International Finance Agreements Amendment Bill

I want to take a brief call just to give a view about what I think is the bigger picture here, because my first mokopuna was born about 16 weeks ago, and she has moved already in 16 weeks from living in London to living in Hong Kong. That is the world she will grow up in, but I hope, obviously, that she will become a New Zealander and will make a contribution here, somewhere 20 years down the track. But the world that she and our other grandchildren—or, for the younger members of the House, our kids who are growing up and in primary schools now—will be living in is going to be fundamentally different from the world that I as a child grew up in, some decades ago. This world will be different for a number of reasons, but one of its absolute, marked features is the rise in the importance of developing countries, and this bill is ultimately related to that broader purpose.

People of my generation have lived in a world that has been culturally and economically dominated by developed countries. The world in which my grandchild will be living will be totally different. It will not be dominated by developing countries, because many of the countries that I have in mind when I make this point will no longer be considered then to be developing countries, in any real sense of the word. It will be a much more diverse world, and it will be a world, I believe fundamentally, that will be fairer, that will involve far less poverty, and that is already coming into view. It will be a world in which much will shift in favour of what we today call developing countries.

In trade, that is obvious; in emissions, if we are looking at the future of a post-2012 Kyoto convention, we see that at the moment around 60 percent of all emissions comes from developed countries. By 2040 that will change around, almost exactly, to the other side of the coin, to where two-thirds of emissions, according to the UN framework convention, will be likely to come from what are called today developing countries. So this is part of a process. This clause, which is designed to promote the development of these countries, is a small piece of that puzzle.

I believe that an enormous majority of New Zealanders have great sympathy for people in developing countries. Personally, I am hugely discomfited by their problems of acute poverty and their lack of access to adequate food, nutrition, and education. But we obviously have differences of view in our community, from that shared base, about how best to address those issues. The differences are less acute now than 30 or 40 years ago, when I look back on the debates I was involved in then, but they are still replicated in this House, in academic discussions, and in media articles.

They are basically the same two views, and this bill puts them into that context. One view is that the global economy out there is a problem for developing country folk, and that they must assert their control more clearly. They must try to keep out investment and keep out imports. That is the old import substitution model. In respect of this particular bill—the International Finance Agreements Amendment Bill—that model puts heavy restrictions on inward foreign investment. The other view—I will not labour the point—is obvious: it is growth as a non - zero-sum game. If developing countries open their economies to the ideas technology—and in this case investment flows—and join in international, multilateral, co-operative agreements such as this agency we are debating has, this bill will work in their favour. Obviously I subscribe to that view, and this is why National is supporting this bill.

If members reflect on the empirical evidence over the last 30 or 40 years, I believe that they will see that that view is unmistakably correct. We are now seeing a world in which, far from the rich getting richer and the poor getting poorer, developing countries as a group—without exception, including those countries that are going backwards, usually in Sub-Saharan Africa but also those other countries where there are massive problems—have been growing, cumulatively, about twice as fast over the last 20 years as the sum of all developed countries. Massive shifts are taking place in favour of developing countries, in terms of world trade flows. In 1986, at the beginning of the launch of the previous multilateral trade round, a mere 24 percent of developing country exports went from those developing countries to each other. In other words, it was fair, perhaps 25 years ago, to see this as a north-south conflictual situation. When the Doha round was launched in 2000—24 years on—nearly 50 percent of developing country exports went from developing countries to each other.

We are now seeing the rise of the two giant developing countries, India and China, which literally represent half of humanity. They have linked into the global economy and turned back from the earlier economic and political models of rigid control, total obsession with their sovereignty, and resistance to agencies exactly such as this. They have embraced inward foreign investment and outside ideas, and have lifted hundreds of millions of people from poverty.

So this bill—highly technical as it is—fits into what I think is one of the big stories of the world that my own grandchildren and younger members’ children will be living in. It is a world that will be very, very different, and it is a world awash with opportunities—both for New Zealand and for the individuals who have the skills and equipment to actually participate in it. Thank you.

I am quite astonished by my colleagues from the Green Party, because they were full participants in the Foreign Affairs, Defence and Trade Committee, which considered the International Finance Agreements Amendment Bill. At no point did they raise concerns about the bill, put in a dissenting voice, or vote against the bill. So it is quite astonishing to come to the floor of this Chamber and find them voting against it.

