New Zealand and New Zealanders travel well in the world. We're well liked, respected and compete above our size and weight.

We also have a reputation for generosity and philanthropy, particularly when it comes to our management of foreign affairs and, in particular, the granting of aid.

This is not an issue if your resources are limitless but ours aren't. With a changing world order and with many of the countries that were previously beneficiaries of our foreign aid now having more vibrant economies than ours (such as Asean countries, China and India), it is timely to reassess our obligations and our strategies. In particular our aim should be to create a more fiscally prudent policy platform that also continues to deliver.

The Ministry of Foreign Affairs costs New Zealanders about $400 million a year. It has about 1300 staff and runs offices in more than 50 countries. Some would argue this is on the exorbitant side but I'd argue it is the price we need to pay to maintain our status as an exporting nation.


Balanced against the $58.9 billion of exported goods to 189 countries achieved in the year to March 2010, for example, it is the price of doing business. It pays for maintenance of trading relationships and paves the way for New Zealanders to conduct their affairs safely and generally hassle free.

Then there is the other side of the equation, which is the administration of more than $500 million a year in aid. It costs $63 million to administer this budget - in other words close to 12.5 per cent is absorbed just in overheads.

If the criticisms made by Minister of Foreign Affairs Murray McCully are correct that for too long this country's aid budget has been a "closed shop", then the origins of such extravagance might be understandable. In this current climate, largesse and laxness make for poor partnerships.

Then there are the countries we support and the projects we bankroll. Take the Solomon Islands, for example. Again McCully believes we have spent the "thick end of $400 million in the last decade" and by his reckoning both New Zealand and Australia spend $250 million a year on a country with only half a million people.

In a recent piece in the Waikato Times, writer Tracy Watkins talks about the failure of our aid dollar and investment in the Pacific. She says the region is the world's highest recipient of aid per capita, with 2009 figures showing aid delivered equalled US$184 ($235) per person. In Africa, it's US$47 per person. She rightfully asks the question: "Why has there been so little return for such a big aid footprint?"

In the same vein, emeritus Professor Helen Hughes, a senior fellow at Australia's Centre for Independent Studies, suggests we might have been better keeping our money out of the mix.

As she says: "When first discovered by Europeans, the standard of living in the Pacific was so enviable that James Cook had difficulty keeping his sailors from absconding. After 40 years of the highest per capita aid flows in the world - totalling more than $100 billion - social indicators such as maternal and child health and literacy are among the worst in the world."

There needs to be more co-operation between the public and private sector when it comes to selection and management of aid projects. My own family foundation, in fact, is active in more than six countries helping to effect positive change with a focus on the Asia-Pacific region. Again, our philosophy is the extension of a hand up rather than a hand out and we look for opportunities that can be sustainable.

I think we have much in common with those championing aid projects so there is room for promoting beneficial partnerships. The Maxim Institute has it right in terms of its recommendations on how our refocus on aid should be configured. Some of its thoughts mirror my own.

* Tighten the focus of aid. Look at programmes that benefit partners and play to New Zealand's advantages where we have expertise such as agribusiness.

* Further collaboration and co-operation with private companies, research institutes and universities - by forming more whole-of-government approaches to issues of international development.

* Look to develop business mentoring and educational programmes in entrepreneurship and investment with measurable expectations and results.

* Ensure transparency across all aspects of where we plant our aid "footprint".

In the end, as Hughes would say, "village pump, vaccination and mosquito net programmes for wide-eyed children make for 'feel-good' television". Although such initiatives are important to health and wellbeing, lifting our sights to develop programmes that make a real, sustainable difference to these countries' economic vitality should be the overriding objective.

Owen Glenn is a businessman and a philanthropist as well as an Officer of the New Zealand Order of Merit.