International Finance Agreements Amendment Bill

It is a pleasure to take a call on Part 1 of the International Finance Agreements Amendment Bill. As we discussed when the House was looking at this during the second reading, it is a bill that did not generate an enormous amount of public interest when it came before the Foreign Affairs, Defence and Trade Committee. In fact, there was precisely no public interest when it came before the select committee, but that is not to say that it is not an important piece of legislation.

What I think would be useful here in Part 1 is—obviously, Part 1 is the purpose clause, and the purpose of this bill is to allow New Zealand to participate in the Asian Infrastructure Investment Bank. In principle, that is something that on this side of the Chamber we support. There is no doubt that as the Asian region continues the enormous growth that we are seeing across it, the need for infrastructure investment—the need for investment that the international community provides—only grows.

The Asian Infrastructure Investment Bank arose out of the belief, and I guess you could say the concern, of those in the Asian region that the gap in infrastructure investment was too big to be bridged by those organisations that are currently working in the region—in particular, we think here of the World Bank and the IMF. That was initially the subject of some significant concern by core stakeholders within the World Bank. There were some media reports that the United States Government and others were lobbying against countries being involved in this, but we are told in the report that was provided to the select committee that other agencies like the World Bank have been closely cooperated with and collaborated with in developing the frameworks to allow this to exist and, importantly, that they will work together with the Asian Infrastructure Investment Bank to make sure that their projects do not cut across each other or are not, in fact, not working together in the best interests of the countries in the Asian region.

So, having got to that position, it is good to acknowledge that New Zealand officials have been working alongside others to make sure that this bank has the strongest possible governance arrangements and has the best working framework to ensure the investments it makes are going to not only provide that infrastructure but also support other values that are important to New Zealanders. It is worth noting that it was New Zealand officials who worked very hard to ensure that appointments to the board of the Asian Infrastructure Investment Bank will be open, transparent, and merit-based, that there will be a non-resident board of directors, and that the appropriate environmental, social, and procurement safeguards will be put in place around what the bank does. That is very significant because although in principle we can say: “Yes, we want this infrastructure to happen.”, if there are not the right safeguards around it, then we could see infrastructure investment that is less than desirable.

So annex 1 of the framework document lists off the draft environment and social framework for the Asian Infrastructure Investment Bank. It is useful to note the environmental coverage is making sure there is an assessment around biodiversity impacts, critical habitat impacts, protected areas, and climate change—the precautionary approach. All of these are really important parts of what makes for good investment. They have been secured in this agreement, and from our point of view that is very important. We also have the social coverage, which includes social risks, impacts on the community, impacts on vulnerable groups, and gender-specific impacts—an important thing to note on Equal Pay Day, today. It also talks about working conditions and the fact that during the implementation of operations, working conditions, health and safety, child labour, forced labour, and labour relations standards all have to be taken into account when infrastructure investment is being put in place under the Asian Infrastructure Investment Bank’s work. These are important safeguards, and it is very important for New Zealand’s participation that those safeguards are there. New Zealand worked hard to ensure that the governance arrangements and the safeguards were there—that there was stability.

Our actual financial contribution to the bank is modest but perhaps appropriate in terms of our relative GDP—well, it has to be appropriate in terms of our relative GDP because that is how it is worked out. So we are making an initial contribution of around—well, let us do US dollars because of exchange rate fluctuations, shall we—US$92 million over the next 5 years. We have also committed US$369.2 million of callable capital. As my colleague Phil Goff noted in his intervention in the second reading, New Zealand has never had to call on the capital that we put aside, but that is the extent of the contribution that we have made. As I say, although that is not a significant financial contribution, it is an important stake for New Zealand to say that we are committed to this bank. We are committed to the Asian region and the opportunities that arise.

