Right-sizing just first step for Mfat

Murray McCully may be positioning himself as a fiscal enforcer but he’s really a bit of a wuss.

Proposed $25 million cuts to the Ministry of Foreign Affairs and Trade ( Mfat), making 305 mostly Wellington-based bureaucrats redundant, simply bring it back to where it was in 2007/8 before Winston Peters announced his massive $600-million five-year spend-up.

Even at the time, Treasury and the State Services Commission opposed Mr Peters’ profligacy.

After all, Mfat, under its existing budgets, had successfully negotiated CER, the Uruguay Round agreement, the free-trade agreement with China and phase one of the Trans Pacific Partnership. It had won election to the UN Security Council, hosted Apec and CHOGM, installed Mike Moore and Don McKinnon to head the World Trade Organisation (WTO) and Commonwealth, and broadly restored relations with the US.

It wasn’t obvious it needed vastly more money than previous foreign minister Phil Goff had provided for six years.

The main change will be that offshore diplomats will be less bothered by pointless administrative cables from Wellington bureaucrats trying to justify their existence. It’s a mere right-sizing.

(The exception is the madcap idea of cutting diplomats’ pay and making them re-apply for their jobs on return to New Zealand, which is certain to be dropped. Their pay should be increased in exchange for slashing perks and rorts, especially for accommodation.)

Gen X takeover
Mr McCully’s more important changes involve not the number of personnel but their deployment.

Mfat has long been the most conservative of departments.

The only way in was its graduate programme. Time served drove promotion. No one was ever fired. Its employment agreements insist that older people have first entitlement to new positions over younger staff. Consequently, it struggles to retain talented 30-somethings.

To the fury of ageing baby boomers, Mr McCully has aggressively promoted top Gen X talent.

Vangelis Vitalis, 43, has been appointed ambassador to the EU and Nato; Taha Macpherson, 40, to Turkey, Israel, Jordan, and the Palestinian Authority; Reuben Levermore, 36, to the Philippines; and Justin Fepuleai, 38, to Afghanistan. Ben King, 39, is John Key’s new chief foreign policy advisor in the Department of Prime Minister and Cabinet.

While a late baby boomer, Patrick Rata has been appointed ambassador to South Korea after Mr McCully discovered him in a back-office role having committed the ultimate Mfat sin – taking a couple of years off mid-career, to be Mr Moore’s right-hand man at the World Trade Organisation.

Surprisingly, given Mr McCully’s ultra-partisan reputation, there has been no hint of political favouritism.

As a student leader, Mr Vitalis led protests against the National government in the early 1990s. Mr Macpherson spent three years as Mr Goff’s top aide. Mr King worked for trade minister Lockwood Smith, whom Mr McCully has fought in bitter intra-party warfare, and Mr Rata for Mr Moore. Dr Fepuleai’s PhD is in political science, surely something deserving Mr McCully’s scorn. Arguably only Mr Levermore fits the McCully stereotype, having played professional rugby in France.

With these and future appointments, Mr McCully has decided that talented Gen Xers shouldn’t have to wait until their late 40s or early 50s to reach the top tier. Nor should older talent be punished for working temporarily outside Mfat’s hallowed halls.

Global redeployment
Mr McCully’s next move should be a global review of how Mfat resources are deployed.

As Bill English points out, only 20% of New Zealand’s exports now go to Europe and the US combined. The other 80% go to faster-growing economies in Asia and Australia.

The investment, education, migration and political patterns are broadly similar – but it is not how Mfat deploys its resources.

As many as 166 kiwi diplomats are still stationed in the UK, continental Europe and the US, even excluding the delegations to the UN, WTO and Russia.

In comparison, just 23 diplomats are stationed in Australia, 41 in India and 44 in mainland China.

Mfat still has 11 diplomatic posts in Europe (excluding Geneva and Russia) but just two in Australia, two in China and one in India.

There is a full-scale embassy in Stockholm, which Helen Clark opened in 2008 and Mr McCully plans to close, and in Vienna, despite New Zealand’s exports to Sweden being just $72 million in 2010/11 and to Austria just $18 million.

In contrast, New Zealand has no presence in Chongqing, with its 30 million people and surging economy, nor is New Zealand represented in India’s boomtown of Bangalore.

Mr McCully is on the right track but he still has a long way to go to build a foreign service that properly reflects New Zealand’s place in the 21st century.