Cuts at MFAT need some context

The New Zealand Ministry of Foreign Affairs and Trade (MFAT) has today announced that over 300 jobs will be cut. As Phil Goff says, these job losses “…represent one in four Ministry employees”, so there is no doubt that they will hugely affect the Ministry’s capacity; however, the dramatic changes in capacity that will ensue have to be understood in context.

The review of policy expenditure commissioned by the government last year found that:

[Total spending] on policy advice appears to have grown by 24% between 2005/06 and 2010/11 (6% in real terms).

Most of the growth has occurred in MFAT. MFAT’s expenditure on policy advice grew by 72% in nominal terms (47% real) between 2005/06 and 2010/11. If MFAT is excluded, spending on policy advice by all other agencies is estimated to have grown by a nominal 16% (a decline of 0.6% in real terms). Growth in MFAT’s policy advice-related appropriations, which includes funding for international representation, was an estimated nominal 77% (51% real) over that period.

The report shows that, of the $380 million increase in total, nominal expenditure on policy, $180 million was due to MFAT’s expansion. No other agency’s policy expenditure grew by more than $32 million over that time (MAF, if you’re wondering). It may be that MFAT did a lot more work, too, but unless you think that MFAT was doing a terrible job under great duress prior to 2005, it is hard to argue that these cuts will “…undermine the ability of the Ministry to carry out its basic functions”, as Goff claims. Of course, the job losses will be very painful for all of the staff affected, but the growth of the Ministry over recent times makes the large cuts at MFAT no great surprise, given the government’s stated desire for spending restraint. They are also unlikely to be replicated in magnitude at other Ministries, since none have seen the growth in expenditure of MFAT.