Labour says the Government's approach to foreign aid has ruined New Zealand's reputation.
Under National, NZAid has been folded into the Ministry of Foreign Affairs, to focus on economic prospects.
But Labour MP Maryan Street says the Government is blurring the boundary between aid and trade interests. She told a Council for International Development panel on Tuesday that the Government has misplaced its priorities.
Ms Street says a strategic and independent relationship needs to be re-established with NZAid and non-government organisations (NGOs) based in New Zealand.
She says improving health and education is the only way to achieve the millenium development goals.
But Foreign Affairs and Trade committee chair John Hayes says taxpayers want their money to go towards support for sustainable enterprise.
