International Finance Agreements Amendment Bill

I move, That the International Finance Agreements Amendment Bill be now read a first time. I nominate the Foreign Affairs, Defence and Trade Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 22 October 2015 and that the committee have authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday during a week when there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).

This is the piece of legislation that enables the Government of New Zealand to become a member of the Asian Infrastructure Investment Bank and to implement our obligations under the articles of the agreement of the Asian Infrastructure Investment Bank. Just as a little bit of history to this legislation, last year the Chinese Government floated the idea of an Asian infrastructure bank. At the time, there was, I have to say, some scepticism about whether there was the room for such a bank, the need for it, and whether it would be structured in a way that meant that there could be multilateral participation in that bank.

The New Zealand Government already has shareholdings in the World Bank and its various manifestations, and the Asian Development Bank. New Zealand took something of a brave step early on, partly with the encouragement and assistance of Singapore, to be the first developed country that put up its hand to engage developing countries and that put up its hand to engage in discussion with the Chinese Government about the possibility of the Asian Infrastructure Investment Bank being a true multilateral institution because, like many others, we anticipated that it would be fairly similar to the other Chinese banking operations that are completely controlled by the Chinese Government. As it happened—principally with New Zealand’s effort, but also with that of others—the discussions with the Chinese Government progressed very positively and much more rapidly than we might have anticipated. It turned out that this initiative, taken personally by President Xi Jinping—it came to be seen that this initiative was intended by the Chinese Government to be a modern, multilateral institution. So that is how it has turned out.

I want to acknowledge the role of the New Zealand officials, particularly the role of the former Secretary to the Treasury, John Whitehead, in negotiating an outcome—unexpected, I think, by the broader community of developed countries and developing countries that took an interest in the structure of the bank. Since New Zealand put up its hand to engage in those discussions, many other developed countries have joined. A number of them commented to me at the signing ceremony in Beijing that the fact that New Zealand had participated early and was happy with the arrangements was a positive signal to them that it was the type of institution that they could support.

The Chinese Government, with its focus on getting things done, has set out a timetable, as have the negotiators of the articles of the bank, more correctly. This bill is part of meeting that timetable. Why have we been interested? Because our future lies in the Asian region. In the context of a lot of discussion about uncertainty over whether the Chinese economy continues to grow at the rates to which we are accustomed, it is important that we broaden our interests across South-east Asia—as this Government has—and build up our relationships and understandings in other well-populated markets where growth rates are significant: Indonesia, the Philippines, and Viet Nam. One has to visit those countries only briefly to see the demand and the need for very significant investment in infrastructure.

This kind of multilateral institution allows a range of countries to participate, but I suspect it will also lead to the setting of both asset standards and financial standards that ensure quality infrastructure investment in those economies. Every bit of that infrastructure will be of benefit, in the long run, to the New Zealand economy. A well-functioning Indonesian economy will, in 10 or 20 years, be a powerhouse of growth. There is no doubt about that. It is the same for the Philippines, the same for Viet Nam, and the same for other countries such as Thailand, Malaysia, and so on.

Those kinds of considerations were reflected in the international treaty examination of both the bank and its articles of agreement, which was handled by the Foreign Affairs, Defence and Trade Committee. I want to thank that committee and the officials, but particularly the committee, for taking quite seriously their opportunity to scrutinise this. There was an opinion that I was looking forward to seeing, and it was a constructive, forward-looking opinion.

The purposes of the bill are to amend the International Finance Agreements Act to enable us to participate. Through our involvement in the negotiations we have seen the founding documents of the Asia Infrastructure Investment Bank that promote and uphold the principles of broad and open membership, strong and efficient governance mechanisms, and a firm commitment to sustainability, to environmental and social safeguards, and to transparency and openness. I am pleased to say that these are the kinds of standards that we take for granted somewhat in New Zealand, and it is important to see them embedded in this institution.

The bill gives certain articles of the agreement the force of law in New Zealand. Clause 7 provides for various privileges and immunities, including from legal proceedings, for the Asia Infrastructure Investment Bank, its assets and archives, and its officials. This is consistent with the immunity afforded to the staff of other international financial institutions, in accordance with the International Finance Agreements Act. Founding members of the Asia Infrastructure Investment Bank have been requested, if possible, to complete ratification by the end of the year. This will allow entry into force of the articles and the start of the bank’s operations by that time.

That is another reason why I think we have got broad agreement to expedite this piece of legislation. Multilateral institutions are often known for the slowness with which they move. We have issues with the Asian Development Bank, whose procurement processes mean that our aid projects across the Pacific are held up because they apply the same standards to small Pacific aid projects as they would apply to a multibillion-dollar investment in a large South-east Asian economy. This particular multilateral institution has been formed quickly. It is moving from concept to operation remarkably quickly, by any international standard.

If this is the way that we can do business with other countries, not just China but the other 49 or 50 members, then it is a great example of not only how we can contribute, but a great example of a higher degree of global cooperation on some of these issues than I have seen in other examples of multilateral institutions.

It is intended that the bill be brought into force when New Zealand becomes a member of the Asian Infrastructure Investment Bank. Two things must happen before that. First, New Zealand must have ratified the Articles of Agreement of the Infrastructure Bank. Second, they must have been entered into force—that is, approved by at least 10 signatories whose initial capital subscriptions comprise no less than 50 percent. We will be a very small proportion of that 50 percent capital, but we can contribute by getting the job done. Again, I want to thank the Foreign Affairs, Defence and Trade Committee and the officials for their work, and I commend this bill to the House.

I rise on behalf of the Labour Party to indicate our support for the first reading of this bill. When announcements were made earlier in the year that the Government was, firstly, signing up as a foundation member and then, secondly, to contribute money, we supported that on the grounds that, essentially, this bank is going to happen, it is going to be established, it is going to become a very important player in our region, and it is something that, as New Zealand looks to expand opportunities for our involvement and our development with the wider Asian region, we should be a part of.

It was quite clear in the Minister of Finance’s speech that he has just given that he expressed some of the surprise that others did at the pace at which developments have occurred with the establishment of the Asian Infrastructure Investment Bank. I want to say that that is the small note of caution that I would like to sound. I think when the select committee has some time to go through the bill, one of the things we would want it to do is to look closely at those governance arrangements and the way in which safeguards have been included within the establishment of the bank because of that particular reason—the pace—but also because this is unchartered territory for an initiative led by the Chinese Government.

The Minister himself used the language very early on, when this was being debated, that some commentators had seen this as some kind of expanded Chinese State-owned enterprise. He was reflecting the concerns of countries that that is what we were facing up to. It is quite clear in the development since that time that that concern has significantly reduced, but it is vitally important that the governance arrangements that are built around this bank have the level of transparency and the level of accountability that we would expect from a multilateral institution like this. I have got confidence in the likes of John Whitehead and others to have involved us in an agreement only if they felt that that was possible. But that is the job of the select committee—to ensure that we have those safeguards in place and that we are confident about the governance issues.

What I can say, in terms of what this will mean for the coherence of infrastructure development across the Asia region, is that this can only be positive. I think anyone who has spent time in the Asia-Pacific region and who has seen the more ad hoc style of infrastructure development that can take place can see how that can cause some problems if a large country—and it often is China, but it can be other countries—finds its way into the Asia-Pacific region and supports a particular one-off project. That is not always the most effective or efficient way of ensuring that that infrastructure dollar is well spent.

When we look at what lies behind the Asian Infrastructure Investment Bank, we can see that it is indeed an attempt to create a very coherent form of infrastructure development right through those Asian nations that the Minister mentioned in his speech. So I think that will be an extremely positive development out of the establishment of the bank, if we can get that kind of coherence into what is, clearly, a rapidly growing region, but one where there are significant infrastructure gaps.

The World Bank and the Asian Development Bank have, certainly in the initial stages of this idea being floated, been very critical of the idea that a separate mechanism was required. Anyone who has spent any time in the Asia region will hear from Governments there their criticisms of the World Bank and the IMF and that they do not believe that they are sufficiently focused or have sufficient knowledge of the Asian region to be able to give the leadership in infrastructure development that a bank focused on and based inside the Asian region would be able to do.

The World Bank has said that a further trillion dollars annually is needed to support economic growth in the region. That is a massive sum of money to be able to find. So the arrival of a domestically or a regionally located bank like this will, clearly, be an important element in getting towards reaching some of those growth goals.

New Zealand already benefits from expanding growth across the Asian region; it is vital to our future success, and the development of infrastructure is equally vital in that context as well. We believe New Zealand does need a seat at the table when these kinds of initiatives begin, and we do believe that the bank is likely to become a very influential institution across the Asian continent. By being there now, we are best placed to exert some influence over the direction, work, and governance of the bank.

