Groser Tim: International Finance Agreements Amendment Bill — First Reading 
Groser Tim: International Finance Agreements Amendment Bill — First Reading 
[Volume:639;Page:9092] 
TIM GROSER (National) 
: 
 I do not as was the case with the previous speaker necessarily rise with great joy to address this topic but I certainly rise to support the International Finance Agreements Amendment Bill. 
Hon Member 
: You love it! 
TIM GROSER 
: Well it is a sensible bill. Legislation like this would not have done anything to help New Zealand investors in the only experience I ever had in this area. That was with regard to a $600 million investment in a geothermal plant in Indonesia where the predator was not the host Government but the IMF. But that is another story. I think the bill does a number of very sensible things. The only mildly partisan comment I make is that I wonder whether if the roles were reversed in 18 months’ time and my colleagues on the Government side were then in Opposition they would be rising to support an agent of international capitalism. We will see whether there are recidivist tendencies in the Labour Party in due course. 
In the broad sweep of things this is a sensible bill. I think it is long overdue that we join the Multilateral Investment Guarantee Agency. I see no downside to doing so; the contingent liability is very modest. It is important to try to think—as other speakers have done—about what lies substantively behind what is in fact a highly technical bill before the Parliament. What lies behind it is the process of development and the role of foreign direct investment flows in helping to achieve that historic goal. Just to put that in perspective I will say that foreign direct investment absolutely dwarfs by a huge order of magnitude official development assistance in terms of its importance as a form of development assistance. 
I recall reading recently that of the $780 billion dollars would members believe of exports from China in 2005—which are powering China’s development and lifting hundreds of millions of people progressively out of poverty although there is still a huge amount to be done in the west—60 percent of those exports were from foreign multinational enterprises in China. The role of foreign direct investment in the transformation of the Chinese economy—to take by far the most important example—is huge and obvious. Such investment needs some protection particularly since developing countries often have very poorly organised infrastructure. The court systems as people generally know—and I have had some experience in Indonesia on this front with regard to New Zealand and Australian companies—are completely unreliable for investors to resort to. So I think the Multilateral Investment Guarantee Agency is really underwriting the process of development. 
From time to time we should sit down and reflect a little on how well the development process is going. There is so much nonsense spoken internationally about the poor getting poorer that just occasionally it is useful to sit down and look at some facts. The facts are that if we take what I think is probably the largest single statistic to indicate welfare life expectancy we see that there has been an absolutely dramatic increase in average life expectancy in all developing countries in the last 100 years. It has risen from around 34 to about 62 and that includes the countries in sub-Saharan Africa and the most unfortunate other African countries that are going backwards because of the epidemic of HIV/AIDS. 
Enormous progress is being made in development. The average rate of economic growth last year for all developing countries including the countries going backwards was almost twice as fast as the average rate of growth in all developed countries. As a consequence of that the numbers in the most disadvantaged segment of the population of the developing world—those who are living on $1 a day or less—has declined by approximately 50 percent in the last 30 years to about 1.1 billion. That figure is forecast to halve again by 2030. The numbers in the next segment those who are living on $1 to $2 a day—a little bit under US$1000 a year—are forecast to drop by about 800 million. What we are seeing—and it is no longer of course just in the most obvious countries such as China; these days it is also spreading increasingly to India—is the rise of a huge developing-country middle class. If we use a definition based on purchasing power parity estimates of between $5000 and $10000 that middle class is estimated to currently stand at around 400 million people today. It is projected to rise within the next 20 years to about 1.3 billion people. That is a huge measure of human progress—it is a huge measure. Other social statistics are improving such as infant mortality as well as the life expectancy becoming higher. 
For those who are not moved by any concerns of that nature about the folk in developing countries I say that of course it also means the emergence of vast new markets for countries like ours. If we look at China we see there is a linear relationship here between the extraordinary growth of the Chinese economy—averaging about 10 percent since 1978—and the fact that in respect of our principal goods export dairy products the compound average rate of growth per year is around 30 percent. New Zealand is the largest single supplier of dairy products in terms of imports in the world. So for those members who are not moved by the bigger humanitarian issue—and I certainly am; I think that is the biggest game in town frankly—there is also a very strong area of self-interest in this for other countries. 
Foreign investment is absolutely central to the development process. The ability of foreign investors to lay off their risk through proper international multilateral cooperation of the type we are debating in terms of this bill is part of that picture and it is for those reasons that the National Party will be supporting this bill.