International Finance Agreements Amendment Bill — First Reading 
International Finance Agreements Amendment Bill — First Reading 
[Volume:639;Page:9087] 
International Finance Agreements Amendment Bill 
First Reading 
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. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Let me make it clear from the outset that National will be supporting the first reading of the International Finance Agreements Amendment Bill. We are supporting it for good reason. New Zealand is a country that is very much dependent on a dynamic international economic environment. The Multilateral Investment Guarantee Agency which the Minister Dr Cullen has just been referring to is all about helping to promote investment and the security of investment in developing countries. It is in New Zealand’s interests that there is successful investment in developing countries. It is in New Zealand’s interests that the developing countries of the world do well because it is just so important for a trading nation like ours. We are so dependent on that dynamic international economic environment. In my view and in National’s view that is a very powerful reason why we should be supporting this bill. 
Obviously the Multilateral Investment Guarantee Agency does some quite specific things which the Minister has referred to. One of the very important things it does is risk insurance if you like to protect investment in developing countries against some fairly tricky things that can happen. For example in some places where businesses may want to invest at times laws can change and it can be difficult to transfer local currency outside the country in question. If the host Government has a turn of mind and suddenly develops an irrational attitude it can sometimes be difficult to transfer local currency out of there. Investors can therefore lose their investment. So one of the things that the Multilateral Investment Guarantee Agency can help to insure against is that inability to transfer local currency. 
Likewise there is a need to protect against expropriation. If it is possible the act of a host Government can put at risk the investment of an investor in that county. The Multilateral Investment Guarantee Agency can help with protection against that. It can also help with protection against breach of contract. It is even possible for the agency to insure against war and civil disturbance. 
The Multilateral Investment Guarantee Agency ought to—and the experience is that it does—help to promote investment in parts of the world where investment may not flow so readily otherwise. Although some of these places are not the easiest places to invest in it is in the global interest that investment takes place. It sure is in New Zealand’s interest that investment takes place because as these countries benefit from that investment they become trading partners for New Zealand. 
I do not want to speak for the full 10 minutes but I just want to comment that the Minister mentioned the fact that New Zealand has to buy shares. We have to subscribe to 513 shares in the Multilateral Investment Guarantee Agency as part of this process. It is interesting to reflect on the number of shares that we have to subscribe to and how New Zealand is treated in that process. New Zealand will become one of 21 category 1 subscribers. It is interesting to look at New Zealand’s position in the developed world in the OECD rankings and see how other countries close to New Zealand in the rankings are treated in subscribing to the Multilateral Investment Guarantee Agency. The countries closest to New Zealand are Spain which is one place ahead of New Zealand in the OECD rankings in GDP per capita or wealth and Korea which is one place behind New Zealand in those rankings. 
What is fascinating is that those two countries that surround New Zealand in terms of our standing in the wealth stakes of the world if you like are not treated as category 1 countries. It is a measure of the extent to which New Zealand’s wealth or GDP per capita has declined that we are still treated as a category 1 subscriber yet our GDP per capita has us among countries that are actually treated as developing member countries. Both Spain and Korea are treated as developing member countries in their subscriptions to the Multilateral Investment Guarantee Agency yet they have a GDP per capita that is right alongside New Zealand’s. That is a measure of the extent to which economic policy in this country is inadequate. 
It is not just a problem of economic policy alone; there are other factors. For example Britain’s joining the EEC to go way back to 1973 put pressures on New Zealand. But inadequate economic policy has seen us fail to respond to that adequately and has seen us slip down the OECD rankings in terms of the income of our people. This legislation drives it home to us that here we are subscribing as one of the 21 category 1 subscribers to the Multilateral Investment Guarantee Agency with 513 shares to be subscribed to while the two countries next to us—one above: Spain; one below: Korea—are both treated as developing member countries under the Multilateral Investment Guarantee Agency convention of the World Bank. 
We have a lot of work to do as a country. With the Budget coming up in the next few days I hope Dr Michael Cullen in the Labour Government is giving a lot of thought to policy and to how he can stem the decline in our international ranking because since Labour has been in office we have slipped yet another place or two down the OECD rankings. We are now genuinely among the developing member countries as far as the Multilateral Investment Guarantee Agency convention is concerned. That said National will be supporting this legislation because it is in our interests that investment can flow in developing countries and that there can be some protections for those who invest in those countries. It is in our interests that they benefit from international investment. That is why we will be supporting this legislation. 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First will likewise be supporting the Multilateral Investment Guarantee Agency. We will also be supporting the International Finance Agreements Amendment Bill going to the select committee and we look forward to its progress. 
As the two previous speakers—Dr Lockwood Smith and Dr Cullen—said it is important that we participate in agencies such as the Multilateral Investment Guarantee Agency that we participate in giving aid to developing countries and that we participate in giving not only monetary aid but also humanitarian and technical aid to countries that have fallen on hard times. Some of those countries are in the Pacific and we can think of one or two of them—Fiji among them—where we know for sure that something will have to be done in the future. It would be surprising to us all I am sure if those countries were to go ahead in their present circumstances. So we will have to come to their aid. 
But over and above the aid that other countries will give to those countries is the long-term direct investment that private individuals or corporations put into them. Of course that is the money those countries really want. This treaty is all about ensuring that there is less risk for private individuals or corporations when they invest in countries—be they countries that are war-torn countries that have been taken over by perhaps a less than ideal democratic system or countries that are just developing. 
When we read through the papers we see that in those countries things like clean water good roading and electricity—all of the absolute basics that we take for granted—are what they want people to invest in and they are trying to facilitate private investment coming through. We applaud that because that is the best sort of investment. Those investors will ensure that their money goes into productive enterprises because it is only from such enterprises that they will get a decent long-term return. 
