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Speech: Murray Mccully - Resilience In The Pacific Conference - Victoria University

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Fuseworks Media

Hon Murray McCully Minister of Foreign Affairs

16 February 2011


Resilience in the Pacific Conference

Institute of Policy Studies, Victoria University

Secretary General, your Excellencies, honoured guests, speakers and participants who have travelled to join us from across the Pacific, ladies and gentlemen.

Thank you for inviting me to address you today.

I want to take this opportunity to speak to you about the process we have underway to address some of the priorities of the Pacific region.

The Key Government was elected with a mandate to commit a greater share of our resources to our own region and shift the focus of our development assistance to give a greater emphasis to sustainable economic development.

Our country is very much a part of the Pacific.

Pasifika peoples currently comprise 6.9% of our population, projected to rise to close to 10% by 2026.

Family links between those who have settled here and those who remain in the region are strong.

As the Minister of Foreign Affairs, that suggests two things to me:

First, the Pacific Division of our Ministry of Foreign Affairs should provide the best informed, best connected, most current experts on the Pacific region of any foreign service in the world.

I have given that very clear brief to the Chief Executive.

Second, our development assistance programmes should have a clear emphasis on our own region, provide outstanding leadership in what they achieve and demonstrate good coordination with other donors.

An essential first step was to merge the aid agency back into the Ministry of Foreign Affairs and Trade so that our diplomatic and development arms were working on a shared strategy in a way that is fully coordinated and coherent.

Our total allocations for the region - despite current economic conditions - have risen from $242 million in 2008/9 to $284 million in the current year.

This is very much work in progress.

Our aid programme has more of the features of a supertanker than a fizz boat.

Making changes takes time.

But I am satisfied that we are well on the way to reprioritizing our own region in the context of our total programme.

As important as the total spend is the effectiveness of our spend.

In this respect we still have a good deal of work to do.

Everything I have seen in the two years I have held this role has confirmed my view that the fixation of some in the development community with the quantum of aid being delivered, rather than the quality of aid, represents a serious medium term problem for the sector.

This is, after all, public money, being appropriated in circumstances that are challenging for most governments.

While it is perfectly reasonable for the development community to lobby for an increase in aid as a percentage of gross national income, it is not reasonable to do so in the absence of serious efforts to ensure that we maximise the effectiveness of current aid expenditure.

Such an approach short changes those poorer folk in the region whose circumstances could be improved if only the existing budgets were to be more wisely spent.

Worse, this lop-sided emphasis on quantity but not quality also risks inevitable public backlash as evidence mounts of poor spending of dramatically increasing budgets at a time of relative restraint in other areas of public expenditure.

I will continue to work hard to persuade my colleagues to provide for ongoing increases in the aid budget, but I intend to bolster our case by demonstrating real and significant improvements in the quality of our existing expenditure.

The share of our total aid budget - that's $525 million this year - that we spend on overheads is far too high.

It is approximately $45 million if you look simply at the costs of running what is now called the International Development Group, or IDG.

But when you account for IDG's share of the overall MFAT corporate overheads - something that has only happened as a result of changes initiated by John Allen and myself - the cost of doing development business comes to $64 million, or roughly 12% of the total budget.

That figure needs to come down.

In part this is simply because we have too many separate activities on the go - over 800 last year, each subject to their own assessment and audit processes.

We are now moving to bigger, more significant projects, where we can get the best bang for our buck, and where the proportion of the budget that is lost in overhead is much smaller.

We need to ask multi-lateral organisations who receive our cash to become more efficient and more effective.

I have over the past two years been giving this message to the Pacific regional organisations as well as multi-lateral organisations further afield.

They need to show us results so that we in turn can account to the public whose money is being spent.

We are also seeking opportunities to conduct more of our work through partnerships with NGOs.

Good NGO partnerships can be an efficient, effective way of committing our aid budget.

You will hear more about the changes we have initiated in this area over the coming weeks.

I have said many times that we are trying to become more focused in our programmes in the Pacific, and in particular that we want to give priority to initiatives that will build long term sustainable opportunities.

That has led us into a number of core activities.

Let's start with education.

No matter what else we do, the Pacific will not flourish if we do not invest in improving educational outcomes for young people.

Currently we spend something like $67 million annually on educational support in the Pacific.

Results across the region are highly variable.

When we sat down for our last formal talks in November 2010, Kevin Rudd and I agreed to complete a stocktake of educational expenditures and outcomes throughout the region as a basis for achieving a more coordinated, coherent spend in an area we both agree to be a high priority.

I anticipate that this exercise will result in education receiving a greater proportion of our resources in the region.

New Zealand has already taken a significant step by re-designing the scholarship programme for the region and increasing the number of places by 100% (from 98 to 198).

It is not difficult to identify the sectors of natural advantage in the Pacific, where investment is most likely to generate long term wealth and jobs.

That leads us immediately to sectors like tourism, fisheries and agriculture and horticulture.

Tourist visitor numbers to Pacific Island Forum countries now exceed one million and continue to rise.

As the global economy recovers, tourism has the potential to generate significant growth across a number of Pacific nations.

Increasing amounts from our development budget are targeted at supporting the orderly development of the sector, including the requisite transport links and the essential measures to protect the quality of the environment.

Nowhere is this more noticeable than in Niue.

We are well down the track with the Government of Niue on a tourism development strategy that is designed to see Niue equipped with the essential infrastructure for a boutique tourism destination: more quality hotel beds, enhanced marketing and promotion, regular air links, a modern communications network and developed attractions in whale watching, diving, fishing, caving and hiking, and the necessary coordinating mechanisms to manage all of this.

