Official data reveals New Zealand’s aid spending is forecast to drop year-on-year for the first time in eight years – from $1.201 billion in 2023/24, to $1.103 billion in the current financial year.

It’s still higher than every other year over the past decade, but Oxfam Aotearoa is concerned it shows climate finance funding has peaked, while Labour warns a decline in foreign aid could impact New Zealand’s strategic interests.

Oxfam Aotearoa climate justice lead Nick Henry says without a continuation of the climate finance funding (due to run out at the end of next year), essential support for climate adaptation in the Pacific can’t progress at the level needed.

Labour’s David Parker says aid for the Pacific is important for New Zealand’s strategic interests, and the millions less available to spend “will have a detrimental affect compared to what otherwise would have been the case.”

According to data provided by the Ministry of Foreign Affairs and Trade, a year-on-year decline in aid spending goes against the overall trend, which has increased in nine out of the past ten years – and significantly so, over the past three years.

But MFAT says aid funding should be compared between three-year periods, as expenditure typically ramps up towards the third year - causing spending to look uneven over a period of time.

The total IDC budget for the three-year period beginning 1 July 2024 is $2.910 billion, compared to just over $3 billion in the 2021 – 2024 triennium, an average of $1 billion each year.

“Recognising the fiscal constraints facing the New Zealand Government at this time, the budget includes a reduction of $7.6m per annum,” the MFAT spokesperson said.

“New Zealand’s development funding will continue to deliver against shared priorities in the Pacific and Southeast Asia, and we are focused on maintaining the impact of the IDC Programme.”

Ahead of the Budget the Government set minimum savings targets for public agencies, of 6.5 percent – although MFAT did not meet this target.

The spokesperson said IDC funding for the new triennium also takes into account a reduction due to the end of $800 million additional time-limited climate finance in December 2025.

“The Government has not yet made a decision about the future climate finance.”

In 2021, the previous Government committed $1.3 billion in climate finance for 2022 – 2025, contributing to a significant jump in aid expenditure.

The fund was designed to support other countries’ efforts to reduce emissions and adapt to climate change impacts – with at least half to go towards the Pacific region, and at least half for climate adaptation.

Henry says the climate finance investment contributed to a significant, and welcome, ramping up of aid funding since 2021.

“As the climate finance commitment starts to run out, we will see an impact on declining support for the Pacific, unless that commitment is renewed.”

“And what we’re now seeing is the uncertainty of what’s going to happen after 2025.

“It’s already having an impact because without long-term certainty of climate finance the programmes can’t be planned ahead, and we’re seeing a ramping down matching the ramping up we had after 2021.”

Henry co-authored a report from Oxfam and World Vision, published in August, which analysed New Zealand’s responsibility to provide climate finance.

It recommended a minimum contribution from New Zealand towards the current global climate finance target, equating to $558 million per year.

He’s hopeful the commitment will be renewed and increased, saying Government Ministers have signalled support for climate finance.

Labour’s Foreign Affairs spokesman David Parker says overseas development, particularly into the Pacific, is one of the most important ways New Zealand can secure our strategic interests.

“We hear repeatedly from the Government that it’s a time of increased strategic competition in our area.”

“One of the ways in which Governments like ours (like New Zealand’s) counter less benign influences is to do the right thing by the Pacific.”

“Amongst other things, it makes it less likely that they will throw their lot in with others.”

Responses to Official Information Act requests show Foreign Affairs Minister Winston Peters has also approved sub-allocations for IDC funding, with the Pacific receiving 60 percent of expenditure.

The MFAT spokeperson said the Government is committed to its ambition to support the resilience, security and prosperity of the Pacific.

“Our intention is to take a more strategic approach to working with other donors in the Pacific region, looking to harmonise and leverage investment wherever possible in support of shared Pacific priorities.”