Annual Report 30 June 2012

Our outcomes

Outcome 1: New Zealand’s security and economic interests safeguarded through its political and security relationships

We need to maintain and develop a network of strong relationships that we can draw on in order to achieve the Government's priorities. The relationships the Ministry builds and sustains also support the work of other agencies, by facilitating access to decision makers who can assist them in achieving their objectives, particularly where these have an offshore component.

Progress towards outcome

Strengthening political, defence and security, trade and economic, and people-to-people links with Australia

Strong momentum was sustained in our close relationship with Australia, with a high level of political engagement supporting advances under the security and economic pillars.

• Number of high-level meetings: 36 (ministerial level), including the second ever Joint Meeting of Cabinet Ministers, which will now become a regular event.
• Major bilateral issues resolved: Australia implemented the World Trade Organization (WTO) ruling on access for New Zealand apples, opening the way for the first apple exports in 90 years.
• Changes in short-term visitor numbers (by country of last permanent residence): 1,175,296 for the year ended June 2012, a 5.8 percent increase compared to the same period last year.
• Other highlights:
• A new Defence Relationship Framework was launched.
• A regular Australia New Zealand Cyber Security Dialogue was initiated, and New Zealand moved from observer status to membership of Australia's Counter-Terrorism and Emergency Management Committees.
• Australia-New Zealand Leadership Forum, held in Sydney, secured high-level Australian business engagement.
• New Zealand and Australia worked extremely closely together on a joint bid for the Square Kilometre Array international radio-telescope project which resulted in the project being shared between Australia-New Zealand and South Africa.

Improving stability, security, governance, economic growth and sustainable development in Pacific island countries

New Zealand has been Chair of the Pacific Islands Forum in 2011/12. We have played an important coordinating role for the region and given profile to the Pacific's economic, development and security interests at international fora. This year saw frequent visits to and from New Zealand and regular high-level Ministerial contact with Pacific island countries.

• Number of high-level meetings: 36 visits (to and from New Zealand), with regular high-level ministerial contact.
• Change in short-term visitor numbers: 95,680 short-term visitsⁱ, a 2.6 percent increase compared to the same period last year.
• Bilateral issues resolved: 22 with countries across the Pacific region.
• Other highlights:
• Detailed negotiations began on a regional trade agreement, PACER Plus, which incorporates the majority of Pacific Island countries.
• The Pacific Islands Forum Leaders Meeting held in Auckland in September 2011 provided an opportunity for New Zealand to advance its development agenda at the highest levels. The Waiheke Declaration, agreed by Forum Leaders, focuses on key areas such as fisheries, tourism, renewable energy, education and infrastructure, and provides a platform for further advancing priorities for economic growth and sustainable development.
• New Zealand has been successful in working with other Pacific governments to maintain a unified Pacific Islands Forum position on Fiji.
• The Pacific region receives over half of the total development assistance of the New Zealand Aid Programme, which focuses on sustainable economic development. (For more information on the New Zealand Aid Programme, see Outcome 4.

Maximising opportunities in the bilateral relationship with the US to secure benefit for New Zealand and our region

The New Zealand/US relationship has moved ahead at a substantial pace following signature of the Wellington Declaration in 2010. The US now characterises its relationship with New Zealand as the best it has been in nearly 30 years, and identifies New Zealand as a valuable partner.

• Number of high-level meetings: 20 visits (to and from New Zealand).
• Change in short-term visitor numbers: 182,816, a 2.8 percent decline compared to the same period last year.
• Major bilateral issues resolved: A Statement of Intent to conclude an agreement Preventing and Combating Crime was signed. Agreements to combat people trafficking in the Pacific and to strengthen US/New Zealand customs cooperation (including integrating the NZ Smartgate system into the US Trusted Traveller Scheme) were signed. Good progress was made on strengthening cooperation in the science and innovation sectors.
• Other highlights:
• The first of now regular Strategic Dialogues was held in Washington in March.
• The successful visit of Secretary of Homeland Security Janet Napolitano in May.
• The Washington Declaration was signed in June 2012.
• Bilateral and regional relationship improvement activities including commemorations of the 70th Anniversary of US Forces arriving in New Zealand during World War II; deeper engagement with the Department of Homeland Security; enhanced cooperation on Pacific development issues; stronger coordination in Asia Pacific regional organisations (PIF, EAS, ARF, ADMM Plus, APEC); and continued cooperation on Antarctic research.

Positioning New Zealand to capitalise on economic growth and development in Asia

New Zealand continues to strongly advance the development of our political and trade links with Asia and opportunities for New Zealand in Asia. Growth in trade with Asia, in particular China and ASEAN, has been fundamental to the economic prosperity of New Zealand in 2011/12.

