Cunliffe David: International Finance Agreements Amendment Bill — Second ReadingText is incorporated into the Bound VolumeCunliffe David: International Finance Agreements Amendment Bill — Second Reading[Sitting date: 05 November 2015. Volume:709;Page:7764. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a call in this second reading to express the Labour Party’s support for the bill. It is part of our ongoing commitment to an open and an internationalist engagement with the world and to build good strong multilateral institutions that allow for the economic and social and governance development of our region.Having said that there has been an enormous amount of naivety expressed around the House in this debate so far and it behoves us I think to lift the bonnet on this and just look underneath at what the engine really is. Can I just pick up a couple of the arguments that have been used by the last two speakers from the National Party. The last speaker but one used arguments of such subtlety and meaning as: “Asia’s got six out of our top 10 markets; therefore we must support this development bank.”Well there are one or two steps between acknowledging that there are a lot of countries in Asia with whom we trade and that a particular investment in a particular bank is in New Zealand’s national interest. What for example is the role of that bank? Exactly what type of infrastructure does it seek to promote? What role would there be for New Zealand in the governance of that bank and what economic or geopolitical benefits would flow to New Zealand from membership as opposed to not being in it? Those are valid questions. The point is that they are somewhat deeper than just saying “Well six out of our top 10 markets are in Asia.” as if that is a lay down misère. It is not and I think the House deserves a better quality of debate. Likewise with Mr McKelvie’s saying: “I have no problem putting money in Asia”—he has got plenty—“rather than New Zealand.” Well yes that is good. It is internationalist it is outward-looking—you know tick that box—but that is not a sufficient answer either. What is the role of this bank? Why is New Zealand investing in it? It is a substantial amount of money: $US92 million about $NZ140 million on today’s exchange rate. Goodness me! That is more than four times the amount the Government is spending on the flag referendum.That is a lot of money—it is a lot of money—and it is coming out of that thing called the Future Investment Fund. Remember that when the Government sold down New Zealand’s sovereign State assets it created a fund which it euphemistically called the Future Investment Fund which was to be spent on things like schools and hospitals and Chinese or Asian investment banks—ah no. That was never in the press release. This is the most abused overused fund in the history of public relations propaganda. It is a ridiculous overstatement.Jami-Lee Ross: Remember when he lost an election on it?Hon DAVID CUNLIFFE: There is “Tony Soprano - lite”—“Tony Soprano - lite” has picked up out of his slumber and he could not resist the opportunity to have a jab. He just did not say anything useful.Let us see what the international commentators are saying about the Asian Infrastructure Investment Bank before we try to confirm that joining it is in New Zealand’s national interest. Here is a very I think useful article by a Hong Kong - based economic strategist which makes the following several points: firstly that the United States resisted the idea of the Asian Infrastructure Investment Bank which is very clearly the creature of the Government of the People’s Republic of China. That does not make it a bad thing to do. As I say Labour supports joining it and supports the bank and a former head of the New Zealand Treasury Mr John Whitehead was I understand materially involved in setting up the governance arrangements for the bank and that is a good thing.But the point is that the United States was the primary sponsor of the Bretton Woods international financial institutions—the IMF the World Bank and the Asian Development Bank—and a perception has on the one hand grown up that perhaps they have not invested sufficiently in the infrastructure of some parts of Asia particularly South-east Asia and that there is therefore a gap in the infrastructure market. The political take on that is that there are some powers in the Asia region that would be very happy if that gap was not filled by what they see as American-backed mechanisms. They would rather have a Beijing-backed mechanism.That may or may not be the right thing. How does New Zealand align itself or take a position on that issue? That is a serious geo-strategic question but let us go into that debate understanding the underlying international political significance of this institution. This is one of the first—if not the first—major international financial institutions to be created since Bretton Woods was set up many decades ago. This is a major development. It signifies the rise of a new global economic power in Asia and New Zealand is confronted with a significant decision about whether to join or not. If it was not significant we would not be putting 140 million hard-earned dollars into it. That is a significant investment by New Zealand.The Hong Kong strategist goes on to note that China which is backing the Asian Infrastructure Investment Bank had sought to participate more actively in the Asia Development Bank but the largest shareholder in that is Japan and it always has a Japanese president and a high level of Japanese influence on its governance. So China understandably enough wanted to create another vehicle in which it had a higher level of influence. The strategist goes on to make the point that the counterfactual is that a lot of China’s existing resource and investment flows to develop the infrastructure of resource-providing partners in the region—and it mentions in particular a railway line in Laos as one example—have been done bilaterally rather than multilaterally and are often a little murky in their governance says the article.So the counterfactual is that we can be part of creating a new institution which has more transparent governance which is regional rather than bilateral and at which New Zealand has a seat at the table. Those are reasonable arguments to weigh up and the Labour Party has come to the view that in fact it is probably in our national interest to be part of that given that New Zealand former officials have been instrumental in the design.However I now want to turn to the select committee report and to the national interest analysis—so-called—that has been provided by our diplomats at the Ministry of Foreign Affairs and Trade. It is remarkable because there are no numbers in it. This is not the first time I have risen in this House and complained about the qualitative nature of a so-called analysis piece that should contain hard estimates on the return on the investment of $140 million of New Zealand taxpayers’ money. The kinds of lines that have been given out by the Government are that the main benefits to New Zealand include increased economic development in the Asian region—tick; with flow-on benefits for New Zealand—question mark. What are they? What are the transmission mechanisms? Has anyone done any kind of sensitivity analysis on the impact of trade flows or even mapped out which sectors they are likely to be in? There is no evidence of that kind of analysis. It supports increased economic integration in the Asian region—yes by definition it does but with a particular geopolitical slant. It augments our existing relationships. It most certainly does.Here is the key point: by signing up to the Asian Infrastructure Investment Bank New Zealand will be building its relationship with the People’s Republic of China. That is a good thing. At the same time New Zealand is busily according to the Government negotiating to be a party to the Trans-Pacific Partnership agreement thus ingratiating itself with the United States Government. So heaven it seems in an era of emerging superpower competition in the Asia-Pacific region is to be in good with both. That is not an illogical position for New Zealand. I just want New Zealanders to understand what is going on when we are spending $140 million of their money. That is what this is about. So this is about keeping a foot in the camp of an emerging institution that is Beijing-driven while also being part of a negotiation according to the Government of a Washington-driven Trans-Pacific Partnership agreement—thus keeping both sides happy. That is why we are spending $140 million here today. That does not mean it is wrong as long as we know why we are doing it and as long as we are well informed.I believe—and Labour believes—that New Zealand’s contribution is as an honest broker—as a country that is no threat to anybody a country with a reputation for integrity and transparency that has in the development of this proposal been able to contribute to the good governance of the bank with the transparency that that brings. Labour supports this bill but we do want New Zealanders to understand why our country is investing in it. Thank you.