Rt Hon Winston Peters
Minister of Foreign Affairs

Embargoed until 12.30pm, 16 April 2008
Speech Notes

A seismic change for New Zealand’s foreign service
Speech to NZIIA
Rutherford House, Victoria University
Noon, 16 April 2008

Ladies and gentlemen, thank you for the invitation to speak today. You will be in little doubt that we are in an election year, given this is the second political speech you will have heard this month.

Last week you heard that foreign policy ought to be bipartisan – and, other than on the occasional issue, that has been the accepted wisdom in New Zealand politics for many years.

Indeed, everything that was outlined to you last week is already part of this government’s key foreign policy goals.

You will hear no disagreement that New Zealand needs to continue lifting its game across the Asia-Pacific.

We must seek new ways of adding vigour to our relationship with Japan, but at the same time put more effort into less traditional relationships such as those with India, Indonesia, and Malaysia.

There is no argument that the intensity of our efforts with Australia, the United States, and in the United Nations must not slacken.

We are already seeking to play a greater leadership role in the Pacific.

We are working hard to ensure a meaningful Doha outcome, and we know New Zealand cannot afford to miss out on securing Free Trade Agreements with the United States, Japan, and Korea.

The pressing issue that needs to be put before you today, however, is one of resourcing.

When a political party talks of cutting back bureaucracy, the public has the right to know exactly what that means.

Don’t forget, all Foreign Affairs staff are bureaucrats.

Can New Zealand truly afford to cut the number of its diplomats at a time when the country’s economic future well-being is so heavily dependent on them pushing our cause on the international stage?

The potential impact could be disastrous, and not just in the short-term.

Let us not forget that in the 1990s the government took the pruning shears to New Zealand’s Foreign Service, forcing on it a decade-long decline in funding, in real terms, of more than 30 per cent.

The result was the closure of a number of overseas posts, and a 14 per cent reduction in offshore staff.

Even with the extra resources they have received in recent years, Foreign Affairs still has fewer staff today than 20 years ago, and those staff seem to be working permanently in overdrive.

The time has arrived to do something about that. Today you will have outlined for you the resources that will be put in place over the next few years – starting with next month’s Budget – to substantially strengthen New Zealand’s international representation.

But before going into the details, let us consider the current international environment in which Foreign Affairs operates.

Twenty-four hours a day, in 50 embassies and high commissions around the world, and at head office here in Wellington, our diplomats and support staff are building and maintaining New Zealand’s relationships with other governments.

They are working to increase trade access for our exporters to foreign markets, and they are looking after the well-being of New Zealanders living or travelling overseas.

The environment in which this work takes place is becoming steadily more complex, more crowded and more competitive than ever before.

Issues are increasingly tied up with each other.

More countries than ever before are actively seeking to secure their position in the world.

Significant new economies are emerging on the world stage.

Non-governmental groups are increasingly influential.

Virtually instant communication and information flows mean that countries have to be quicker than ever before to take advantage of opportunities or respond to problems.

This changing world picture means that our diplomats and support staff now have to work smarter, faster and harder than at any time in the 60-year history of New Zealand’s Foreign Service.

Generally the Ministry has been able stretch itself to deliver a credible level of support to the Government’s foreign policy. But in my time as Foreign Minister it has become quite apparent that the Ministry is skating on thin ice.

This is why about 18 months ago Foreign Affairs officials were asked to begin identifying innovative ways to position the Ministry so that, if we could find the means, New Zealand could lift its foreign policy performance.

Since then, some steps have already been taken. For example, the two divisions that used to cover Asia have been amalgamated to make better use of staff and expertise.

The same goes for the divisions covering disarmament and global security.

A group has been set up to meet the growing demand for international responses on climate change issues.

The Ministry and the government’s development agency, NZAID, have created a Special Relations Unit to better manage the needs of Niue and Tokelau, whose people are, of course, New Zealand citizens.

Consistency in approaches to free trade negotiations has been improved through the creation of a Task Force structure.

This means individual negotiating teams are supported by a single pool of senior trade advisers and trade law experts.

Recruitment of junior policy officers has been stepped up, and information technology and management information systems have been improved.

These innovations have been successful, but on their own they are not enough to meet the demands created by the increasingly complex operating environment.

In many areas the Ministry is struggling simply to react to issues, let alone plan. It is facing rising costs, particularly overseas. Its plant and equipment are becoming obsolete. Funding packages put in place by my predecessor that improved short-term capability are now coming to an end.

The reality is that New Zealand is struggling to maintain an adequate presence on the international stage.

Think about this: Roughly a quarter of our overseas posts have only two New Zealand staff.

That’s a maximum of two people to manage national relationships covering trade, government-to-government relations, New Zealanders in distress, official visits, and so on.

Some of these small posts are in major centres where we have substantial relationships to maintain – for instance Madrid, Hong Kong, Los Angeles and Shanghai. Others are in challenging environments, especially in the Pacific and the Middle East.

In several important parts of the world we have no posts at all.

