Parker David: International Finance Agreements Amendment Bill — Third ReadingText is incorporated into the Bound VolumeParker David: International Finance Agreements Amendment Bill — Third Reading[Sitting date: 12 November 2015. Volume:710;Page:7980. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour): It is my pleasure to confirm as has been said in earlier contributions from the Labour Party and mentioned in the Foreign Affairs Defence and Trade Committee report that the Labour Party is in favour of this legislation. We think it is a very good advance in world affairs that China is leading using some of its financial wherewithal—which is very substantial these days—to improve the lot of people in countries that are not quite as fortunate by funding through the Asian Infrastructure Investment Bank things that would not otherwise occur.I want to mention one level of detail where we do not agree with the Government before coming back to our agreement with the general provisions that we are enacting. Under this agreement New Zealand subscribes for 4615 shares in the Asian Infrastructure Investment Bank. That is given effect to in the articles of association of this new organisation which are included as a schedule to the bill. For every one of those shares New Zealand commits a million dollars of capital to the fund. Not all of it has to be paid across but we are liable for it to be called on if things went wrong and we agree for a certain proportion of it to be paid in cash. So every time New Zealand’s shareholding goes up or down in one of these organisations in the future there is a considerable economic cost to the country. This is true of every one of these international finance agreements.I think it was just last year we changed the proportions held by New Zealand in the IMF and also increased the amount that was due in respect of each IMF member per share. So the effect of that in respect of the IMF was to increase the total amount of capital available through the IMF in the various things that the IMF does but to decrease the proportion held by New Zealand of that increased total.These things only happen occasionally but when they happen relatively small changes in shareholding have a big impact on the amount of money that the Government is required under the international agreement which is changed to commit to that organisation. The Labour Party is of the view that those sorts of changes which are spending taxpayers’ money in a way that is not generally contemplated in a Budget—those sorts of things should be overseen by Parliament rather than be done by the executive. As a consequence in respect of the last amendment to the International Finance Agreements Act the Government conferred upon itself the regulation-making power to agree to changes in the amounts of capital that New Zealand is required to be responsible for in these international organisations by statutory regulation. I thought at the time that that was wrong that that sort of change to international financial agreements ought to have the approval of Parliament. It actually does not happen that often. I think the number of times that that sort of change would have been before Parliament—it has only been on a few occasions since the IMF was founded all those years ago.In respect of the Asian Infrastructure Investment Bank I am also confident that those changes in capital subscription will not occur very often.One of the reasons you can be confident in that is partly that they have got so much room to move in that the capital subscribed for is so much more than the capital that is called. So if there is a need for some more capital in the fund they have got quite a bit of room to move in terms of calling capital that has already been subscribed upon rather than increasing the capital that is subscribed for and therefore the total liability of the Government. So I think it is wrong that through this amendment legislation we are actually extending the right of the executive to change the obligation of New Zealand in the future by way of statutory regulation rather than having to come back to Parliament for a new authorisation if they want to subscribe for more capital to one of these international organisations.That said I want to agree with the Minister of Finance the Hon Bill English in respect of a number of his comments. I think it is very good that New Zealand embraced the concept of the Asian Infrastructure Investment Bank early on. There is a long history in New Zealand of New Zealand engaging with China both economically and politically in advance of a lot of other countries. I think it has been of credit to New Zealand that we have done that. I think it has also been to New Zealand’s benefit in our international reputation and I think it has also been to our economic benefit. I think it has also benefited China. China as a consequence of its exposure to New Zealand earlier than would otherwise have been the case changed its system I am sure in some ways to reflect the sorts of things that New Zealand advocated it should do.I am sure that just as China gives us advice at times and we look to it sometimes for examples where it might do things well it also looks to New Zealand and respects the advice that we tender at times.That is certainly true in respect of the Asian Infrastructure Investment Bank. Through the former Secretary to the Treasury John Whitehead the New Zealand Government was able to influence the shape of the provisions under which this new Asian Infrastructure Investment Bank will operate.One of the concerns that was mentioned in the media by some of the countries that were less enamoured initially of the Asian Infrastructure Investment Bank was based on the concern that this bank might be used as a primarily political tool driven by the Chinese Government to pursue its international ambitions in a way that was not neutral and to pursue political objectives rather than being focused on what are the most pressing infrastructure needs in this regionthat need to be met.I think it is fair to say that those criticisms have waned as a consequence of the fact that when the detail has been provided as to how the Asian Infrastructure Investment Bank board will act—those concerns have waned and there is now widespread recognition across not just the countries that are in the Asian Infrastructure Investment Bank but across other developed countries as well that the earlier concerns were not valid. I think that reflects well upon both China and New Zealand.Those operating principles are set out in article 13 of the agreement set out in schedule 8. It says that the operating principles are firstly that “The Bank shall be guided by sound banking principles in its operations.” and secondly that “The operations of the Bank shall provide principally for the financing of specific projects or specific investment programmes”—there is some more detail which I will not read out there. It “shall not finance any undertaking in the territory of a member if that member objects to such financing.”—so they have got to have the cooperation of the local government. “The Bank shall ensure that each of its operations complies with the Bank’s operational and financial policies including without limitation policies addressing environmental and social impacts.”—it is pleasing to see that.There were some earlier projects of the IMF and other development projects elsewhere in the world where there was the assertion that some of the projects that were funded by international banks like the IMF inappropriately ignored some of the adverse environmental consequences.Indeed my understanding is that some of the projects that were criticised were mining projects—actually not so much mining projects as big power projects including hydro-projects in parts of the world that had serious environmental concerns including the displacement of local people who were not treated fairly when they were displaced and perhaps should not have been displaced in the first place because the projects might not have been that wise. So it is good to see that that sort of thing has been guarded against through part 4 of article 13.There are other parts of this agreement that will ensure that New Zealand’s reputation for pursuing good governance in the world is adhered to. I think that is very important—that New Zealand lends our weight and our ethic which is that we ought not to be embarking on corrupt practices and we ought not to be assisting in corrupt practices. I am sure that New Zealand’s influence on the Asian Infrastructure Investment Bank will ensure that it is less likely that this bank gets tied up through those investments in the propping-up of corrupt practices in the countries that this Asian Infrastructure Investment Bank will be assisting. With those comments I will take my seat and record my thanks to the Minister of Finance for shepherding this legislation through.