• Number of high level meetings: 54ⁱⁱ
• Changes in short-term visitor numbers: Asia is the region with the second highest number of short-term visitors to New Zealand after visitors from Oceania. In the year to June 2012, there were 492,768 visitors from Asiaⁱⁱⁱ, a 9.8 percent increase compared to the same period last year. Of these visitors, 123,408 were from China, which is a 39 percent increase compared to last year.

North Asia

• Bilateral issues resolved:
• China - Five, including settling the methanol anti-dumping case, expanding the Air Services Agreement, and agreeing the Investment Promotion Arrangement.
• Japan - Four, including the Air Services Agreement and the Double Taxation Agreement.
• Korea - Four, including access issues around potatoes, beef and kiwifruit.
• Hong Kong - Two, including the signing of an Education Arrangement.

• Other highlights:
• The New Zealand China Council was established.
• The 40th anniversary of China-New Zealand diplomatic relations has been marked with cultural events.
• Japanese leaders welcomed New Zealand's response to the Japanese earthquake and tsunami, transparency on the inquiry into the CTV building collapse in Christchurch, and initiation through a Disaster Management Workshop of collaborative scientific activities on disaster risk reduction.
• A Defence Cooperation Memorandum of Intent with Japan is ready for signature.
• 60th anniversary of Japan-New Zealand diplomatic relations has been marked with cultural events such as the Oktabe exhibition at the Pataka Museum of Arts and Culture.
• Extensive Japanese corporate and political engagement in Rugby World Cup 2011.
• The 50th anniversary of Korea-New Zealand diplomatic relations/2012 Year of Friendship has been marked with cultural events, progress in science and technology commercialisation.
• The World of Wearable Arts show in Hong Kong was the first significant WOW event in North Asia and profiled New Zealand expertise and tourism.

South East Asia

• Highlights
• A Prime Minister-led business mission to Indonesia and Singapore in April lifted New Zealand's engagement with two key ASEAN economies.
• Persistent lobbying by New Zealand (MFAT and the Ministry for Primary Industries) restored horticultural exports to Indonesia, and ensured exports of key halal-compliant primary exports to Indonesia and Malaysia could continue on a more reliable basis.
• New Zealand at the table for preparatory work toward negotiation of an ASEAN-centred Regional Comprehensive Economic Partnership.
• The ASEAN Regional Forum Inter-sessional Group hosted by New Zealand in Wellington delivered on objectives and was acknowledged as highly effective by key partners.
• New Zealand-led Integration Partnership Forum was welcomed by ASEAN partners.
• Contribution of New Zealand in APEC - including on regulatory coherence, fossil fuel subsidy reform, food security œ acknowledged by the US and Russia, APEC hosts in 2011 and 2012.
• New Zealand APEC initiative to establish a networking framework for Chief Science Advisers advanced and adopted by APEC Ministers.
• The year saw the first-ever visit to Burma by a New Zealand Foreign Minister in March, welcomed by the Burmese President as opening a 'new chapter' in our relations, and reflecting historic political reforms there.
• In November New Zealand hosted the visit of the Malaysian Agong (King) to Antarctica, following his country's long-sought accession to the Antarctic Treaty.

Developing a more influential relationship with the European Union (EU)

• Number of high-level meetings: 27, including the visit of European Commission President JosÙ Manuel Barroso, and the Prime Minister meeting with German Chancellor Angela Merkel and UK Prime Minister David Cameron.
• Changes in short-term visitor numbers: 449,344^iv, a 1.5 percent increase compared to last year.
• Bilateral issues resolved: Agreement was reached with the EU to enter negotiations for an EU-New Zealand Framework Agreement (FWA). The FWA is necessary as a pre-cursor to New Zealand's longer-term objective of a fully Comprehensive Agreement with the EU. Unprecedented in its scope, the FWA has already involved over 20 New Zealand Government agencies on the mandate/preparations for the first round of negotiations held in July 2012.

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Outcome 2: Economic growth and international competitiveness advanced through New Zealand's international connections

International connections underpin the Government's economic growth agenda. Through connections we are able to protect benefits that we have negotiated, support greater competitiveness and opportunities, and help gain trade access for New Zealand exporters. These are vital for improving economic growth and productivity and maintaining New Zealand's capacity to influence a rapidly changing world economy.

Progress towards outcome

World Trade Organization (WTO) Doha Round

New Zealand has worked to preserve outcomes negotiated to date, particularly by highlighting the need to avoid artificial deadlines for conclusion of the round. We have been an active and engaged contributor to services and trade facilitation. We have coordinated closely with like-minded developed and developing countries to promote compromise solutions on new guidelines for WTO accession of Least Developed Countries.