For example, we often hear about the similarities between New Zealand and countries like Sweden in terms of independent foreign policy and a focus on human rights. Yet our Ambassador to the Nordic countries is based in the Netherlands.

Overseas posts are a vital part of New Zealand’s international operations. They ensure we have deep knowledge of overseas markets, governments and societies.

They allow us to make decisions based on local experience; they demonstrate to the host country that we value the relationship, and they offer advice and assistance to exporters and to travelling New Zealanders.

With the best will in the world, flying officials in and out of capital cities to do business is no substitute to having them living and working there.

Further more, our diplomats on the front line cannot operate in a vacuum.

There has to be a core of people in Wellington, working with Ministers, producing policy advice, and supporting our overseas posts. Currently that work is carried out by very small numbers of staff.

For instance, the Ministry’s business with Asia – China, the Koreas, Japan, India, and all the countries of Southeast Asia – is overseen by just 20 Wellington-based foreign policy staff. Our important relationship with Japan, for example, is predominantly managed by two desk officers.

This lean staffing is a problem because diplomacy is a people-centred business.

It is about having enough skilled people in the right place, at the right time to influence decisions of other countries and international organisations that affect New Zealand and New Zealanders.

We must invest in our foreign service if New Zealand businesses are to have a better chance of competing successfully around the world; if ‘NZ Inc’ is to have its concerns and interests met internationally, and if holidaymakers and expats are to be better protected overseas.

The countries that we often compare ourselves with, such as Ireland, Norway, Singapore, all have much deeper diplomatic footprints than we do.

Ireland, for example, has roughly the same population as New Zealand but its foreign ministry has twice as many staff and 17 more overseas posts.

Norway, with a slightly larger population, has over twice as many overseas posts and around 200 more foreign affairs staff than we do. And Singapore, again much the same size as New Zealand, has a foreign ministry twice the size of ours.

In short, the weight of responsibilities facing our Foreign Ministry is certainly no less that those of Ireland, Norway, or Singapore, yet our capacity is clearly much smaller.

Let’s be clear, this is not about keeping up with the Joneses. What is at stake here is our ability to prosper in the 21st Century.

The pace of international relations has been increasing and there are fewer certainties now than at any time in recent history.

Regional alliances are growing and shifting. New major powers, including China and India, are emerging.

The web of trade agreements is becoming ever more intricate.

The planet is coming under serious pressure from human activity and there is a need for international rules that will successfully manage the environment and natural resources for the global common good.

The Ministry of Foreign Affairs and Trade has broken down these emerging challenges into seven broad areas.

All seven require at least some level of capacity building if the Ministry is to protect and advance New Zealand’s interests globally.

These seven areas are important, so I want to work through them briefly now.

First, the Pacific is no longer a stable and relatively untroubled place. In recent years we have seen a regional assistance mission sent to Solomon Islands; New Zealand troops deployed in Tonga after rioting, and Fiji suffering its fourth coup in 20 years.

New Zealand needs to be active in the Pacific as never before. We need to be a good neighbour, especially to Niue, Tokelau and the Cooks, with whom we have special constitutional relationships.
It is also in New Zealand’s interests to ensure that our immediate environment is peaceful, secure and prosperous.

New Zealand’s aid budget will grow considerably over the next four years in order that we can make a bigger contribution to development and poverty elimination in the Pacific.

This has to be supported by a high level of diplomatic engagement, not only as a platform for our political relationships, but also to secure consent for the larger and more effective aid contributions we plan to make.

New Zealand also has to work harder than ever to make its voice heard in the new regional groupings that are emerging, especially in Asia.

The 10 members of ASEAN are working towards an economic community. The 16-member East Asia Summit process is pursuing its own trade liberalisation initiative, and APEC has begun talks on the possibility of a Free Trade Area.

Although these overlapping blocs are all working towards the positive goal of economic integration, there is a risk for small countries like New Zealand of being swamped as bigger players jockey for competitive advantage.

We must, therefore, keep our profile high in Asia; find ways of deepening our economic ties with the region, and generally expand our presence there.

Speaking of trade – which of course is the portfolio responsibility of the Hon Phil Goff – the intensity of bilateral and multilateral negotiations is stepping up.

As the WTO struggles to maintain momentum in its current round, so countries are placing more and more emphasis on other options.

Over 400 free trade agreements are now in existence or being negotiated. Keeping New Zealand’s interests to the fore in such a spaghetti bowl is a major undertaking.

We are always looking to build new markets and economic networks, and to improve market access by reducing protectionism.
Apart from the trade agreements that are already in place (or nearly in place), we are now in negotiation with Malaysia, ASEAN and the Gulf Cooperation Council.

We are holding discussions with Mexico, India and South Korea.

And of course it is no secret that we are interested in better market access to Japan and the United States – not just in goods and services, but in investment and technology as well.

Every trade discussion or negotiation is hugely resource-intensive, particularly when you compare it with the relatively efficient process of negotiating with 150-odd countries at once through the WTO.

As we seek new market access we must at the same time safeguard New Zealand’s existing trade advantages.