The reasoning for joining the bank was threefold. Economic factors—New Zealand’s economic success is linked to the Asian region. I know that the leader of the Labour Party, Andrew Little, was in China last week, and other Ministers from the other side of the House have visited regularly as well. No one can underestimate the extent of the development that is there and the extent to which China is continuing to invest. The Prime Minister will go with a business delegation to Viet Nam next week—there is a country where there is a need for increased infrastructure investment for it to continue to develop sustainably. It has enormous rates of growth, but it is a country that could do that. We have just seen the elections this weekend in Myanmar—there is a country with an enormous infrastructure deficit that could be assisted by the work of this bank. From New Zealand’s point of view, all of those are countries with which we will trade, and do trade, and all of those are countries that we want to see flourish in order for our region to flourish.

The second reason was around connectivity to market and our ability to build on the connections that we already have in Asia. We have status within ASEAN, we attend the East Asia Summit—that is where the Prime Minister is going next week—and obviously we have the free-trade agreements with China and other ASEAN members. This is a further step in New Zealand staying connected in the Asian region and connected to where we will see much of our future trade relationships.

Then there is just the question of the ability to influence. If New Zealand is not there in a discussion like this, we do not have the ability to do the very things that I mentioned before—making sure that the governance arrangements are sound and that the bank is working with the systems that we would want.

So I will leave my contribution there. Suffice it to say that the Labour Party supports this bill. In this Part 1 of the bill there are no particular changes to deal with. In Part 2 there is one, which I will take a brief call on.

Can I thank the member for a pretty succinct and sensible summary of the Asian Infrastructure Investment Bank and its purpose, as laid out in this bill. Also, can I thank the Foreign Affairs, Defence and Trade Committee and chairman Mark Mitchell.

The legislation is here because the New Zealand Parliament has dealt with it pretty expeditiously. I have just a couple of points to make in addition to those made by the member, and I look forward to contributions on the way through this debate. It is a slightly unusual piece of legislation—it is not the only one that has been done like this but, essentially, we are legislating the Articles of Agreement of the Asian Infrastructure Investment Bank, which were not written by us. They are the result of the collective discussions of a significant number of countries.

I might say that the way they are laid out in this legislation should be a lesson to our own bureaucracy. There is admiral economy, clarity, and brevity in these articles, for what is a complex multinational institution. It all fits into about 20 pages, or slightly more, and you can actually read it and understand it. So I would like to give the select committee credit for that but, actually, it did not have the opportunity to get into the detail of it—although I know Mr Parker could have improved on it.

However, it does demonstrate something that I think is certainly a feature of a bipartisan approach in New Zealand and that is that under successive Governments, New Zealand has been able to carve out a bit of a role as an honest broker in international events and international forums. This piece of legislation here is a product of that, actually, because when the original proposal was put forward there was a great deal of concern and reticence among a number of countries that this bank may be set up in a way that enabled it to expedite the policies of the Chinese Government, and that was it. Of course, it was any number of countries that were interested in participating because they were interested in the investment capital, and the member Grant Robertson mentioned some of them.

But with the early focus on Singapore, but particularly New Zealand—because we count in the international world as a developed economy, while the much wealthier economy of Singapore counts as a developing economy—as the first developed economy to participate, was able to have considerable influence over the articles as we find them here.

And, finally, can I just acknowledge the role of the parties across the Parliament. The speed at which this multilateral institution was proposed and has come into existence is remarkable, by any standard. In fact, there probably has not been another one like this. That demonstrates, I think, a wide set of interests in the broader multilateral community, particularly to have institutions of a higher quality and a broader base than the current World Bank and the IMF, where, unfortunately, reforms to their make-up that reflect the fact that the balance of world GDP has shifted away from the European and North American economies to a whole range of emerging economies—those reforms simply have not proceeded, for various reasons, but it has been disappointing. So there has been an interest from the international community in this institution because it can start afresh in the 2010s rather than the 1940s, and the world, of course, is a bit different now.

So I want to acknowledge the fact that the Parliament has seen the virtue of that, and has expedited this legislation so that we will meet the deadline—by 1 January this will be in place and New Zealand will, along with other countries, be able to take up its role in the governorship of this bank.