New Zealand taxpayers will invest $15 million over 3 years to complete this project.

But symbolically, Niue last year accepted a small cut to its budget support payments in recognition of the fact that in future it wants to rely increasingly on income it has generated for itself from the facilities now being developed.

In the Cook Islands we are starting the very expensive, but absolutely essential process of tackling the issue of lagoon water quality in Rarotonga.

Without substantial roading, stormwater, waste and sanitation initiatives over the next few years, declining lagoon water quality will seriously impact on the jewel in the crown of Cook Islands tourism.

The cost of these combined initiatives is in the region of $80 million, so while we will be happy to take the lead, we are obviously working to get other donors on board such as the European Union.

These are the sorts of measures that we need to sign up to if we are serious about the future economic viability of our region.

Most of our Pacific neighbours have substantial fisheries assets in the form of substantial exclusive economic zones.

For some of our poorest neighbours like Kiribati and Tuvalu, their EEZs represent by far their most substantial economic assets.

Yet they lack the means to ensure that a reasonable share of that wealth flows into their own hands.

The Forum Fisheries Agency estimates that in 2009 approximately $2 billion worth of tuna was legally caught from within the zones of the 14 Forum Island Countries.

But estimates of the value of fish taken illegally from that zone start at about $400 million.

That is the reason we are devoting an increasing share of our development budget to improved surveillance, to training and placing observers on boats, to training local people in modern fisheries skills so that their governments can insist on employment opportunities on boats working in their zones and ensure a supply of suitably equipped people.

And that is also why we are increasing support for the various bodies and programmes that will improve fisheries management in the region.

The Pacific is the last large fisheries resource on the planet that has not already been exploited beyond the limits of sustainability.

But we are running out of time.

And we need to get really serious about this.

In the areas of agriculture and horticulture there is real potential to turn fertile soils, good rainfall and productive climates into first a source of import substitution, and second a growing source of exports with which to fill the many empty containers that return to this country.

Our development partners look at our massive success as a farming nation and ask why we do not do more to assist them with modern agricultural techniques and practices.

We are trying to lift our game in this area, and also to leverage off the significant success of the Recognised Seasonal Employee programme which equips large numbers of workers around the region with both skills and capital.

None of these sectors can succeed without transport linkages that are moderately efficient and timely.

And too often in recent years we have been reminded that safety practices around the region still leave much to be desired.

On this latter point we are significantly increasing the resources we make available.

In relation to both air and sea links we have an increasing number of initiatives underway to ensure that good initiatives in tourism, fisheries or agriculture do not fail for want of reasonable transport linkages.

This brings me to the final big building block for economic sustainability in the region, which are collectively drawing a larger share of our resources: renewable energy.

Every small Pacific economy is being hammered by the cost of electricity generated from imported petroleum.

Bookshelves around the region groan under the weight of reports written for donors by consultants.

Many of us are now impatient to see action.

I have made it clear that our aid programmes in the Pacific will give absolute priority to renewable energy initiatives.

We were the first to put our hands up to fund the Tonga solar energy initiative that will be constructed this year and we will remain on the front foot with other similar initiatives in the region.

It is my hope that the Pacific Forum Leaders' meeting which we will host later this year will see measurable progress in this area.

We hear many lofty words on climate change, accompanied by large sums of climate change money being allocated to multi-lateral funds with very few people attending to the need for those funds to be translated into real renewable energy initiatives.

We need to ensure that the region is equipped to make real progress this year.

I have focused in these remarks on the building blocks for economic sustainability within the region.

Some critics have chosen to portray the New Zealand Government's focus on sustainable development as an indication that we have turned our backs on humanitarian needs.

Nothing could be further from the truth.

Their criticisms would carry more weight if they had, in recent years, turned their minds to some of the serious humanitarian challenges in our region instead of simply attending lavish conferences in New York.

Undeniably the greatest humanitarian challenge in our region is in Kiribati, and specifically on Tarawa, its capital.

There, 50,000 people are crowded onto a string of atolls in conditions which exhibit every imaginable type of humanitarian challenge.

Over the past two years we have started the process of trying to show some genuine leadership in dealing with these challenges.

In conjunction with the initiatives we are funding at the maritime school, at the airports and in the fisheries sector to provide greater income opportunities in line with my earlier comments, we have committed to major projects to alleviate the obvious humanitarian issues.

Fresh water initiatives, sanitation programmes, solid waste disposal and new accommodation subdivisions are just part of the programme we have embarked on.

Two years ago we were spending around $3 million a year from our aid budget in Kiribati.

Next year we are programmed to spend about $30 million, in an attempt to break the back of the most significant challenge in the region.

On top of that we have managed to attract another $77 million in other donor funds to complete these major initiatives.

This is the role we should play as active facilitators in this region.

That, of course, will not completely solve the problems of Kiribati.

But it will make a difference.

And it will tangibly demonstrate that as we attempt to get focused on the big development challenges of the region in areas like agriculture, tourism and fisheries, that we have not turned our back on the serious humanitarian challenges in the neighbourhood.

Doubtless you will hear a good deal more from us on these topics this year.

New Zealand is proud to have been selected to host this year's meeting of Forum leaders - the 40th anniversary of the regional body.

We are determined to use our leadership role constructively and to ensure that we consult widely amongst Pacific nations in the lead up to the event.

We also hope to leave a legacy of real improvements in the lives of Pacific people as a result of our time as Forum Chair.

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