I think it is important that people understand why we give aid to other countries. I am often called upon to explain this to people. Some people attack me or come to see me on a regular basis and ask me why we are giving all this money to other countries when here in New Zealand hip replacements are needed and hospitals need money etc. Of course the answer is to ask them whether they want all those people in the other countries to come to New Zealand. Of course they do not and New Zealand First makes a bit of an issue about that. So it is in our interests to make sure that we help people in their own country. We say there should be heaps of that help and that people are better off in their own country. We can help them and this project ensures that that can happen. 
The other area that interests me particularly—because of my interest in primary production—is the exporting area. We simply cannot sell the sorts of products we sell to countries that are in poverty. It is in our interests—as Dr Lockwood Smith and Dr Cullen said before me—for those countries to have modern-day infrastructures and living standards and to see them rise up to the standards where they can afford the sorts of things we call primary produce. In countries that are in poverty primary produce—as far as food items are concerned—is very close to being a luxury item. 
New Zealand First absolutely applauds this legislation. We look forward to it going to the select committee and to hearing what the committee has to say about it. I cannot see that the select committee will have too many problems with the legislation and I am sure it will come out the other side. To those people who object to 10 percent of the subscription being paid in cash or even to the total of $9 million going towards the entry fee for the Multilateral Investment Guarantee Agency I say that that is a very very small price indeed for stability and for emerging markets into which we can sell our produce. 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 I rise with great joy actually to support the International Finance Agreements Amendment Bill. I will tell members why I think it is an important bill. We cannot fight world poverty without the support of the whole community. It is true that in New Zealand many many people give private donations to aid agencies such as Oxfam Save the Children Fund and World Vision—you name it; there are a lot of agencies. We are a generous people; we do that individually. But on its own that is not enough. Aid agencies are not very good at building airports roads and ports. And yes the New Zealand Government contributes aid and I live in hope that that contribution will grow. I presented an argument that it should grow and we did grow it. But there is still a wee way to go and I want to see that aid increase as we go forward. I will come later to what we do and how we as the New Zealand Government contribute. 
But most of all the countries in the Pacific and around the world that are developing need to have a capital injection—that is big money to build airports ports and roads. The people they would get that money from the international companies are very nervous of investing in countries that might actually go kaput or whose police—as once happened in the Solomons when the police wanted an increase in their pay—surround Parliament with their guns drawn until they get an increase in pay. People have found that if they were investing in a harbour and that money went off to pay the police extra money there was no stability. They wanted some guarantee and protection against an inability to transfer local currency outside a country that may result from the host Government’s action. Those people want a protection an insurance against expropriation—against the loss of an insured investment as a result of the acts of the Government—and against breach of contract. In other words they want—and they will get it through this bill by our joining in the Multilateral Investment Guarantee Agency—to get that insurance. That agency will build up a fund to offer insurance to private companies to invest in the developing world. 
Why do we need to fight world poverty? People often think about that in terms of the aid agency advertisements we see which show little children with flies on them. Everyone feels incredibly sorry for them and the issue is all about us giving to them. But the situation is not quite as simple as that. There is a quid pro quo. Those countries are potential markets. They are places of peace. They are places of good health. 
R Doug Woolerton 
: And fellow humans. 
Hon MARIAN HOBBS 
: They are places where fellow humans live. Left alone they become places of chaos poor health no markets and no trade. 
Let us begin with the markets. When I was a little kid my mother invariably told me to eat my food or she would parcel it up and send it to China. 
R Doug Woolerton 
: That’s what happened to me. 
Hon MARIAN HOBBS 
: I had that problem. I laid down the fat for a long time. How wrong was that? It was just that China was so poor that we were told it got our left-overs. It never ever got them actually; my peas never went to China—I think that even then we had food regulations. But the point is that now no one would tell a child that his or her leftover puddings or vegetables will be sent to China because China has a strong economy that we are trying to do a trade agreement with. It was a country that was economically way behind other countries but it has now become the place that everyone in the world wants to trade with. 
We should apply that thought in terms of what we need to do in order to build up the infrastructure and trading capacity of developing countries. This issue is about the people of those countries but there is also self-interest in it. When we think about health we think about the risks to health from AIDS. We have only to look at the number of people affected in Papua New Guinea to understand that AIDS is as fast-growing there as it has been in Africa. When we think about it spreading down Melanesia and through into Polynesia—of which we are part—we know there is a reason to invest in community health in Papua New Guinea. It is about defence as well as about actual human justice and social issues. 
 There are issues around environmental damage. We know from inside New Zealand that if we deforest we will eventually have floods. Deforestation has occurred in places—in Papua New Guinea and in Fiji at Labasa—and then a fast flood comes down and wipes out parts of the town and kills people. The flood may come quickly because of a dam that has built up as a result of deforestation. How do we persuade people therefore to develop a different economy: one that is not based on taking out the primary products first without building a sustainable economy? We can do that only through aid. We are fast realising that we are not a country on our own. We are absolutely interconnected with other countries and environmental damage in Fiji Vanuatu and throughout the Pacific will have its effect on us in New Zealand. 
Of course if we leave countries alone to face AIDS and unsustainable economies without resources then we know—we see this all the time—that those countries go into militarism mass uprisings and tribe fighting against tribe as we saw in the Solomons. Those issues arise and then we pay out money to send in our army and our police to sort out the issues. Would it not be much better if we were working to actually support these countries by means of aid? People argue that charity begins at home. I say that home is much more inclusive than just New Zealand. Home includes protecting our borders from AIDS and building markets—there is a self-interest there. It is not just a matter of the cost of a hip operation here versus the work that we do over there. 