Can I concur with my colleague Grant Robertson and the Minister of Finance’s comments. I do think it reflected well on New Zealand that we were early to the party when it came to saying that we thought that this was a good idea, and that we then tried to mould it into a well-governed organisation that will do good in the world. I know that some of the opposition in other parts of the world was not just against the potential—as the Hon Bill English has said—misuse of this fund as an instrument of Chinese Government policy, which was one of the original concerns. Actually, their concerns were sometimes just about the rising influence of China, and a desire that China not be able to exert the influence in the world that it can through this new agreement. That was an inappropriate reason for opposition to this Asian Infrastructure Investment Bank, and I am pleased that the New Zealand Government got on the right side of that debate from fairly early on.

There is one issue in particular that I would like to raise in respect of Part 1. Part 1, as the Minister has already told the Committee, inserts the articles of association that are set out in new schedule 8 in the schedule of this bill. It does that at clause 5 of the bill. Those articles of association include the number of shares that the New Zealand Government subscribes for, and everyone who subscribes for a share takes up a capital subscription—or a capital risk, if you like; some of it has to be paid across, but some of it is just there to be called upon if needed. Every 10 of those shares carries with it a $1 million capital subscription, so New Zealand’s capital subscription is $461.5 million for 4,615 shares. I have done a quick calculation as to what New Zealand’s share of the total is, because there is $75,000 million of capital being subscribed for. As a consequence, New Zealand’s contribution is 0.64 percent of the capital, roughly—less than 1 percent.

The proportion that New Zealand takes in these organisations—and the IMF is the same—is lower than it would have been in yesteryear because the New Zealand economy has not grown at the same rate as overseas economies have, and, as a consequence, our proportion of the total of these capital funds is less than it used to be in yesteryear. We saw that—I am not sure whether it was earlier this year or last year—when an Act of Parliament was brought in to change another of the agreements under the International Finance Agreements Act, where we amended the IMF articles to note the changing proportion of different countries in the world economy, and New Zealand’s percentage of the total capital went down because our share of the world’s economy went down because New Zealand has not done as well as some other countries. At the time of that debate, the International Finance Agreements Act was amended to enable amendments to articles of association by way of regulation by the executive, rather than bringing those agreements back to this House.

The effect of this amendment bill, in concert with the earlier amendment bill that says these things can be changed by regulation, is that this Parliament is setting up a system in respect of the Asian Infrastructure Investment Bank, which is what this bill is mainly about, that in the future we are handing over to the executive the power to change. We objected to that at the time, when the regulation-making power was being conferred on the Minister of Finance and the Government, because we think that we should have these important agreements coming back to this House when they require alteration. It actually does not happen very often. I think the IMF articles have been changed only a few times since they came into force many, many decades ago, so it is not an onerous task for Parliament to keep an oversight of how our participation or how the rules of those organisations change.

I am not going to take much longer on that point, other than to note the fact that I would like the Minister in the chair to respond with why it is that he thinks that when New Zealand’s obligations under these articles change, because of a change in the articles—where they do have significant monetary effects for New Zealand—why that sort of thing should be able to be done by the executive, rather than coming back to this Parliament, because that is what we are doing with this clause.

Part 1 of the International Finance Agreements Amendment Bill sets out the purpose clause, and the purpose is, of course, to enable New Zealand to become a member of the Asian Infrastructure Investment Bank. Then the rest of the bill implements our obligations under it, including the whole of the articles of agreement, which take up about 30 of the 34 pages. Labour supports this bill, and the reason that we have supported it, both at the Foreign Affairs, Defence and Trade Committee and here in the Chamber, is that there is a gap in infrastructure investment in the Asia region, and this enables us to join a bank that will foster sustainable economic development. But I have questions for the Minister in the chair, the Hon Craig Foss, who, I am sure, is very well informed about the bill.

