Parker David: International Finance Agreements Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Parker David: International Finance Agreements Amendment Bill — In Committee 
[Sitting date: 19 February 2013. Volume:687;Page:7965. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Labour) 
: 
 Just before I address clause 4 I have to record my surprise at the Greens voting against this—are the Greens voting against this legislation as a whole? 
Eugenie Sage 
: Yes. 
Hon DAVID PARKER 
: You know in an international world where we rely upon international organisations like the IMF to make the world a better place I am surprised that the Greens are voting against this legislation the International Finance Agreements Amendment Bill. In fact I have to say that I regard that as fringe behaviour. I really do. I am surprised that the Greens are not supporting what is a key international institution. Not all of the advice that the IMF has given over the years to developing countries as to how they should conduct their affairs has been correct—I am not saying that. I can see why the Greens would be critical of some of the advice that was given to developing countries you know for a Government to move out of all provision etc. and some of the advice that was given to Russia for example as it came out of Communism was terrible advice and led to the rise of oligarchs in a way that would have been avoided had the transition to democracy been better. But to say that the IMF should not be able to change its percentage contributions in respect of these important funds that are increasingly coming from developing countries like China which have emerged as economic powerhouses and not to update the IMF legislation to reflect that change I think is wrong and fringe. 
Having said that I shall deal with clause 4. I have an amendment before the Committee to delete this clause and I want to explain why. The legislation that this bill updates was originally passed in 1961. Since then there have been a number of amendments to the International Finance Agreements Act when the articles of the IMF have changed but they are not so onerous as to not have been within the ability of this Parliament to consider and debate on their merits. Since the Act originally came into force in 1961 articles of the IMF have been changed on only four occasions before this. That was in 1968 1976 1992 and 1998 plus there is this change. Those changes can have significant long-term effects. I understand that even if the legislation does not come before Parliament the effect of the Government which has authority to represent us at IMF meetings agreeing to a change in quota—or even if it disagreed and the requisite number of members did agree to a change—is that New Zealand is bound to go along with it unless it pulls out of the IMF. I understand that. But I do not think that means that these changes when they are coming about should not be debated by this Parliament. I think one of the reasons that is important is that—for the very reasons that we have heard in this debate—Governments can be selective about the advice that they take from the IMF and we actually do not get all that many occasions to debate the inconsistency of positions taken and why it is that a Government might be taking this bit of advice but not pursuing a capital gains tax or not pursuing changes to monetary policy etc. So I think that these sorts of debates are useful and important in Parliament. 
That is why we in the Labour Party think that when our arrangements with the IMF are changed in this fashion they should be debated in Parliament. They are not normally urgent. It is not like we have to disrupt urgent business and go into consideration of the IMF changes; we can put it on the Order Paper and consider it when the Government has a bit of time. That is evidenced by the fact that these changes—sorry there are two sets of changes here one of which relates to an agreement in 2008 at the IMF and the other to one in 2010. Here we are 5 years later just putting those into effect in legislation or getting close to finalising it. It is not like this has to be done in a rush which disrupts normal parliamentary business. But it should have parliamentary scrutiny and it should in accordance with due process come before us. 
Clause 4 says that in the future it does not have to come before us. We are going to abandon the practice that we have had since 1961 which is whenever there is a significant change to our arrangements with the IMF Parliament gets a chance to debate it. Well all of a sudden the Government says: “Well we don’t need to do that in the future. The Government will just give effect to that by way of Order in Council.” So the scrutiny that we have at the select committee and the discussions that we have in this Parliament will not be necessary in the future; the Government will just do it all by Order in Council and we will not have the opportunity to debate it. I think that is wrong. The Labour Party thinks that is wrong. We do not think that schedules 1 2 3 and 7 of the principal Act schedules 1 and 2 of the International Finance Agreements Amendment Act 1966 or schedule 2 of the amendment Act—none of those schedules—ought to be able to be amended by way of Order in Council. 
Just to put that into perspective as to what the financial consequences of these changes can be currently New Zealand has to pay up 25 percent of its commitment to the IMF in paid-up capital to the IMF and the IMF uses that for various things. In addition we can have capital called up from us up to the total of our quota and there are other related lending arrangements where when the IMF calls on us to make good on our promise to help other countries by lending direct to countries that need a hand for a while we have to do that within a set period. If that amount changes dramatically that does have dollar consequences for our country. Indeed when changes are made to increase the amount in the IMF fund but New Zealand’s total commitment does not go up that causes us to reflect on the fact that relative to the size of the world economy we have not been growing; we have actually been getting a smaller share of the total world economy rather than a greater one. That in itself is something that should cause us in New Zealand to reflect on whether we have our economic settings right. 
For those reasons the Labour Party is proposing an amendment to this clause. We are actually proposing that this clause not proceed. The provisions of the amendment bill set out in the schedules would still have effect so we are not frustrating the intent of the legislation. We are just saying that if it needs to be changed again in the future it should come to Parliament to do that rather than it being done by statutory regulation.