FTAs and other trade and economic frameworks

• Trans Pacific Partnership (TPP) - New Zealand has continued to play an active role in advancing negotiations. In June New Zealand announced on behalf of all current TPP participants that Canada and Mexico would join the negotiations and had confirmed their commitment to achieving the shared goal of high-ambition, next-generation regional trade.
• FTA negotiations with the Russia, Kazakhstan and Belarus Customs Union - substantial progress has been made towards conclusion.
• FTA negotiations with - India three further rounds of negotiation in the last year. Revised goods offers and requests have been exchanged. Services and Movement of Natural Persons offers and requests have also been exchanged and negotiations are ongoing.
• FTA negotiations with Korea - New Zealand has continued to engage with Korea on how to advance towards conclusion of the agreement.
• An Economic Cooperation Agreement between New Zealand and the WTO Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) - negotiations commenced between the New Zealand Commerce and Industry Office in Taipei and the Taipei Economic and Cultural Office in Wellington.
• Investment Protocol pursuant to the New Zealand/Hong Kong China Comprehensive Economic Partnership (CEP) negotiations advanced with Hong Kong.
• Full Ministerial review of the NZ/Thai CEP has been completed and a pathway ahead identified for an in-built agenda.
• ASEAN-Australia-New Zealand FTA (AANZFTA) was brought into force for all ASEANs with Indonesia's ratification.
• AANZFTA Joint Committee deliver practical benefits for New Zealand business.
• China FTA implementation issues progressed through Joint Commission.
• Inaugural NZ/Hong Kong CEP Joint Commission hosted by New Zealand, establishing CEP infrastructure on a solid footing.

Minimising impact of trade access problems

The Ministry has provided expertise and support as required, especially through its network of Posts, for addressing bilateral and regional market access problems. In this work the Ministry coordinates closely with other NZ Inc agencies (notably Ministry for Primary Industries, Ministry for Economic Development, New Zealand Customs Service and NZTE) and has been in regular contact with industry stakeholders.

Improved economic growth and productivity in New Zealand through increased international linkages

The Ministry has supported a wide range of activities aimed at assisting other business agencies to promote export engagement, for example Export Credit Office changes, establishment of a new Crown entity Education New Zealand, and the double taxation review (with Inland Revenue and the Treasury). At an international level, the Ministry's engagement with the OECD on key issues such as services trade and global value chains is supporting improved understanding of international linkages.

The Ministry continued to lead cross-agency work on NZ Inc country and regional strategies, which strengthen strategic planning and operational coordination among agencies. In 2011/12 NZ Inc strategies have been launched and are being implemented for China and India, and NZ Inc agencies have worked on country strategies for the US and Australia, and regional strategies for the ASEAN and Gulf Cooperation Council regions. There has been extensive engagement with business in developing, testing and implementing the strategies. Information seminars on the China strategy took place in nine centres around New Zealand, with more than 650 people participating. The refreshed New Zealand Latin America Strategy, which Cabinet approved in 2009, continues to guide New Zealand's engagement for this substantial growth region.

The Ministry is coordinating the Building Export Markets workstream of the Government's Business Growth Agenda, which will help drive a more productive and competitive economy. Building Export Markets articulates a range of coordinated actions that the Government is undertaking to promote opportunities for New Zealand exporters and improve the operating environment for exporters both in New Zealand and in offshore markets.

New Zealand maintains a capacity to influence a rapidly changing world economy

The world economy has demonstrated significant volatility in the past year. In response to the changing times the Ministry has been positioning its network of assets and people to respond in a nimble way.

Throughout this change we have successfully maintained the capacity required to continue implementing our strategic policy objectives.

The Ministry continued to engage with relevant international economic organisations œ such as the OECD œ to help promote New Zealand's interests in international economic policy development.

Measuring progress towards economic outcomes

Progress towards achieving economic outcomes

Indicator	Sub-Indicator	2009/2010 (March Year)	2010/2011 (March Year)	2011/2012 (March Year)
NZ exports grow as a percentage of GDP1		28.3%	29.7%	30.2%
Foreign direct investment as a proportion of GDP1	Inwards	49.4%	47.9%	48.1%
NZ performance on key indicators of international competitiveness improves	Outwards	11.5%	11.7%	12.0%
	KOF globalisation ranking	27 out of 208	25 out of 208	27 out of 208
	World Economic Forum competitiveness ranking2	20 out of 144	23 out of 144	25 out of 142
	World Economic Forum enabling trade ranking	11 out of 125	6 out of 125	5 out of 132

Percentage of merchandise trade covered by trade agreements

	Share of total exports in 2011	Share of total exports in 2010
TRADE AGREEMENTS CURRENTLY IN FORCE
NZ-Australia CER (1 January 1983)	23.0	23.0
NZ-Singapore CEP (1 January 2001)	1.7	1.9
NZ-Thailand CEP (1 January 2005)	1.5	1.6
P4 (Singapore, 1 May 2005; Brunei, 12 July 2006); (Chile, 8 November 2006)3	0.1	0.1
NZ-China FTA (1 October 2008)	12.3	11.1
AANZFTA (1 January 2010)4	4.3	4.8
NZ-Malaysia FTA (1 August 2010)	1.8	1.8
NZ-Hong Kong CEP (1 January 2011)	1.7	2.0
Total exports covered by agreements in force	46.6	46.3
PENDING FINALISATION
NZ-GCC FTA	3.2	2.9
UNDER NEGOTIATION
TPP (Australia, Brunei, Chile, Malaysia, Peru, Singapore, US, Viet Nam)5	8.6	8.8
NZ-Korea FTA	3.5	3.2
NZ- India FTA	2.0	2.1
NZ-Chinese Taipei –ECA6	1.9	-
NZ – Russia Belarus-Kazakhstan FTA	0.6	0.6
Total exports to be covered by agreements	66.4	64.0