The first thing—when we assessed whether we should become a member of the bank—was that it was very well known that the United States was opposed to countries joining up to it, and it was opposed for basically two reasons. First of all, it claimed, somewhat curiously, that investment needs were being met in the Asian region. I say “curiously” because both the World Bank and the Asian Development Bank, which are both operating in this area, suggested that a further trillion dollars was needed each year to support economic growth in the region. So it is not a case of the Asian Infrastructure Investment Bank elbowing out other banks, but rather supplementing those banks to meet an unmet need. The second reason that the United States appeared to oppose this was that it said it would expand the influence of China. I actually concur, curiously, with the comments of the Minister of Finance, who made it clear that the gap was there and it was real, and that the old Bretton Woods institutions were not doing the job. They were not doing the job partly because they reflected the world as it was in 1945, and not as it is in 2015. One of the outcomes of that is that China was actually constrained from playing the full role that it ought to play in Asia under those Bretton Woods institutions.

It is quite clear that China is an economic superpower. It is the second-largest economy in the world, and, equally, that gives it responsibilities and obligations to help other countries in the region—and by providing infrastructure investment it can do that. Of course under what is set out in this bill in the articles of agreement, China will end up with about 25 to 30 percent of the voting rights. That gives it a significant role, and that is because it invested $30 billion out of the $100 billion that will be available for infrastructure investment. But my question to the Minister is this: as we worked through the process of agreeing to become a member of this bank, what approaches were made, directly or indirectly, formally or informally, by the United States to try to persuade us not to become members? As it happens, its expressed opposition to the bank has not prevented the vast majority of countries in the region—38 regional members of the bank from the Asian and Middle East region, and 20 non-regional members—signing up to the bank. That includes other countries, like Germany, France, the United Kingdom, and the Scandinavian countries, which are, clearly, very much part of the Western, developed world but nevertheless see some real benefit in having this bank set up and operating.

I want to just touch briefly on the amount of capital that we are putting into it, because I know that other parties in the Committee may have some concern about that. The subscribed capital is US$92 million. That, however, is payable over 5 years, so the amount of money that we are sinking into it each year is less than the referendum on the flags debate. I think it is about $22 million a year that it comes out at. We also put up US$369 million in callable capital, but when I did a little bit of research on our participation in like institutions, to the best of my knowledge the callable capital that we have committed to has never been called up, because the institutions have never run into financial difficulty. I would like the Minister, if possible, just to confirm that fact. So the US$369 million that we will subscribe in callable capital is unlikely to be called upon.

Why are we becoming a member of this bank? That is what the purpose clause addresses. I think the first cause, very clearly, is economic. Our future now is inextricably linked to the future of the Asia-Pacific region, and as such, with most of our largest trading partners in the Asia-Pacific region, we have a vested interest in how well the region does. I did a free-trade agreement with China and with ASEAN. Those countries are all part of this bank, and those countries, particularly the ASEAN countries, will benefit from having a bank that will improve its infrastructure—the infrastructure of the countries—and improve their economic performance. That will have a flow-on effect for New Zealand. So it is the right thing to do, but doing it will also benefit New Zealand economically.

The other benefit we get is from our connectivity to the market. We are a country that has origins as a Western, European country, but we have fought very hard to be seen as an active, participating, and contributing member in the Asia-Pacific region. As a small country we do not have a very large share in this bank, or voting power, but it is the symbolic importance of our being seen to be committed to the development of the region. What is really important, from my experience in working economically and in trade matters with the Asia region, is building relationships. Before you can do business you need to build a relationship, and this, for us, is about building that relationship.

The third reason why we are being a member, I think, is because it gave us a chance to get in very early on in the development of this bank and to influence how that bank would be set up and the rules under which it would operate. I want to again pay tribute to John Whitehead, who represented New Zealand in those negotiations. I think he did a fine job. We were able to help ensure that the membership of the bank is broad and open. We were able to ensure that there are sound governance and appointment processes followed by the bank. That was important. I think we probably exercised an influence beyond our size. We were able to establish the principle that decisions have to have regard to environmental and social issues. For us and the importance we place on those things, that is also very important.