It is important to note that New Zealand’s contribution over the next 5 years will be a fairly modest $126 million, with a possible further commitment of $504 million of callable capital. This is a large investment in terms of just raw dollar figures, but across the many billions of dollars required in the region it is quite small. We do think that there are significant benefits in terms of increased economic development in the Asian region, in supporting that economic integration, as I mentioned before, and in augmenting New Zealand’s other relationships that it has in the Asian region. We are not as represented as we could be in some of the places where the bank will be doing its work.

This offers a way in for New Zealand being a part of the development of those countries. Particularly, we think it will, if done well, improve the operational standards and the safeguards around infrastructure development by having a more coherent process. Clearly, it builds on our very good and strong relationship with China. Some commentators have likened this to being the fifth first, with New Zealand there. Anyone who has been to China will have been part of a speech talking about the four firsts—Mr Goff has certainly given plenty of those. He was there for most of them. But New Zealand has always been at the forefront of recognising China as a market economy, of supporting its involvement in multilateral institutions like the World Trade Organization, beginning negotiations for a free-trade agreement, and then, eventually, being the first country to settle a free-trade agreement with China. They were the four firsts. Some people see New Zealand’s early involvement with the bank as a fifth first. That can only be positive for developing our relationships in China.

We do support this legislation, but I do want to note the very odd way in which the Government has chosen to finance its contribution into the fund. It has done that through the Future Investment Fund. The Future Investment Fund is a well-used mechanism by the Government when it wants to find some money. It was, as people will recall, the fund that was to be created by the sale of State assets. Around $4 billion ended up in it. I will not go into how the fund did not end up being what it was going to be, but $4 billion ended up in it.

We have sat in this House year after year and seen Government Ministers stand up and tell us that things will be funded out of the Future Investment Fund. It was not surprising, when we came to the Budget this year, to discover that the Future Investment Fund is now oversubscribed. So with all the commitments that the Government has made for the things that it originally said the Future Investment Fund would be used for—education and health specifically, and building that infrastructure here in New Zealand—there is still outstanding hundreds of millions of dollars that have not yet been spent. Yet the Government seems to be able to find the room, in this case, to find $125 million to go and spend on the bank.

By all means be part of this, but that is not what the Future Investment Fund was meant to be for. The Future Investment Fund was quite clearly designed to be spent on things like education, building schools, and building hospitals here in New Zealand. It was always an illusion. It was an accounting trick by the Government, and it has the gall to come to this House and say: “Here we are; we’re going to fund New Zealand’s contribution to this very worthy initiative by raiding the Future Investment Fund, which we’ve already overspent.” It is not without irony for people who are sitting in the regions of New Zealand and wanting an infrastructure boost, and wanting to see some roads developed, perhaps for the forestry sector on the East Coast, or maybe for the Ōpōtiki wharf. They are saying: “Wouldn’t it be good to get some of the Future Investment Fund into our infrastructure.” We can understand that people would see it as somewhat ironic to be using that fund.

It is a track record that the Government should not be proud of. It managed to spend $6 million fixing the roof of the Beehive. That was, apparently, worthy of the Future Investment Fund. It spent $8 million on the census. That also came from the Future Investment Fund. This is not the health and education infrastructure that New Zealanders were promised would come out of the Future Investment Fund. So I think it is pretty disingenuous of the Government to claim that it can keep on raiding that fund, which is already overcommitted, when it has not been able to follow through on the education and health funding that was meant to occur.

So we now see the Government being about $364 million short of the spending on schools it promised under the Future Investment Fund, and about $316 million short on health funding. The Government has failed to find the funding that was needed for that, yet it still tries to pretend that this is where the funding will come from for this particular initiative. So we would be interested in looking into that as we go through this in the select committee process, just to see exactly where this funding is coming from, because, quite frankly, I do not believe it.

Mr Deputy Speaker, I just want to finish—because I know you will sit me down in a moment—on the slightly odd motion that the Minister moved, at the start of his speech, on having a truncated select committee process. I certainly appreciate the need to get this done by the end of the year, but we would be asking why the Government is so disorganised that it has to keep coming to the House with such motions.

It is a pleasure to rise and speak to the International Finance Agreements Amendment Bill, which in itself speaks to the Asian Infrastructure Investment Bank. The purpose of this bank is to address the gap in infrastructure investment in the Asian region and to promote regional collaborations and partnerships. I would note that the Minister of Foreign Affairs has described Asia as important to New Zealand’s future and that Asia is driving global growth. Indeed, if we look at a 2009 report from the Asian Development Bank, it has estimated that infrastructure financing in Asia may be as much as $8 trillion dollars during the decade 2010 to 2020.

I think it is useful just to talk briefly to the definition of Asia as it is described in this agreement. That definition is the United Nations classification of Asia and Oceania, which in itself encompasses North Asia, South-east Asia, South Asia, Central Asia, parts of the Middle East, Australasia, and the Pacific, and I think it is useful to bear that breadth in mind.

The committee officials noted three particular benefits to New Zealand’s involvement in this bank. The first reason is economic, obviously noting that Asia’s growth is limited by its infrastructure, and if it benefits, then indirectly we benefit. Of course, New Zealand firms may directly compete for proposed infrastructure projects that may well be of direct benefit also.

The second point noted by officials was strategic connectivity, and it was noted that our international relationships benefit from this agreement as well, as it supports Asian networks. It has already been noted that China particularly has appreciated our early relationship with the bank.

The third comment was about our ability to influence and shape as a founder member. We were the 24th country to join negotiators, and, as has been commented on, the first Western developed country. We can look and see what New Zealand’s influence has been, as one of these founding members, across a range of domains. If we look at governance, New Zealand has supported a non-resident board of directors and adopted many of the frameworks and models from the World Bank. Our negotiators supported open, transparent, merit-based appointments. That is a good thing.

Further, we looked at safeguards. We were looking to ensure social and environmental safeguards, and I note that New Zealand had “sustainable” added before the “economic development” phrase in the purpose section, therefore reading, in continuity, “sustainable economic development”. Of course, as part of best practice and other safeguards, it is noted that proposed investments and proposed projects will also be open procurement and best value for money. The fourth influence from New Zealand is in the collaboration of global and regional institutions and promoting best practice.

We have some obligations under this agreement. Our obligations are to provide the agreed paid-in capital and callable capital and accept voting decisions—and voting decisions where membership may be suspended if we do not fulfil our obligations. We are to impose no capital constraints, nominate the Reserve Bank as a depository, and our liability is limited to the shareholding.

I would like to just briefly talk about our equity contribution, which is $125 million paid-up and $500 million on-call capital. We asked about the security of that equity. What we were told was that we have already received a disproportionate benefit for what is effectively a 0.6 percent shareholding. We were also told there is a very small probability of the on-call funds actually being called up. We asked about the security of the $125 million that we have paid, and we were told this was very secure—secure on the basis of preferred creditor status, a favourable risk rating, and the fact that there is a high proportion of paid-up capital to callable capital in this particular arrangement, which at 20 percent actually exceeds the World Bank. The logistics of entry into force—10 States comprising 50 percent of the bought-up capital—have already been commented on as well.

I note that one of our partners alluded to the progress of this agreement and the fact that China is a dominant shareholder. I would note that it is not unusual to have a significant anchor shareholder. The World Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development also have this. I would like to acknowledge the committee members and officials for this fine piece of work. I commend this bill to the House.

I rise to take a call in respect of the legislation to give effect to New Zealand’s participation in the Asian Infrastructure Investment Bank, which it does by way of amending the International Finance Agreements Act to make provision for this new international development bank to sit alongside some of the other banks that New Zealand participates in, including the likes of the IMF and the World Bank.

I begin by thanking the Chinese Government and the people of China whose resources lie behind this bank. Without their contribution this would not be happening. I know that there was some initial opposition to the formation of this bank from the United States, and from some other countries that perhaps were a little threatened by the rise of China and did not want to see it being given recognition by the creation of this Asian Infrastructure Investment Bank, which is so clearly tied to its fortunes and to its rise in the world. I thank the National Government for its steps to bring this to fruition, because I think that it has made the right call, that we should be involved, and we should be celebrating this as a good thing in the world rather than seeing it as a bad thing.

