Financial Review Debate — Ministry of Foreign Affairs and Trade

I want to focus today on the botched job that this Government has done in cutting the Ministry of Foreign Affairs and Trade and supposedly reforming it, but in the process destroying it. It is a little bit like the Viet Nam War slogan “We had to destroy the village to save it.” Well, they have destroyed the Ministry of Foreign Affairs and Trade. If anyone is in any doubt about that or thinks that that is hyperbole, have a look at what the 49 top diplomats in New Zealand, the heads of mission, had to say to their own ministry about what the impact of those restructuring reforms has been on the ministry. One thing that stands out above anything else is the huge damage done in demoralising and disillusioning the people who work for one of our finest ministries. I can say that with some passion because I have worked with them for 9 years, and John Hayes can agree because he worked for them as an employee for a lot longer.

You know, we are a little country, we cannot bully our way in the world. We certainly cannot bribe others to make them do what we want them to do, so what do we rely on? We rely on the innate skill and ability of the most talented people we can find, in our Ministry of Foreign Affairs and Trade. When I became Minister in 2000 I read a great article in the International Herald Tribune that said that our ministry was tiny but it outperformed a neighbour five times our size, in every category.

I have always thought that there is a lot of truth in the old saying “If it works, don’t fix it”. They have fixed it all right! They started off in September last year doing an independent review, and what did that review find? It found that the ministry was able to obtain and retain talented and committed individuals. It found that it had a distinctive professional diplomatic culture that delivered some remarkable successes. Who said that? It was the Department of the Prime Minister and Cabinet, Treasury, and the State Services Commission.

What has been the result of this botched reform effort? First of all, we have lost some of our best people in the ministry. Crawford Falconer, who would outperform any other trade negotiator in the world, the former chair of the agriculture committee at the World Trade Organization—gone. Nigel Fyfe, the head of the trade negotiations division, a very competent ambassador in Chile, and a really competent trade negotiator—gone. What I find when I talk to any of my contacts in foreign affairs is that they are either putting their notice in or they are getting their references ready to put their notice in. They are leaving in their droves, and it is the best, the brightest, the most talented, and, therefore, the most mobile who are going, and that is the achievement of Murray McCully.

What does Murray McCully say in response to this? He knows that it was botched. They are now back-pedalling so fast it is hard to know where they are going to end up. But he says that it is all the fault of the Foreign Secretary, Mr Allen. Mr Allen is a civil servant. He was actually plucked out of the private sector by Murray McCully to cut the Ministry of Foreign Affairs and Trade and restructure it. But there is this about a chief executive officer: he cannot answer back to lies and criticisms made about him by a Minister. He is defenceless. I cannot remember a time in 30 years, Mr Chairman—and nor can you—when a Minister blamed his civil servant in a way that he knew that that civil servant could not fight back. But the ministry answered that. They said that it was the Minister who appointed John Allen, and it was the Minister who set the directions, and it was the Minister who gave constant oversight. He cannot help himself—he is a micro-manager. Murray McCully is responsible for this, and no matter how much he hides behind blaming his chief executive for the botch-up, he is responsible and he needs to go.

Jenny Shipley decided that in 1999 when she sacked him as Minister of Tourism. She sacked him because of his inappropriate interference in the running of the Ministry of Tourism. He did it then and he is doing it now, and what upsets me and makes me passionate about this is that he is destroying an agency that has worked professionally, capably, and competently to serve the interests of our country. We should be proud of that ministry. It has fine people and now they are falling over each other to go because they see that they have no future in that ministry. It is a shocking disgrace what has happened and it is unprecedented that the 49 heads of mission would actually come out and say that what is happening to their ministry is destroying it. It is taking away its fundamental strengths. It is a shame that it has come to that, and Murray McCully is to blame.

No hyperbole in that speech at all—none whatsoever! It is interesting, though, that there is no public announcement of what the decisions are within the Ministry of Foreign Affairs and Trade and its change until 10 May. No hyperbole at all? What nonsense, Mr Goff! Let me say to you this: our Government inherited a situation where the economy was out of control, and you, Mr Goff—and Mr Peters; you were Foreign Minister at this time, in your last year of office—put bucketloads of money into the ministry, which this country could not afford. You opened posts in all directions, and I know because staff talked to me and they were saying: “We have been given so much money we don’t know where we should put it.” Meanwhile, that money was actually coming out of the pockets of your workers and my constituents. This money does not grow on trees, and this Government has been put in place by the community, after 9 long years of mismanagement, to put things right.

Labour increased spending by $22 billion in the last 5 years it was in office. So we employed a Secretary of Foreign Affairs and Trade, and he was given quite clear instructions about looking at the management of that sector and trying to work out how to move resource from the back office to provide services to the community and to provide foreign affairs services.

💬 Andrew Little: Instructed by the Minister of Foreign Affairs.

What happened? A consultation document—

💬 Andrew Little: Instructed by the Minister.

Of course it was constructed by the Minister of Foreign Affairs; that is why you have Ministers. I realise the member has not been in the House sufficiently long to understand how it works, but that is another problem.

The ministry staff were invited to comment on the range of changes that were being proposed back in February, and a number of people reared up on their hind legs. The day the document was put on the table people went berserk and leaked documents to Mr Goff, who said that he was getting leaks in triplicate. And then Mr Goff started saying that the consultation document, a draft document, was the end result. Well, it is not.

