Hayes John: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Hayes John: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:664;Page:12145] 
JOHN HAYES (National—Wairarapa) 
: 
 I rise in support of the third reading of the Tariff (Malaysia Free Trade Agreement) Amendment Bill. It is great to be in a waka with 121 paddlers where all but 11 of them are paddling in the same direction. 
This bill will give us new market opportunities. It will help exporters and it will help service providers. It will provide transparency and certainty. Malaysia is our eighth largest export market. It is bigger and more important to us than Germany India and Canada. In the period between 2004 and 2008 our exports to Malaysia grew at a rate of 80 percent which is double the rate of growth of New Zealand’s exports to the rest of the world. Our investment in Malaysia has grown by 77 percent since 2003 and it now sits at about half a billion dollars—or it did in 2008 which are the last figures I have seen. That means that our investors have confidence in the integrity of Malaysia’s systems particularly its justice system and in the integrity of its private sector law. 
The Green Party contains nine paddlers who are facing the back of the canoe not the front. I will respond to Dr Kennedy Graham’s request for some practical examples of why the Greens’ understanding of life is in a practical sense different from that of the other paddlers in this waka. The Green opposition to the bill is set out in a minority view in the Foreign Affairs Defence and Trade Committee’s report back to Parliament: “It wrongly assumes that the two trading countries will both be better off as a result.” of signing up to this agreement. How wrong can those members be? How muddled can their thinking be? 
I think that the Greens may be using computers. If that is the case I invite them to type the word “Ricardo”—R-I-C-A-R-D-O—into Google which is a search engine. Then they should read what it says about Mr Ricardo. His insight is that trade barriers—whether they are subsidies to farmers regulations prohibiting clothing or textile imports or taxes—will make us and Malaysia worse off. Ricardo argues that it does not matter whether Malaysia is better at making things than New Zealand. He says that each country should stick to what it does best and should stick to producing whatever its economy is best at turning out. Ricardo argues that even if New Zealand was worse at producing everything than Malaysia was we should still stick to what we are least bad at producing. 
Dr Kennedy Graham asked for some practical examples; I will try to give him one. I have a company in Dannevirke called Metalcraft Industries. Let us say that it produces an electric drill in half an hour. It can also—it has very good people working there—produce a flat-screen television in about an hour. But a Malaysian worker can produce an electric drill in 20 minutes and a flat-screen television in 10 minutes. So if New Zealand and Malaysia do not trade which is the outcome Dr Graham wants nothing will change. It will take us 90 minutes to work to produce a flat-screen TV and a drill while in Malaysia the TV and the drill can made in half an hour. So if we follow the Green Party way of looking at the world nothing will change. But if we get rid of the trade barriers as this bill aims to do both countries can trade and both countries can be better off. The Malaysian worker can make two televisions in 20 minutes and the Dannevirke worker can make two drills in an hour. If we trade one drill for one TV then both New Zealand and Malaysia will be better off because they save at least one-third of the time involved. 
Contrary to Green belief it is simply not possible for trade to destroy all of the jobs in New Zealand. It is also impossible to import everything from abroad and export nothing. If we did that—if we followed this Green utopia—we would have no cash with which to buy anything. It may surprise the Greens but goods and money do not just appear and disappear; they are interconnected. No one beyond New Zealand would accept a New Zealand dollar in payment for some other good or service if we were not exporting products like milk cheese wool and timber so that our dollars can be used as a basis for paying back other countries. 
Having gone down this road with Ricardo my second suggestion is that “Dr Green” and his paddlers going in the wrong direction could type into “Mr Google” the words “Abba Lerner”—A-B-B-A L-E-R-N-E-R—and read what is arguably the most important theorem of trade theory. In 1936 before even Dr Kennedy— 
Chris Auchinvole 
: Dr Kennedy Graham. 
JOHN HAYES 
: —Dr Kennedy Graham was born Abba Lerner said that a tax on imports is exactly equivalent to a tax on exports and he proved this. 
Finally we could think about the practical examples Dr Graham asked for. We can think about countries that are restricted like North Korea and we can think about countries that are open like South Korea. I then leave it to Dr Graham to determine who is the better-off from that openness of economy. We can think about Austria and we can think about Hungary. We can also think about our recent experience in signing the free-trade agreement with China. As I said in the House last night in the year to April 2010 our exports to that country increased by $860 million. That is an increase over a 12-month period. That increase is virtually the same size as us finding another export market the size of Indonesia. Opening that free-trade agreement with China has helped every person in this country and to some extent it has insulated New Zealand from the recession that we find ourselves in. 
Finally I say that this is a good bill. It is a good bill for the people of Dannevirke; it is a good bill for all of the people in the Wairarapa. It is good for all New Zealanders and it is good for all Malaysians. It has my absolute support. Thank you.