International Finance Agreements Amendment Bill

This sort of looks like a relatively minor clause, but clause 7 does in fact repeal the entire International Finance Agreements Amendment Act, which is quite extensive and runs through—I am just looking at this relatively carefully—about 20 pages of statute. So, although this is a tiny couple of lines, it is something that takes out an entire Act, and I want a level of assurance that this is necessary and that the financing and commitment arrangements that are in the 1975 Act have, in fact, been picked up somewhere else in the International Finance Agreements Amendment Bill.

I have had a quick look through this bill. I cannot see the financing commitments that are in article 7 of the schedule of the 1975 legislation that we are currently repealing where the fund can use calls on members “to provide individual commitment in the form, at their option, of … direct financing; or … an individual undertaking for borrowing by the Fund; and calls on all members to provide a collective undertaking for borrowing by the Fund.” I cannot see where that core method of financing methodology is picked up and replicated elsewhere in the bill. Of course, I did not sit on the Finance and Expenditure Committee, and I am not entirely familiar with it. I am pretty sure that members opposite did, and I would be happy for them to explain where in the legislation that we are currently contemplating that, in fact, does occur.

The next question goes to the issue of prepayments, which were previously in section 4 of article 5 of the 1975 legislation. The question I have of the Minister of Finance—and colleagues can continue to ask it—is how prepayments are treated now in the legislation. Are they treated differently? Are they treated the same as they were in the 1975 legislation, and, if there is a change, where are prepayments picked up in this area? I am unable to see it. It might be that there has been a decision not to have prepayments any more. It might be that everyone is so cash-strapped that they pay on the due date and there is not a prepayment arrangement or an allowance for that. But if there is a system change, then I think it is important.

Section 2 of article 5 of the 1975 legislation also goes to the eligibility for loans. A member who requests a loan from the IMF has to make it clear “to the Governing Committee that it: … is encountering serious external financial difficulties;”—that is many countries in the world at the moment—“has made the fullest appropriate use of its reserves and has made its best efforts to obtain capital, on reasonable terms, from other sources; and … has made the fullest use of other multilateral facilities.” That is a pretty important set of conditions. Again, as with the question of prepayments, I ask the Minister, and he can clear it up pretty quickly, to indicate where these 1975 rules are replicated, or whether we are, in fact, transferring to the IMF itself—to the governing board or to the executive board—a set of powers that it does not currently have, and having something that is less regulated.

Again, if that is the case, I would like to know. That could be a very good reason for my colleagues voting against the legislation. I see eyebrows going up and someone else shaking their head, so I cannot quite work out amongst my Green colleagues what the story is and what the reason is for them voting against it.

I am sure my colleague the Hon Lianne Dalziel will want to look even more carefully at the 1975 legislation that is being repealed. My understanding is that this was legislation that was put through the House by the Rt Hon Bob Tizard, one of the longer-serving members of Parliament, although not necessarily the longest-serving Minister. In fact, he was a member of Parliament during quite an unfortunate period, from our perspective. He was not quite as unfortunate as Bill Rowling, who, I think, was a member for 24 years, of which he was in Government for only 3 years.

That was not a good time for the Labour Party—[Interruption] I am sorry?

💬 David Bennett: A good Labour Party member.

Bill Rowling was a good member of Parliament. In fact, he launched a very good campaign in Hamilton West—a successful campaign—against Mike Minogue, who at that stage was running, I think, at 4 percent for preferred Prime Minister, and he lost. It was one of the indications that personal popularity, especially under a first-past-the-post system, did not guarantee very much at all.

But the point I am making is that this is legislation that appears to have stood the test of time for the last 38 years. What I would ask of the Government is whether the 1975 amendment Act is being replicated elsewhere by this legislation or whether this is just a gross and irresponsible transfer of power within the IMF.

My colleague the Hon Trevor Mallard has raised a number of points, but he made a point earlier on about his absence from the Chamber, which, of course, one would not normally refer to. But I wanted to explain why I too had been absent from the Chamber at the commencement of this debate when the House resumed at 7.30 p.m. The reason was that I wanted to see the end of the John Campbell programme that was on television because it related to some matters affecting my electorate and that of the Hon Ruth Dyson, with regard to a financial matter. So I think it is relevant to some extent, because the issues that were being raised actually transgress international financial understandings and, actually, obligations around property ownership—that if a Government is compulsorily acquiring property there is an obligation to pay fair compensation. In this particular instance, we have examples of the owners of land being offered, by the Government—

The CHAIRPERSON (Eric Roy): Order! The member should come back to clause 7.

—a mere 50 percent of their rating valuation. It was a really important issue for both my electorate and Ruth Dyson’s electorate, so I thought it was important to tell the Committee why I was not here on the dot of 7.30 p.m.