But, most important, we were able to help ensure that this bank will operate according to economic and financially sustainable principles. As a result, there will be proper oversight for investment decisions and for development outcomes. There will be international best practice for the way this institution runs. When we did the international treaty examination of the bank, there were also risks pointed out, but I think we have been able to mitigate those risks and I think the arguments very clearly are in support of our participation in this bank. I commend those who helped negotiate the agreement. The Labour Party will be supporting this bill through its final stages.

I too would like to acknowledge those officials who undertook that early participation in negotiations in this agreement. I give them credit for the fantastic work that they did. That does not actually preclude our continuing opposition to this legislation.

Part 1 enables our participation in this infrastructure bank. Many of the speakers, including the Minister, have spoken of one of the benefits being the ability to influence economic factors and connectivity to the market. The arguments given are: increased economic development in the Asia region—we have heard that repeatedly; supported increased economic integration—that it augments New Zealand’s existing relationships. Let us take a reality check here, and just stop and look at what the officials actually provided this Committee in terms of information. The reality is that there is nothing in this legislation and nothing in the appendices attached to it, schedule 8, that says—it actually specifically says that there will be no investment in New Zealand. New Zealanders will not seek for investment to be undertaken in New Zealand under this legislation, nor, it specifically says, will the investment bank itself actually invest in New Zealand.

The question was then asked as to what the benefit is to New Zealand of signing up to this financial agreement. We have heard a lot of lovely intangibles, but the reality is—and this is the reality—Government officials never undertook a financial impact statement or an analysis of the benefit of this financial agreement with New Zealand, because from the outset they established that there would be no, or negligible, financial benefit to the New Zealand economy. Those were the Government’s own official words. That is the reality of this situation that this Committee is in today. That is the reality of the contribution being given here. It sounds lovely when you hear the words from some of the members today about the impact on New Zealand, but that is not the reality. The officials themselves have said so.

New Zealand First has questioned the economic impact from the outset. The argument has also been around influence, but we would also point out that China, for example, will trade with New Zealand without a free-trade agreement. In fact, trade with China was growing exponentially before a free-trade agreement, because China wanted what we had. It wanted our commodities, and it was prepared to come and negotiate and work with New Zealanders to do that. Businesses and New Zealand will continue to build relationships with China and the ASEAN communities. We have, as Mr Goff so rightly pointed out, these free-trade agreements with the Republic of Korea, with China, and agreements with the ASEAN community. That will not stop, because this Government, for example, would go before them and say: “Look, we’re willing to help you write this infrastructure financial agreement, because we think we have something to contribute, but we actually can’t afford to give you the money.” I think that would have been fair and reasonable, and we would not have broken friendships or undermined our relationships if we had said, honestly: “Look, we’re up to $80 billion to $100 billion worth of Government debt. We’ve sold assets. We’re supposed to be paying for our own hospitals, our own schools, and investing in our own community. Look, the reality is that we can’t contribute that minuscule sum to make this work for you.”

The other issue I have, and it is actually a question for the Minister in the chair, Craig Foss—if I can find my notes—is around our participation and our level of influence. I think it was the Hon Mr Parker who said that we have a 0.64 percentage of share in this bank. He is bang on. My calculation was 0.66 percent; it was even more generous. But if you go into the appendices—I ask the question specifically of the Minister in the chair. Our participation on the board is dependent on those rules, and one of those rules says—schedule B of schedule 8, clause 2(a)—that we have to have 6 percent share in this bank in order to be a participative member.