The proportion of New Zealand merchandise exports entering FTA markets duty-free

Trade agreements currently in force	% of exports to FTA partner duty-free in 2011	% of exports to FTA partner duty-free in 20109
NZ-Australia CER (1 January 1983)	100	100
NZ-Singapore CEP (1 January 2001)	100	100
NZ-Thailand CEP (1 January 2005)	51.1	56.3
P4 (Singapore, 1 May 2005; Brunei, 12 July 2006); Chile (8 November 2006)7
Chile	85.8	85.8
NZ-China FTA (1 October 2008)	37.5	37.7
AANZFTA (1 January 2010)8
Indonesia	49.9	49.6
Philippines	78.1	73.6
NZ-Malaysia FTA (1 August 2010)	94.9	93.2
NZ-Hong Kong CEP (1 January 2011)	100	100

Approximately 36 percent of total New Zealand merchandise exports entered duty-free into the various FTA markets. In addition, FTAs have secured favourable trading conditions for New Zealand investors and services exporters in key sectors, including a range of professional and business services.

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Outcome 3: New Zealand's interests secured through regional and multilateral engagement and effective international rules

New Zealand's ongoing prosperity depends on the prosperity and security of the markets we trade with. It also depends on the willingness of other countries to respect international rules, many of which are set by the UN and related organisations. Where common resources are concerned, internationally agreed rules are often required to avoid over-exploitation. As a small country, New Zealand has an interest in a rule-setting system that is effective and gives us a voice.

Progress towards outcome

Enhanced security through more effective responses to international and regional security challenges

New Zealand promotes rules-based approaches to international security, and more effective functioning of regional and international security institutions. New Zealand also participates in targeted interventions offshore, to address the security challenges related to fragile and failing states, and is actively engaged in efforts against threats to national and international security such as terrorism, illegal migration and proliferation of WMD and conventional weapons.

Peace support deployments

• The Ministry leads the Provincial Reconstruction Team (PRT) in Bamyan, Afghanistan.
• The PRT has contributed to the province's standing as one of the more secure in Afghanistan. Bamyan was one of the first two provinces declared in transition in Afghanistan in July 2011 and was the number one ranked province for the Performance Based Governors Fund in 2011.
• Progress in Timor-Leste and Solomon Islands has enabled development of withdrawal options for peace support deployments.
• Contribution to the Multinational Force and Observers has helped maintain stability in the Sinai despite instability elsewhere in Egypt. Our Syria deployment lent support for international pressure on the regime.
• New Zealand maintained its contribution to the UNCMAC force on the Korean peninsula.

Counter-terrorism

• Southeast Asian counter-terrorism capacity has been enhanced through targeted regional and bilateral technical assistance and training projects funded under the Asia Security Fund.
• Pacific island countries' counter-terrorism legal frameworks were enhanced and compliance with international counter-terrorism obligations increased through a New Zealand-funded UN Office on Drugs and Crime project.
• Key partners' awareness of New Zealand counter-terrorism contributions has improved, and donor coordination enhanced, through New Zealand's participation in the new Global Counter-Terrorism Forum, launched in September 2011.
• Financial and other sanctions were enacted against terrorist organisations through the formal designation of these entities under New Zealand's domestic counter-terrorism legislation (in addition to listing all terrorist entities designated by the UN).

People smuggling

• There has been improved cross-government coordination of policy and operational responses to maritime people smuggling and effective management of attempted maritime ventures.
• New Zealand made targeted contributions to the Bali Process to help combat trans-national crime in the Asia-Pacific region.
• New Zealand's mass arrival response capability was tested through successful completion of Exercise BARRIER 2012.

Nuclear security

• New Zealand made direct contributions to improving nuclear security in Uzbekistan and Southeast Asia.
• The Prime Minister's participation in the second Nuclear Security Summit in March 2012 raised the global profile of New Zealand's efforts.

Non-proliferation

• New Zealand joined international efforts to put pressure on Iran, Syria and the Democratic People's Republic of Korea to comply with non-proliferation commitments through the International Atomic Energy Agency.
• New Zealand provided Global Initiative to Combat Nuclear Terrorism partners with a model table-top exercise to improve state-level nuclear security controls and continued active support for and participation in the Proliferation Security Initiative.
• New Zealand chaired the four-yearly assessment by Wassenaar Arrangement members, during which a number of long standing initiatives were concluded or moved forwards. Subsequently the New Zealand chair was appointed to head the Wassenaar Secretariat.

