KEY POINTS:
National ministers are extending their review of Government spending to officials' handling of New Zealand's $500 million overseas aid budget.
Foreign Affairs Minister Murray McCully yesterday said National would not be cutting the budget. However, the Government wanted to make sure NZAID, the organisation responsible for it, was operating efficiently, especially in terms of the overheads involved in running aid projects.
NZAID has already undergone four reviews and audits since its establishment in 2002, including one conducted last year by the Office of the Auditor-General on its contracting practices and financial management systems.
Mr McCully said it would be hugely unfair if the Ministry of Foreign Affairs was subject to tight rules, while there were more lax ones covering NZAID.
"That is the situation which has increasingly been occurring."
He noted that Australia was rearranging its aid spending by imposing reciprocal obligations on aid recipients and aligning aid spending with foreign policy objectives.
"That is going to ask some questions of New Zealand because we can only really achieve best value for money if we operate on a consistent footing with Australia."
National is already reviewing the last Government's $523 million expansion of the operations of the Ministry of Foreign Affairs which was scheduled to create around 300 new positions over the next five years.
Amidst the worsening fiscal climate, Labour Party Cabinet ministers had already determined before the election there should be an "interim slowdown" in the implementation of the package unveiled by the previous Foreign Affairs minister Winston Peters.
The ministry received the large increase in its baseline funding to maintain current capabilities against rising costs and "lift the tempo" of New Zealand's diplomatic engagement at home and abroad, according to ministry briefing papers released yesterday.
National has promised to cancel the extra spending, saying it was clearly a "political trophy" for Peters.
Mr McCully has asked ministry officials for a report detailing how much of the cash injection is now committed to such things as property leases for new embassies and extra staff already hired so that he knew the contractual obligations the ministry was under.
