What happened to aid in Budget 2021/22

terence

What news did budget 2021/22 bring for New Zealand aid? It’s a good question, and it is also a frustratingly hard one to answer. As with last year, there was no Vote ODA in today’s budget, making it harder to work out the total aid spend. Worse than last year, there’s no annual information on aid spending for this triennium. All that’s available is information for the coming financial year, plus some lump sum totals which are not very easy to work with.

Still, here’s what we know thus far.

Aid is set to increase slightly in the coming financial year

Aid increased nearly 11% in the current financial year, but that is primarily making up for an under-spend in the financial year prior to that. Next year aid is budgeted to increase by just 0.7%. (None of the calculations in this email take into account inflation; if they did the slight increase would likely be a slight fall.)

New Zealand aid over time (nominal, million NZD)

So the budgeted increase in aid next year is very small. Hardly the best we — a comparatively fortunate country — could do in a time of global need. Worse still, the increase is all in departmental overheads. Actual aid itself falls.

New Zealand aid and aid overheads over time

What’s coming after that? As I said, budget documents make it very hard to tell. But I suspect aid will increase by about 3% a year over the following two years.

With inflation taken into account, the real increase will be less. With Cook Islands removed from the data, the increase will be a fall. (Cook Islands is still a recipient of New Zealand aid, but is now too wealthy to be a recipient of Official Development Assistance as defined by the OECD).

I think aid programme overheads are a good thing, so an increase is fine. You need enough experienced staff to give aid well. You need to pay them. I think giving aid to the Cook Islands is a good thing. We have a special relationship with the Cooks.

But I also think that we could be doing a lot better. We can keep increasing overheads, we should keep giving aid to the Cooks, but we should also be increasing our aid budget by more. In these Pandemic Years we’ve been comparatively lucky. We could be doing more to help the rest of the world.

I’ll be back in a week or so with additional numbers. I will also double check these — they were calculated in a hurry. Do feel free to email me comments or corrections.

Terence for NZADDs admin