Conventional weapons

• New Zealand has been the coordinator of national implementation measures in the Convention on Cluster Munitions, resulting in 13 ratifications during the year.
• New Zealand was closely involved in preparations for the launch in July 2012 of formal negotiations on a comprehensive treaty to stop the illicit trade in conventional arms.

Progress in advancing an international environmental and natural resource agenda that advances New Zealand interests and supports New Zealand economic competitiveness

• At the COP 17 climate change talks in Durban, New Zealand's over-arching interests in a comprehensive global agreement were advanced with the decision to negotiate a new legal agreement, applicable to all parties, by 2015. New Zealand successfully facilitated all aspects of the global effort to mitigate greenhouse gas emissions during the transition to this new agreement, and secured outcomes that advanced our specific interests in carbon markets, forestry and agriculture.
• In the International Whaling Commission, New Zealand was in the forefront of cumulative pressure on Japan to withdraw from whaling in the Southern Ocean, but efforts to persuade Japan and to find a long-term solution were unsuccessful. New Zealand's role reflected our conservation interests and we led resolution of divisive issues. Last year 267 whales were caught in the Southern Ocean. There are variances year to year, but an overall downward trend.
• At the annual Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR), New Zealand's objectives were fully achieved, including development of conservation measures to underpin the sustainable management of the fishery. New Zealand's proposal for a marine protected area in the Ross Sea region was advanced. The CCAMLR Secretariat reported that the trend of illegal fishing in the Southern Ocean was estimated to have continued at a relatively low level.
• At the annual Antarctic Treaty Consultative Meeting/Committee for Environmental Protection, New Zealand proposals on fishing vessel safety, tourism, and several new initiatives to identify and protect areas requiring conservation were adopted. Issues relating to the Antarctica (Environmental Protection) Act, such as unauthorised expeditions and permitting, were managed effectively.
• The South Pacific Regional Fisheries Management Organisation (SPRFMO) continued momentum towards entry into force with strong New Zealand support. In a further positive step forward, the Preparatory Conference agreed on revised interim management measures.
• At the UN Conference on Sustainable Development (Rio+20), there were good outcomes on oceans, fisheries, including a commitment to eliminate harmful fisheries subsidies, and further multilateral recognition of the importance of fossil fuel subsidy reform. Pacific objectives were secured in the outcomes of Rio+20 through New Zealand's role as Pacific Island Forum coordinator. New Zealand continued to provide strong leadership on other UN oceans processes, including chairing roles. New Zealand is a partner of the World Bank-led Global Partnership on Oceans.
• New Zealand's interests were advanced and protected across a wide range of issues under the Convention on Biodiversity. We supported the development of the Nagoya Protocol following conclusion of negotiations.
• At an IAEA International Conference on the Safe and Secure Transport of Radioactive Material New Zealand continued to advance the concerns of coastal states about the importance of adequate communication and liability arrangements around the transportation of radioactive materials, and helped to secure agreement to work on the development of best practice guidelines in relation to Government-to-Government communication.

A more effective and accountable UN that is more responsive to New Zealand's interests

• New Zealand's UN Security Council bid is on track with agreed vote target met. New Zealand continues to advocate for reform in relevant UN fora with incremental progress.
• Securing the visit of UN Secretary General Ban Ki-moon to the Pacific Islands Forum that New Zealand chaired was an opportunity to focus on the challenges and concerns of New Zealand and the Pacific region.
• A mechanism has been established for annual Pacific/UN Secretary General dialogue.

A relevant and more effective Commonwealth that advances respect for the rule of law

• New Zealand objectives at 2011 CHOGM, including New Zealand's interests in new Commonwealth Charter were achieved.
• New Zealand continues to advocate for reform in relevant Commonwealth fora with incremental progress.

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Outcome 4: Sustainable development in developing countries in order to reduce poverty and contribute to a more secure equitable and prosperous world.

Good development outcomes in the Pacific and elsewhere are critical elements of New Zealand's foreign policy objectives.

The Ministry's International Development Policy Statement: Supporting Sustainable Development' was published in March 2011 and sets out the approach the New Zealand Government follows in managing and delivering development assistance. It identifies four themes: investing in economic development, promoting human development, improving resilience and responding to disasters, and building safe and secure communities. The policy statement identifies sustainable economic development and the Pacific as priorities, and sets out a targeted approach for other regions.

Progress towards outcome

During 2011/12 the amount of development assistance spent on sustainable economic development activities increased by 40 percent (from $100 million to $140 million). The percentage of support going to the Pacific increased from 52 percent to 56 percent (from $257.3 million to $287 million^v), and the median annual expenditure on activities increased from $200,000 to $255,519. Ten Joint Commitments for Development and programme strategies have been agreed with bilateral partner countries. These are positive results in line with Government policy directions and the new business model. (For details of development results resulting from New Zealand's development assistance, refer to section six of this report.)