The concern that I have got about the repeal of the International Finance Agreements Amendment Act 1975 follows on a lot from what my colleague had to say. I have not heard an explanation from the Minister in the chair, the Minister of Immigration, as to why this particular amendment Act is being repealed, because, of course, the legislation itself actually sets out in legislation the financial support fund of the Organization for Economic Cooperation and Development—the OECD, to which we would refer. When I look at the objectives of the fund, they are: “(a) to encourage and assist members to: (i) avoid unilateral measures which would restrict international trade or other current account transactions, or which would artificially stimulate visible and current invisible exports, and (ii) follow appropriate domestic and international economic policies, including adequate balance-of-payments policies and co-operative policies to promote increased production and conservation of energy; (b) to serve for a limited period, in view of current economic conditions, to supplement, in exceptional cases, other sources of credit to which members encountering serious economic difficulties have had recourse; and (c) to ensure that the risks on loans by the Fund to members are shared equitably among all members, in proportion to their quotas and subject to the limits of their quotas, however the loans are financed.” It states: “All decisions under this Agreement shall be guided by these objectives.”

What is not clear to me is whether this still stands with the repeal of the entire International Finance Agreement Amendment Act, and I think that may have been one of the points that my colleague the Hon Trevor Mallard was traversing in his contribution to this. If it is not the case, then what is the case? I mean how has this been dealt with—in another way? It does seem to me that the two questions are inextricably linked, because if we are to pass the legislation tonight—and, of course, we do actually have to pass this legislation. We do not really have any particular issue with not passing it, because, you know, the reality is that the amendments that we have passed already through this Committee stage do not empower developing countries as much as some have claimed. The 85 percent rule, which we have already addressed, is required now, and all we are doing is updating the relevant legislation. But that does not seem to be clear on the face of it when we come to the repeal of the International Finance Agreements Amendment Act 1975. In fact, the issue seems to be quite unclear, and I think it would assist the Committee if the Minister could, in fact, address that particular issue.

Obviously, because this fund has been an important element of the relationship that we have had with a number of other jurisdictions, with whom we have a relationship in establishing and supporting this fund, I would like to know how the Government has addressed this particular issue in order for us to feel confident that the Minister is able to address all these issues.

I rise to address the issue of clause 7 of the International Finance Agreements Amendment Bill, which repeals the International Finance Agreements Amendment Act 1975. I do so because I was interested in listening to the comments from the Hon Trevor Mallard about this particular clause, that he could not see where the financing methodology would be in the bill if this clause goes ahead and the 1975 Act is repealed. He mentioned the issue of prepayments, whether people would be treated differently or the same, and whether this was picked up in the current draft legislation. We agree. We often agree with the Hon Trevor Mallard.

His other point was, I think, pertaining to the loans issue, that it needed to be made clear as to whether there would be a set of conditions and whether it would be a transfer of decision making to the board of the IMF. We agree with that too. So there is a lot—a lot—in addressing clause 7 that we would no doubt agree with the Hon Trevor Mallard on. There is a lot that we generally agree with the Hon Trevor Mallard and the Labour Party on, but not on the overall nature of the bill.

I am sorry, Mr Chairman, that I was unable to be here earlier, as well. I was not watching Campbell Live; I was actually discussing this issue and broader issues with the Governor of the Reserve Bank. So I come reinforced with new ammunition on this, in opposing this bill.

Let me explain why we do oppose the bill. Mr Mallard mentioned at one stage that the bill is generally in favour of greater international transparency on economic and financial issues—that is true and we agree with that too—and he could not quite work out, I think he said, the reasons why the Greens will vote against it. Let me explain. It was his own close colleague the Hon Shane Jones who actually did note, or offer his own view, that the debate on this bill is actually a debate over Thatcherism and Reaganomics that has come to influence the IMF—[Interruption] I am quoting—I am quoting. I am quoting a member of the Labour Party. He said that the debate is over Thatcherism and Reaganomics, that it has come to influence the IMF, and that it is essentially revolving around monetarism. I am not sure whether Mr Mallard agrees with that or not, but that is what Mr Jones said. That is the nub of this issue, as we see it, so we do agree with yet another colleague in the Labour Party. The debate is over the nature of the IMF.

Where we diverge—where we diverge—from the Labour Party on this is that having agreed that the debate is about monetarism we would seek to engage the world in reforming the IMF from that theory, in various ways, whereas Labour is disposed to support the bill notwithstanding. We have for some time called for the fundamental democratic reform of the IMF, and this bill essentially invites us to comment on the requirements for the reform of the IMF. Let me give you three examples, Mr Chairman, if I may, and, through you, my colleagues. The first is the stated intent of the reforms: to move towards a more democratic and equal representation model. There is some critique of the reforms that they are not fulfilling that goal in terms of the number of directors who are on the board. The US would hold 16.5 percent of total votes, and the group of 77 would account for 41 percent—120 nations having 41 percent. Secondly, the agreement would also change the voting allocation. There is a 6 percent increase shift in the vote for the dynamic emerging economies like Brazil, Russia, India, and China—2.4 percent of this shift comes from the other developing nations losing their voting share. What kind of reform is that? The question can be attributed not just to the Government members but to the members of the Labour Party as well. Thirdly, where there is inadequate reform of an organisation, a party has a choice to make. You can support the bill while criticising the bill because it does not go far enough and then support it, or you can say that the bill does not go far enough in reforming the organisation and that because of that you will oppose the bill. The Green Party is taking the latter approach.

We will continue to oppose the bill, notwithstanding the report back from the Finance and Expenditure Committee, notwithstanding the debate on the second reading, and notwithstanding anything that has been said in this Committee stage as well. A young, emerging party stands by its principles. Those apprehensive of and facing the imminent onslaught of sclerosis fail to do so.

Clause 7 agreed to.

Schedule 1