Cosgrove Clayton: International Finance Agreements Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Cosgrove Clayton: International Finance Agreements Amendment Bill — First Reading 
[Sitting date: 08 May 2012. Volume:679;Page:2004. Text is incorporated into the Bound Volume.] 
Hon CLAYTON COSGROVE (Labour) 
: 
 As my colleague David Parker has said Labour will support the International Finance Agreements Amendment Bill. We like most other parties in Parliament believe in the worth of international institutions. The IMF World Bank World Trade Organization ILO and others are critical now in a globalised community and in globalised economies.  
I just want to touch on a couple of things and I note Mr McClay’s final comment that we should pass this in a timely fashion and I agree but I would just make this point. The question arises as to why it has taken so long for this bill to appear in Parliament. The advice I have is that Australia passed equivalent legislation in September 2009 and November 2010 and this is just I think another example of where the Government has to get its priorities right. This is a very important piece of legislation. Our involvement in the IMF especially during the global financial crisis is critical. We have responsibilities and obligations and I would have thought that this piece of legislation given its importance would be brought to this Parliament in due time.  
Putting that aside our involvement in the IMF is critical. I remember a former Cabinet Minister in the 1984 Labour Government who made a point to me many years later reflecting on the history of the turbulent economic times that were inherited in 1984 when the then Prime Minister—whom I am sure you know of Mr Assistant Speaker Tisch—refused to deregulate and we lost $600 million I think in those days offshore. The former Labour Cabinet Minister said to me that had we not been an English-speaking country back then the IMF would have moved in and said “She’s all over.” because we were I believe at that stage 6 or 7 days away quite literally from going broke as a country. That is how bad it was.  
Then if you fast forward to the various economic meltdowns we have had in various countries around the world and now the global financial crisis you can see the worth of these global institutions. In the financial crises of the 1920s and 1930s Governments heads of central banks such that they were politicians and critical institutions did not communicate. People and countries acted almost in silos. Now we have a situation where Finance Ministers central bankers and global institutions like the IMF and the World Bank act in concert to try to stabilise the world economy and assist those in greatest need so that you do not get into a situation—touch wood as we go through this—where the world economy implodes to the extent that it is almost unrecoverable.  
This is an important piece of legislation. It will maintain if you like New Zealand’s quota commitment to the IMF at around $3 billion—the former amount was about $2.9 billion—so it is basically a steady state. I think my colleague David Parker makes a valid point in respect of the changes to allow future updates of the articles to be made by regulation. When we have had major agreements in the trade area for instance they are generally brought back to this Parliament and examined and they are examined at the select committees. They are looked at quite carefully because that is the appropriate thing to do. To date generally at least within the major political parties there has been a bipartisan approach to that which reflects our joint view on New Zealand’s interests. That process is valid for a number of reasons. It is democratically valid but also it allows folk in the community to have their say on those agreements. It also allows—and I think this is a good thing—for various myths especially in the free-trade area for instance created by those who linger in the shadows and create myths about what may be positive or negative about free trade to be stripped away. It allows public scrutiny not only of the agreements but also of those myths and legends.  
Where we have difficulty I think in the communities is when there is a vacuum when things pop out of nowhere especially with international obligations such as this and when there is not appropriate scrutiny by Parliament and thereby the community. I just say to the Minister of Finance as he is going through and considering this piece of legislation that it may well—and I do not make a political point—be worth reconsidering the mechanism by which those future updates are made in terms of whether it is as proposed in here by regulation that can happen at the snap of a finger and an Order in Council or whether it would be profitable to bring those back at least in a cursory way to Parliament thereby providing scrutiny of Parliament and thereby providing to some extent a level—I see Mr Hayes shaking his head. I am not sure whether he is shaking his head at you Mr Assistant Speaker or me or whether he has just got the shakes; it may have been a hard night. We could look at whether it would be worth bringing back those regulations to Parliament to allow parliamentary scrutiny and to allow the community even in a cursory way to have some input thereby providing some confidence for those who may have concerns about the nature of global institutions and also exposing those who create myth and legend about them because sunlight as they say is the best disinfectant. So I say to the Minister of Finance that it may well be that he may wish to look at the mechanism again. I think it is also appropriate when we are signing up to obligations like this that Parliament at least gets to scrutinise those—not after the event but as they go through. Again I think that that provides some confidence at least as people can say that the representatives of this House have given it the once-over but also if necessary to question and inquire as to why if there are questions the Government has signed up to regulations and supported regulations as it has.  
The IMF is often criticised of course for getting there a day late and a dollar short as someone once said but one has to ask especially in the global financial crisis that we currently go through what would have been the nature and impact of events had the IMF and other global institutions not been there. One has to ask that and I think any student of history would argue that these are extremely necessary institutions.  
New Zealand’s contribution and of course New Zealand’s votes are pretty minimal on this. There are some I have heard—even some of the folks in my patch—who have asked: “Why do we bother contributing to this. What’s in it for us?”. Well what was in it for us if you go back to 1984 was some serious support. But also we have an international obligation to do our bit to assist others and to contribute to those international institutions like the IMF. So in turn the IMF can play a role as it has done in Greece and Portugal and other economies as they wobble around. Of course what happens in Europe or what happens in Asia—what happens to economies when they are destabilised by whatever force economically—is that ultimately for a small economy country and community like ourselves that has a knock-on effect. We know that if China’s growth rate dips—if for instance it was to go to 7 percent rather than 8 percent—that will have a knock-on effect on Australia and that will have an economic impact ultimately on us. We are a price-taker we sort of have to ride the wave of economic instability and we have very little international influence in terms of that.  
So we support this piece of legislation. It is important. There is very little politics in this but I just conclude by going back to my former point and that of David Parker. I would ask the Minister as he moves this through the process to consider the appropriateness of simply regulating commitments changes and amendments to IMF agreements without due parliamentary scrutiny. Again because there is very little politics in this I reiterate the point. Where there is some parliamentary scrutiny and some community input that in itself creates a degree of confidence in those agreements and that in itself acts as a barrier to those who would nefariously create myth and legend around those organisations and be nefarious in their motives. It exposes the arguments and it allows us to have a debate. It would be rather unthinkable I think if this Parliament did not support its Minister of Finance in supporting those amendments unless they did something completely crazy. I think it is appropriate that there is a level of parliamentary scrutiny.