Coleman Jonathan: International Finance Agreements Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Coleman Jonathan: International Finance Agreements Amendment Bill — Second Reading 
[Sitting date: 25 September 2012. Volume:684;Page:5615. Text is incorporated into the Bound Volume.] 
Hon Dr JONATHAN COLEMAN (Associate Minister of Finance) 
 on behalf of the Minister of Finance: I move  
That the International Finance Agreements Amendment Bill be now read a second time 
. Following the first reading the bill was examined by the Finance and Expenditure Committee which recommended that it be passed with no amendments. The bill will amend the International Finance Agreements Act 1961. That Act allows the Government of New Zealand to meet its obligations as a member of various financial institutions including the International Monetary Fund the World Bank and the Asian Development Bank. This bill updates the principal Act so that New Zealand legislation takes account of changes the IMF has made to its Articles of Agreement. These changes were agreed to by the IMF governors in 2008 and 2010. 
As the Minister of Finance stated in his first reading speech New Zealand sees clear value in being a contributing member of the IMF. As a small open economy we benefit heavily from a stable and prosperous global economy. The IMF supports this by providing a global safety net which can mitigate the effects of financial crises and helping to support trade and economic activity. The financial commitments that we have made to the IMF are effectively premiums to an insurance policy against damage to our economy from an unstable world. Contributing to the IMF and global financial stability is also important for New Zealand’s international reputation. Supporting the IMF in the work it does places New Zealand alongside countries that we often benchmark ourselves with internationally. 
The changes to the articles of agreement reflected in this bill are part of a series of governance reforms that the IMF has been undertaking over the past few years. The reforms are designed to enhance the IMF’s legitimacy and effectiveness by ensuring that members’ voting shares and representation reflect their relative economic weight in the global economy. In addition the IMF has linked the reforms that are incorporated into this bill to quota changes to improve the representation of emerging markets at the IMF taking account of their increased role in the world economy. The Government reforms also facilitate an agreed change in the membership of the IMF’s executive board. Once these new rules come into effect the five largest IMF members will no longer be able to appoint an executive director meaning that there will now be an all-elected board. 
In addition to updating the principal Act to take account of the IMF reforms this bill also updates New Zealand legislation by repealing some now redundant legislation. The bill also creates a regulation-making power in the principal Act so that future updates to the articles can be made by regulation. This power will simplify the process by which New Zealand meets its international obligations. For those members who may wish to query the regulation-making power I would like to note that the Regulations Review Committee advised that the committee was not concerned about the proposed regulation-making power on the basis that New Zealand is bound by changes to the articles of agreement once they come into effect whether or not we have incorporated those changes into domestic law. Furthermore any regulations made under the regulation-making power are also subject to disallowance under the Regulations (Disallowance) Act. 
Overall passing this bill will signal New Zealand’s support for reform additional resourcing and better legitimacy in an important international financial institution. I commend this bill to the House.