All of the ministry’s heads of mission were brought back to Wellington about a month ago and their views were taken into account. The Minister was involved through that process, as was the secretary, and I commend the Minister, actually, for doing an excellent job. He would be here in this Chamber this afternoon defending himself if he was not doing a particularly good job with his other forum colleagues in Fiji right now. I can assure this Committee that Mr McCully has been doing an absolutely outstanding job helping bring normalisation of events back into Fiji.

So after the consultation document went to staff there was a considerable amount of feedback from them and from other stakeholders, including the Government. Many of the proposals were revised by the ministry’s management. In essence, the initial proposal, perhaps, contained too many moving parts at one point in time, and it is good, I think, that the Minister has said to the ministry that it needs to look at that issue.

The decision document will be available to staff on 10 May, and at that point we will be interested in Mr Goff’s comments, because, in my conversations with the same staff who talked to Mr Goff, it is quite clear to me that younger staff members see huge opportunity in the changes that are coming up and they are really excited about the process. We have to follow the rest of the world. The only way in this country that we are going to move ourselves forward to pay for health and education is if the money coming into the country exceeds the money that goes out for things that we export, and the Ministry of Foreign Affairs and Trade has a really important role in this area. This is why we are trying to make sure that we are doing our level best for the ministry to operate in a focused way.

We are interested particularly in two issues: trade and economic issues. That is why we have strengthened the promotion of New Zealand’s export goods and services through our “New Zealand Inc.” approach of coordinated Government agencies. That is why the Prime Minister, the Minister of Foreign Affairs, and the Minister of Trade have led trade missions to the Gulf region, China, Hong Kong, Brazil, Mexico, India, Singapore, Malaysia, and Indonesia. That is why we continue to work with developing a single—

This is an unmitigated disaster and New Zealand First opposes the manner in which this National Government is decimating the Ministry of Foreign Affairs and Trade, with the effect of undermining and placing at huge risk the credibility of New Zealand in our important markets and with our strategic allies and partners.

I rise not only as a member of Parliament but as someone with previous experience, having been a trade commissioner and vice-consul for Belgium for 10 years between 1998 and 2007. During that period of time I had personal experience, in the consular corps and in the diplomatic corps, of the value of our trade commissioners, of the value of our diplomats, and of the value of having front-line people in foreign posts around the world. I certainly saw the impact that Belgium had around the world in terms of its posts. I was its representative here in New Zealand and I certainly saw the value and the gains in its economy as a result of having front-line people and properly resourced posts around the world to do that work.

Also in my former life in the meat industry for many years I saw the importance of the Ministry of Foreign Affairs and Trade in terms of getting access to many of our markets around the world. I started off in the days of Amalgamated Marketing when it opened the markets in Russia, Iran, Jordan, and all those other places. It was very much working hand in hand with the likes of the ambassadors and the ministry people around the world to help open those doors for the early markets for New Zealand around the world.

That continues, and it is a continuing important part of the New Zealand economy. This is an economy that depends on trade. This is an economy that depends on us playing our part in the global market, and, quite frankly, this is a complete undermining of New Zealand’s front-line troops. The Government keeps talking about keeping our front-line troops; this is the undermining of our front-line troops around the world.

This is also a situation where the Minister of Foreign Affairs, Mr McCully, has basically hung his chief executive out to dry. He brought in Mr John Allen to restructure the ministry—and certainly there was some fat in the ministry and there was some need for some restructuring—but basically now, having held that chief executive on the end of a string for several years, he has hung him out to dry. This is the first non-diplomat to head up the Ministry of Foreign Affairs and Trade and now Mr McCully is blaming that very first non-diplomat for the fiasco that we see within the Ministry of Foreign Affairs and Trade now.

Forty-nine of our 53 most senior diplomats signed a letter protesting the change process that identifies major risks with the proposals, including “the absence of any analysis … of the net impact of the changes … on NZ’s external interests”. This is our top diplomats saying this, that there was an “absence of any analysis … of the net impact of the changes … on NZ’s external interests”. That is almost verging on treason—the situation where we are seeing our external interests undermined in this manner. Also, the wives and partners of our diplomats, those important support people around the world, have complained bitterly about the way this change process is being executed.

What was meant to be a way of clearing out some of the extravagant dead wood in the diplomatic corps has backfired on this National Government, and this Minister and this Government are responsible. We are now seeing an exodus of some of the best in the Foreign Service, who are finding better jobs outside the diplomatic corps, such as in academia, in the private sector, in commerce, and in trade. There is a serious loss of institutional knowledge and experience that is of immense value to New Zealand. Morale in our Ministry of Foreign Affairs and Trade is at an all-time low.

Meanwhile, the Meat Industry Association, Fonterra, and other major export groups have expressed grave concerns at the impact on our Foreign Service and on our nation’s ability to foot it on the global stage, where diplomacy and trade are vitally important to a small trading nation like New Zealand. If we do not grow our exports and contain our imports, then we as a country will continue on a very slippery slope of ever-increasing deficits.

Under the details of this Appropriation Bill I note that it says: “This appropriation is limited to the purchase of policy advice and representation directed to the management of New Zealand’s foreign trade relations with other countries, bilaterally and in regional organisations, including using New Zealand’s international connections to facilitate …”.

Report noted.

Department of Corrections