand open to criticism that we have abandoned our neighbourhood...the previous government weakened our hand in the Pacific at the very time the region has become a more crowded and contested strategic space.”

'Heading the right way'

The additional funding would increase New Zealand’s ODA to 0.28 per cent of GNI, he said.

Peters told Newsroom the ODA increase was “not as much as we should be putting in...but we’re heading back the right way”.

His ultimate goal - not yet government policy - was to increase New Zealand’s ODA spending to 0.35 percent within two or three terms of office.

Peters suggested the OECD target of 0.7 percent would be a tall ask for New Zealand, but highlighted other overseas engagement which was not formally counted as aid.

“You’ve got a bill of over $99 million for overseas hospital attendances for Pacific people, that’s overseas aid, if you’re putting significant bureaucratic resource into the seasonal employment scheme, that’s overseas aid, and defence.”

Also among the foreign budget boost is $150.4m over four years for MFAT’s operating expenditure, along with $40.3m in capital expenditure.

“Resources are essential to influence, and both for New Zealand have waned.”

Peters said there had been almost a decade of underfunding under the last government, with MFAT “hollowed out” by a restructure and New Zealand left with fewer diplomats as a result.

“Resources are essential to influence, and both for New Zealand have waned.”

Peters said the increase would allow the Government to create 50 foreign policy positions, after 100 diplomats had left New Zealand’s foreign service over the last nine years.

Having previously highlighted the lack of experienced diplomats within MFAT, he said he would support the rehiring of those who had left - although noted that was ultimately an operational decision.

Peters said the Government would also reopen an embassy in Stockholm, Sweden, suggesting New Zealand had missed out on the benefits of closer collaboration with Scandinavian countries.

“We’ve failed to align ourselves with countries who in many ways could have helped our IT, our economic, and our developmental process as a country,” he told Newsroom.

National leader Simon Bridges said the Government had its priorities “badly wrong”, making a significant investment in foreign affairs while moving away from a promise of cheaper doctors’ visits.

“What matters more to New Zealanders – more diplomats or more doctors?”

The foreign affairs funding increase showed claims of underfunding crises in areas like health and education were "ludicrous", Bridges said.