What difference can we make through supporting that work and through supporting aid? We can build roads. It is utterly ridiculous that in Port Moresby in Papua New Guinea peas beans and carrots are imported from Australia for the tourists who stay in hotels. Up in the highlands of Papua New Guinea peas beans and carrots grow absolutely magnificently—far better than they grow in Australia. But you see there is a plane that flies between Darwin and Brisbane and Port Moresby. There is not a plane—there is not even a road—that goes through the highlands down to Port Moresby where the market is. That country could be self-sufficient. That country would not need to spend its money importing vegetables if there was actually some decent infrastructure there. The same goes with regard to airports and the tourism that comes through having them. I think it was Pukapuka an island—I think I have this right—in the Cook Islands where it took 2 weeks for any boats to get there in the middle of the last cyclone that hit. There was no other way to get there. Small planes and a small airport could have helped. Then we have issues about waste management education and community health. 
This matter is not about being Goody Two-Shoes—that is what I am really trying to say. This is not about being Goody Two-Shoes. There is an element of self-interest in aid. In fact naming it as “aid” irritates me now even though we have an agency called NZAID. Aid is not always about stretching out the hand. There is an element of self-interest and as such we support it. There is a particular kind of self-interest here. This bill is actually about making it easy for international companies and financiers to put their money in and to put it in safely particularly since it is money that has been invested by ordinary citizens throughout the world. 
TIM GROSER (National) 
: 
 I do not as was the case with the previous speaker necessarily rise with great joy to address this topic but I certainly rise to support the International Finance Agreements Amendment Bill. 
Hon Member 
: You love it! 
TIM GROSER 
: Well it is a sensible bill. Legislation like this would not have done anything to help New Zealand investors in the only experience I ever had in this area. That was with regard to a $600 million investment in a geothermal plant in Indonesia where the predator was not the host Government but the IMF. But that is another story. I think the bill does a number of very sensible things. The only mildly partisan comment I make is that I wonder whether if the roles were reversed in 18 months’ time and my colleagues on the Government side were then in Opposition they would be rising to support an agent of international capitalism. We will see whether there are recidivist tendencies in the Labour Party in due course. 
In the broad sweep of things this is a sensible bill. I think it is long overdue that we join the Multilateral Investment Guarantee Agency. I see no downside to doing so; the contingent liability is very modest. It is important to try to think—as other speakers have done—about what lies substantively behind what is in fact a highly technical bill before the Parliament. What lies behind it is the process of development and the role of foreign direct investment flows in helping to achieve that historic goal. Just to put that in perspective I will say that foreign direct investment absolutely dwarfs by a huge order of magnitude official development assistance in terms of its importance as a form of development assistance. 
I recall reading recently that of the $780 billion dollars would members believe of exports from China in 2005—which are powering China’s development and lifting hundreds of millions of people progressively out of poverty although there is still a huge amount to be done in the west—60 percent of those exports were from foreign multinational enterprises in China. The role of foreign direct investment in the transformation of the Chinese economy—to take by far the most important example—is huge and obvious. Such investment needs some protection particularly since developing countries often have very poorly organised infrastructure. The court systems as people generally know—and I have had some experience in Indonesia on this front with regard to New Zealand and Australian companies—are completely unreliable for investors to resort to. So I think the Multilateral Investment Guarantee Agency is really underwriting the process of development. 
From time to time we should sit down and reflect a little on how well the development process is going. There is so much nonsense spoken internationally about the poor getting poorer that just occasionally it is useful to sit down and look at some facts. The facts are that if we take what I think is probably the largest single statistic to indicate welfare life expectancy we see that there has been an absolutely dramatic increase in average life expectancy in all developing countries in the last 100 years. It has risen from around 34 to about 62 and that includes the countries in sub-Saharan Africa and the most unfortunate other African countries that are going backwards because of the epidemic of HIV/AIDS. 
Enormous progress is being made in development. The average rate of economic growth last year for all developing countries including the countries going backwards was almost twice as fast as the average rate of growth in all developed countries. As a consequence of that the numbers in the most disadvantaged segment of the population of the developing world—those who are living on $1 a day or less—has declined by approximately 50 percent in the last 30 years to about 1.1 billion. That figure is forecast to halve again by 2030. The numbers in the next segment those who are living on $1 to $2 a day—a little bit under US$1000 a year—are forecast to drop by about 800 million. What we are seeing—and it is no longer of course just in the most obvious countries such as China; these days it is also spreading increasingly to India—is the rise of a huge developing-country middle class. If we use a definition based on purchasing power parity estimates of between $5000 and $10000 that middle class is estimated to currently stand at around 400 million people today. It is projected to rise within the next 20 years to about 1.3 billion people. That is a huge measure of human progress—it is a huge measure. Other social statistics are improving such as infant mortality as well as the life expectancy becoming higher. 
For those who are not moved by any concerns of that nature about the folk in developing countries I say that of course it also means the emergence of vast new markets for countries like ours. If we look at China we see there is a linear relationship here between the extraordinary growth of the Chinese economy—averaging about 10 percent since 1978—and the fact that in respect of our principal goods export dairy products the compound average rate of growth per year is around 30 percent. New Zealand is the largest single supplier of dairy products in terms of imports in the world. So for those members who are not moved by the bigger humanitarian issue—and I certainly am; I think that is the biggest game in town frankly—there is also a very strong area of self-interest in this for other countries. 
Foreign investment is absolutely central to the development process. The ability of foreign investors to lay off their risk through proper international multilateral cooperation of the type we are debating in terms of this bill is part of that picture and it is for those reasons that the National Party will be supporting this bill. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 This is one of those bills where Parliament passes legislation in order to give effect in domestic law to treaties that the executive has already signed with other countries so we can be seen as a bit of a comma after the full stop in that sense. Normally these bills go through Parliament with no controversy. But as it happens the Greens are not going to vote for this bill and I want to explain why we are not. 
