Friday, May 19, 2006

More on the budget and ODA

Scoop's Sludge report tells it like it is on the government's miserly allocation for foreign aid in the budget:

Budget 2006 includes $21million annually for Overseas Development Aid. This takes NZ's ODA contribution as a percentage of GDP from 0.27% to 0.28%. At this rate of gain the stated aim of 0.7% of GDP will be achieved in 2048.

(Emphasis added)

In 2000, the government signed up to the UN Millenium Development Goals, which included a commitment to raising aid to the international benchmark of 0.7% of GDP by 2015. According to a report from NZAid, this goal was reaffirmed by Cabinet in August 2003. With this pathetic increase, we're reneging on that promise to the world's poor. We're even reneging on our own somewhat pathetic target of increasing aid to 0.35% of GDP by 2010. Instead, we're going to be just another nation which talks a fine talk on global development - but does not pull its weight.

Once upon a time, Labour used to be better than this. In the 70's, under Norman Kirk, they boosted foreign aid to its highest level ever - 0.52% of GDP. Since then, the story has been one of steady decline [PDF]. Is it too much to expect that Labour remembers its roots, adopts an internationalist outlook, and actually keeps its promises?


Utter nonsense.

At the rate of gain in question we'll have passed the international benchmark of 0.7% of GDP by 2018.

Posted by Graeme Edgeler : 5/19/2006 09:58:00 AM

How so? We've had a significant increase over the last five years - but this budget stalls it, raising funding to 0.28% of GNI and keeping it there until 2009 (or, in Cullen's words, ODA will be "maintained at the new plateau"...)

A lot of money has been transferred from MFAT into new, multi-year appropriations, but it hasn't been increased. Likewise, the expected increase in "other expenses" in 2010 is more than offset by the expiry of that multi-year funding.

If anything, Scoop is being too generous. Rather than increasing by 0.01% of GDP a year, we're increasing by that much and then holding it steady for three. At that rate, it'll take us until 2130-odd...

Posted by Idiot/Savant : 5/19/2006 10:52:00 AM

People who never really got maths, eh? I guess I'm one of the 'lucky' ones.

You (and scoop) talk about the rate of increase - and the rate of increase given the figures you quote (you hadn't initially mentioned the 2009 bit) is 3.7% per year.

Using simpler numbers:

Assume it was 1% last year, and we were trying to reach 7%.

Next year we're going to 2% - this is a 100% increase as we're doubling the proportion we're giving.

If we were to keep increasing it by 1 percentage point per year it would take until year 7 to reach the target. However, if we to keep the rate of gain constant (100% per year), the target would be reached in year 4.

It's confusing because we're talking about percentage increases of percentages, but if you were to look at it using dollar amounts the point would be clearer:

E.G. This year it's $1000. Each year we'll increase it by 10%. So next year it will be $1100. In two years' time it will be $1210. If we were increase it by $100 a year then the rate of increase would be going down (10% increase in the first year, 9.1% in the second etc.)

Posted by Graeme Edgeler : 5/19/2006 11:23:00 AM

This is a common flaw of the left, to blame the Labour Party for it.

The only way to get aid taken seriously in mass politics would be a New Zealand version of the extraordinarly successful Make Poverty History campaign that did so much good in the UK.

Political parties can help sway public opinion but honestly, do you think that Labour suddenly saying, "We're going to increase aid spending by $700m a year" would do anyone any good, in the current political climate?

Why don't you do a post about how the progressive left could work with the Labour Party, the Greens, the Alliance, the churches, the trade unions, the environmental NGOs etc to build public support for such a change?

Posted by Jordan : 5/19/2006 11:49:00 AM

Graeme: Right... So you're not actually talking about the amount the government is actually spending, but a semantic point about how Scoop has described it.

I suggest you read the estimate of appropriation for Vote:ODA. That makes everything perfectly clear.

Posted by Idiot/Savant : 5/19/2006 11:50:00 AM

Jordan: There is already such a campaign, being run by the Council for International Development. last year, they got 14,000 people to petition Parliament calling for the government to honour its promises and lay out a timetable showing how it would meet its commitments - a call backed by the Foreign Affairs, Defence and Trade Committee.

United Future's Peter Dunne has likewise called for Labour to put its money where its mouth is, and was seeking a cross party agreement on significantly increasing aid levels.

The public support is there. There is support among Labour's coalition partners and its wider allies in Parliament. The problem is that Labour doesn't see keeping its promises in this area as a priority.

I'm not expecting Labour to pull a Norman Kirk and increase its aid levels over night. This government's style is about steady, incremental progress, not dramatic gestures (except at election time). But is it too much to ask that they would say "we've made a commitment, and this is how we're going to keep it", and plan for some steady increases over the next few years?

Posted by Idiot/Savant : 5/19/2006 12:04:00 PM

Oh, and more generally: it would be nice if Labour actually tried to sway public opinion every so often, rather than bowing to it every single time. You don't win the battle for mindshare by not bothering to fight.

Posted by Idiot/Savant : 5/19/2006 12:07:00 PM

That's a little unfair I/S - the only information I had was the information you provided, and if that information was/is correct then government aid would pass 0.7% of GDP, not in 2048, but some 30 years sooner.

Posted by Graeme Edgeler : 5/19/2006 04:43:00 PM

Graeme: Hardly. Its fairly clear from the Scoop comment that the "rate of gain" they are talking about is in terms of % of GDP (0.01% of GDP / year), not in terms of last year's spending baseline. It's not my fault that you chose to misinterpret it.

I brought the extra information into it because I thought you'd bothered to look, and were disagreeing on the basis of some line in the estimates somewhere - not that you were being semantically pedantic.

Posted by Idiot/Savant : 5/19/2006 05:23:00 PM

Dropping back to the semantic point for a second, surely it wouldn't be by 2018 either: a yearly rate of +3.7%/year would take 25 years to reach 0.7% (0.28*1.037^25=0.6944). That'd be in 2032. To make it in twelve years would need a rate of +7.9% p.a (to get there in n years, the annual multiplier is e^(ln(2.5)/n). Unless my figures are wrong...

More on topic, I've always thought it was fairly shonky the pitiful amount of aid from New Zealand, that isn't even close to half of the target.

Posted by sappho : 5/19/2006 06:07:00 PM

" People who never really got maths, eh? I guess I'm one of the 'lucky' ones."


Never, ever say that sort of thing. Because if you do then you can be sure that'll be the post where you get your arithmetic wrong.

You're saying will go from 2.7% to 7% in 12 years. That's an increase of over 150% in 12 years. That requires something like 8%/annum (compounding) since rule of 72 says that 8% doubles you to 5.4% in 9 years.

Posted by Icehawk : 5/19/2006 11:23:00 PM

Jordan, the left blames the Labour Party for its failings in foreign affairs because Labour leads the Government and has taken an (at best) indifferent approach to the views of its coalition support on the left.

New Zealanders are actually quite proud of our legacy as an international citizen, but the current stagnation means that this is being condemned to the past.

The figures speak for themselves.

Posted by George Darroch : 5/20/2006 07:14:00 PM

Hi Jordan,

NZ also has it's own MPH campaign:

To be fair to Labour though, there was a heck of a lot of baying for tax cuts at the last election (and, indeed, since then), which was something they resisted. So, for people like myself, who would like to see increased public spending on anything (including ODA) the question remains: from where else do you want to cut money; or how can you convince the public that we need to raise taxes.

Granted in the case of ODA we are only talking about a very small raise but still...

Posted by Terence : 5/22/2006 01:20:00 PM