Groser Tim: International Finance Agreements Amendment Bill — Third Reading 
Groser Tim: International Finance Agreements Amendment Bill — Third Reading 
[Volume:642;Page:11895] 
TIM GROSER (National) 
: 
 Kia ora tatou. It is always a great privilege to follow my colleague Dr Mapp who has put the context of the International Finance Agreements Amendment Bill in the broader framework of the problems facing Labour and its desperate attempt to make foreign policy a divisive issue for New Zealanders. [ 
Interruption 
] Absolutely I say to Dr Mapp. He has provided that broader political framework and I shall make just a few brief comments on the substance of the bill as I do not think I can improve on his comments. 
This bill has gone through the Foreign Affairs Defence and Trade Committee and has attracted quite careful attention from the parties that have been watching its passage. It has attracted broad support. Along with a number of members of this House I was a little surprised to find when we first came across this issue that New Zealand was not already a member of the Multilateral Investment Guarantee Agency given that there are 170 members and that we historically have put a lot of emphasis on multilateralism. It is the one avenue of diplomacy where New Zealand’s small size frankly does not really matter as much because ideas count as well as power. Nevertheless this lacuna existed and this bill will fix up that problem. It is part of a broader jigsaw if you like of putting in place international cooperation that for the first time will include New Zealand within its aegis. 
The second thing I would say is that this measure is a fairly low-cost solution from our country’s point of view. From memory the contingent liability is US$5.5 million and we have an immediate cash liability of 10 percent of that. So the cost of this solution is pretty modest. I would imagine it is deeply improbable that the full contingent liability—modest though it is in itself—will ever be called upon in the future largely because of the very prudent management principles underlying this agency which are reflected in the bill. 
The design is prudent. If members look at article 15 of the new schedule 7 which is in the schedule of the bill they will see that it involves careful cooperation with the host country which I think is absolutely necessary. Foreign investment remains a sensitive issue in many of these developing countries. This is not a case of the World Bank going in with its muddy boots on over the top of host country wishes. It will not operate without the express consent of the host country. 
I think the design is prudent in terms of management of risk. It has a limited risk of up to 150 percent of the capital on call and each individual project is capped at US$110 million. In a sense this is quite a modest amount of money. It indicates that we are not talking about mega projects or mega power projects; we are talking about relatively modest projects by the standards of international capital with a maximum liability of US$110 million. 
It attacks real problems as previous speakers in previous stages of this bill have pointed out. It is very very difficult for private companies—whether they are New Zealand companies or companies from other countries—seeking to put some investment opportunities before these developing countries to get private market insurance for expropriation or for breach of contract by the recipient Government. Of course this measure would not cover breach of contract by a private actor in those countries. It is very difficult if not impossible to insure against war and civil war which are quite explicitly set out in the relevant provisions of this bill. 
This is prudently designed legislation. I think New Zealand is right to get into this agency. It is fundamentally important in terms of lowering risk premium and opening up development opportunities for developing countries. Thank you.