4. Hon PHIL GOFF (Labour—Mt Roskill) to the Minister of Foreign Affairs: What is the percentage reduction in foreign policy or diplomatic staff he has set out in his paper to the Cabinet Committee on State Sector Reform and Expenditure Control, dated 26 April 2012?

Hon MURRAY McCULLY (Minister of Foreign Affairs) : As a former Minister, the member should know that it is normal for Cabinet committee and Cabinet discussions to take place confidentially. For that reason, if such a paper existed, it would not be in the public interest for me to provide the information that he seeks. I understand that yesterday the member released what he asserted to be material from Cabinet committee papers. If his question refers to those, he will already have the answer he seeks.

Hon Phil Goff: Since I already have the answer, why is he slashing 53 foreign policy positions—that is the people who do the diplomatic work, nearly 10 percent of his diplomatic staff—from the ministry, when his friend, former senior ministry diplomat Charles Finny, said last year that there were already “huge staffing gaps” in the ministry, which required core ministry work to be farmed out to expensive private consultants?

Hon MURRAY McCULLY: The original ministry proposal was that 64 foreign policy positions would be disestablished. More recent discussions have centred around a number in the mid-50s, although that is still a matter being discussed between the Government and the ministry. Were that to be the position where things settled, about half of those positions would be represented by current staff and around half by current vacancies.

Hon Phil Goff: Notwithstanding his denial on Morning Report this morning, will he acknowledge there is a major morale problem in the Ministry of Foreign Affairs and Trade when his ministry’s own survey, which I have got in my hand, shows that more and more people are disillusioned and disengaged, “significantly more” than any other State sector organisation, and when last week his important trade negotiation division said that confidence was shot and they cannot retain talented people?

Hon MURRAY McCULLY: The member claimed to be deeply concerned about staff morale within the ministry and about damage to New Zealand’s foreign policy interests from this process. If he wishes to identify the persons responsible, then he just needs to find himself a mirror.

Hon Phil Goff: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! A point of order has been called.

Hon Phil Goff: I asked the Minister whether he would acknowledge that there was a significant morale problem within the ministry. He went on, then, to say that I was responsible for everything. It used to be the chief executive officer. Now it is me, apparently. But he has not answered the question.

Mr SPEAKER: That is an interesting point the member raises, because the question asked whether the Minister would acknowledge that there was a significant morale problem. The Minister tended to indicate, in his answer, that he does not think there is but if there is, then he blamed the previous Minister. That is an answer. Whether it is a good answer or not is another matter. The member does have further supplementary questions. He is a very experienced member, and I am sure he is capable of pursing that further.

Hon Phil Goff: An answer, but not as we know it! My supplementary question to the Minister is why is he recommending the closure of the embassy in Stockholm when he said to the Foreign Affairs, Defence and Trade Committee just months ago: “we put a high value on those Scandinavian relationships, which is why we did not take a step of closing that post”—a decision not to close the embassy, which he said was “the result of careful reflection and consideration”; and why has he flip-flopped in a matter of months?

Hon MURRAY McCULLY: As I have said on a number of occasions publicly, the question of closure or opening of missions overseas is a matter for Cabinet. The discussion that took place in the original change document did raise the prospect of changes in Europe. In the letter of 22 March I canvassed a range of options for the ministry to advise further on. Those matters are still to come before Cabinet for a final decision.

Rt Hon Winston Peters: Will the Minister admit that he inherited a ministry that was being properly funded and that foreign aid was heading towards 0.35 percent of GDP, and that these cuts simply indicate that he has no influence at Cabinet, which begs the question of him why did he seek the position in the first place?

Hon MURRAY McCULLY: I would have used the word “lavish” to describe the funding when the Government came into office. What I can say is that in 2008 the Ministry of Foreign Affairs and Trade sought from the then Minister of Finance an extra $212 million a year in 2011-12 terms. In the first year in office as Minister, I took $115 million off the table and in the subsequent year a further $20 million. Now we are looking at a further reduction of $24 million to $25 million this year, which would still leave over $50 million of the funding advanced by that member as Minister in 2008. I think I will stop there, because the Minister of Finance is starting to ask himself whether maybe we should do more.

Hon Phil Goff: In addition to the $9.2 million that he has spent on the change process so far this year, is the additional $3.296 million that he has admitted to me will be spent next year on change consultants the total financial cost of the change process that he estimates for next year, including internal staffing costs and redundancy costs; if not, what will be the total cost of this botched process?

Hon MURRAY McCULLY: The member has been told before that the figure of $9.2 million is a budget not an expenditure level to date. What I can say to him is that the manner in which we have tried to assist the ministry in making some final decisions at an early time is designed to ensure that we can move on to business as usual as quickly as possible and save as much from the change budget as possible. The specific answer to his question can only be given once all of the decisions have been made.

Hon Phil Goff: As the result of the latest changes that he has in his paper, has the ministry changed the contracts of any of those consultancy firms, which he is aware will require compensatory payments to them; if so, what will be the cost of that?

Hon MURRAY McCULLY: I am not aware of any arrangements of that sort.