I agree strongly with all the causes that Marian Hobbs has just espoused in her speech: international aid enabling developing countries to improve their quality of life health infrastructure and all the rest of it and even that foreign investment is necessary in order for them to do that. But let us look at the track record of the Multilateral Investment Guarantee Agency and see what it has actually done in the past. The agency exists to protect foreign investors from the risks associated with investing in developing countries. So we put up capital along with other countries to cover the insurance for those corporations. It seems they do not have to buy their own insurance; it seems we buy it for them. It costs us around $9 million to belong to the agency. This is not the only agency of the World Bank that provides that kind of guarantee and insurance policy so it is not as though there are no other ways that cover can be provided. 
Let us look at this particular agency and see what it has done in the past. Well it has a set of guidelines for the projects where it will guarantee investment and it is supposed to cover things such as human rights the environmental record and social issues. But a recent investigation by the compliance adviser ombudsman of the agency’s parent body the World Bank strongly criticised the agency for projects where it had guaranteed the investor but been completely negligent about checking on human rights issues on the environmental record and on the social effects on the host community. I do not think that our aid money should be going to support an organisation that performs as badly as that. 
Let me give members an example. The agency insured investment in a copper and silver mining project in Katanga in the Democratic Republic of the Congo. The audit concluded that the risks to the local communities in terms of the human rights impact of the project were not adequately considered. The mining company that the agency insured apparently provided logistical support to the Congolese army during a violent counter-offensive to suppress a small-scale uprising and according to the United Nations as many as 100 civilians were killed during that military offensive supported by the multinational company. The World Bank investigated that. There does not seem to have been any process whereby the agency investigated the effects of the investment projects that it was insuring and guaranteeing and it seems that they were negative in terms of human rights and negative in terms of the life and safety of the local people and their social well-being. 
Another project the pulp mill at Fray Bentos in Uruguay was insured and guaranteed by the agency. That mill made pulp out of eucalypt chip It was strongly opposed by the local community because of the concern that it would seriously pollute their river. The bank also found that the agency had neglected to investigate the environmental human rights and social impacts of that project. 
So here is an organisation that simply doles out our money to foreign investment companies to guarantee them against the local risks of investing in countries where they make a lot of money and it cannot even be bothered to investigate whether the projects that it is supporting will be good for the local community. The investigation of that agency was not carried out by a radical Third World monitoring organisation but by an official of the World Bank who found that the agency was not living up to its responsibilities and was not taking due care or doing due diligence on projects. It was just there to facilitate investment regardless of whether that would be good for the local community. 
I have been a strong supporter for raising New Zealand’s official development assistance. I think we have a responsibility to countries that are developing to help them more than we currently do. We are way down on the international league table in terms of the proportion of our GDP—about 0.27 percent—that we devote to official development assistance and we have signed up really to the international agreement that it ought to get to 0.7 percent. Well we are not getting there very fast; we certainly will not get there in my lifetime. But if our aid is to include guaranteeing multinational investors against local events in the communities where they invest and if they invest in projects that are damaging to human rights to the environment and to the local society I do not think that is an appropriate use of our money. 
The Greens will therefore be voting against this bill. We do not expect that that will prevent it from passing but we think it is time that somebody stood up and told the truth about what the agency does. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
Tena koe Mr Deputy Speaker. Kia ora tatou iteneipo. The legislative schedule before the House today has exceeded itself with the use of acronyms. This bill makes its own contribution—IMF MIA and MIGA to name a few—and includes such tantalising terminology as neo-liberalism multilateral investment global trade and investment liberalisation. 
In my preparation for debating the bill I came across a new principle that I would like to share in this debate. It is a principle coined by Professor Jane Kelsey on behalf of the Action Research and Education Network of Aotearoa. Professor Kelsey has introduced me to the “Dracula principle” which is the destruction of obnoxious agreements by exposing them to the light of day. It is a principle that we in the Maori Party wholly endorse for the International Finance Agreements Amendment Bill. 
The context of foreign investment and a nation’s economic relationship with the world is of course a key issue for any political party. It is also a context that has been part of the ongoing debate within Maoridom in particular and within the indigenous global community as well. It is a context probably best explained by the Native American activist who said that neo-liberal globalisation “is just a different version of the same old cavalry”. 
Tangata whenua have long wrestled with the notion of foreign investment from the very first colonial land speculators to the hugely controversial Multilateral Agreement on Investment put forward in 1997 to remove basically all restrictions on foreign investment. Maori up and down the length and breadth of Aotearoa attended hui wrote submissions and took to the streets to speak out on their belief that such a proposal would open the floodgates to wholesale exploitation and appropriation of our lands and resources and threaten the very integrity of the nation. 
 It is an interesting coincidence that today—a day that we the Maori Party released a key policy platform in order to ensure that all parties to the Treaty settlements process are on a level playing field—we think back to the way in which earlier foreign investment agreements sought to relate to the Treaty. Signing up to the Multilateral Agreement on Investment would have required the New Zealand Government to speed up and force the pace of Treaty settlements settling all claims by the year 2000. 
We would say to this House that sovereignty was not ceded by Te Tiriti o Waitangi nor should the Government yield its false claim of sovereignty to anybody else but Maori. The Treaty must stand to continue to protect future Maori generations and to guide Aotearoa’s future. Consistent with this the Maori Party today announced the establishment of an Independent Settlements Authority. But what do we have here with the International Finance Agreements Bill? We get another agreement signed up to by the Government without the involvement of tangata whenua—without any kind of agreement from Maori as the partner to the Treaty. 
In 1997 the Law Commission produced guidelines that I would recommend to this House for background reading to this bill. Its guideline entitled  
The Treaty Making Process: Reform and the Role of Parliament 
 recommends that a treaty impact statement should be prepared for all treaties to which New Zealand proposes to become a party. It states further that the impact statement should set out any consultation undertaken with Maori and whether the treaty will have an effect upon the rights guaranteed in the Treaty of Waitangi. 