I think that in addition to the trade benefits, which have been emphasised by other members, I would emphasise some of the non-economic or indirect economic benefits that will flow from this. I want people to be lifted out of poverty. I think that we are a better world if people can have decent standards of living in their own countries and the secure civil settings that that brings about. If we are going to avoid conflagrations where we have civil wars and the movement of millions of people—refugees—caused by war and lack of economic prospect in their home country, then we actually need to lift the people in poorer countries so that their circumstance at home is better. That is a good thing to do for them, and it is actually a good thing for us to do, not just economically. I do not want to emphasise so much the economic benefits for us; I want us to do this because it is the right thing to do for the world, and I think it is. I think of the history of the World Bank and the IMF, both of which have made mistakes over time—but overall these have been institutions that have made the world a better place than it would otherwise be.

I agree with the previous speaker, Dr Reti, that it is good that New Zealand has been influential in this from the start, and that we have tried to imbue some of our standards as to what we think will make the world a better place by, as Dr Reti has said, trying to get environmental impacts of new infrastructure developments to be taken into account. There was a period, I think, when international organisations funded infrastructure improvements without much regard to the environmental consequence—when taking those environmental consequences into account has a better long-term outcome.

The other thing I want to talk about is that I think it is very important that this Asian Infrastructure Investment Bank stands against corruption from the start. I have some hope in that regard from the fact that the Chinese Government itself is pushing against some of the corrupt practices that it has discovered in its own country and that it dislikes. I would hope that the systems that the Asian Infrastructure Investment Bank implements from its first day push against corruption in these developing countries, against the private profiteering by politicians out of large infrastructure projects, against kickbacks, and against improper practice in its contracts. And if they do, then the Asian Infrastructure Investment Bank will not just have the benefit in respect of the individual project; it will actually be lifting the standards of conduct in these developing countries, to their benefit and, again, to our wider benefit, because they will be better countries as a consequence and we will live in a better world.

In terms of the small percentage that we make to the capital, the same thing has to be said here as was said in recent amendments, I think it was last year or the year before, to the IMF rules under the international finance agreements legislation that we have in New Zealand—that is that New Zealand’s contribution to these organisations keeps dropping as a percentage because we are not growing as fast as other parts of the world. That is due, in part, to developing countries catching up, but in part it is because our record of economic development and growth in this country is not as good as it should be. We are funding, through this new bank, infrastructure projects that will lift economic performance in other countries, and that is a good thing, but it has to be noted that in respect of New Zealand’s economic performance our exports are dropping.

Perhaps we should pay some more attention to the recommendations of other international bodies like the OECD and the IMF, which have given instruction to New Zealand as to how we could improve our economy and lift exports. Instead, exports are going backwards as a percentage of our economy. They have dropped from 30 percent to 28 percent of GDP in the last 7 years, and they are still dropping. The Government’s ambition was to lift them from 30 percent to 40 percent of GDP.

I want to turn to an issue that Grant Robertson raised, which was the funding of this out of the Future Investment Fund. Has not this fund turned into being the pot into which you dip in order to fund everything? We had the list that Grant Robertson started—listing the census and the Beehive roof. I went back and looked at some of the other things that they said they are going to do. Bill English initially said that they were going to pay down debt from the fund. Well, how did that go? Well, actually, debt under this Government has gone up by $60 billion, despite having inherited zero net debt from the outgoing Labour Government, which had also reduced gross debt from 40 percent to 18 percent of GDP. This Government has increased both measures by about $60 billion. It was going to fund schools and hospitals—that was what John Key said. That was going to be the main reason for this fund.

Well, what has it done since? Nathan Guy said it was going to fund irrigation projects out of it—a terrible thing to do anyway because it is effectively a transfer of wealth from taxpayers to landowners. But, putting that aside, it was going to do it out of the Future Investment Fund. Gerry Brownlee said it was going to rebuild Christchurch. Gerry Brownlee also said it was going to fund Auckland transport projects out of it. Then Mr Joyce wanted to get in the news and so he said they would fund some of the recapitalisation of KiwiRail out of it. Then Bill English wanted to recapitalise Kiwibank. Guess where that came from? The same Future Investment Fund. Then Chris Finlayson wanted to be involved in the Wellington war memorial—that was the part that he propped up. Then Tony Ryall, as the then Minister for State Owned Enterprises, shot some money into Solid Energy, or said he was going to, from that fund.

This really has been a grab bag of things, and the Future Investment Fund has not been used to add to the productivity of New Zealand. As a consequence, of course, of the sell down of those State-owned enterprises, taxpayers have lost control of what, I think, are pretty important assets over time. They have also forgone the dividends and the future profits from those companies in a way that is always going to be to the long-term cost to taxpayers because, of course, the return on those sorts of investments always exceeds the Crown cost of capital and, therefore, it would never have made sense from a point of view of the deficit, and it was not necessary in terms of the Government’s balance sheet.

Returning to the objectives of the Asian Infrastructure Investment Bank, can I thank the Finance and Expenditure Committee for its report on the treaty, which has led to this legislation. Lastly, in terms of process, if there is to be a motion to put this to the Finance and Expenditure Committee for a truncated process, I do not understand why. Just let the committee do it as quickly as it can and report it back, and trust the committee to do its business wisely and quickly. Do not create an artificially short process that will require us to vote against that part of the process.

When it comes to the International Finance Agreements Amendment Bill I just want to take a short call. This bill is in regard to the establishment of the Asian Infrastructure Investment Bank, which is basically an equivalent of the World Bank and the Asian Development Bank. It is led predominantly from the Chinese economy rather than through the Asian Development Bank, which is led by the Japanese economy, and the World Bank, led by the US.

When we look at this proposal, members have spoken about the hard work that officials undertook in negotiating it. I would like to congratulate those officials as well. I know that earlier in the year at a conference they were especially well-thought-of as being leaders in the negotiation with the Chinese and the Singaporeans to deliver the structure of this bank that has enabled many other countries in North America, Europe, and through Asia to feel comfortable to be involved in it, and I think those officials need to be well thanked.

It is good to see the Labour Party will be supporting this bill as well, so that is good to hear. We know that the New Zealand First Party will not be supporting it. If it is consistent in its arguments, then it should stand up in this House today and withdraw funding from the World Bank and withdraw funding from the Asian Development Bank, which are both banks that essentially do the same thing. In fact, this bank will actually be delivering finance to our region and to the South Pacific, which is actually more important than probably the World Bank for us, and the Asian Development Bank has had issues in doing that. So I would like to see consistency from the New Zealand First Party rather than bigotry against certain countries because of race.

This is a good bill and is something that is needed. [Interruption] Do we hear there is something against that from the other side? Well I would like to hear your reason why you will not withdraw from the other ones. Thank you.

I raise a point of order, Mr Speaker. I took offence. He called New Zealand First—he implied—I do not want to say the word again, it was so offensive.

I take the member’s point of order. The member who has just resumed his seat should be a little bit more discreet in respect of that, but making a comment about a party is different from making a comment about a particular person.

The Green Party will be supporting this bill at its first reading. The bill, of course, puts into effect the Government’s commitment to make a contribution to the Asian Infrastructure Investment Bank, which is an initiative of China, in particular, but it has 57 countries signed up to it to be a multilateral investment vehicle that will enable investment in core infrastructure and also in areas of potentially productive industries across Asia and the Pacific.

There is no question that investment in infrastructure across the world will be necessary to respond to both of the big global challenges that we are facing: that is, climate change and inequality. When it comes to climate change there is the potential for infrastructure to reduce pollution and also to help us to adapt to the climate change that is already locked in, like sea-level rise and increased frequency and severity of storms. It is really critical that we are investing in the right type of infrastructure to address these problems. It remains to be seen whether or not the Asian Infrastructure Investment Bank will be leading on that type of investment.

The Global Commission on the Economy and Climate put out a report earlier this year called The New Climate Economy. It had a specific focus on infrastructure. What the report says is: “2015 is a year of unprecedented opportunity. A goal once seen as distant—to end extreme poverty, achieve broad-based prosperity and secure a safe climate, all together—is increasingly within reach.” And that is exactly what the Green Party is interested in. We must respond to climate change. We must reduce greenhouse pollution—there is no debate about that. To that end, every piece of infrastructure that we are investing in needs to bring us closer to that goal.

What is increasingly being said by economists across the world is that there is no trade-off between reducing our greenhouse pollution and having an economy that works for people. There is not a big financial cost to reducing our emissions—in fact, there will be an enormous financial cost and consequences to not reducing greenhouse pollution—so that is why climate change in particular is a major priority for the Green Party. We have high hopes that the Asian Infrastructure Investment Bank will be investing in infrastructure that not only enables reliable access to electricity, clean water, sanitation facilities, transport, and urban development, but does all of this with an eye to reducing greenhouse pollution and achieving greater equality across the world, because ultimately that is going to be better for the economy.