And we need to do more to get the Ministry of Foreign Affairs and Trade working alongside New Zealand Trade and Enterprise on trade promotion, especially in developing markets and the energy economies.

Latin America, Central Europe and the countries of the Gulf Cooperation Council are particularly important here.

The emergence of climate change as a key global issue is another major source of demand on our diplomats. As negotiations ramp up, our new climate change team will need strengthening.

Growing pressures worldwide on natural resources mean we are also going to need more specialist advice in areas such as biodiversity, biological resources, fisheries, and international law.

There are other multilateral obligations that also require increased effort and capability.

Expanding global counter-terrorism, and countering the proliferation of weapons of mass destruction, involves a growing volume of security policy analysis and compliance work.

We need to play an active role in the new and rapidly expanding UN Human Rights Council. Equally, peacekeeping remains a major international commitment that requires diplomatic support.

A final area of challenge for our foreign service comes is helping own our citizens overseas. New Zealanders rightly expect that their posts will be able to help them when they are in trouble.

As more New Zealanders travel to out-of-the-way places, so the pressure for consular assistance grows.

In addition, cross-boundary risks such as pandemics can potentially affect large numbers of New Zealanders overseas in many different places at the same time. The government must be able to meet this risk.

The bottom line is that the Ministry does not currently have the critical mass it needs to meet all the emerging challenges I have just outlined. In fact, it cannot even do everything it needs to do now.

This is why the Government is delivering a financial injection that the Ministry calls a ‘step change’. It is a change that goes beyond incremental – it directly confronts major shortfalls.

The Ministry’s operating funds will be increased over the next five years by $523 million dollars. There will also be a capital injection of $98 million.

Those figures do not include NZAID funding.

To get the full impact of this additional sum, you need to consider that the Ministry’s current annual operating budget is around $278 million.

A portion of this new money will be needed to simply ensure the Ministry has the capacity to do the things it needs to do now. This reflects the relatively low level of funding it has received over many, many years.

The overwhelming majority of the new funds, however, will be used to bring about a considerable increase in capability through significant growth in the number of diplomats and support staff.

An extra 100 or more overseas staff positions will be created over the next five years, and there will be extra staff and infrastructure at head office.

In the first phase of this major upgrade, from 2008 to 2010, New Zealand’s presence in our own neighbourhood – Australia, Asia, the Pacific – will grow considerably because it is the area where we face the most pressing demands.

This year we will be opening two new posts and upgrading a third. This work is underway and diplomatic staff will be on the ground by July.

The consulate-general in Brisbane will be reactivated, and the Melbourne trade office will be given a diplomatic as well as a trade representative.

These moves will significantly increase our ability to do business throughout Australia, our closest neighbour and our biggest trading partner.

Further afield, we will open an embassy in Stockholm. This will allow us to fill the increasingly obvious on-the-ground gap in our representation in the Nordic countries, and simultaneously increase our reach into the European Union.

Posts in Asia will get more staff and resources so they can work more effectively with important regional groupings such as ASEAN, the ASEAN Regional Forum, and the East Asia Summit. This will also strengthen our work in progressing bilateral and multilateral trade deals.

And we’ll build our capacity at home and abroad to push towards trade negotiations with other target markets such as Korea, Japan, the United States, India and Mexico.

Our ability to cover Afghanistan – where of course we have had a long-term troop deployment – will be improved by building up the overstretched embassy in Tehran. This will also allow us to better engage with Pakistan, where we are building trade and education relationships.
Also in the 2008 to 2010 period, several of our two-person posts will be upgraded to at least three people – meaning they can at last do more than simply keep their heads above water.

New Zealand posts in troubled Pacific countries will be reinforced to meet growing needs. This move will be matched by increased resources for those working on the same countries back in Wellington.

The Pacific Security Fund and Asia Security Fund will be increased steadily to build capacity in our wider region to combat terrorism and other trans-national threats.

These are some of the changes you will hear more about in Dr Cullen’s Budget next month. Together they represent an advance of historic proportions in the way the Ministry of Foreign Affairs and Trade will be able to work for New Zealand.

The changes are no less than a seismic re-engineering of our foreign service to meet 21st century conditions. They are about increasing New Zealand’s international presence, and thereby building our prosperity, our security and our international profile.

This re-engineering acknowledges that our embassies, high commissions, and consulates are increasingly the front offices for a range of interlinked agencies conducting business in other countries, such as foreign affairs, customs, defence, immigration, police, education, and particularly trade and enterprise.

When our diplomats step out into the world they are representing and promoting everything this country stands for, including its values.

Over many years this country has built up a strong international reputation as a small, active, independent, decent country. We need to guard that reputation jealously, and ensure that it is renewed and expanded in the years ahead.

To do this, our foreign service must be able to step up to the increasing challenges it faces internationally. It must be able to represent this country’s exporters and its citizens as they need and deserve.

What has been outlined to you today will ensure that New Zealand’s voice will continue to be heard – and listened to – in an increasingly crowded, complex and competitive world.

It is in the interests of all New Zealanders that our foreign policy has a deeper footprint right around the world. The seismic change that that has been delivered will do just that.

ENDS

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