The Treaty clauses have been included in recent agreements such as the 2006 Trans-Pacific Strategic Economic Partnership Agreement as a result of Maori challenges and pressure. But such clauses are always limited because it is left up to the Government of the day as to how it chooses to fulfil its obligations under the Treaty. The clauses are also meaningless if they lack any prior dialogue or debate between Maori and the Crown as to whether the agreement is a good idea in the first place. The Crown’s fundamental obligations to tangata whenua as guaranteed in Te Tiriti o Waitangi are overridden by this bill to confirm New Zealand’s membership in the Multilateral Investment Guarantee Agency not least because it has already been signed up to on 6 September 2005—conveniently and not surprisingly I suppose some 2 weeks out before the general election. 
The bill accords with the economic pathway brought in by Labour and National Governments which instigated then extended a massive programme of corporatisation and privatisation and between them removed essentially all restrictions on foreign investment. By the mid-1990s there were foreign buy-ups of prime commercial and residential property overseas ownership of New Zealand companies had increased by 145 percent and local manufacturing had plummeted and with it employment levels and rates of pay. 
We stand in this House today to make it quite clear that Maori have strongly resisted foreign investment agreements that willingly give investors rights over lands and resources that right now we are contesting through the Treaty process. We must continue to act locally and think globally. The international trade agreements that successive Governments keep signing are simply another mechanism—along with the Treaty settlements process—that locks us all further into a neo-liberal net. All that the Multilateral Investment Guarantee Agency does is to give more power to the big corporations that dominate the world economy. It is another corporate steal providing for yet another quantum expansion of corporate power. It is a net in which the market mentality is extended to commodify all aspects of life including those that were formerly outside its domain: community iwi identity—in other words humanity itself. 
Yet we in the Maori Party know that the market exists only because the State allows it to exist; so much so that 85 percent of the world’s wealth is controlled by 20 percent of its population—disciples of the market who are supported by the State to ensure that the advantages they have are maintained. Is that fair? If it is not what are we going to do about it? The agreement guarantees that corporations shall be supported to continue and indeed grow activity for private profit rather than guaranteeing investment that actually benefits the country and its people. 
No one in this House can overlook the reality that the gaps between the haves and the have-nots have grown dramatically over the last 20 years with the most vulnerable members of our society—Maori and Pacific people beneficiaries and low-income families with children—showing significant increases in the proportions of people in severe hardship. The Child Poverty Action Group health spokesperson the paediatrician Professor Innes Asher has told us that the vast range of health statistics show that New Zealand’s large income-gap contributes to the poor health of low-income earners and their children. So we are wondering how foreign investment will do anything to improve the income and other resources available to our poorest families with children. How will the Multilateral Investment Guarantee Agency respond to the costliness of the long-term effects of increasing inequality and poverty on children their families and society? 
The Maori Party will not support this bill. We will stand alongside all of those who have stood previously against successive moves to remove virtually all restrictions on foreign investment. We will stand with Maori activist unions students Grey Power anti - free-trade groups and local government. We will oppose any deals done with international corporates that invite foreign investors to come in and remove jobs and businesses to slash pay rates and work hours and to take the land and the resources that Maori are already contesting. 
Finally I return to another hikoi the great hikoi against the Foreshore and Seabed Act 2004. That hikoi mobilised New Zealanders into action. The Hikoi of Hope in 1998 arose from a call from Anglican bishops for New Zealanders to re-examine the wider choices that we were making as a nation. The bishops challenged the Government to focus on the bigger picture—on jobs the health system benefits wage levels housing and education—to respond to the trends of the time which were described as “deeply disturbing”. So with that they launched five planks: poverty housing health education and job creation. 
As we debate yet another item on the Government’s global liberalisation agenda it is useful to remember the people—the vulnerable and the poor—who are clearly not benefiting from foreign control. As we lead up to Budget day next week we say the priorities of this Labour Government that are articulated in the International Finance Agreements Amendment Bill are not the priorities that will advance our nation. We will oppose this bill. 
DIANNE YATES (Labour) 
: 
 Those who are listening at home to this debate may have lost all track of what the debate is about—it is about the International Finance Agreements Amendment Bill. This is a bill that amends the International Finance Agreements Act 1961 and it provides for New Zealand to become a member of the Multilateral Investment Guarantee Agency. 
As the bill tells us in the explanatory note the agency is one of five agencies that make up the World Bank Group. The core mission of the agency is to enhance the flow of capital and technology to developing countries for productive purposes by providing investment insurance for member countries against both sovereign and political risk. I am rather surprised at the stance of the last speaker Te Ururoa Flavell on this bill because I thought that he would have been much more philanthropic in his approach to this particular legislation. The legislation is one of those Acts that puts an international agreement into New Zealand law; it is part of our process. There has been a national interest analysis done on this legislation and I would remind people that in September 2005 there was Cabinet approval to sign this Multilateral Investment Guarantee Agency convention. 
In September 2005 New Zealand signed the convention. In July 2006 the Cabinet agreed that the text of the convention and the accompanying national interest analysis which is done on all these types of agreement should be presented to the Finance and Expenditure Committee for consideration. Now that select committee— 
Shane Jones 
: A very good committee. 
DIANNE YATES 
: Obviously Shane Jones is on the select committee. That select committee considered the national interest analysis—it considered what we were signing up to—and it reported back to the House. It said that there were no matters to bring to the House. That means that the select committee agreed with it. Now we have this bill that is adopting that convention into New Zealand law. So here we have this actual process happening. The national interest analysis is very good and it explains why we should bother doing this. 
The Convention Establishing the Multilateral Investment Guarantee Agency was adopted in Washington DC in 1985 so members cannot say that we are hurrying this through in the dead of night as people often say in this House. There are already around 170 parties to this convention. As I have said New Zealand signed up in September 2005 and we are ratifying this convention through this legislation in 2007. 