There is a slight risk, right? This is because investment in all of these areas of infrastructure, whether it is electricity generation, transport, water, sanitation—all of that has the potential to reduce pollution and respond to climate change and reduce inequality, or it has the potential to make it worse. This is one of the points that was made by the Global Commission on the Economy and Climate. It said that “crucial investments will be made over the next 15 years in … land use and energy systems [and transport]. They have the potential to generate multiple benefits for economic growth, human development and the environment; or they could lock countries into high-carbon pathways …”. So it is really critical that this is a major priority for how we prioritise infrastructure investment.

Unfortunately, here in New Zealand the National Government is not using that as a lens for how we prioritise investment. In fact, it is prioritising a lot of investment in transport infrastructure, in particular, that is not only going to do nothing to reduce the cost of moving people and goods around New Zealand, it is actually going to make our greenhouse gas emissions from transport increase, rather than decrease. So that is a real lost opportunity here in New Zealand, but we hope that the development bank—because it will be independent and not constrained by the narrow political ideology of the National Party here in New Zealand—will be looking to seize the global opportunity to actually respond to climate change, reduce inequality, and have an economy that is going to serve people and the environment better.

There is some concern because, of course, there has been criticism of some of the policies of the World Bank and the IMF in the past. I think the basis of the criticism is that if the decisions are being made primarily by people with linkages to financial industries—like finance Ministers and central bank governors; if they are the only ones at the table—they end up pushing certain policies that do not represent the interests of everybody in the economy, especially workers. So that is the basis on which Joseph Stiglitz, for example, has criticised some of the policies of the World Bank, and has said that we need agencies that are dedicated to development. It is possible for those agencies to be making decisions that benefit everyone in the economy, but if we have only a narrow group of people making the decisions, it is very easy for those decisions to not reflect the interests of everyone in the economy but, in fact, to reflect the interests of their connection to people they know who are involved in the financial industries. These interests are often at odds with the real economy, as we have seen over the past 10 years.

But I am relieved to say that if you look at the Asian Infrastructure Investment Bank, it states up front that its modus operandi will be to be lean, clean, and green: lean, as in having small, efficient management—which could be good, but, again, we want to make sure that a broad group of people are involved in decision making; clean, as in having zero tolerance for corruption; and green, being an institution built on respect for the environment. So it is on that basis that the Green Party is very positive about this development and the possibilities for us to invest in infrastructure that is actually going to reduce pollution, make people’s lives better, and start to chip away at the increasing inequality that exists not only in this country but around the globe. There is a real opportunity there.

I note with interest—and I have to agree with—the comments from Grant Robertson and David Parker. We do have concerns about the speed with which the bank has been established—it has been unprecedentedly quick—and I think that is something that needs to be canvassed during the select committee process. Particularly, we have concerns about where the money that New Zealand is contributing is going to come from, because comments have been made that it is coming from the Future Investment Fund, which, of course, was the money set aside from the proceeds from the asset sales that National undertook last term. It is not clear that there actually is enough money in the Future Investment Fund to cover all the different promises that National has made.

We in the Green Party certainly did not agree with the asset sales. We do not believe that that was an intelligent economic policy for New Zealand. We do not believe that it has done anything to reduce our debt, which was one of the bizarre claims made by the Government at the time—that it was going to be reducing debt—and, of course, the promise that was made was that the proceeds would be invested in productive infrastructure for New Zealand, like schools and hospitals and rail. Of course, putting the money in something like the Asian Infrastructure Investment Bank is quite a different proposition from investing in infrastructure here in New Zealand. So it will be interesting to see where, in fact, the money is going to come from.

One final point is that $125 million is going to be going towards this bank over 5 years to capitalise it. Before the last election the Green Party put forward a policy of having a green investment bank for New Zealand, and, in fact, it was a very similar amount of money. It was $120 million over 3 years that we thought was needed to capitalise a green investment bank here in New Zealand that could then be run on commercial grounds and specialise in investment in clean technology and other infrastructure that is going to help us respond to climate change. We think that is a great policy. It makes a lot of sense. It is the sort of thing that one would think National would support. Of course, it has not shown any support for it thus far, but it is interesting that it is a similar amount of money for a similar purpose, albeit this purpose.

The Asian Infrastructure Investment Bank obviously has wider implications for our relationships with other countries, but there is a case for having a green investment bank here in New Zealand to help prioritise the projects that are going to help us have an economy that is going to respond to climate change and allow future generations to prosper well into the future. Thank you.

I rise on behalf of New Zealand First to speak against the International Finance Agreements Amendment Bill, as it gives rise to the implementation and our membership of the Asian Infrastructure Investment Bank. I would just like to take the first part of my speech as an opportunity to reply to some statements from the Minister of Finance and Mr Bennett, in particular. They used the World Bank and the Asian Development Bank as examples of operations running well. Actually, what we are seeing here today and are debating today arises from the very fact that China has said for decades that the Asian Development Bank and the World Trade Organization do not operate well. They do not operate well, and, therefore, China has decided to not necessarily opt out but to create its own infrastructure bank, and the reasons for that are myriad and complicated. But it just goes to show that what is held up on that side of the House as examples of what is good, from the debate itself, from the issues arising from this very legislation, are actually bad examples.

The Minister spoke of how wonderful this will be and how it will encourage regional growth in our area. He specifically spoke of Indonesia, and then he listed off a few other countries in the region as being powerhouses of growth in about 20 to 25 years. I would put it to this House that that Minister, who is the Minister of Finance and who is in charge of this economy, should be speaking to this House about plans to make New Zealand the powerhouse of growth in the Asia-Pacific region. He should be talking about how the Government is developing plans to grow New Zealand, not relying on other countries, neighbours, reasonably close by. Instead, he goes on and talks about relying on others growing. Yes, Minister of Finance, your plan is working: sell off New Zealand, fund other countries’ growth, and let New Zealanders pick up the crumbs! It just makes no sense, whatsoever.

If New Zealanders were not already suffering, if our regions were not already missing out, if our exports were not actually declining, if real unemployment in New Zealand was not actually on the increase, and if money used to buy into this club was not, in fact, sourced from broken promises given by Prime Minister John Key, New Zealand First would actually welcome a discussion on China’s initiative. For example, one of the questions New Zealand First would ask is, what kind of aid does a—

💬 Hon Member: A brilliant speech!

—developing Asia actually need—Mr Ross?

Members of this House will know that developing countries with weak institutions and poor governance are often far bigger obstacles to growth than an actual lack of funds. New Zealand First would point out that a project will often look good on paper; practical implementation, on the other hand, is often a frustrating and sobering experience. Costs provided to investment bank projects historically far exceed initial estimates, and planners bidding for funds often woefully underestimate the skills and funds needed to ensure maintenance and repairs of these big infrastructure projects. But there was no discussion. Actually, instead, the details of the Government’s participation in this investment fund came to the select committee after the fact. All decisions had been made in relation to our participation in the infrastructure bank itself.

New Zealand First stands to oppose this legislation. There are two significant reasons for this. Firstly, and perhaps most important, is the fact—as I mentioned very briefly—that the Prime Minister promised in his 2011 election campaign that the money from State asset sales would be for New Zealand hospitals and schools. Money from the assets sales went into the Future Investment Fund launched in 2011, but the Government is now using it to pay a $140 million contribution to pay an infrastructure investment bank off of New Zealand shores.

💬 Alastair Scott: Oh, “offshore”. That’s a scary word: “offshore”.

Mr Key means to look New Zealanders in the eye—along with some of those National backbenchers—to look your constituents in the eye and talk to them about your broken promises and explain how he was unable to answer questions in the House, bizarrely insisting that this was an asset for New Zealand. This is so far from his election promise. [Interruption]

💬 Mr DEPUTY SPEAKER: Order! Take a breath.

This is so far from his promise. Many who were opposed to the sales, including New Zealand First, were told that this fund would be spent on hospitals, schools, and infrastructure. We were told it would be spent on paying off this Government’s debt. We were told it would be spent on investing in Christchurch.

There will be hospitals, schools, and roads built, but not in New Zealand, and that is the reality of this investment. This Government has agreed to put $140 million up front into the investment bank. It has agreed to more than half a billion dollars being set aside to be on call. And, actually, as the New Zealand dollar devalues and because these discussions were had in United States dollars, our commitment actually grows and grows day by day. So we are talking perhaps around a $145 million commitment today, and perhaps the $561 million on call is over and beyond $600 million now. This is a vast sum of money that could be used to invest in New Zealand infrastructure—into cell towers, roads, schools, hospitals, or rail. We could set up provincial New Zealand for growth when the recovery kicks in. New Zealand First insists that infrastructure development, just like charity, actually should begin at home.

