Budget 2022

Hi and welcome to another NZADDs update,

Once a year, every year, late at night, I start howling.

Don’t worry, it’s not lycanthropy. My problem is much more prosaic: I try to keep track of the New Zealand aid budget.

New Zealand aid transparency is improving. In between MFAT’s intermittently updated website, and its annual reports, you can – some time after the fact – cobble together a sense of what’s going on. (You can also use OECD reporting, but only after a long lag.) There’s nothing as user friendly as Australia’s “Greenbooks” of historical data. Nor is there anything as timely as Australia’s budget night aid releases.

Hence the howling. When our budget is actually released each year, working out the barest of basics of what’s changing in New Zealand aid requires devoting an evening to augmenting this spreadsheet with numbers buried places like page 90 of this PDF. Even then it’s imperfect. I have, for example, had to keep aid to Cook Islands in the totals. The government still calls the money it gives the Cooks ODA (I think about $50M a year), even though Cook Islands is no longer an ODA eligible country. Conversely, we may give some aid outside of Vote Foreign Affairs, but I can’t find it in budget documents. So I may be missing some aid spending. The big picture is correct enough though.

And here’s the big picture:

What the chart shows is that, when inflation is taken into account, New Zealand’s aid actually fell last year. But this, to be fair, is only a function of high inflation. Aid increased nominally. And New Zealand aid is set to rapidly increase over the coming year. By the 2023-24 financial year, our aid will top one billion NZD for the first time in our country’s history. That’s good news.

There’s more good news in the next chart, which combines aid data with Treasury and Stats NZ GNI estimates.

If GNI projections are right, our ODA/GNI ratio will top 0.3% for the first time since 2008. (Please remember this includes aid to Cooks; if we were to follow OECD rules, the ODA/GNI would be about 0.29%.) Even with the Cooks complication considered though, the trend is still in the right direction. Good news.

The more complicated news is that, as best I can estimate, almost all of coming years’ aid increases will be because of climate finance: money we give developing countries to help them mitigate their own emissions, or to help them adapt to the effects of climate change. (I’m still working on this and will email again if I can make more sense of the limited data in coming weeks).

Climate finance is no substitute for cutting our own emissions. But in the midst of an active climate crisis, climate finance is not a bad thing.

It should be new and additional to existing aid spending though. In New Zealand’s case, unlike Australia’s, it seems like we are not robbing our existing aid budget to pay for climate finance. That’s good. However, as best I can tell, we won’t be meaningfully increasing aid outside of climate finance anytime soon. In a world reeling from a food crisis and COVID-19, not to mention perennial development problems, this isn’t good enough.

Remember aid is about 1% of government spending. We could quite easily do more.