Hi and welcome to an NZADDs update,
2024 will be a bad budget for aid if promised cuts materialise
From time to time my friends ask me what I miss most about Australia. When they do, I cast my mind over the golden sand beaches, the deep blue waters of the tropics and the majesty of the Outback. But my answer is always the same: “I miss the PDFs”
Their response is always the same too: “The PDFs!?!”
“Yeah sure”, I say, “everything from the smallest mite to the largest crocodile wants to kill you, but in Australia at least they release clear, detailed, timely PDFs outlining their aid budget.”
New Zealand aid transparency has improved in recent months. But the improvements are all to do with project details. Transparency when it comes to high-level data, like how much we’re actually planning to give, is still lacking.
And so I’ve spent the last few hours carefully navigating sprawling Treasury spreadsheets and labyrinthine budget estimates files.
Here’s what I’ve found:
The 2024 budget was a bad one for New Zealand aid. By the end of the coming triennium (aid is budgeted for in three-yearly cycles), our aid will have fallen below 1 billion NZD again. And our aid/GNI ratio will be at an embarrassingly low 0.2%.
You can see the grim future picture in the following two charts.
But first please note that my data include aid to the Cook Islands even though it’s no longer aid-eligible in the eyes of the OECD. This is because there’s no way to exclude it thanks to our poor aid transparency. The good news though is that aid to the Cooks is small enough that it barely affects overall figures.
I have also had to estimate departmental spending, which is aid overheads, for the years 2025/26 and 2026/27. Why? Because the data released today didn’t disclose the actual estimated amounts (presumably a state secret). In lieu of this information I have assumed that overheads remain 9% of actual aid spend, which was the ratio in the most recent year with data. Luckily this is a pretty safe assumption.
So here are the trends:
Actual aid spending
Aid/GNI
By 2027, our aid generosity as measured by aid/GNI will be lower than much poorer countries like Lithuania and Slovenia, and worse even than notorious aid tight-fists the United States.
Why is this happening?
There are three reasons:
- The first, and least materially important, is that overheads will fall as the rest of the aid budget falls.
- The second is aid cuts outside the Pacific.
- The third is that the aid we were giving as climate finance, which increased substantially under the previous government, will be allowed to decrease again.
This third change is the most significant, and also the most complex. The previous government hadn’t budgeted to maintain its climate aid increase either, although it’s a reasonably safe bet that it would have, particularly if the government had been a coalition with the Greens. It’s also possible that the planned cuts to climate aid will not occur even under the current National-led coalition. It would be very embarrassing for the Government to front up to the next UNFCCC COP meeting and say, “Um, gosh, yes, we’re being pretty hopeless on our domestic emissions, and we’re cutting climate finance too.” So it’s possible that an announcement will be made at a future COP meeting, and our climate aid, along with overall aid, will rise again. Or not. There are alternatives (like closing other aid projects and using the savings to fund new climate projects, or creative accounting), but perhaps the New Zealand aid picture won’t look so bad in a couple of years’ time. We’ll see.
That’s my analysis, prepared on the night. If you think any of it is wrong, please let me know: I’ll post corrections. If you have any questions, please let me know. If you are from MFAT and are planning to release some more informative documents (or if you already have, and I just cannot find them), please let me know, I will happily credit you for this.
You can download my working data here.
Terence for NZADDs admin.
New Zealand Aid and Development Dialogues 