Analysis: It’s hard to imagine any finance minister having an easy ride in coalition with Winston Peters.
The New Zealand First leader is hardly known for his modest financial requests: take the $3 billion Provincial Growth Fund he secured under the last Labour government, or his current push to buy back BNZ at a cost some estimate could run north of $20b.
Even with that in mind, Peters and Finance Minister Nicola Willis have had a particularly fraught relationship in the Government’s term to date.
The pair have clashed over the Cook Strait ferry replacement, with Peters seizing responsibility for the project off Willis in 2024 and declaring he was “back to the drawing board, and over the Finance Minister’s nascent plans to partially privatise Lotto’s operations (“Dead in the water,” Peters declared within hours of Newsroom breaking news of the discussions).
Yet the most significant battle – a war that is still raging – is over a matter dear to Peters’ heart: the country’s foreign affairs budget.
On Wednesday, Willis belatedly revealed the Ministry of Foreign Affairs and Trade had been carved out from the list of government agencies required to reduce their operating budgets by 2 percent in the coming financial year – a noteworthy win for Peters and his ministry at a time when the Government is trying to scrape together every cent it can.
While the Finance Minister said the foreign ministry would still be required to trim 5 percent off its budget in each of the following two financial years, Peters has made clear he has no intention of following suit, telling reporters the day before: “There’s a smaller matter of [an] election on the 7th of November and the Budget next year.”
The spat echoes the pair’s clash behind closed doors ahead of last year’s Budget. Back then, Willis accused Peters of ignoring a request to find savings and advocating for projects that were “not clear or well-articulated” – only to find herself accused of presenting him with “grossly misleading” and “preposterous” data, with proposed funding levels for foreign affairs and defence that would “be viewed by our closest partners as unserious and derisory”.
This time around, the disagreement is playing out in public, with Willis suggesting Peters was placing business class flights for diplomats above the greater good, and Peters suggesting National (along with Labour) had adopted “a Scrooge-like approach” in recent decades.
“They talk a big game to get there, and do nothing when it comes to supporting foreign affairs offshore – that’s their record.”
There are important principles at play behind all the bluster. Peters has long argued that New Zealand lags behind similarly-sized nations when it comes to our offshore presence, a point he reiterated in a speech at an Asia New Zealand Foundation event on Wednesday.
“Our voice is not strong. We fight our budget corner hard, but until future New Zealand governments – whoever leads them – see defence and foreign policies not as a cost, but as a driver for making New Zealanders richer and more secure, a highly active diplomacy will be needed to compensate for the lack of resources,” the foreign minister declared.
It seems to be a cause that Peters truly believes in, given his repeated efforts to secure funding for diplomats and overseas aid despite the fact neither seem likely to be vote-winners with the wider public.
For her part, Willis sees a foreign ministry whose budgets swelled during Peters’ last stint as minister, and which has been largely excluded from the coalition’s cost-cutting drive so far this term.
We may lag behind others when it comes to our diplomatic network, sure – but why should that be prioritised over additional funds for health, education, infrastructure and other areas of dire need?
Neither politician appears for turning, raising the spectre of further clashes to come on the campaign trail and into a hypothetical second term.
For its part, Labour has questioned whether Willis will be able to meet her $2.4b target given Peters’ obvious unwillingness to countenance the banked 5 percent cuts to the foreign ministry. It’s a reasonable point, although such a reprieve would mainly irritate other departments rather than make a major difference to the overall savings figure.
The bigger question is how coalition dynamics would play out in a second term in power, something Peters and New Zealand First have never achieved – and, on current numbers at least, with even more influence over its supposedly bigger partner.
Entering such uncharted waters, Willis could well be in need of her Cabinet colleague’s ferries.