Economic Indicators

High level indicators of economic change form a starting point for tracking progress towards the development outcomes that New Zealand seeks to support. Results are largely attributable to the performance of the countries themselves with donor support supplementing their efforts, which makes direct attribution difficult.

The key bilateral partners of the New Zealand Aid Programme are shown below, with basic statistics including the amount of aid they have received from New Zealand and other donors.

Bilateral partner countries: basic statistics

					New Zealand Aid (NZ $M)
Bilateral Partners	Population (M)10	GNI per capita 2010, Atlas Method (US$)11	Total aid from all donors 2010 (US$ M)12	Net ODA as a percentage of GNI 2010 (US$ M)13	2009/10	2010/11	2011/12
Cook Islands	0.03	n.a	13	n.a	7.7	18.9	19.4
Niue	n.a	n.a	15	n.a	11.2	23.7	16.2
Tokelau	n.a	n.a	15	n.a	14.6	20.5	23.3
Samoa	0.19	2,980	147	25.5	21.8	18.5	20.4
Tonga	0.1	3,290	70	19.5	13.0	14.6	25.5
Tuvalu	0.01	4,760	13	26.2	2.8	1.8	7.4
Papua New Guinea	7.06	1,300	513	5.5	25.1	31.4	27.6
Solomon Islands	0.54	1,030	340	61.4	41.1	33.4	33.6
Vanuatu	0.24	2,640	108	16.2	21.0	16.7	18.2
Kiribati	0.11	2,000	23	10.5	6.0	8.9	22.0
Fiji	0.85	3,630	76	2.5	5.8	4.5	6.6
Indonesia	241.37	2,500	1,393	0.2	10.2	16.4	19.5
Viet Nam	87.84	1,160	2,945	2.9	12.7	9.0	9.3
Timor-Leste	1.09	2,220	292	9.2	7.8	9.4	9.9
Cambodia	14.52	750	737	6.9	5.9	4.6	4.6
Philippines	94.09	2,060	535	0.3	5.2	5.9	4.6
Lao PDR	6.38	1,040	416	6.2	2.6	3.7	6.9

n.a = data not available

Economic growth

Economic growth forecast in the Pacific region accelerated from 2.9 percent in 2011 to 3.6 percent in 2012^vi. The major contributors to this performance were Papua New Guinea, Solomon Islands and Timor-Leste, with economic growth rates of more than 6.0 percent. In the Cook Islands, Tuvalu and Kiribati projected economic growth rates improved at least 1.4 percent from 2010/11. The 2012 projected growth rate of 6.95 percent in the Asian region has moderated and remained stable since 2010/11 due to weaker external demand and tightened monetary policies to battle inflation.

Ease of doing business

Ease of doing business is a key indicator provided by the World Bank. Three of the 13 New Zealand partner countries measured have improved their regulatory environments for starting and operating local firms. Compared to last year, Tonga, Solomon Islands and Timor-Leste have shown an improvement in their rankings^vii. Other partner countries have stayed the same or shown a slight reduction in their rankings.

Progress in Sustainable Development

			Ease of doing business ranking (low numbers better)15
Programme	Forecast growth rate of GDP 2012	Current account balance 2011 (% of GDP)14	2011	2012	Human development index (HDI) values 201116
Cook Islands	5.4	4	n.a	n.a	n.a
Samoa	2.5	-9.3	55	60	0.688
Tonga	0.4	-11	62	58	0.704
Tuvalu	1.4	n.a	n.a	n.a	n.a
Papua New Guinea	7.5	-36.8	97	101	0.466
Solomon Islands	6	-11.2	81	74	0.51
Vanuatu	4.5	-5.9	75	76	0.617
Kiribati	3.5	-28.9	111	115	0.624
Fiji	1	-11.2	72	77	0.688
Indonesia	6.5	0.2	126	129	0.617
Vietnam	6.3	0.2	90	98	0.593
Timor-Leste	10	339.4	169	168	0.495
Cambodia	6.5	-7.1	138	138	0.523
Philippines	4.8	3.1	134	136	0.644
Lao PDR	7.6	-15.9	163	165	0.524

n.a = data not available

Dependence on Official Development Assistance

The majority of Asian developing countries have made progress towards a reduction in dependence on development assistance as a proportion of their GNI compared to last year^viii. In contrast four from eight of our Pacific partner countries (with data available) appear to have increased dependence, especially Samoa and Solomon Islands. (This may reflect increased assistance following the 2009 tsunami in Samoa and an increase in Australian support for Solomon Islands).

Human Development Index (HDI)

HDI is a comparative measure of life expectancy, literacy, education, and standards of living of a country. HDI values in New Zealand's bilateral partner countries slightly improved over the past year^ix.