New Zealand First stands to oppose, as I said, on two main grounds. The second reason for this opposition arises from the actual history of infrastructure banks, as spoken to by both sides of the House. Infrastructure and development banks, as I mentioned to Mr English—for example, the Asian Development Bank and the World Trade Organization—are actual examples of China’s ongoing discontent with those banks. Here we are today—I say it again—debating this legislation because those infrastructure banks do not work for all of their members. I put it to this House that although New Zealand has been quick on the uptake and part of developing the rules and obligations of this bank, which I commend, the reality is that we are a small member with very few shares. Our commitment, although I contend it is huge as far as the New Zealand economy is concerned, is tiny in comparison with other countries’ contributions. So although we are acknowledged as an early starter and an early player in this, the reality is that we will not have the say that the members on the other side of the House have spoken to. We will be just as frustrated as China was in its own relationship with previous development banks as the future unfolds.

There are actually several issues with the legislation itself, but it looks like discussions around the House will have it that this will come to select committee despite New Zealand First’s opposition to this bill, and I will take the opportunity to raise opposition to particular parts—for example, article 56 of schedule 8—in those conversations. Thank you.

This bill is good and this agreement is good for New Zealand because the future of New Zealand and its economy is in exporting more goods and being an open country: forward facing, looking towards other parts of the world where we can contribute and sell our goods. The Asian markets and the Asian countries are a big part of where New Zealand’s future opportunities lie. New Zealand’s participation in this agreement with this bank is also important, because having good infrastructure in Asian countries where they can grow and where they can develop and demand more of our goods is going to be good for New Zealand as well.

Many of the speeches in this House have already covered those points, and I do not want to dwell on them, but I do want to point out some of the aspects in the Foreign Affairs, Defence and Trade Committee’s report on the international treaty examination. There is some good stuff in that report. It talks about the fact that “We”—the committee—“consider that New Zealand’s early involvement in the bank provided a good opportunity to influence its direction”. It talks about the fact that being a founding member of the bank “also makes sense for geo-strategic, political, and economic reasons.” The report goes on to say that “New Zealand’s economic future is linked to the Asia region, and Asia’s growth is increasingly constrained by limited infrastructure investment capital.” These are very good points.

I do want to point out to the House that when the committee considered this treaty, the committee included one Fletcher Tabuteau. The committee included the New Zealand First Party. In this report there is not a single word of opposition to this treaty. At the committee meeting the New Zealand First Party and the New Zealand First member did not have a whisper, did not have a murmur, did not have a squeak of opposition to this bank. But New Zealand First members come into this House and they beat their chests day after day on issues on which in the select committee they sit there quietly like little lambs, supporting very much of what the Government is doing.

If Mr Tabuteau wants to be honest with the New Zealand public—he said we should go and be honest with—

💬 Fletcher Tabuteau: I raise a point of order, Mr Speaker. I seek your guidance here. Mr Ross is completely misrepresenting the facts. I did speak out against this.

💬 Mr DEPUTY SPEAKER: That is not a point of order. It is a matter for debate.

The report speaks for itself. There is no minority report; there are no points about some members disagreeing with x, y, or z in the report. New Zealand First members are little lambs in select committees. In select committees they do not oppose what the Government is doing, but they come in here and beat their chests.

This is good for the country. This is good for New Zealand’s future growth and economic opportunity. That is why we are supporting it. I suggest New Zealand First members would be better off continuing with the position they take in select committees when they come into this House and contribute to debate.

A Green Party 5-minute call—Dr Russel Norman.

I rise on behalf of the Green Party to support this bill. I think what we are recognising with the Asian Infrastructure Investment Bank is that the global economic institutions are having to accommodate the growth of China. Of course, China’s initial gambit was actually to increase voting rights and reform voting rights in the International Monetary Fund, but that attempt to reform the International Monetary Fund and voting rights within the fund has been blocked by the US Congress. People may or may not know that in order to change the voting rights within the International Monetary Fund, you have to get an 85 percent vote from the fund, and, of course, the United States controls 16 percent of the votes on the International Monetary Fund board, so it can block any attempt to reform voting rights on the board. China, of course, has only about 3.8 percent of the vote in the IMF, and yet it currently represents more like 15 percent of global GDP.

So the old economic institutions—the Bretton Woods institutions that were set up after World War II—were an attempt to represent the global economy at the time and to provide global economic governance of a sort. They have done that, at times well and at times extremely poorly. But those economic institutions simply have to change to reflect the rise of China, and they have not. And, really, the US Government—in particular, Congress—has only itself to blame for the invention of the Asian Infrastructure Investment Bank.

What China said eventually—when it got completely frustrated by the lack of reform in the global economic infrastructure—is that, OK, it would set up its own. Of course the United States said that that was totally unacceptable and no one would join it. A number of countries have, of course, joined China, including Britain and New Zealand, and eventually a whole raft of countries signed up to the infrastructure bank, and that is what we are, effectively, doing here today. And I think that is a good thing. The reality is that the world has changed. China is now a huge part of the global economy, and the global economic institutions simply need to reflect that. So that is the first point I would like to make.

The second point is that I just hope that the Asian Infrastructure Investment Bank does a really good job. At various times the IMF and the World Bank have done a good job; at other times they have done a terrible job. During the 1997 Asian crisis, the intervention of the IMF and the World Bank at that point was disastrous, as Joseph Stiglitz went on to write about. He was the chief economist at the World Bank. So there have been times when the global economic institutions have played a positive role, and at times a very negative role.

The third point I would like to make about the Asian Infrastructure Investment Bank is that sustainability needs to be at the heart of the thing. The president-elect of the bank has said “lean, clean, and green”—his rhyming description of what he wants to do. The green stuff is really important now in Asia. I think people from outside do not realise how rapidly this has come to the centre of things. Obviously, a lot of it is about air quality. In those giant Chinese cities air quality has now become a big focus. But also the Chinese Government is getting its head around climate change in a big way, and of course it is the world’s leading producer of solar panels and is the leading installer of a lot of different kinds of renewable energy.

So the green part of it is tremendously important, and we need it in the infrastructure that is built over the next 20 years in East and South Asia, in particular, where there is a massive growth. If that infrastructure uses clean energy rather than coal and dirty energy, that will make a fundamental difference to the future of climate change on this planet. That really is going to be one of the deciding factors. Does India, for example, put in coal-fired power, or does India use sustainable energy? That will be one of the deciding factors in the future of planet Earth for us and our children. That is one of the key questions—and likewise all through South-east Asia and East Asia.

So if the Asian Infrastructure Investment Bank can play a positive role in pushing in a sustainable direction for those giant infrastructure projects that are going to determine the future of life on planet Earth, then that will be a very positive thing. We do not yet know the outcome of that, but the Green Party is very hopeful, given some of the early comments, that it will be sustainable and it will push infrastructure in a sustainable direction, and we very, very much hope that New Zealand uses its influence to push infrastructure in that direction. Of course, unfortunately, the current New Zealand Government obviously goes in the opposite direction, but at some point, hopefully, there will be some representatives on the board from New Zealand who push that bank to embrace sustainability more than it already does. Thank you.

I rise to take a short, 5-minute call in support of the Asian Infrastructure Investment Bank. I have got only 5 minutes so I will be very quick and clear about the reasons for that support and what is really going on here. I want to strip through some of the officialese that pervades the documents that we have in front of us. Supporting the comments of my colleague Dr Norman and congratulating him on his recent appointment to head Greenpeace New Zealand, can I agree that there is a major gap in the international financial institutions. The World Bank has been spending too little in the Asian region, the Asian Development Bank is worthy but of a smaller scale, and the International Monetary Fund historically has got itself fairly tangled up in driving what has historically been seen as a pro-austerity set of economic measures rather than bankrolling sustainable development. That is less so, it has to be said, under the current chair, Christine Lagarde, and we welcome the progress in the broadening of the IMF’s agenda, but there is a gap.

Secondly, this is about geopolitics. The US, the architect of the Bretton Woods institutions, which include the World Bank and the IMF, really did not respond to the changing geopolitics and China threatened to go it alone. New Zealand was the first Western country to sign up to join this initiative by the People’s Republic of China to get a new Asian investment vehicle up. We did so, as far as I can tell from the documents, for the very good reason that an integrated China is better than an isolated China and that together, provided that sufficient openness and transparency was included in the governance arrangements, we might make this a constructive contributor to the region rather than a divisive one.

