Goldsmith Paul: International Finance Agreements Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Goldsmith Paul: International Finance Agreements Amendment Bill — First Reading 
[Sitting date: 08 May 2012. Volume:679;Page:2009. Text is incorporated into the Bound Volume.] 
PAUL GOLDSMITH (National) 
: 
 I was finding the previous member’s speech a little difficult to follow. He talked first about the US debasing its currency and then seemed to conclude his speech by suggesting that New Zealand should also debase its currency in order to get in on the act. Maybe we should start watering the milk; that might be the solution to all our problems. I hope that was not what he was trying to say.  
It is my pleasure to be speaking in favour of this bill the International Finance Agreements Amendment Bill which is set down for its first reading. It amends the International Finance Agreements Act 1961 which allows the Government to meet its obligations as a member of the various financial institutions including the IMF and the International Bank for Reconstruction and Development and it provides for New Zealand to recognise changes to the articles of agreement of the International Monetary Fund.  
The basic dynamic here is that the IMF members provide commitments to fund lending and are eligible to take out a loan in times of economic difficulty. The quota of each member country is intended to reflect its economic size and is denominated by special drawing rights. The changes to the articles of agreement of the IMF that the bill provides for include improving the representation of the faster-growing emerging market economies at the IMF. It is doubling the quota which is the IMF’s main means of raising funds; it basically doubles that quota. The bill also provides for regulation-making powers so that the future updates of the articles can be made to the Act by regulation.  
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 changing relative economic weight in the global economy. Because of that shift in weight New Zealand’s share of the overall pie falls but the net effect once it has taken into account the near doubling of the overall total quota is that New Zealand’s commitments remain relatively constant—moving from about $2.9 billion to $3 billion.  
 I think this bill provides an opportunity for us to pause and reflect I suppose on the shifting currents of the global economy. The old developed world when the IMF was set up is in the process of being caught up and indeed overtaken by a lot of countries that were once regarded as developing countries. We had Mr Parker here before saying that that was a terrible indictment on New Zealand. I do not look upon it in such a negative way. I think it actually is a good thing in many respects that hundreds of millions of people around the world in China in India in Korea and in many other countries—in Africa indeed—have been pulled out of poverty over the last couple of decades by this unprecedented period of rapid economic growth. The fact that those economies are growing and New Zealand’s overall share of the global wealth is diminishing is not in itself a negative thing. Indeed the fact that China and India are shaking the dead weight of very unfortunate policies—socialist policies really—of decades past and are now facing up to and welcoming the energy of the market economies has been a great thing for humanity across the board and is something that we should celebrate more than lament.  
But it does of course raise the issue of where New Zealand fits in all this and the lesson that I draw from it all is that New Zealand’s wealth and position in the world is not written in stone and we have to work for it each decade and each year. We need to create wealth and it is not going to be created for us and the most important thing a Government can be doing in that area is creating an environment that is consistent and a set of policies that are consistent. I think it is one of the signal achievements of this Government in the last 4 years that we have been following a set of policies: getting the Government’s finances back in order building a more productive and competitive economy delivering those better public services within tight financial constraints and since the earthquake rebuilding Christchurch. The fact that we have gone on about those four priorities ad nauseam for a long time so that people know them inside out is exactly what we need in these difficult international times so that New Zealand businesses and individuals can have the confidence to know where the Government is going what it is trying to do that it has a clear plan and that you can make those long-term judgments knowing that this Government will be sticking to its basic plan. Given that broader context I support this bill’s referral to the Finance and Expenditure Committee. Thank you.