Economic goals, poverty, and hard facts

Murray McCully has a column in today’s Herald on overseas aid, where he defends his view that economic growth leads to poverty reduction and thus should be the focus of our Aid dollars through NZ AID. He says that the NGO's who disagree with him are self interested and disinterested in "hard facts" - but he refuses to meet with them. Lifting people out of poverty depends directly on increasing economic growth and strengthening trade, McCully says, and no country in the world has achieved one without the other.

Sounds good, but it's how economic growth is increased that is the sticking point.

Economic growth is one of many instruments in development, it is not a development goal in its own right.Hard fact number one. Therefore constraints on development - not constraints on growth, should underlie effective strategies in decisions on how to allocate taxpayer aid money. And a part of the development community must contribute to that analysis.

But in New Zealand, the Government has shut down dissenting views - like the views of Caritas, TEAR Fund and other aid agencies who were refused the opportunity to discuss their views with the Minister, who instead, has effectively told them to get stuffed.

Now to hard fact number two. In order for McCully's plan to work three things must happen: Policies have to generate growth, that growth has to lead to development - to reduce poverty - and that development has to be greater than if the focus was on poverty reduction.But the reality is that when economic growth is prioritised over development and poverty reduction, the actual development progress that results is less than it world be had development been the priority. It would be different if McCully could determine the desired level of growth, but he can't. Hard fact number three. Furthermore, countries that pursued growth without changes in sustainable development can't sustain either. WHich doesn't do much for poverty reduction. Hard fact number four. Therefore countries that focus on development are more likely to see development sustained and poverty reduced. Hard fact number five.

But while McCully bangs on that economic growth is a goal to poverty reduction, our aid dollars are likely to be corrupted as they will be less likely to be as efficient in assisting the poor.

That's probably a fact, too.

Cutting aid in the name of economic development

After eight years, Murray McCully wants to dissolve NZAID (the country's disaster relief and aid funding body) inside the Ministry of Foreign Affairs (MFAT) – as well as redistribute funding. Most NZAID Official Development Assistance is spent within the Pacific region but McCully wants to ensure there is even more concentration of NZAID money on the Pacific.

So, he cuts $1.95 million a year off a Pacific NGO collective's budget. Sounds like this agreement is history, then.

McCully made the decisions in secret and didn’t bother to tell any of the aid agencies and stakeholders affected, leaving the Opposition to do it. He didn’t even put it in his weekly newsletter. In fact, he isn’t writing his weekly newsletter because, as his spokesperson told me “the baubles of office burdens of office preclude that possibility”.

At least the burdens and baubles are not "precluding the possibility" of Heather Roy from doing her weekly newsletter – or posting on her Facebook site. She’s the Associate Minister of Foreign Affairs and would have had responsibility for the aid budget but this government made it the responsibility of the Minister. But I digress.

NZAID was set up with a central goal of eliminating poverty after independent development experts reviewing the original aid programme found problems with it, like poor policy and lack of clear goals. McCully wants to change the focus from poverty elimination to trade and economic development and reduce the trade imbalance that currently exists between New Zealand and our Pacific neighbours. In other words he wants to change the focus from aid to foreign policy, with a focus on trade.

So what’s the difference? Aid is about helping people work their way out of poverty, whereas foreign policy is about pursuing New Zealand's interests abroad. There can be a conflict when aid agencies like World Vision are attempting to assist people via a policy framework that is more about New Zealand’s interests: The needy lose out.

The Government has committed .35% of our gross national income (GNI) in overseas aid by 2010. The international target is 0.7%. Economic development in poor countries cannot be sustained unless there is a focus on poverty elimination. What happens if there is not? Well, aid money, instead of supporting a road to get the produce from impoverished farmers to market, is spent on a road to the Prime Minister's house. Don’t snigger, this has reportedly already happened in at least one country. Is that the sort of thing we want our taxpayer dollars through NZAID spent on?

Read more on the Don't Corrupt Aid site – a campaign to keep New Zealand’s international aid focussed on addressing poverty.