This is interesting because in parallel with this are the Trans-Pacific Partnership negotiations sponsored by the United States. New Zealand was the first Western country to sign up to this Chinese initiative. You can imagine the pressure that will be on New Zealand to sign up to the Trans-Pacific Partnership and the offset arguments, which are the wrong reasons for signing. It may or may not be a deal worth having but that has got to be judged on its merits in terms of New Zealand’s national interests.

It brings me to the third point. I deplore the lack of specificity in the select committee papers produced by the Foreign Affairs, Defence and Trade Committee officials. There is no quantitative analysis as to the economic return to New Zealand for this investment, and it is not the first time that an international treaty has been proposed to this House with a matching capital investment, and qualitative rather than quantitative analysis has been provided. The Ministry of Foreign Affairs and Trade is capable, along with Treasury, of better than that and Parliament should, frankly, demand it. This is not an inconsiderable amount of New Zealand money.

Fourthly, the Future Investment Fund is the source of that capital. This is not only an overspent fantasy but an improper use of Future Investment Fund capital according to the objectives that the Prime Minister and the Minister of Finance set for that fund. In that regard I think that New Zealand First has a point—not actually to say that we should not support the Asian Infrastructure Investment Bank but to say that the Future Investment Fund is an inappropriate source of that capital. It has already been spent a thousand times over for every pet project of every Minister. It was the result of the fire sale of New Zealand assets, and its funds were to be protected for investment in New Zealand. That has been gainsaid.

Finally, let me say this. New Zealand officials have made a positive contribution to the governance arrangements and the agenda of the Asian Infrastructure Investment Bank, being one of the first Western countries to participate in those negotiations. They have upheld New Zealand’s tradition of constructive engagement. They have done so by ensuring the appointment processes are safeguarded in the articles of agreement, and that there are safeguards around effectiveness and procurement transparency, and collaboration with other global and regional institutions—all built into the articles, and for that I think that our diplomats deserve our thanks and congratulations.

Let me conclude by summing up. Firstly, there were and are grievous gaps opening up in the Bretton Woods system of international financial institutions. We ought to work closely with our American friends to ensure that those institutions are modernised and that those gaps are reduced. Secondly, New Zealand was the first Western country to sign up to this Chinese initiative. It is a good initiative but we ought to understand the geopolitics around that. Thirdly, this is being funded from an inappropriate source. It should be funded directly off the Crown balance sheet. Fourthly, we ought to thank our officials for their work.

I rise to support our involvement in the Asian Infrastructure Investment Bank. When I was listening to the speech by the New Zealand First member I got the strong impression that everything Chinese is bad, everything Asian is bad—that is the impression.

The world has changed. China is the second-largest world economy, and many of the fast-growing economies in the world are in Asia. So this is the reality. Look at our trade with China. China is our second or first trading partner. In the 1970s our trade with Asia accounted for about 10 percent of all our trade but today over 40 percent of our trade is done with Asia, so that is how important Asia is to us.

It is clear that Asia needs that infrastructure. According to a 2009 Asian Development Bank report we need about US$8 trillion for Asian infrastructure, so that is why we need to help Asia. To help Asia is to help New Zealand, simply because Asia is so important to us. Our contribution is very small but symbolically it is very important, so I am very pleased—I am very pleased—that New Zealand is the very first OECD country to sign up to this China-led initiative.

It is good for us because, as many members have mentioned, we have many firsts in our relations with China, and this is another first. It is important for us to strengthen our relations with China and with Asia simply because we are so close to the region economically and also culturally and in terms of people-to-people relations. So I support the International Finance Agreements Amendment Bill wholeheartedly, and I think we are doing a good job for New Zealand. Thank you.

We on this side of the House, from the Labour Party, have indicated that we will be supporting this bill. Markets are powerful institutions. They make excellent servants and terrifying masters. Of course, the open flow of capital has beneficial effects where countries benefit from trade, but it can also have detrimental effects when markets are exposed and when some countries struggle to compete where they have not found their comparative advantage and maximised that benefit. We need strong international institutions in order to encourage the kind of trade from which we will all benefit.

We are a global society and, increasingly, all of our futures are intertwined. This region is no different. When China sneezes, the US stock markets catch a cold, and so our future prosperity is dependent on our neighbours doing well and on us doing well also. That prosperity in our region has effects in terms of security, liberty, and peace. Prosperity itself creates the conditions for strengthening and maintaining the rule of law. It is a virtuous cycle that, of course, is then a key plank in prosperity itself.

I think that the path to reducing inequalities is part of creating a more prosperous society. We know that societies with low inequalities have higher social mobility and in those societies there is less suspicion that the rule of law is there to protect the interests of a favoured few, and so there is less likely to be civil unrest in countries with lower inequalities and higher social mobility. We in New Zealand have a part to play in creating a world with strong institutions that support those countries that are struggling in the global economy, both to introduce prosperity and, from that—and, really, the more important thing—to create countries that people would want to live in, which have security, liberty, and peace.

The prosperity of nations is built on the infrastructure that everyone needs but very few people can afford on their own. When I say this, I am thinking of things like hospitals, schools, clean running water, roads, police forces, and courts that are beyond corruption. The principle of fair and equitable access to those institutions and to that infrastructure is critical to social justice and also to the success economically of nations. So here we have the Asian Infrastructure Investment Bank, which is going to contribute a little bit to that picture through investing in infrastructure in developing economies. These institutions that provide the reasonable financial stability that nations need ensure that the opportunities for growth that free capital flows bring are more likely to be grasped and also, I guess, they give the confidence that when economies are open, not just will they have the opportunity for the growth but they will be somewhat protected from the downsides of globalisation and those effects will be mitigated against.

This legislation and this investment bank, the Asian Infrastructure Investment Bank, are not without risks. We read in the report that has been adapted from the negotiators meeting, the report of the Foreign Affairs, Defence and Trade Committee, that there are many risks ahead, and some of them are, of course, risks that any new institution like this might face. There is a learning process with any new institution. People have to find their roles. Countries have to find their roles within this. Those risks, though, should not stop us wanting to support something that is genuinely good for the world, that we hope will reduce inequality, and that will begin to address the problems of climate change and other environmental and social impacts.

Some of these things are listed in the paper and they very clearly outline the risks and the kinds of things that they would want to achieve with the bank: “The environmental and social safeguards draft policy outlines an approach to (i) identifying and managing environmental and social risks, (ii) the formulation and implementation of environment and social management plans for each AIIB operation, and (iii) ongoing monitoring and post-project evaluation.”—these are all things that of course we would wish to support—“The policy covers biodiversity, sustainable land use, climate change and greenhouse gas emissions; gender, working conditions, community health and safety; and child labour and forced labour.”

These are all things that we would like to see progress on, not just in our own country but across the Asia region, and we recognise that with that stability, with the implementation of those ideals, comes prosperity not just for those countries but also for neighbouring countries. We all benefit from having a safer, fairer world where all have access to justice, where all feel they have a stake and can make a contribution, and where people do not feel excluded from participating in the economy and from justice. So Labour supports this legislation that will enable the Government to become a member of the Asian Infrastructure Investment Bank, and we are pleased that the Government is taking these steps.

There is, of course, a somewhat comical aspect to this in that various members of the House—not comical; I use that word kind of reluctantly because it would be comical were it not so serious. The Future Investment Fund, we are told, is where this money is coming from, but that is money that has already been spent on a variety of other projects by this Government. We know this fund is a mythical pot of money that the Government has created. First, it was going to pay down huge amounts of debt from it, but we find that this Government has borrowed more money than the Government of Muldoon. It is now $100 billion in debt, and that debt has been growing year by year. This is a Government that has continued to borrow, and yet it said initially that this Future Investment Fund would be used to pay down debt.

Well, I return to the point, which is that we are told that this contribution that we are making—this $92 million to the bank—will be paid for out of the Future Investment Fund, and I am questioning whether that is indeed possible, given that this fund has been spent on so many different things, including the roof of the Beehive building. The roof of the Beehive building has come out of that. We were told it was going to be used for schools and hospitals and other infrastructure that would help our prosperity in the future, but it has also paid for compliance for tax legislation and for repairs to Te Papa and to fund the census and to fund—I mean, for goodness’ sake! These are the things coming out of this Future Investment Fund. It has been spent many times over, and my colleagues have drawn attention to this.

💬 Dr Megan Woods: Magic money.

It is magic money that can be spent again. David Parker listed the likes of Kiwibank receiving funding from it, Chris Finlayson buying memorials out of it, and Auckland transport and the Canterbury rebuild—you name it, the Future Investment Fund has been labelled as the source of this magic money.