Millennium Development Goals (MDGs)

In the Pacific, the overall trend is that Polynesian countries are performing relatively well and are on track to achieve four of the MDGs: universal primary education, reducing child mortality, improving maternal health, and ensuring environmental sustainability^x. The Cook Islands and Niue are on track for six out of seven MDGs and Tonga is on track for five. In contrast, Melanesian countries and Kiribati are not making much progress. Papua New Guinea is the most off track and its large population of approximately 7 million tends to skew the statistics for the Pacific.

In Asia, most countries are on target to eradicate extreme poverty and hunger - all have reduced the percentage of population living below the international poverty line (US$1.25 per day)^xi. There has been less consistency in achieving universal primary education, with the Philippines, Timor-Leste, Lao and Cambodia not on track to meet the MDG education targets. No Asian country is on track to meet all seven MDGs, although Viet Nam is on track to meet six, and Timor-Leste has shown significant gains and is now on track to meet at least four. The Philippines is not on track to meet any of the MDGs.

Improving how we manage development assistance and measure our impact

Programme performance

Throughout 2011/12 the Ministry has been developing new development programme management policy, planning and results frameworks that will better define what official development assistance (ODA) New Zealand will contribute to a particular programme and how New Zealand can support the best outcomes. New Zealand's specific contribution towards development outcomes for each country programme are outlined in Joint Commitments for Development (for Pacific countries) and programme strategies.

Efforts to reduce fragmentation and improve aid effectiveness have seen the number of programmes reduce from 33 to 24 in 2011/12. Each programme completes an annual plan and progress report including a rating of progress towards the development outcomes set out in programme strategies. For 2011/12, out of a total of 130 strategic objectives, 70 percent were rated good or better, and 97 percent were rated as adequate or better (see section six).

Programme ratings
Drawn from 26 reports		Excellent	Good	Adequate	Unsatisfactory	Total
2011/12	Number objectives	17	74	35	4	130
	%	13%	57%	27%	3%	100%
2010/11	Number objectives	18	70	32	6	126
	%	14%	56%	25%	5%	100%

During 2011/12 a multi-year strategic evaluation programme was developed in order to contribute to both accountability and learning. Key strategic evaluations currently underway include sector evaluations of our work in policing and Pacific fisheries.

Programme spend
Programme	2009/10 $M	2010/11 $M	2011/12 $M
Cook Islands	7.4	18.8	19.0
Niue	11.2	23.7	16.2
Tokelau	14.6	20.5	23.3
Fiji	4.8	4.4	3.2
Kiribati	5.9	8.8	21.4
Papua New Guinea	24.7	28.1	23.7
Samoa	20.4	17.9	18.8
Solomon Islands	40.7	32.7	32.6
Tonga	12.7	14.2	25.1
Tuvalu	2.8	1.7	6.9
Vanuatu	20.7	16.3	16.5
Pacific Economic Development	17.6	14.8	15.6
Pacific Human Development	15.4	19.3	20.2
Pacific Regional Agencies	15.8	20.7	20.3
Afghanistan	5.1	7.8	7.1
Indonesia	8.6	13.6	18.8
Timor-Leste	7.4	8.5	9.8
Viet Nam	12.6	7.9	9.3
Asia/ASEAN Regional	20.8	21.9	24.8
Africa Regional	7.9	6.0	3.9
Latin America Regional	5.6	4.7	2.3
Partnerships	41.5	32.3	31.0
Humanitarian	9.0	16.8	20.1
Multilateral	93.1	123.8	114.1
Other Non-programme	9.0	9.9	6.4
Grand Total	435.3	495.1	510.4

Activity performance

In 2011/12 Activity Management Operational Guidance was released, covering a suite of activity cycle management and contracting policies, guidelines, templates and business tools for managing development assistance. New mandatory Activity Results Frameworks focus on identifying results (outputs and outcomes) that are directly due to New Zealand's contribution and on developing strong integrated monitoring and evaluation systems at the start of the activity life cycle. Activity Monitoring Assessments and Activity Completion Assessments monitor our activities and track progress against results. They provide measures of relevance, effectiveness, efficiency, likely impact and sustainability of benefits.

Efforts to reduce the number of activities being managed and ensure increased number of larger and higher impact activities have been successful. In 2011/12 there were a total of 597 activities, compared to 718 activities in 2010/11. (For details on selected activities from the Pacific and Global Appropriations refer to section six.)

Working with others

New Zealand works in partnerships with third parties to deliver ODA. This enables us to draw on the expertise, knowledge and experience of a variety of different organisations throughout New Zealand and abroad. It is also a way to support greater coherence and harmonisation of aid within a region or sector and enables New Zealand to contribute towards larger scale resourcing needed to address significant challenges.

