Guest Column: Still Failing the Poor: why New Zealand needs to give more aid

By Terence Wood

We live in a time of unprecedented material wealth: our planet is home to almost 800 billionaires; while there are over 8 million millionaires living in the United States alone. The Sultan of Brunei spent nearly US$30 million on his 50^th birthday party, while a single pen was bought at Harrods for US$265,000. Annually the world spends $US40 Billion on pet food [PDF] and the people of Europe spend $US 11 Billion on Ice Cream each year.

At the same time, according to the best available evidence, almost half the world's population lives in utter poverty, surviving on less each day than US$2.56 would have bought you in the United States in the year 2000¹ - in other words, almost nothing.

This is the sort of grinding poverty that dramatically reduces life expectancy and opportunities. This is the sort of poverty that leads to the deaths of 10 million children every year and which confines hundreds of millions of people to illiteracy.

This is the sort of poverty that is clearly intolerable in a world as wealthy as ours.

The question, then, is what is to be done? And, most importantly, what can we do?

The solutions to global poverty are complex and there is no one magic bullet that will rid the planet of the problem. A fairer global trading regime would help, as would debt reduction for some countries, as would reduced corruption. On top of this, however, more aid is needed. And this, sadly, is one area where – as Idiot/Savant noted – New Zealand continues to fail shamefully in the task of tackling global poverty.

In 1970 the United Nations adopted General Resolution 2626, through which the nations of the developed world committed to devoting 0.7% of their Gross National Product (GNP – now commonly referred to as Gross National Income or GNI) to Overseas Development Assistance (ODA, or aid). This commitment has been reaffirmed several times since but it has never been met. At present, collectively, the OECD donor nations don't even manage to give half this target – in 2006 a paltry 0.3% of GNI was given as official development assistance.

In New Zealand's case the news is even worse: in 2006 we managed to give just 0.27%. Or, to put it another way, our official development assistance amounted to a miserly 27 cents for every $100 dollars we earned.

Over the rest of this blog post I am going to outline 3 reasons why, as a country, we need to do better than this.

The Moral Argument

The moral case for meeting the 0.7% target is straightforward. The amount of money that is being asked of us is very modest – 70 cents from every hundred dollars of national income. Yet, given well, this money can make a huge difference to the lives of people whose needs are acute. Compared to other endeavours such as the invasion of Iraq, estimates as to what would be required to provide primary education, water and sanitation, and improved health care to everyone on Earth are remarkably small. Annually, US$55 billion alone would be enough to meet the Millennium Development Goals' health targets, as well as extend primary education, improved sanitation and safe drinking water to everyone on Earth who currently lacks it. If the OECD donor nations were to meet the 0.7% target almost US$140 Billion dollars of extra aid would be given every year - easily enough to provide sanitation, clean water, education and better health to everyone on Earth. This is something that would save the lives of literally hundreds of millions of people.

In short, the sacrifice being asked of us is so small, and the benefits associated with giving more so great that it is very hard not to see the current situation as being immoral.

Even more so when you consider that colonialism, with its arbitrary map drawing and establishment of extractive institutions [PDF], played a considerable role in the problems that confront the developing world today.

Enlightened Self Interest

No doubt, out there in the New Zealand blogosphere, there will be people to whom the idea that the wealthy are morally obliged to give money to the poor is heresy most dire. But even these people may want to consider supporting increased aid giving. After all giving more aid is in our own self interest.

While living in an increasingly integrated world brings with it many benefits it also brings risks – globalisation means that developed countries ignore the developing world at their own peril. To give you but one example, at present Papua New Guinea is in the early stages of a generalised HIV epidemic; if no action is taken it is highly likely that, within a decade, the economic and social damage wrought by the disease will be similar to that witnessed in Sub-Saharan Africa². It is also probable – given the region's high risk indicators – that if HIV goes unchecked in PNG it will spread outwards across the Pacific. And if this happens it is highly unlikely that New Zealand, with its strong ties to the region, will escape the impact. This need not take place though: countries such as Thailand have shown that well-planned health programmes can arrest the spread of HIV. Increased ODA could be spent on such programmes in the Pacific – preventing future problems before they arrive on our doorstep.

On a more positive note, ultimately, aiding the developing world ought to aid our own economy. Today's aid recipients can become tomorrow's export markets. This has been the case with South Korea whose economic lift off was assisted by aid and which was, as of 2004, New Zealand's sixth largest export destination.

International Standing

As a small country New Zealand relies on multilateral institutions and agreements to advance our interests. Yet when we fail to meet our own international commitments we undermine our own ability to argue that other countries should meet theirs.

Until recently, New Zealand's low ODA levels were afforded some cover by the fact that many other OECD nations were poor givers. This is no longer the case: New Zealand's ODA as a proportion of GNI is now the 6^th lowest of the OECD donor nations, and we are well below the OECD donor country average of 0.46% [PDF].

If we don't rectify this situation, if we continue to fail to meet our commitments, how can we argue that other countries should meet theirs?

Giving more would be the morally right thing to do, what's more it is in our own interest, the question then is why on Earth don't we do so?

One possible answer, and one which is trotted out regularly by aid's critics, is that aid doesn't work. Another is that it is trade, not aid, that is needed. A third response is that the developing world is poor because it is corrupt and that aid can't do anything to help this.

In my next post in this series, I'll have a look at these counter arguments and explain why they are mistaken.

Footnotes:

1. These numbers come from the World Bank's global poverty measurement project and are reproduced in Peter Singer's book One World. With regards to the World Bank's poverty lines several things should be noted: first, they are not exactly US$1 and US$2, they are US$1.08 and US$2.15; second, they are purchasing power parity dollars, this means that they take into account the fact that US$1 will buy you more in a developing country than it will in the US; third, they are inflation adjusted 1992 dollars – Singer provides an updated line for 2000 which is the basis for my $2.56 figure; fourth, they are arbitrary constructs taken by averaging the poverty lines of a bunch of poor countries (for more discussion see here [PDF]) - they are not constructed around any meaningful needs set and the US$1 a day line is so low as to be almost meaningless – as detailed in one of the articles here [PDF] the two dollar a day line is probably closer to a minimal set of health needs); fifth, World Bank figures most probably understate the level of global poverty (see Sanjay Reddy's article here [PDF]).

2. I have found no better illustration of the impact of HIV than this moving chart (click on the play button) plotting the fate of one of Africa's onetime success stories, Botswana.