NZ First Leader and Foreign Minister Winston Peters appears to be the first big winner to emerge from this year’s Budget negotiations.

He has secured another of $150.4 million over the next four years, and an additional $40.3 million in capital expenditure for the Ministry of Foreign Affairs and Trade plus another $714.22 million over four years for the aid budget.

The aid increase has obviously been synchronised with a similar increase announced by Australia in its Budget last night – both countries clearly trying to head off China in the Pacific.

Though in part, the New Zealand budget increases  appear to have been prompted by growing concern about China’s activity in the Pacific they are also about the current state of our foreign ministry.

The MFAT money will be welcome relief for a Ministry which was allowed to significantly run down under the previous Government.

In its first Budget in 2009, the Key Government allocated $992 million to MFAT; that had dropped to $960 million in its last budget last year.

To have kept pace with inflation the vote should have been $1.1 million.

A large number of experienced diplomatic staff have left the Ministry over the past nine years; at one point last year, MFAT reported that 40% of its staff had been there less than three years.

It has also had to recall retired diplomats to staff top overseas posts including Beijing and Moscow.

In a pre-Budget speech last night Peters said almost a decade of underfunding had started to bite, “undermining our ability to maintain New Zealand’s independence as an international actor projecting our distinct values.


“An enormous amount of expertise and experience was lost as a consequence of the last government’s badly bungled restructure.

“The country’s network of foreign posts expanded but without funding to adequately resource them.

“The resulting hollowing out of the ministry has left New Zealand with only 248 diplomats across 58 posts, weakening our ability to advance our interests and influence others.”

He said one example was in Manila where New Zealand had just two diplomats in its Embassy. 

“Australia’s Embassy has more than ten times that number.

“That is a gross difference irrespective of relative populations, and New Zealand’s interests are no fewer than Australia’s.

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

“Returning as Minister last year it quickly became obvious that a change of course was required.

“Leading a modified status quo would not suffice.”

And he has also secured $714.22 million over the next four years to be spent on aid; a 30% increase.

He said that amount was only the first step and further increases would be sought in future budget rounds.

It is expected that approximately 60 per cent of the new aid will be spent in the Pacific.

This is part of what he calls the “Pacific Reset”  but which privately many in Government and in the diplomatic world in Wellington believe is designed to counter growing Chinese influence in the region.

Even so, it is chickenfeed alongside OECD guidelines for foreign aid which target a country’s aid expenditure at 0.7% of gross national income (GNI). New Zealand was on track to fall to 0.21% by 2021, but the increase announced yesterday would boost the percentage to 0.28%.

And New Zealand is massively outspent by Australia in the Pacific – even in Polynesia  — yet New Zealand likes to trade on its role in the Pacific in international forums and with overseas Governments.

The latest aid figures available show that Australia spent $A133.2 million in Fiji, Samoa and Tonga against New Zealand’s $NZ66 million in the same countries.

And last night its Treasurer, Scott Morrison, announced a record $A1.3 aid package for the Pacific, Australia’s largest ever for the region.

Australia is also to open a diplomatic mission in Tuvalu, the Pacific country most threatened by rising sea levels. It is another measure of New Zealand’s foreign policy cutbacks that in contrast, our Ambassador to the country is based in Wellington.

Chinese President Xi Jinping meeting with Tupou VI, the king of Tonga in Beijing, China on 01 March 2018.

Both New Zealand China are motivated by China’s growing presence in the region.

It is rapidly increasing its aid – for example, last December it gave $US30 million to Tonga;

And during the recent visit by Prime Minister Jacinda Ardern to Samoa, Prime Minister Tuilaepa Dr Sa’ilele Malielegaoi defended China’s aid.

He said China had earmarked for the next five years US$2 billion for grants to Pacific Islands and US$2 billion for soft loans. 

Australia has taken a more sceptical view of China’s role in the region than New Zealand and has supported a Japanese proposal to form an Indo Pacific group of Japan, the US, India and Australia, which  Winston Peters referred to during a recent forum in Australia.

“It’s a counterweight, and you all know which country it’s a counterweight to,” he said at the meeting where he shared the stage with Australia’s Foreign Minister, Julie Bishop.

Peters has been warning about China’s influence for some time.

Speaking at the Lowy Institute in Sydney in March he said “While these (Pacific)  countries might be small, and disparate and isolated, in reality they occupy a serious part of the world’s space which is becoming more important every day.

He said that New Zealand’s national security was directly affected by the Pacific’s stability.

New Zealand must boost its aid to Pacific island nations, he said, to “improve their resilience, and through that their autonomy.”

Nations like New Zealand and Australia should “pool our energies and resources to maintain our relative influence,” he maintained, as “we know we cannot help the Pacific solve its problems on our own, as there will always be someone with deeper pockets than ours, and some Pacific leaders are attracted to easy sources of funding.”

Trade Minister David Parker said the overall boost in MFAT funding would allow for the re-opening of the Embassy in Stockholm

The Stockholm embassy was opened in 2008 by the then Labour government and downsized by National shortly after it was elected and then closed in 2012.

Then-Foreign Minister Murray McCully said the closure was part of $10 million in savings across MFAT’s European posts.

The Embassy will be part of New Zealand’s outreach to the EU as the trade agreement with the EU comes on stream and as Europe assume more importance once Britain leaves the EU.

This adds up to a significant victory for Peters and a long-overdue emphasis being put on our Foreign Ministry.