Multilateral organisations

In 2011/12, $145.4 million^xii or 28 percent of the New Zealand Aid Programme was delivered through multilateral organisations, including humanitarian agencies. The largest multilateral recipients are the Asian Development Bank, United Nations Development Programme (UNDP), the World Bank, and the United Nations Children's Fund (UNICEF).

New Zealand non-government organisations (NGOs)

In 2011/12, the Ministry committed $23 million to NGOs for multi-year projects through the Sustainable Development Fund (SDF). The SDF will be replaced in 2012/13 by the New Zealand Partnerships for International Development Fund that will provide contestable support to New Zealand NGO, state and private sector organisations to deliver development results offshore. (For additional details on selected activities in the International Agency and Voluntary Agency Grants, refer to section six.)

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Outcome 5: The rights of New Zealanders protected abroad.

The Ministry is responsible for assisting New Zealanders in distress overseas, including in the event of a natural disaster or other large-scale emergency. The Ministry also seeks to mitigate risks to New Zealanders by raising the awareness of New Zealanders travelling and living overseas.

The Ministry's consular emergency response capacity would also be activated in the event of a major natural disaster in New Zealand in order to facilitate international assistance and liaise with foreign missions.

Progress towards outcome

Raising the awareness of New Zealanders travelling and living overseas

We receive consistently positive feedback on our service performance in our surveys of recipients of consular services. Preliminary indications of this year's survey indicate a very high 82 percent client satisfaction rate and an increased awareness of the safe travel website (up by 10 percent).

Consular emergency responses

There have been no large emergency response events this year. Assistance was, however, provided to a handful of New Zealanders evacuating from civil unrest situations in Syria, Mali, Guinea Bissau and Thailand floods in October.

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Footnotes

[i] This is the total number of short-term visitors whose country of last permanent residence was the Cook Islands, Fiji, French Polynesia, New Caledonia, Samoa or Tonga.

[ii] This is the number high level inwards and outwards visits serviced by the Ministry for the Asia region.

[iii] This includes visitors whose place of last permanent residence included the People's Republic of China, Hong Kong (SAR), India, Indonesia, Japan, the Republic of Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand.

[iv] This is the total number of visitors whose country/place of last permanent residence included: Austria, Denmark, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden, Switzerland and the United Kingdom.

[v] This figure includes the Pacific appropriation, plus projects in the Pacific funded through the Sustainable Development Fund (New Zealand AgenciesƒAppropriation).

[vi] ADB, Asia Economic Monitor, December 2011 and the ADB Pacific Economic Monitor, March 2012.

[vii] Ease of Doing Business Ranking 2012: World Banking Group: Doing Business 2012.

[viii] Net ODA as a percent of GNI 2010, World Bank: World Development indicators http://data.worldbank.org/indicator/DT.ODA.ODAT.GN.ZS

[ix] Human Development Indicators (HDI) values, UNDP 2011.

[x] 2011 Pacific Regional MDGs Tracking Report.

[xi] 2011 ADB Key indicators for Asia and the Pacific.

[xii] This figure includes the International Agency Appropriations, plus other bilateral, regional and humanitarian funding channelled through multilateral agencies.

[1] Figures quoted for 2009/10 and 2010/11 are different to those used in the MFAT Annual Report 2010/11 due to a revision of GDP figures covering several financial years preceding.

[2] The lower the ranking the better the performance.

[3] Only reports the additional contribution made by new FTA partners.

[4] Only reports the additional contribution made by new FTA partners and also excludes Malaysia given the separate New Zealand-Malaysia FTA.

[5] Only reports the additional contribution made by new FTA partners. Note the table does not include Mexico and Canada, although they are expected to join TPP negotiations later in 2012.

[6] Negotiated by the New Zealand Commerce and Industry Office in Taipei and the Taipei Economic and Cultural Office in Wellington.

[7] Only reports the additional contribution made by new FTA partners.

[8] Only reports the additional contribution made by new FTA partners and also excludes Malaysia given the separate New Zealand-Malaysia FTA. Figures for Viet Nam, Brunei, Cambodia, Laos, and Myanmar are not available.

[9] Note the figures reported here for 2010 differ from those reported in the 2010/11 Annual Report. The 2010/11 Annual Report was based on projections from the National Impact Assessments of the respective FTAs, whereas all figures presented here reflect actual trade flows.

[10] ADB Basic Statistics 2012.

[11] ADB Basic Statistics 2012.

[12] OECD Aid Statistics, Recipient Charts (last updated Jan 2012).

[13] World Bank: World Development Indicators (accessed July 2012).

[14] ADB Basic Statistics 2012.

[15] Ease of Doing Business Ranking 2012: World Banking Group: Doing Business in a more transparent world 2012. Figures quoted for 2011 are different to those used in the MFAT Annual Report 2010/11 due to a revision of the previous years 'Ease of doing business ranking' figures.

[16] Human Development Index 2011: UNDP.

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