In order to become a member of the Multilateral Investment Guarantee Agency New Zealand must become a party to the Convention Establishing the Multilateral Investment Guarantee Agency. As I have said this convention was established to do three things—to provide three key services. The first service is political risk insurance for foreign investments in developing countries and I am surprised that some members of this House do not agree with that. The second service is technical assistance to improve investment climates and to promote investment opportunities in developing countries and Marian Hobbs has given us very good reasons why we should be doing that. The third service is dispute mediation services to remove possible obstacles to further investment. 
I think that some of the concerns of the Green Party can be worked through with that third point. I point out that in these cases we have to be in to change things. One of the advantages given in the national interest analysis of New Zealand’s joining is that New Zealand will be able to chair an annual meeting of the World Bank Group—it is unable to chair an annual meeting of the World Bank Group unless it is a member of all five institutions in the World Bank Group. Also following the ratification of this convention New Zealand will be able to chair an annual meeting outside New Zealand—that is it could chair the meeting in Washington DC. So this bill gives us the opportunity to chair that meeting and to have more say which is really important. 
Metiria 
Turei 
: Whoopee! 
DIANNE YATES 
: I remind the Green member who is laughing that it is the same as in this House—if members are not in the House they cannot have any say. If we are not at the meeting we cannot have any say or any influence on the meeting; so we should be there. New Zealand has had tremendous influence and we punch above our weight in many of these organisations. Should we choose to entertain this opportunity it would be likely to lead to an enhancement of our reputation at the bank and to provide a valuable opportunity—and the members who have spoken before me should listen to this because it is in the national interest analysis—to advance New Zealand’s priorities in the work of the World Bank. If we are not there we do not have a say. That is a very very important paragraph— 
Hon Ruth Dyson 
: Who else would advance our interests? 
DIANNE YATES 
: Who else would advance our interests and who else would advance the interests of many of the smaller countries in the Pacific and the countries we work with? If we are not there we cannot have our say. 
When we talk about a national interest analysis I think we should also be talking about an international responsibility analysis which is what New Zealand has. I point that out to previous speakers as it is a very very important part of this. As we have said the other reasons that the national interest analysis gives and the assessment as to why New Zealand should join the Multilateral Investment Guarantee Agency are based on three broad categories as Michael Cullen has reminded us including supporting the New Zealand private sector’s contribution to development goals. The New Zealand private sector has a very important role to play especially in the Pacific in this regard and in supporting multilateral organisations. Specifically by ratifying the Multilateral Investment Guarantee Convention New Zealand is strengthening its commitment towards international efforts that promote development and improve our credibility. 
We talk about our own national interest improving our credibility at the World Bank. As of October 2005 New Zealand was one of four countries still in the process of fulfilling membership requirements and it is currently the only OECD country that is not a member. As I have said this is not something we are rushing through in the dead of night. It was originally a convention adopted in Washington DC in 1985 and it has taken us a considerable amount of time to bring it into our legislation. I thank the Hon Michael Cullen for bringing this legislation which we are now debating to the House. Another advantage spelt out in the national interest analysis is New Zealand’s contribution to international efforts to promote development through facilitating foreign direct investment flows—as I have said already—enhancing New Zealand’s credibility. 
I commend the bill to the House and I urge those members who are not so interested in it or who have spoken against it tonight to read the national interest analysis—it is about 30 pages long with the actual agreement attached to it—and to realise that if New Zealand is not in we cannot have an influence. If New Zealand is not there we cannot chair the organisation at its meetings overseas. Once again I believe that this is one of those occasions when it is really important for us to be inside the tent rather than outside. Thank you Mr Deputy Speaker. 
SHANE JONES (Labour) 
: 
Tenatatou katoa. Firstly to you Mr Deputy Speaker tena koe. Recently you and I had the pleasure of gracing the screens of television sets around Aotearoa as the descendants of the Dalmatian gumdiggers and of our Maori mothers and grandmothers. So as we would say in our Croatian language: mojepoštovanjedobrovece.  
I now go on to discuss this bill. In the unlikely event that people in this House think I am just the chairman of the Maori caucus committee of the Labour Party I say that I stand as the chair of the Finance and Expenditure Committee which considered the background material to the bill. I want to unmask some of the problems that lie behind the narratives and rhetoric that have been served up by my whanaunga Te Ururoa Flavell and our friends from the “Greenie” party. I want to dive into the role that private enterprise and investors play in regenerating and rejuvenating the economies of the less developed countries. 
Without that capital mobilisation without people taking risks and seeking profit in very tumultuous circumstances it is not possible for us to imagine that those economies will grow and develop. People are attracted to take risks in those less developed economies and for us to become a party to this particular institution the Multilateral Investment Guarantee Agency will improve the prospects of success. It is a bleak day when the analysis underlying this bill or the exclusive source of advice for the Maori Party should come from that old sparring partner of mine Jane Kelsey. Jane Kelsey does not believe in capitalism and she does not believe in economic growth. She constantly looks at the future in terms of a rear-vision mirror. So it is with a great deal of sadness that I say that Te Ururoa Flavell’s comments are reflective of a deep flaw in how the Maori Party approaches economic development. It sees a taniwha lurking everywhere. 
All risks involve danger. All risks reward those who seek adventure but that is a double-edged sword. If we want to see growth and if we want to see less reliance on our country by our near neighbours in Te Moana-nui-a-Kiwa—the Pacific—then the role of institutions like the one that we are affirming this evening is going to be very valuable in terms of growing those economies. People will not go there unless nations like ours are prepared to cover off some of the risks when investors go in at a fragile—or should I say a very vulnerable—stage in a country’s development. In the case of parties that supposedly represent equity and that supposedly represent the interests of the downtrodden—or the citizens of the emerging economies who are trapped in “Strugglers’ Gully” and trying to create a greater sense of economic independence—I think it is an abject failure on the part of those parties that they do not come in behind this agency and support the relatively modest contribution that the Crown on our behalf will be making to it. 
