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:7971. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Labour) 
: 
 I am pleased to take a call in favour of clause 5. Clause 5 is one of the operative parts of the International Finance Agreements Amendment Bill in that it gives effect to changes to the first schedule of the International Finance Agreements Act 1961. That first schedule is amended in the manner that is set out in schedule 1 of this amendment bill. It is interesting to go back to the 1961 Act and see that what we are dealing with here is effectively the constitution of the IMF the International Monetary Fund. 
The IMF of course in case we forget is one of the institutions that was formed as a consequence of the rise in Fascism the rise in Communism and World War II that resulted from the economic policies of the world particularly in the 1920s and the 1930s when the downward spiral that various countries were in could not be recovered under the economic management of the time and the injustice and deprivation that was suffered by so many peoples around the world led to war. At the end of World War II there was a meeting of the United Nations called the United Nations Monetary and Financial Conference which was held in July 1944 towards the end of the war. Someone else might be able to tell me whether this is correct—I think it might have been either there or at the subsequent conference at Bretton Woods in the United States that not only did the international community agree that it needed to reform some of the matters relating to international monetary policy but also the conference led to the formation of some of the financial institutions that were intended to both pursue reconstruction after the war and rebuild the economies in Europe and Asia that had been particularly decimated by the war and also to form the International Monetary Fund with functions that are set out in this first schedule that we are amending. 
It is interesting to see that the purposes of the International Monetary Fund are set out in the first article of this schedule that we are amending. They include: “To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems … To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.” and “To promote exchange stability to maintain orderly exchange arrangements among members and to avoid competitive exchange depreciation.” I am going to emphasise that last matter. One of the purposes of the IMF was and is “to avoid competitive exchange depreciation.” In that regard it falls on me to again remind the Committee that whilst we are considering amendments to parts of this schedule we have a Government that is ignoring other lines of advice that are coming out of the IMF that show that existing monetary policy is no longer working for New Zealand’s best interests. We are not avoiding the deleterious effect of competitive devaluation abroad and it is time for New Zealand to move beyond giving primacy to inflation targeting and to manage other important aspects of management. 
Of course this legislation does not touch on this because the advice function of the IMF is unaffected by these provisions except to the extent of the funding of the IMF which I presume is in terms of its advice function. This is funded from the same pool of money that is provided by Governments and that money will be invested. I suspect it lives off some of the income that it generates from that money. I am sure that if another member has information to the contrary they will leap to their feet and say so. When quotas are set as to the funding of the IMF that funding funds not just some of the loan functions that we have talked about loans of money to countries that are in trouble; it also funds the IMF itself which has this advice function that is so important. Although it is never always right if you like—no one is always right and the IMF has made some mistakes over the years—it nonetheless has been a force for good in the world and the Labour Party is happy—