Parker David: International Finance Agreements Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Parker David: International Finance Agreements Amendment Bill — Third Reading 
[Sitting date: 21 February 2013. Volume:687;Page:8124. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Labour) 
: 
 The Labour Party will be supporting the International Finance Agreements Amendment Bill as it has done in prior stages. As the Minister has ably described New Zealand is proud to be part of the International Monetary Fund and to contribute to the World Bank and the Asian Development Bank. All of these institutions and their forerunners were an outcome of international cooperation following World War II after which the world came together and said that we need to ensure that we do not make the mistakes that led to World War II and to the rise of fascism and communism where countries that suffered economic collapse did not have a way of getting out of the downward spiral that they found themselves in. So countries of the world decided that they needed to provide international institutions that could help reconstruct some of the countries that had been so damaged by World War II and also to provide support for countries that get into terrible trouble in peacetime. It was one of the outcomes of international cooperation that has served the world very well overall since then and has seen a decreasing number of wars a decreasing proportion of the world living in poverty and the international community being able to come to the aid of economies that are in dire trouble following collapse. 
We have seen the IMF over the years bail out countries as disparate as Asian countries African countries European countries and South American countries including the likes of Argentina. Were it not for the support that other countries are able to provide through the International Monetary Fund the troubles that we have seen in those countries would have been more likely to result in civil war within those countries and political instability—the rise of more extreme forms of government including fascism and communism—not just to the detriment of those populations but to the detriment of world peace and to the detriment of world trade which we benefit from. 
Although this piece of legislation is not the most important that will pass through this House this year it is appropriate to note the importance of these institutions. The Labour Party is a party that believes in an outward-looking interaction with the rest of the world. We think that it is even more important for small countries than for larger countries that we have these multilateral institutions and it is important that the Labour Party supports them. 
I am surprised that at the prior reading of this bill the Green Party was opposing it. I do not know whether it is continuing to oppose this legislation but if it is I think that is unwise. I think that the IMF provides very important support to the world. It is true that some of the advice function of the IMF has at times been contentious. The IMF has been dominated by an American view of economics which has lots to offer but is not always perfect. The IMF gave advice to emerging nations and included in that were nations that were moving from controlled economies to open economies such as we saw during the late 1980s and the 1990s in the Soviet Union and the former Soviet bloc. 
Some of the advice that was given to emerging nations to move quickly to smaller forms of government and to privatise previously publicly owned institutions was extreme and resulted in outcomes in those countries that were less than perfect. It has seen the rise of oligarchs in Russia in no small part facilitated because of the regime that was recommended by the International Monetary Fund. 
But that is not to say that the International Monetary Fund and its advice are fundamentally flawed. I think overall they are a force for good. So I am disturbed to see that our colleagues in the Greens are voting against this bill which serves to update the arrangements with the International Monetary Fund. 
Hon Simon Bridges 
: What are you thinking Steffan? 
Hon DAVID PARKER 
: What is that? 
Hon Simon Bridges 
: What’s Steffan thinking? 
Hon DAVID PARKER 
: Oh sorry. In terms of the legislation itself the Labour Party is on record as saying that we think these things are sufficiently important that they should attract the attention of Parliament rather than allowing future amendments to the International Monetary Fund articles that control how it operates to be delegated to statutory regulation and we have opposed that part of the bill. We have lost that debate. We think this legislation is worse for that. We think that having every decade or so an amendment to the articles through Parliament enables us to reflect on the importance of international linkages and advice from the IMF. It enables parties like the Opposition whoever they may be at the time—currently us—to reflect on parts of the IMF advice that are being ignored. At the moment the IMF is saying to New Zealand that one of the most important things to improve the New Zealand economy is to have a neutral investment signal into the economy through a capital gains tax. 
John Hayes 
: Shane Jones doesn’t believe that. 
Hon DAVID PARKER 
: Shane Jones most certainly does believe that. Having a neutral investment signal into the economy is fundamentally important so that people are investing in our economy based on the profitability of a business rather than a tax bias. Too much money is invested in New Zealand in land-related transactions because there is a tax advantage to doing so. The IMF the OECD Treasury in its own way the Reserve Bank and just about every economist in New Zealand say that we will have a stronger economy through introducing a capital gains tax which in the case of the Labour Party proposal would exclude the family home. 
It is interesting that the Government believes in the IMF but rejects that important piece of advice. Labour hopes to remedy that in the future when re-elected which will act to the benefit of New Zealanders and will result in a fairer tax system more employment opportunities a lower current account deficit and growing wealth in New Zealand. 
This is a good piece of legislation. The IMF as I have said provides leadership in the world. One of the other areas where it is looking again at what are good settings lies around exchange rate policy. The IMF has moved away from the idea that inflation targeting should be given primacy ahead of other important aspects of economic management like current account deficits and the exchange rate. It is another area where the Labour Party has moved on but the National Government has yet to see the light. I think one day it will but in the meantime of course our non-primary exporters are suffering an exchange rate that would be different if the Reserve Bank had a different mandate. 
 We have heard the Minister of Finance Bill English say that nothing would change if there was a different mandate. It is true that if the mandate of the Reserve Bank was different not everything would change but it is axiomatic that if the mandate of the Reserve Bank was broader and included a more balanced reference to other important matters of economic management its decisions at different times would be different and we would have a different economic outcome which in the view of the Labour Party would improve the New Zealand economy. It would mean that some of our non-primary export manufacturers who could survive—well Mr Bennett shakes his head but the truth is that manufacturing outside of the primary sector is continuing to shrink including in areas where it has survived for decades. 
Some of these companies are world leading and they are increasingly moving their production to countries that have a better exchange rate regime and a better monetary policy regime. They are not companies with high labour input. They are selling high-value products. They are the sorts of exporters you would think should be able to survive in a country like New Zealand if we have the right economic settings but they are not investing in New Zealand. They are shedding jobs in New Zealand and they are increasingly outsourcing their production to other countries. 
It is not that they are going broke; it is just that they cannot make a living in New Zealand. So they are forced to relocate elsewhere with the loss of jobs and incomes and as a consequence too many New Zealanders decide that they cannot make a living here and they depart to Australia or elsewhere. Too many of our young people do not have job opportunities here and we lose the benefit of that economic activity in New Zealand which we are instead transferring to the rest of the world. 
This is a good bill. It provides us with an opportunity to debate matters relating to the advice function of the IMF and I think on that front the Government is being too selective in the advice it is taking.