So here we have a $92 million contribution. We in the Labour Party think that this is a useful thing to be investing in. We need stronger financial institutions in the world. If we are all going to capture the benefits of flows of capital, we need to have the kinds of strong institutions that give countries confidence to participate in global markets—that give them the confidence that there is some level of security that should their economies stumble, there will be investment in the kind of infrastructure that builds economies over time. We will be supporting this bill and we want to see stronger international institutions to support economies in the interests of prosperity and the interests of fairness and in the interests of creating a better world.

The Asian Infrastructure Investment Bank is, clearly, a very significant initiative that has enormous potential to be of great benefit to New Zealand’s future economic growth, and therefore I have great pleasure in supporting the measure. I thank most members in the Opposition parties for their support of the measure.

I move, That the International Finance Agreements Amendment Bill be reported to the House by 22 October 2015 and that the committee have authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).

There are a couple of reasons for moving this motion. The first is that the proposition has already had extensive and thorough scrutiny from the Foreign Affairs, Defence and Trade Committee as part of the parliamentary treaty examination process, and that committee reported to the House last month. I would have to say that that inquiry was held in a constructive and positive atmosphere, and I think that members of the committee noted the efforts of officials representing New Zealand and their efforts to achieve a truly modern, multilateral institutional framework for the Asian Infrastructure Investment Bank—not a bad effort for a small country that will hold only a fraction of the capital.

I may say that, in that respect, our fleeting moments of influence are probably now over in respect of the bank. That means that a foreshortened select committee hearing will not foreshorten the opportunity for Parliament or the public to understand the nature of the bill. In a technical sense, the earlier date will allow New Zealand to join the Asian Infrastructure Investment Bank as the articles of the agreement enter into force, and that will enable us to continue to play a constructive and effective role as the bank begins its operations at the end of the year.

I think that is consistent with what has been an effort across almost 50 countries to expedite this bill. It is a small part that we can play to get it through the select committee by 22 October.

I do thank the Minister of Finance for that explanation of the thinking behind this motion; however, I want to say at the outset that the practice of the Government of coming to this House with truncated select committee processes is one that Labour regards with—I guess the best word is “suspicion”. Frankly, it happens too often, and it goes against what is good practice in this Parliament. Of course there will be reasons from time to time why a piece of legislation needs a short select committee turn-round. It may be a matter of particular urgency that has arisen; it may simply be because the issues involved are ones that are completely non-controversial and there are no issues that need to be considered. But actually that situation will be extremely rare, and once again I think that we have got a piece of legislation here that is getting a truncated select committee process because the Government cannot manage its own business.

If we look at some of the dates involved in this situation, the original finalisation of the text was adopted at the fifth chief negotiators meeting on 22 May. New Zealand then finalised its signatory to the agreement on 29 June. What was happening after that? Why did it then take until August for the Foreign Affairs, Defence and Trade Committee to be able to give its report to Parliament? The committee met on 28 July and then on 20 August. There is just this constant slippage in the process. So you have an agreement that is actually signed off in May, that New Zealand signs up to in June, that eventually finds its way to the committee towards the end of July, that emerges out of the committee in August, and that gets to Parliament here in September. At some point did someone on the Government benches go: “You know what, we actually need to get a wriggle on here if we are going to get this passed by the end of the year.”?

💬 Dr Megan Woods: Gerry should’ve.

The Leader of the House—the last time that we did this was only on the last sitting day of Parliament—the Leader of the House’s management of the legislative programme is hopeless. What happens is that members of Parliament and members of the public are the ones who suffer as a result of that. I take the point that the Minister has made that the matters covered in this bill have had a reasonable amount of examination by the Foreign Affairs, Defence and Trade Committee, but that does not reduce the importance of the public seeing this legislation and having the chance to comment on it or MPs having a chance to consider the full range of issues that will arise. I actually believe that if the Foreign Affairs, Defence and Trade Committee were simply given the information that this bill needs to be enacted before the end of the year, it is quite within its power and wit to say: “Yup, we understand that.” It is a pretty good committee; it operates fairly collegially. It would get the bill reported back with plenty of time, but without this arbitrary restriction around it being reported back by 22 October.

So it is with regret that we are not going to be able to support this. It places pressure on all parties in Parliament. The Foreign Affairs, Defence and Trade Committee has representatives of smaller parties in this House. Those members find it very hard to be able to attend select committee meetings when the House is sitting, because they do not have the resources. It is even a stretch for other, larger parties to have that. It interferes with the business of MPs who perhaps are not available on Fridays or on other days on which this motion would allow the select committee to meet. So it is extremely disappointing from this side of the House.

These are serious issues within this bill. We support the New Zealand signatory to the establishment of the bank through this piece of legislation, but nobody, including the Minister of Finance, has stood up here today and said that this is without risk or that this is without issues around governance, which need to be clearly sorted through. We need to give the public the opportunity to be a part of that debate. New Zealand is contributing over $100 million. This is a new venture in terms of how to fund infrastructure in the Asian region. It goes against what some of our traditional allies would want, so that is a serious matter as well. All of these are matters that deserve full and proper public attention, and I simply do not think that it is good enough for the Government’s disorganisation to be the cause of limited involvement by the public. If there is another good reason, by all means, but that is not how it appears to us on this side of the House. We know that this legislation could have been in front of the House any time from the end of June onwards, and the failure of the Government to get a piece of legislation together in time so that we do not need a truncated select committee process is ridiculous.

I do also just want to finish my comments by saying that I think we need to treat individual committees with some respect. The Foreign Affairs, Defence and Trade Committee would have been capable of making a decision about getting this bill back so that we can sign it up, so that it is all sealed and delivered before the end of the year, so that we will be there when the bank first kicks off its operations. I am very disappointed that this motion has found its way to the House. It is, unfortunately, becoming a pattern from this Government to have truncated select committee processes. We do not think that that is good enough, and we will oppose measures unless there is a very good reason to support them.

New Zealand First would like to stand up to oppose this proposal from the Minister of Finance. I would like to acknowledge a lot of what was spoken to by the previous member, Grant Robertson. This is a truncated process and essentially undermines democracy. It undermines democracy and a longstanding process that has been accepted by the members of this House over decades of practice and participation.

It should be noted, especially coming from New Zealand First, that smaller parties with only one member on such select committees are compromised entirely by this truncated process, as we are unable to fully engage in this process in a meaningful way. We must make the very tough decisions of either contributing to the conversation and forgoing other work that we are obligated to do for this House in representing the people of New Zealand, or we choose to represent the people of New Zealand in other business and we forgo our representation on this select committee, for example. That is not acceptable. It is not a decision that should be forced on smaller parties.

I would just like to end our opposition by voicing the fact that yet again this is another example of the Government taking an unwarranted opportunity to truncate a democratic process and take away, essentially, the voice of New Zealanders in terms of a contribution to a good, fair, and meaningful select committee process. We certainly cannot support this.

I rise to take a call to join with my colleagues in opposing the truncated report-back time for the International Finance Agreements Amendment Bill. The proposal has been made by the Government that the Foreign Affairs, Defence and Trade Committee should have only 5 weeks, until 22 October, to report this bill back. This is a bill that the Government negotiated back in May, and it has taken months to get to this House. The Government is now proposing that the difference be made up by denying the New Zealand public the opportunity to make considered submissions on the bill and to have those submissions considered in the normal way. I wish to refer, firstly, to the type of work that confronts the select committee and why it is important to have adequate consultation and deliberation, and, secondly, to the broader picture of the threats to democratic process and good governance, which this move is yet another small part of.

The job in front of the select committee is to complement the work that the Foreign Affairs, Defence and Trade Committee has done. We have a 3-page report from that committee. That is about $40 million worth of capital investment per page—assuming that the 500 and something million dollars of call facility is never called. But, as Bill English would say—I see Bill over there, doing urgent negotiations with the Māori Party—$500 million here, $500 million there, and pretty soon you are talking real money. Well, for New Zealanders that is already real money, and that is why we deserve more than 5 weeks to consider how it is being spent—more so because the Government is pinching from Peter to pay Paul. It is pinching from the Future Investment Fund—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is not part of this.

—to provide this capital. We covered that in the earlier debate.

The Foreign Affairs, Defence and Trade Committee has looked, at a very broad and general level, at the work the New Zealand officials did—which we have earlier acknowledged was good work—on progressing this treaty. What it has not done is a comprehensive national interest analysis. In Appendix B it has done what I think would be called a qualitative national interest analysis. It goes through the provisions of the bank. It goes through the purposes of the bank. It notes, in the Treasury documents, some of the safeguards, the protocols, the purposes—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! When we are doing an instruction to the select committee on a truncated report-back period, you cannot refer to the contents of the bill, as you are doing. I refer the member to Standing Order 290(3): “Any debate on the question for a motion under this Standing Order is restricted to the special powers or instruction set out in the motion. It may not extend to the principles, objects, or provisions of the bill to which the motion relates.” I will ask the member to come back to talk about why this process is being truncated and the reasons that the member wishes to express.