Two examples in recent times come to mind: the money that we have provided in respect of the terrible floods in Fiji and the money that was applied in terms of tsunami relief—about half a million dollars as I recall it—in the Solomon Islands. 
Why these two groups are unwilling to allow us to take our rightful position in the line of international citizens under the cloak of our nationality beggars belief. We cannot continue to hold our heads proud and attract the attention of other leading nations in either the OECD or the wider world community unless we are prepared to commit to building a more prosperous world through investing in developing nations and upholding organisations and bilateral relationships. That process requires us to make a commitment. Why should we not make that commitment? Why should we expect small possibly ill-informed investors who are willing however to go into those troubled nations and to go into environments and economies that suffer substantial handicaps not to look to the more prosperous nations of the world to hedge—to take some of the responsibility for—the risk? 
You see underlying what we have heard earlier this evening from Mr Flavell is I think a mistaken belief that I hear all too often even from that very close whanaunga of mine Hone Harawira that somehow all the answers lie simply in the formation of Governments in those countries. Yes we must support the emergence of representative democracies in those countries and we should always both provide assistance and lay down boundaries as to the costs if the institution of representative democracy is trivialised. However those democracies and those emerging Governments need assistance in order to grow not only civil society but also the scope and the depth of the economy. 
We have a very wide range of skills talents and experiences. Not only do we lead the work in relation to our agricultural enterprises etc. but our people—our human capital endowment—are widely respected all around the world. Indeed with Mr Wolfowitz’s momentary fall from grace—permanent perhaps—who do we hear is looked upon to steer the World Bank through this period of turbulence and a rather rocky transition? It is none other than a Treasury-trained—perish the thought—economist in the World Bank. So that is an example of how at different levels we in our small nation with a broad vision are willing to provide both talent and an example of what can be done. If we do not stand shoulder to shoulder and uphold our obligations as good international citizens then how can we expect to enjoy attract and sustain either people’s esteem or admiration for what we have sought to do as an example to our near neighbours? 
So it was with a great deal of disappointment that I heard what I think was a very facile and disappointing analysis. It was almost informed by a conspiracy that always lurks at the centre of the contributions made by our friends from the Maori Party. It is as if progress is impossible because at the kernel of progress lies self-destruction. That is the stuff of a conspiracy. Unfortunately it infects a lot of the dialogue and contributions of Maori Party members to matters of a domestic nature. However I will speak more about that at a later date. 
As the chair of the committee— 
Hon Ruth Dyson 
: Which committee? 
SHANE JONES 
: The Finance and Expenditure Committee—and I must say from time to time we see Mr Hide there and the frisson actually improves and increases when he is there. We have not seen much of that for a while but he is welcome back there at any time given that we have agreed today to hold a select committee inquiry into monetary policy. We did that despite the fact that Mr English—breaking the rules of the select committee—raced out without the permission of the select committee and unilaterally announced that he was not going to support it. He was prepared to support—for want of a better expression—anti-smacking but he would not support a consensus on anti-inflation. But I have no doubt that once the experts and the legions of people who have already been in contact with us come to the fore and provide their evidence to the committee as to what can be done in relation to the interaction between monetary policy the establishment and implementation of fiscal policy and other broader economic considerations despite Mr English saying that he does not want the National Party to either acquiesce to or endorse the inquiry the National members will be vigorous participants. That is how it works. As the Maori say: “Kei runga te korero kei raro te rahurahu.”—the lips say one thing; however the thoughts are elsewhere and God knows what the hands are doing. 
However we did deal with the International Finance Agreements Amendment Bill at our committee and I join with earlier speakers on the Government side of the House in commending this bill which enables us to show the credentials we obviously have in international citizenship. Kia ora tatou. 
DARREN HUGHES (Labour—Otaki) 
: 
 It has been very interesting listening tonight to the debate on the first reading of the International Finance Agreements Amendment Bill and to the various points that have been made by different speakers. What comes through from what everyone has had to say has been the role New Zealand plays in trying to be an honest broker in this area of overseas development assistance and in trying to use international organisations to ensure that we have progress on the things that New Zealand considers important. 
This is particularly so around how to bring as much assistance as we can to those in poverty-stricken countries where there are structural problems in the economy so that people do not earn any decent wages to be able to support their families or where there has been some sort of catastrophic natural event. This could be by way of a tsunami or a hurricane or a famine or an earthquake—something like that— 
Hon Rick Barker 
: Plague of locusts. 
DARREN HUGHES 
: It has been a while since we have seen that but I suppose we have to be prepared. Only the Minister of Civil Defence Rick Barker would think out along that way but we have to be ready for these things. 
Although New Zealanders are very generous individually and the New Zealand Government is always trying to do its bit as well—although the extent to which we go is an area of debate; I understand that—we have to have strong international institutions in order to make sure that this kind of assistance gets through to where we would like it to go. The concern has always been that when people give money in good faith to different charities or organisations or see their Government do that as well we must make sure that the money goes to where those receiving the money say it will go and that a ticket is not clipped along the way. 
That point reinforces why this multilateral agreement is needed. We are very late in joining it. It will be 20 years next April since it came into force and New Zealand is the only OECD country that has not joined it yet. We are not part of the international mainstream in that regard which is surprising seeing that we are normally very much in support of multilateral institutions and a rules-based system—and for a small country we need to be. That is why we support so strongly the World Trade Organization and why we have looked for UN resolutions before committing ourselves to armed conflict or to armed situations. So we have very much approached our foreign policy and our development policy by looking for strong international institutions to make sure proper effect is given to what the intention of the New Zealand Government has to be. 
Our signing this treaty and passing this legislation which makes us part of this last part of the World Bank Group—the institutions that make up the World Bank—gives New Zealand a much more sure footing when we are contributing in these areas. It was interesting to note that a number of countries in our region are already part of the Multilateral Investment Guarantee Agency. Countries from the Pacific region like Papua New Guinea Fiji Samoa the Solomon Islands Palau and Vanuatu are already coming into that agency. As we go through Asia we see other countries that are part of it as well. 
