Cullen Michael: International Finance Agreements Amendment Bill — First Reading 
Cullen Michael: International Finance Agreements Amendment Bill — First Reading 
[Volume:639;Page:9087] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the International Finance Agreements Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Foreign Affairs Defence and Trade Committee. 
The bill will amend the International Finance Agreements Act 1961. This Act allows the Government of New Zealand to meet its obligations as a member of various financial institutions including the International Monetary Fund and the International Bank for Reconstruction and Development. This bill is the next step towards New Zealand becoming a member of the Multilateral Investment Guarantee Agency which constitutes one of the five arms of the World Bank Group. At this point the Multilateral Investment Guarantee Agency is the only arm of the World Bank that New Zealand is not a member of. In order to become a member of the Multilateral Investment Guarantee Agency New Zealand first has to become a party to the relevant convention and the Multilateral Investment Guarantee Agency Convention was signed by New Zealand in Seoul on 6 December 2005. 
As a member of the World Bank Group the Multilateral Investment Guarantee Agency contributes to the World Bank’s mission of poverty elimination and the achievement of the Millennium Development Goals. The Multilateral Investment Guarantee Agency seeks to mobilise private sector resources to help in addressing the stark development challenges such as the provision of services building infrastructure and creating new jobs. The core mission of the Multilateral Investment Guarantee Agency is to enhance the flow of capital and technology to developing countries for productive purposes by providing three key services: firstly political and sovereign risk insurance for foreign investments in developing countries; secondly technical assistance to improve investment climates and promote investment opportunities in developing countries; and thirdly dispute mediation services to remove possible obstacles to future investment. 
The convention has been through a national interest analysis which concluded as follows. First New Zealand is fully supportive of the Multilateral Investment Guarantee Agency as its services are well aligned with our broader development interests and to a lesser extent our foreign policy interests. Secondly the assessment of whether New Zealand should join the Multilateral Investment Guarantee Agency was based on three broad categories: supporting the New Zealand private sector in terms of its assistance contributing to development goals and supporting multilateral organisations. Thirdly by ratifying the Multilateral Investment Guarantee Agency convention New Zealand is strengthening its commitment towards international efforts to promote development and improve our credibility with the World Bank. 
I realise of course that this bill comes at a time when the World Bank itself is in a position of some difficulty and strife due to claims of a conflict of interest on the part of the World Bank’s President Paul Wolfowitz. I might say that New Zealand has taken the position whereby we think that Mr Wolfowitz’s current position is becoming fairly impossible and that it would be desirable if he were to step aside from it. There is nothing personal about that at all. It is very hard to preach the importance of ensuring that there are no conflicts of interest as part of international development when clearly there is some conflict of interest involved in the chief executive’s position. Nevertheless the World Bank is crucial to the fulfilment of the millennium development goals and the Multilateral Investment Guarantee Agency is an important part of its activities. 
Assuming that the International Finance Agreements Amendment Bill is passed we will be required to deposit a copy of the amendment Act with the World Bank. New Zealand will then be required to pay a subscription fee. The subscription that will be involved is the purchase of 513 shares at a cost of approximately US$5.5 million. Of that amount 10 percent is in cash and 10 percent is via a promissory note. The remaining US$4.4 million will be subject to call by the Multilateral Investment Guarantee Agency. The fund is unlikely to be called upon as a call would require the agreement of all shareholders—and I am sure members understand that getting the agreement of all shareholders in an organisation like the Multilateral Investment Guarantee Agency is even harder than getting a broad consensus on monetary policy in New Zealand. 
I commend the bill to the House. I am sure it will have very widespread support. I hope that the select committee will be able to deal with it fairly expeditiously as it has already been through the other process in relation to the convention signing itself and that it will come back to the House and proceed rapidly to its final passage so New Zealand will then be able to implement the select committee’s recommendations.