Thank you for your clarification and guidance on that. The agreement was negotiated on 22 May. New Zealand signed the agreement on 29 June. It was considered by the Foreign Affairs, Defence and Trade Committee on 28 July and 2 August—only two meetings to produce a pretty thin report. The bill has come to the House now to be debated at first reading on 15 September, and we are being asked to require the Finance and Expenditure Committee to report it back to the House in fewer than 5 weeks. That is an inadequate time. It denies the public the proper opportunity to consider what is a large and complex set of documents for a large and significant amount of capital. We think the New Zealand public deserves better than that. I do not think it is out of scope to say that as part of that compressed time frame there are risks that the proper financial, economic, and legislative analysis that would normally be done for such a complex instrument could well be compromised. It is that which is our immediate concern.

Moving on, can I also say in respect of this truncated time frame proposal from the Government, that there has been a habit of coming to this House with requests for compressed select committee timetables. For members of the public who may be watching or listening, a normal select committee process, as you well know, Mr Assistant Speaker Tisch, would expect to take about 6 months. That would give a committee adequate time to advertise, to wait for the public to prepare their submissions, to receive an analysis of those submissions, to consider that analysis, to prepare a report, and to get it back to the House. Under our Standing Orders, which you are of course the master of, Mr Assistant Speaker, the House would then consider the bill at second reading, clause by clause in the Committee of the whole House, and at third reading. It is just not possible to do that in 5 weeks, and something will be compromised by that time frame.

Finally, I do think it is worth noting that this habit the Government has of compressing select committee considerations does appear to be part of a tendency towards the slow erosion of some of the guarantors of our Westminster tradition. Around Wellington you hear public servants saying how little the current Government cares for the convention of free and frank advice, how much Ministers are expecting officials to tell them what they want to hear, and how the Government is railroading through proposals—sometimes involving close associates. The tradition of free and frank advice is there for good reason. For any Government, whatever its stripes, it is much better to find out the bugs and problems in legislation before decisions are made, rather than afterwards, and find out the hard way. In protecting the select committee timetable for this bill we also wish to make a nod to the broader conventions that underlie good governance in our Westminster system.

Finally, of course, that other guarantor of good governance is the free and independent press. I guess many watchers of the media are watching with some concern the impact of new technologies on traditional broadcasting models and the importance that that places on a strong public broadcasting system with a reputation for independence and integrity, which can ensure proper public debate of issues like this—complex issues, international issues, issues that are not the product of reality TV or flag consideration panels, or other matters that seem to clog up the news websites. Five weeks is not enough time to consider a matter that has a contingent liability for the New Zealand taxpayer of over $600 million. The bill has been months in the production, in which New Zealand officials have played a proud role, and in principle we are happy to support it. But this timetable is not appropriate. It does not do justice to the best traditions of this House. We are opposed to the motion that the select committee process be truncated to a mere 5 weeks.

There is an old saying that is that you cannot know what you do not know—you cannot know what you do not know. As I stand here, I do not know whether there are hidden mistakes in this bill and whether they are significant. As a member of select committees, including, at times, the Finance and Expenditure Committee, I know that it is through the select committee process that we run in this Parliament that you tease out mistakes in legislation—sometimes errors as to words or grammar, which have effect as to meaning, and sometimes errors as to policy. These things are brought to the attention of select committees through the select committee processes, which take time. More often than not, the mistakes that are found in legislation are identified by submitters to the legislation who are interested in the areas and go over it with a fine-tooth comb. In a Parliament that has only got one House of Parliament—we have not got an Upper Chamber to correct mistakes and shoot things back to the main House of Representatives when mistakes are identified in the Upper House—we are more reliant on select committee processes.

The other thing I would say is the Finance and Expenditure Committee is dominated by Government members. They hold a majority on that committee, and they are in control of their own process. Another piece of legislation, which was actually more controversial than this, where the Government wanted to speed up progress recently, was on the reduction in tariffs consequent on the New Zealand - Korea free-trade agreement. Minister Groser approached us and, indeed, me on our behalf, to see whether we would agree to a truncated select committee process. I said no, for two reasons. One was that it would just feed suspicion within the population that their rights were being run roughshod over, and, two, I thought it was wrong in principle. We all knew on the select committee—and, actually, I did not sit for the hearings on that bill, but everyone who was on that select committee knew—that there was an interest in actually doing it properly, and so the select committee, quite properly, did not take the full amount of time that Parliament allowed it because we had heard the request from the Government that it was in New Zealand’s interest to pass the legislation promptly.

So the select committee did not muck about. It called for submissions through a tight period and it reported the legislation back to Parliament very promptly, well within the normal select committee period that was allowed. The process was done properly, the bill was properly scrutinised, and the Government still achieved its objective. In respect of the Finance and Expenditure Committee, it is the most senior committee in Parliament in some ways.

💬 Hon Christopher Finlayson: It is not—Privileges is.

Sorry, excluding the Privileges Committee—quite right, Mr Attorney-General. Excluding the Privileges Committee, it is known as the senior committee. It has senior representatives from all parties, including the Government, and it is in control of its own processes. Why can the Government not trust its own select committee, which it has got the numbers on, to actually give this the urgency that it needs, if urgency is needed, and have a period where it calls for a shortened period of submissions, perhaps, so that it can proceed promptly with consideration of the bill?

The date of 22 October is a bit more than a month away—what, about a month and a week away? It is hard for submitters in that time, if they are volunteer organisations, which most of the submitters are—from the New Zealand Institute of Chartered Accountants or, I do not know, there will be some international foreign affairs organisations or the Law Society. These committees are generally populated by people who are doing this in their own time. They have reporting structures that are periodic. They cannot make these decisions as to what the submission should be off their own bat, generally; they have to take it to a committee to whom they are accountable and get its approval. That all takes time. You cannot do it in a period that then enables the committee to give consideration to the submissions that are made.

The terms of the treaty itself really are not up for grabs. They have been considered by the prior select committee, so I do not think that the detailed consideration of the articles will be too hard and, indeed, the terms of the bill are reasonably clear. It is not a complex bill. It is an important bill, because it involves a lot of money, but it is not a complex bill. So I would have confidence that the Finance and Expenditure Committee, if there was a pressing national interest—as in a New Zealand interest, as opposed to a National Party interest—in reporting this back promptly, would responsibly go about its business and do just that.

I want to reinforce some of the criticisms that have been made in terms of what is our representative democracy. All the members of this select committee, including members of minor parties, ought to be able to appear. I know that one of the members of the Finance and Expenditure Committee is the Rt Hon Winston Peters. He is a busy man. He is the leader of the New Zealand First Party, he is the representative up north, and he is on this Finance and Expenditure—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry, it is not for me to interfere with the member’s speech, but this bill is not going to the Finance and Expenditure Committee; it is going to the Foreign Affairs, Defence and Trade Committee.

Oh, I am sorry. Thank you, Mr Assistant Speaker. I thought this was—

The ASSISTANT SPEAKER (Lindsay Tisch): One moment. For those who may be listening, previous speakers have talked about the Foreign Affairs, Defence and Trade Committee, which this bill is being referred to. You are referring to a different committee. I am just trying to help you so that people are not confused about which committee it is going to.

Thank you, Mr Assistant Speaker. I was not here when the Hon Bill English put the motion, so I am sorry I picked that incorrectly. It is going to the Foreign Affairs, Defence and Trade Committee, but it is, itself, a senior committee. It is actually one of the committees that run on a more consensual basis than some of the other committees. I have sat on it at times, and it is a more collegial committee, a less adversarial committee, and it is trying to achieve things in the New Zealand interest. I am sure that that committee, too, would be able to report this bill back promptly.

That brings you back to the why. Why? Why is it that the Government is putting Parliament in the position that it has to agree on an inappropriately short select committee period? That comes back to competence of Government. If this agreement was agreed in May and signed in June, why is that we, at this late stage and at this late juncture, are only now considering the legislation? Why could not the legislation have been produced earlier and have been put to the select committee at the same time as the treaty? Nothing in the Standing Orders would have prevented that. Indeed, it would have been more efficient for submitters. Submitters could have been considering the treaty at the same time as they were considering the bill that accompanied it. These things could have been done in parallel by the Government, they should have been, and if they had done that, we would not be contemplating this poor process, which leads to less robust outcomes. For those reasons, the Labour Party will be opposing this motion.