English Bill: International Finance Agreements Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
English Bill: International Finance Agreements Amendment Bill — First Reading 
[Sitting date: 08 May 2012. Volume:679;Page:2000. Text is incorporated into the Bound Volume.] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move  
That the International Finance Agreements Amendment Bill be now read a first time. 
 This 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. The amendment bill updates the Act to give effect to the changes to the articles of agreement of the IMF which were agreed to by the governors in 2008 and 2010.  
I just want to talk briefly about the role of the IMF in the current context of global volatility. The risks of another global financial crisis are real. Whichever region a crisis might stem from we will all face negative economic consequences given the interconnectedness of the global economy. It is organisations like the IMF that can help steer countries through turbulent times. IMF member countries such as New Zealand play a shareholding contribution to the IMF so that the organisation can loan money to countries that are experiencing a balance of payments crisis and cannot find sufficient financing on affordable terms. This helps prevent the situation where a country has to default on paying debt due to insufficient capital and therefore prevents adverse shocks occurring in the global economy. The IMF also provides advice to Governments and central banks based on analysis of economic trends and cross-country experiences in addition to research and statistics based on its tracking of global regional and individual economies and markets. 
 For these reasons New Zealand takes its membership of the IMF seriously. We believe it is important to be an active participant in the international system whether it is by being an active member of multilateral organisations such as the UN regional organisations such as the Pacific Islands Forum or an economic organisation such as the IMF. As a small open economy we benefit considerably from a stable and prosperous global economy— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! Could I ask members please—there is too much noise and I cannot hear. Can I refer the Minister to Standing Order 283(1): the Minister should at the commencement of his speech indicate to the House the committee he nominates should consider the bill. That is Standing Order 283(1). So I ask the Minister before he continues to actually do that now. 
Hon BILL ENGLISH 
: I intend to move that the bill be referred to the Finance and Expenditure Committee. Our commitments to the IMF are effectively premiums to an insurance policy against damage to our economy from an unstable world. Contributing to the IMF and global financial stability are also part of our international reputation.  
The changes to the articles of agreement are integral parts of an overall package designed to bolster the resources available to the IMF and enhance its legitimacy and effectiveness by ensuring that members’ voting shares and voice appropriately reflect their changing relative economic weight in the global economy. The amendment to the articles will assist in facilitating the agreed change in the composition of the IMF’s executive board and its future evolution by removing the right of the five largest fund members to appoint an executive director and allowing instead for an all-elected board. Consequently passing this bill will signal New Zealand’s support for reform additional resourcing and better legitimacy in an important financial institution. This is in the context particularly of the push by emerging economies to have a say in multilateral institutions which reflects their growing economic weight.  
Financially this bill will mean an increase to New Zealand’s quota commitment to the IMF. However members of the New Arrangements to Borrow programme of which New Zealand is a member have agreed that they will undertake a corresponding decrease in their commitment to that programme. Overall this means that our commitment to the IMF remains relatively constant moving from 1580 million standard drawing rights to 1592 million standard drawing rights or approximately in New Zealand dollars from $2.9 billion to $3 billion. New Zealand has already agreed to these changes and adopting the International Finance Agreements Amendment Bill simply puts that agreement into practice.  
The bill also creates a regulation-making power in the principal Act so that further updates to the articles can be made by regulation. This power will simplify the process by which New Zealand meets its obligations. Once changes to the articles are agreed to by the requisite majority of members of the international financial institutions New Zealand will be bound by the amendments which means that we are required to bring our domestic legislation into line with our international obligations. The decision to approve changes to the articles of agreement of the IMF is effectively made at the time but the Minister of Finance votes on the matter as a governor of the institution. Furthermore the regulation-making power would not be unique. The Legislation Advisory Committee guidelines note that a number of Acts have futureproofing clauses that allow the executive rather than the Parliament to update the text of a treaty. In the context of the IMF there is likely in the future to be further changes in its processes reflecting the changing economic significance of different members. These changes do not mean we will change the way in which we consult on important IMF policy changes. Rather this bill is about demonstrating our commitment to multilateral action as well as simplifying the processes needed to update our own legislation to reflect what has already been agreed to with the IMF. I commend the bill to the House.