I say to my colleague from the Māori Party Hone Harawira that I am sure he knows quite a number of Māori who own dairy farms and corporations that are raising money and investing in the future of their mokopuna by generating income from exporting dairy products. I will tell him that in 1994, when I was Ambassador to Iran, we faced a situation where the Iranian Government defaulted on $100 million of letters of credit that had gone through the Iranian banking system. That money was owed to 14 New Zealand companies. Members may recall that Mr Cosgrove’s erstwhile colleagues Roger Douglas, Mike Moore, and, I suppose, David Lange got rid of the Export Guarantee Office. We used to have a State agency in this country that guaranteed the exports of New Zealand companies. The Export Guarantee Office had gone down the gurgler by 1993-94, and we were in a situation where those New Zealand companies—there were 14 of them—had potentially lost $100 million of their money. They were carrying the loss—not the State, as used to be the situation.

So I say to my colleague in the Māori Party that it is in the interest of his people who are engaged in dairying or logging, for example, to support this legislation. I will repeat to him that we are in a situation whereby this legislation and the risks that are covered by it—as set out in the convention in new schedule 7 of the principal Act—are about issues of currency transfer. That means that in a situation like that which occurred recently in the Solomon Islands, were it a member—unfortunately it is not—when it hit the wall and could not provide enough foreign currency to meet its bills, then this insurance scheme would have come into play. It would have come into play in Iran, because Iran is a member, were we members back then—when Australia was, unlike this Government.

If we think about a second area of new schedule 7, we realise article 11(a)(ii) of the convention will allow the covering of business risk where any legislative action, administrative action, or omission attributable to the host Government has the effect of depriving the holder of a guarantee of its ownership or control—in other words, situations where the host Government takes something off the holder, as could easily happen in Fiji, where we have martial law at the moment.

The bill also provides under article 11(a)(iii) of the convention in new schedule 7 for breach of contract. That is something that happens regularly in Papua New Guinea. This scheme is used, for example, to cover the Lihir goldmine. What is the Lihir goldmine about? It is about providing an export income to Papua New Guinea. It is about providing jobs to Papua New Guinean people. It is about using the money gained from the extraction and export of that gold, from a very highly sophisticated goldmine, in order to educate children. The money from that goldmine allows the Government to fund its anti-AIDS programme. AIDS is a huge problem in Papua New Guinea. That money can also be used to engage in roadmaking and to pay for heavy machinery imports—all sorts of things that, ultimately, are of benefit to the people of Papua New Guinea. I ask my colleagues in the Māori Party not to keep their heads in the sand.

We also have to look at events in the Pacific area, because under new schedule 7, article 11(a)(iv) of the convention also enables New Zealand companies—and particularly small to medium sized companies—to cover losses attributed to any military action or civil disturbance. I think there of Tonga. Do members recall that Tonga’s capital burnt down very recently? I think of the Solomon Islands. The capital there was burnt down too. I am still with article 11(a)(iv) of the convention in new schedule 7, where we have cover for civil disturbance. Those things are a reality in the Pacific. I know that the Government is burying its head in the sand and pretending we can use a megaphone to beat the heck out of the military regime in Fiji, for example. That is to the detriment of New Zealand companies that are trying to do business there—for example, running hotels, exporting food, and those sorts of things. Belonging to this insurance convention will insulate New Zealand companies, particularly small to medium sized ones, from the risks this Government is imposing upon them.

It is also really important that we ask the Government to engage in encouraging those Pacific countries that are not yet members of the convention—for example, Tonga, and the Solomon Islands— to join it. When that happens, their companies will be able to benefit from that membership.

If I could move on a little, I notice that in article 32 of the convention in new schedule 7 there is a structure for appointing a board of directors. I would simply like to point out, particularly to my Labour colleagues in the select committee—to our chair, Dianne Yates, to Paul Swain, and to Jill Pettis—who will be leaving this House over the next few months, or if not then, certainly next year, that there is a possibility of work after they leave this Parliament by finding themselves a slot as a director of the agency. That is really encouraging, and it may be a way to help those people to move on.

We warmly support the bill.