So we have kind of been out of step institutionally although clearly we have not been out of step in terms of policy given the way we have behaved in the international community and the way we have tried to play our part and bring a little bit of relief where that has been needed at times—including quite recently with the big earthquake that happened in the Solomons where we put an initial sum of money of about half a million dollars. We went up to the Solomons to try to give some initial relief until we work out presumably a package of assistance there. 
The Solomons earthquake was a good example of the fact that world attention is sometimes focused in other areas. Sometimes there is a world catastrophe or disaster and that is the issue of the moment—everyone is focusing on it looking at it and keen to support it and people rally around behind it. Yet at other times when these things happen people almost turn a blind eye to it. The Solomons earthquake happened at around Easter time when people were busy getting ready to go away and for some reason it did not enter the consciousness in the same way that some of these other tragic events can. Obviously the Boxing Day tsunami happened during a very quiet period and everyone was immediately focused on that. 
One wants to see whether the world can come together in order to ensure that all the goodwill is there and with the way people dig into their own pockets that will always happen. We know that it will happen over time but we want to make sure that the investments are being made properly because there is always the suspicion that when people give money what is meant to go east goes west. That has long been a suspicion in this area so having these strong institutions that have integrity and respect is important. 
I pick up on the comments made by the Minister of Finance in moving the first reading tonight. The treaty we are looking to sign—and by passing this bill are giving effect to—puts us in the last of the institutions that make up the World Bank. Having the World Bank as a reputable institution is very very important and the New Zealand Government has expressed this concern. 
The allegations of impropriety or of a conflict of interest in the actions of the President of the World Bank Mr Wolfowitz in seeking to find employment for his partner when he became the president has left a number of questions being asked in that institution. A lot of the staff who work in that area and have to go into countries and be seen as being beyond reproach feel that it is a difficulty for them if there are any suggestions hanging over activities at the World Bank. So although presumably the president of the World Bank was acting in good faith because his partner was already working at the World Bank—he suddenly got appointed and she could not work there any more so obviously that problem was not of her making—the actions he took by trying to get her a job at the State Department at a higher rate of authority and at a higher rate of pay than she had at the World Bank has led to a bit of a collapse of confidence in his ability. 
So I can see the problem there when the World Bank has to be seen as one of the institutions that can go in negotiate and set up a framework to channel all these large numbers of donations that come in. New Zealand approaches that problem by saying that now the position has probably become untenable. 
I comment on that because by giving effect to this legislation New Zealand now has the ability to chair the World Bank annual meeting—the group of World Bank institutions—which we have been unable to do until now. The convention came in 20 years ago and many countries have signed up to it. In fact as I said before we are the only OECD country that has not done so. So in a role where New Zealand can often be seen as being a third player and as being able to bring sides together this is an example where New Zealand cannot get to that top seat of one of the key arms of the architecture of world diplomacy in the infrastructure of global institutions because we have not passed this law. That is why it is pleasing to hear that there will probably be pretty broad political support for the bill tonight. 
I will pick up on just one comment that the New Zealand First speaker Doug Woolerton made. He went to the heart of what the problem often is around international aid. We all know that there is this global target of trying to get rich modern economies to spend 0.7 percent of their GDP on overseas aid. That is one of those things that one can agree to readily because it sounds like a good idea. But when one’s economy is growing it is actually a very very hard target to get to. 
The Hon Marian Hobbs the former development assistance Minister who spoke before worked in this area. It was under Marian Hobbs’ watch that we were able to get New Zealand’s contribution up to 0.27 percent—so we got the “7” part right just with a decimal place removed. But we still have further to go and I know that the Minister of Foreign Affairs the Rt Hon Winston Peters has put a lot of effort into this area and a lot of commitment into overseas aid particularly around the Pacific. 
Doug Woolerton was saying—and he was right—that sometimes constituents come and see members and they have seen how much has been given to a certain country because hard times have fallen on it. A constituent who wants to see the member because he or she cannot get X Y or Z or because he or she would like to see such and such funded says: “Here you are spraying money out around the world.” It is a really difficult thing because there are so many things in New Zealand that one would like to see money spent on. I guess the point one has to make about overseas aid is to ask those people whether they would rather trade places. 
OK not everything in New Zealand is perfect. A lot of working families struggle to get by—which is why the tax credits are so important. People do not feel rich yet they see this money being given out overseas and they wonder why they cannot get any of it. But we have to ask people whether they would trade places. That is where we really have to try to go to the common humanity of where people are around the world. 
It is very interesting that members of the public who have travelled to Third World countries and to very poor countries never come home and say that New Zealand should give less in aid. People who go into poverty-stricken countries and see how poverty and corruption is destroying people’s chance of a fair go at life always believe we should be trying to do the best we can in terms of contributing. That can seem like a hard thing to accept for people who are working in a low-paid job and it is difficult to make ends meet and they would wonder why we would do that. 
But what is important if we can get New Zealanders to give more individually and if we can encourage the Government to step up its contribution from the current 0.27 percent is that we must ensure that the international framework exists and that the institutions are there to make sure the funding and money get through to the exact area where they are needed. By signing this agreement and by giving effect to it by passing this legislation I am sure we can move on to ensure that New Zealand’s reputation as a country that is committed to being a good international citizen can only be enhanced and that will be promoted by our passing the first reading of this bill. Thank you Mr Deputy Speaker. 
A party vote was called for on the question  
That the International Finance Agreements Amendment Bill be read a first time 
. 
Ayes 111 
New Zealand Labour 49; New Zealand National 48; New Zealand First 7; United Future 3; ACT New Zealand 2; Progressive 1; Independent: Field. 
Noes 9 
Green Party 6; Maori Party 3. 
Bill read a first time.