Nash Stuart: International Finance Agreements Amendment Bill — In CommitteeText is incorporated into the Bound VolumeNash Stuart: International Finance Agreements Amendment Bill — In Committee[Sitting date: 10 November 2015. Volume:710;Page:7811. Text is incorporated into the Bound Volume.]STUART NASH (Labour—Napier): I hope there are no media watching this because they may find me in the situation of agreeing with Mr Foss. Mr Tabuteau it was a rather naive speech. The reason I say that is there are a number of reasons why this is a very important development in the international banking sector. First and foremost I think you will find that most 21st century literature says that for an economy to grow it has got to have good sound infrastructure. We are talking about power stations we are talking about roads which are a sort of 20th century infrastructure but in this day and age we are also talking about copper about fibre and all those other things that link the world and allow businesses to locate pretty much anywhere that they can. When you look at the applicants who have joined this bank—we are talking about India Thailand Malaysia Singapore the Philippines Pakistan Oman Qatar Sri Lanka Uzbekistan and Viet Nam—New Zealand was actually the first developed Western country to apply to join. In recent months so have a number of others—Germany and Britain for example.One of the reasons as Mr Goff alluded to that the United States was against this was it cited that it believed that the governance within the Asian Infrastructure Investment Bank would not be up to standard. That is slightly ironic in a way because I believe after the reading I have done that if the Asian Development Bank and the International Monetary Fund and the World Bank had actually undertaken the sort of development and put in place the sorts of strategies that the region needed then this bank would not have been formed in the first place. In fact the irony is that the push for change around the IMF has been supported by President Barack Obama because he himself actually called for reform in the IMF last year. So this has really sprung up as a need in the region. As mentioned it is a massive part of the global economy. It is growing and it is where a huge chunk of our future lies. The thing is when America mentioned the governance arrangements and the concerns it has if you read through chapter V of new schedule 8 in the International Finance Agreements Amendment Bill it lists all the governance arrangements. It seems to me that it is very clear they need a quorum of two-thirds of members. Article 22 states: “1. Each member of the bank shall be represented on the Board of Governors and shall appoint one Governor and one Alternate Governor.” It looks very very robust from a governance perspective. I believe that you would find that the Germans and the Brits let alone other developed countries would not have a bar of this if they thought that the governance structure was not absolutely sound.The other thing I would like to talk about is this. If you go to article 2 “Functions” of the agreement set out in schedule 8—look at the functions. They are to promote investment in the region of public and private capital but when you look at article 2(iii) it actually talks about “to encourage private investment in projects enterprises and activities contributing to economic development in the region in particular in infrastructure and other productive sectors and to supplement private investment when private capital is not available on reasonable terms and conditions;”. One of the legal tests is a reasonable person test and I wonder what “reasonable terms and conditions” means. If that actually means that this bank is going to lend money more akin to the interest rates in Asian nations as opposed to for example in the developed world—in New Zealand for example—then it is perhaps not a bad thing. Infrastructure is vital and the funding is US$100 billion. That sounds like a lot of money and in many circumstances it is. But when we are talking about major infrastructure projects US$100 billion actually is not that much money when you think a large power station can cost $2 billion to $3 billion. It is a lot of money but for infrastructure development in these developing nations I suspect—and it will be interesting; Mr Foss has said we have never had to call down on our capital reserves but you may find that this is the case going forward certainly over 5 years because these economies are growing at a great rate of knots.I agree with a number of the speakers that it is very important that New Zealand is part of this. Mr Tabuteau is right. I cannot see any circumstance at all where the infrastructure would be built in New Zealand out of money from this fund—it is not needed. We have sufficient capital markets and sufficient private investors to allow the sort of infrastructure needed in this country without having to dive into this whatsoever. But these sorts of banks are not set up to help developed countries maintain or grow their infrastructure; they are really about developing countries and the flow-on effect from that can be massive. It is already acknowledged that India is an economy growing at a great rate of knots as is China and a lot of the other economies mentioned. Thank you.