In what is becoming an annual ritual after the Australian budget for Foreign Affairs and Trade has been handed down, I take a look at how DFAT's New Zealand counterpart fared in its own budget-cut fest. The NZ Ministry of Foreign Affairs and Trade 'Estimates of Appropriations' usually make Australia's DFAT look flush by comparison.

MFAT has had a turbulent few years, with the massive cuts threatened a couple of years ago wound back after something of a furore exploded in the (then) new minister's face. Cabinet papers dealing with the Government's reversal were leaked, allegedly by someone within MFAT, and the whole affair is now subject to investigation and judicial review.

2012 was to have been, on my interpretation, 'quite a good year' for MFAT. Turns out the 2012-13 budget might have involved a bit of fancy footwork by the NZ Treasury, because 2012 was in fact a horror year for MFAT. Expenditure was 11.5% down on the budgeted numbers, and the eventual estimated actual expenditure was 14% lower than the previous year's 2011-12 spend. By any measure, that's a big haircut.

That puts into context what looks like a relative budget hike this year – the NZ$505 million given to MFAT is NZ$122 million more than was spent last year, but only after two years of fairly savage cuts.

As seems to be the rule for budget papers, the numbers hide the pain. Despite the partial reversal on job cuts, it appears around 140-150 positions were cut in 2012-13, or more than 10% of staff from an organisation of only around 1300 people. Word is that, on top of these savings, MFAT has made major organisational changes to achieve further efficiencies, scrapping the rotational system to make Wellington postings 'new' jobs rather than place-holders between overseas postings. In the words of opposition foreign affairs spokesperson Phil Goff:

We undermined our greatest asset in foreign relations, our skilled and committed workforce, all to save a miserable $12 million which after its backdown is all the Government got from its internal restructuring.

New Zealand is a tiny nation which has been extremely successful on the world stage. Its free trade agreement with China, signed in 2008, is the only FTA China has made in the developed world. As Goff points out, New Zealand's exports to China have more than doubled since the FTA commenced, and have insured New Zealand from the worst impacts of the GFC. Goff attributes this to the expertise of New Zealand’s diplomats:

Securing the free trade agreement wasn’t by good luck. It was the skill of our negotiators and the hard work in diplomacy we put in over a long period to develop a strong relationship of trust with China. 

MFAT is a small agency tasked with the large challenge of promoting New Zealand's interests in the world. There was little fat to be cut, and now there is even less. MFAT's 2013-14 budget looks to have arrested the swing of the hatchet. It remains to be seen whether the reprieve is temporary or permanent.

Photo by Flickr user juicyrai.