Reti Shane: International Finance Agreements Amendment Bill — First ReadingText is incorporated into the Bound VolumeReti Shane: International Finance Agreements Amendment Bill — First Reading[Sitting date: 15 September 2015. Volume:708;Page:6599. Text is incorporated into the Bound Volume.]Dr SHANE RETI (National—Whangarei): It is a pleasure to rise and speak to the International Finance Agreements Amendment Bill which in itself speaks to the Asian Infrastructure Investment Bank. The purpose of this bank is to address the gap in infrastructure investment in the Asian region and to promote regional collaborations and partnerships. I would note that the Minister of Foreign Affairs has described Asia as important to New Zealand’s future and that Asia is driving global growth. Indeed if we look at a 2009 report from the Asian Development Bank it has estimated that infrastructure financing in Asia may be as much as $8 trillion dollars during the decade 2010 to 2020.I think it is useful just to talk briefly to the definition of Asia as it is described in this agreement. That definition is the United Nations classification of Asia and Oceania which in itself encompasses North Asia South-east Asia South Asia Central Asia parts of the Middle East Australasia and the Pacific and I think it is useful to bear that breadth in mind.The committee officials noted three particular benefits to New Zealand’s involvement in this bank. The first reason is economic obviously noting that Asia’s growth is limited by its infrastructure and if it benefits then indirectly we benefit. Of course New Zealand firms may directly compete for proposed infrastructure projects that may well be of direct benefit also.The second point noted by officials was strategic connectivity and it was noted that our international relationships benefit from this agreement as well as it supports Asian networks. It has already been noted that China particularly has appreciated our early relationship with the bank.The third comment was about our ability to influence and shape as a founder member. We were the 24th country to join negotiators and as has been commented on the first Western developed country. We can look and see what New Zealand’s influence has been as one of these founding members across a range of domains. If we look at governance New Zealand has supported a non-resident board of directors and adopted many of the frameworks and models from the World Bank. Our negotiators supported open transparent merit-based appointments. That is a good thing.Further we looked at safeguards. We were looking to ensure social and environmental safeguards and I note that New Zealand had “sustainable” added before the “economic development” phrase in the purpose section therefore reading in continuity “sustainable economic development”. Of course as part of best practice and other safeguards it is noted that proposed investments and proposed projects will also be open procurement and best value for money. The fourth influence from New Zealand is in the collaboration of global and regional institutions and promoting best practice.We have some obligations under this agreement. Our obligations are to provide the agreed paid-in capital and callable capital and accept voting decisions—and voting decisions where membership may be suspended if we do not fulfil our obligations. We are to impose no capital constraints nominate the Reserve Bank as a depository and our liability is limited to the shareholding.I would like to just briefly talk about our equity contribution which is $125 million paid-up and $500 million on-call capital. We asked about the security of that equity. What we were told was that we have already received a disproportionate benefit for what is effectively a 0.6 percent shareholding. We were also told there is a very small probability of the on-call funds actually being called up. We asked about the security of the $125 million that we have paid and we were told this was very secure—secure on the basis of preferred creditor status a favourable risk rating and the fact that there is a high proportion of paid-up capital to callable capital in this particular arrangement which at 20 percent actually exceeds the World Bank. The logistics of entry into force—10 States comprising 50 percent of the bought-up capital—have already been commented on as well.I note that one of our partners alluded to the progress of this agreement and the fact that China is a dominant shareholder. I would note that it is not unusual to have a significant anchor shareholder. The World Bank the Asian Development Bank and the European Bank for Reconstruction and Development also have this. I would like to acknowledge the committee members and officials for this fine piece of work. I commend this bill to the House.