NZAID to join MFAT, budget to increase

New Zealand's aid budget will increase but not as much as promised by Labour and those making decisions over how it is spent will be returned to the Ministry of Foreign Affairs, the Government announced today.

Foreign Minister Murray McCully said the new Government had concerns about the effectiveness of aid spending.

In a speech in Wellington today, Mr McCully said aid spending would increase.

There would be "prudent increases over the next few years" that would see the aid budget reach $600 million in 2012/13.

"The aid increase announced today is smaller than that promised by the previous government, but it is realistic and sustainable in the current global economic situation," Mr McCully said.

The aid budget was set at $471.9 million last year. It will increase to $500 million in this financial year, rising to $525 million in 2010/11, $550 million in 2011/12, and to $600 million in 2012/13.

"Following a review process, the Government has decided to change the mandate of NZAid, the government's aid agency, to focus on sustainable economic growth," Mr McCully said.

There would be a continuing focus on the Pacific.

"Given that the objective of our aid should be to reverse the negative trends we see in the Pacific, current policies are clearly failing. Our money has generally done little to build strong economies providing jobs and the promise of a brighter future."

NZAid's semi-autonomous status within the Ministry of Foreign Affairs and Trade would also be removed.

Critics of the move say it could see a return to aid being used as tool of diplomacy and not necessarily where it would do the most good.

Mr McCully said the change recognised aid was a key component of the Foreign Affairs portfolio, "and thus needs to align, as much as possible, with our wider foreign policy interests".

- NZPA