Matthew Hooton: Budget must show cultural change

Winston Peters emphasises that New Zealand support will focus on promoting Pacific self-sufficiency, rather than economic dependency through debt. Photo / Michael Craig

After his Russian, Kazakhstani and North Korean diversions, Foreign Minister Winston Peters has finally delivered a compelling account of his foreign policy priorities.

Every government's first responsibility is defence of the realm.

Key to New Zealand's long-term security is keeping great powers out of Australia, Papua New Guinea and the Pacific islands used as stepping stones by the Japanese in the 1940s, by the British and other Europeans in the 1700s and by the people who would became the Māori over previous millennia.

New Zealand's last three governments have done well securing a rules-based economic relationship with China but have been naïve about its strategic ambitions. Like all great powers, it seeks to guarantee its own security by attaining hegemony well beyond its borders.

Consequently, as Peters puts it diplomatically, "the South Pacific has become an increasingly contested strategic space".

China now has a diplomatic presence in the South Pacific exceeding New Zealand and Australia's and is securing a hold over Pacific states through cheap but excessive debt. Left unchecked, a military presence will follow.

Peters' response is his billion-dollar boost to foreign aid and the Ministry of Foreign Affairs and Trade (MFAT).

Coming days after Labour broke its election promise on GP visits, this is certain to be politically unpopular but is essential to compete with China in our own front-yard and better protect the rules-based system globally.

With New Zealand unable to outspend China in total dollars, Peters wisely emphasises that New Zealand support will focus on promoting Pacific self-sufficiency, rather than economic dependency through debt.

Still, Peters' programme is doomed to fail unless it comes with structural and – even more importantly – cultural change within MFAT.

Like the rest of the public service, MFAT and associated agencies have become shockingly risk-averse and slow. It is difficult to imagine them today embracing anything as ambitious as the China or Trans Pacific Partnership strategies launched a generation ago.

Too many of New Zealand's offshore diplomats seem to regard their postings as OEs on the taxpayer, with the best strategy to get another being to keep their heads down and avoid anything new. While certainly global according to their air-points status, many are stunningly unworldly about anything outside government chanceries or banquet halls.

Back home, seemingly simple processes like finalising the paperwork for an agreed promotion take months.

The last foreign minister to attempt change within MFAT was Murray McCully. Famously, the mandarins fought back, forcing him into disastrous personal initiatives such as the mad Saudi sheep affair.

If MFAT's current leadership responds as petulantly to Peters' new priorities, he should be able to sack them, as Shane Jones has suggested.

MFAT is hardly the worst offender across the public service.

As John Tamihere argued in the Herald this week, taxpayers already spend enough to solve most of New Zealand's social ills but their money is administered by Wellington bureaucrats terrified of trying anything new for fear it might fail and hamper their careers.

Doing nothing even mildly innovative is the best way to protect oneself in Wellington's Bowen Triangle.

Peters is not the only minister likely to find himself with hundreds of millions more when Finance Minister Grant Robertson delivers the Budget on Thursday.

Education Minister Chris Hipkins will surely receive billions more which will be entirely wasted if just added to teachers' salaries with nothing in return.

To be fair, Hipkins has launched what seems to be a genuine blue-sky review of the sector.

More worrying is what will happen to the billions to be dumped into health. The minister, the Rev Dr David Clark, is an academic theologian and one of the world's foremost experts in Christian existentialism but it is not clear this had prepared him well to run a $17 billion-a-year social service.

Unless he asks sacrilegious questions about the merits of the District Health Board model, expect no significant improvement to health services no matter how much more Robertson throws at him.

On welfare, minister Carmel Sepuloni was massively constrained when the Prime Minister decided to suddenly abandon the social investment model that Bill English's reluctant bureaucrats had taken nine years to develop.

Jones' provincial growth fund and billion-tree programme both look likely to fail given bureaucratic opposition. Phil Twyford's KiwiBuild programme is already a laughing stock in property circles with his bureaucrats rushing round trying to buy existing developments, opening up wonderful opportunities for scams.

The easy bit for ministers is appropriating their departments more taxpayers' money.

The real test is how they can get their bureaucrats to use it creatively and innovatively to achieve the policy goals they seek. Unless Hipkins makes progress as State Services Minister in changing how the Wellington bureaucracy interacts with ministers, the private sector and the wider community, expect them all to fail and the money to have done more good left with taxpayers.