Just to give a quick answer to Mr Goff’s point—yes, Mr Goff, you are correct. There are similar organisations, such as the Asian Development Bank, the IMF—the International Monetary Fund—and the World Bank, which we contribute to and have capital invested in, as well as, presumably, this one, if Parliament passes the International Finance Agreements Amendment Bill. The callable capital has never been called upon, Mr Goff, for your clarification. To the previous speaker, Mr Tabuteau—I guess that if New Zealand was an island nation that had no interest in the development of its region, or other economies, or peoples, or cultures, or countries, that member may be correct. But, actually, there is an obligation and responsibility to be part of this region, and those other organisations, which are similar to the organisation we are proposing to invest in here—for example, the Asian Development Bank and the World Bank—invest in the Pacific, actually helping sustainable energy projects and helping countries to become self-sufficient. I guess, in brief, that part of being a leading developed, civilised nation with a solid economy and great history in helping other countries develop is that also, as these Asia-Pacific countries—Asian countries, in particular—that this organisation will be assisting grow, their interest in New Zealand products and services grows as well. So it is actually, in a roundabout way, an investment in our region to help grow our Asia-Pacific region particularly, which will in turn, over time, assist opportunities for the New Zealand economy to grow alongside them. Thank you.

I hope there are no media watching this, because they may find me in the situation of agreeing with Mr Foss. Mr Tabuteau, it was a rather naive speech. The reason I say that is there are a number of reasons why this is a very important development in the international banking sector. First and foremost, I think you will find that most 21st century literature says that for an economy to grow, it has got to have good, sound infrastructure. We are talking about power stations, we are talking about roads, which are a sort of 20th century infrastructure, but in this day and age we are also talking about copper, about fibre, and all those other things that link the world and allow businesses to locate pretty much anywhere that they can. When you look at the applicants who have joined this bank—we are talking about India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Oman, Qatar, Sri Lanka, Uzbekistan, and Viet Nam—New Zealand was actually the first developed, Western country to apply to join. In recent months so have a number of others—Germany and Britain, for example.

One of the reasons, as Mr Goff alluded to, that the United States was against this was, it cited, that it believed that the governance within the Asian Infrastructure Investment Bank would not be up to standard. That is slightly ironic in a way because, I believe, after the reading I have done, that if the Asian Development Bank and the International Monetary Fund and the World Bank had actually undertaken the sort of development and put in place the sorts of strategies that the region needed, then this bank would not have been formed in the first place. In fact, the irony is that the push for change around the IMF has been supported by President Barack Obama, because he himself actually called for reform in the IMF last year. So this has really sprung up as a need in the region. As mentioned, it is a massive part of the global economy. It is growing, and it is where a huge chunk of our future lies. The thing is, when America mentioned the governance arrangements and the concerns it has, if you read through chapter V of new schedule 8 in the International Finance Agreements Amendment Bill, it lists all the governance arrangements. It seems to me that it is very clear they need a quorum of two-thirds of members. Article 22 states: “1. Each member of the bank shall be represented on the Board of Governors and shall appoint one Governor and one Alternate Governor.” It looks very, very robust from a governance perspective. I believe that you would find that the Germans and the Brits, let alone other developed countries, would not have a bar of this if they thought that the governance structure was not absolutely sound.

The other thing I would like to talk about is this. If you go to article 2, “Functions”, of the agreement set out in schedule 8—look at the functions. They are to promote investment in the region of public and private capital, but when you look at article 2(iii), it actually talks about “to encourage private investment in projects, enterprises and activities contributing to economic development in the region, in particular in infrastructure and other productive sectors, and to supplement private investment when private capital is not available on reasonable terms and conditions;”. One of the legal tests is a reasonable person test, and I wonder what “reasonable terms and conditions” means. If that actually means that this bank is going to lend money more akin to the interest rates in Asian nations as opposed to, for example, in the developed world—in New Zealand, for example—then it is perhaps not a bad thing. Infrastructure is vital, and the funding is US$100 billion. That sounds like a lot of money, and in many circumstances it is. But when we are talking about major infrastructure projects, US$100 billion actually is not that much money, when you think a large power station can cost $2 billion to $3 billion. It is a lot of money, but for infrastructure development in these developing nations, I suspect—and it will be interesting; Mr Foss has said we have never had to call down on our capital reserves, but you may find that this is the case going forward, certainly over 5 years, because these economies are growing at a great rate of knots.

I agree with a number of the speakers that it is very important that New Zealand is part of this. Mr Tabuteau is right. I cannot see any circumstance at all where the infrastructure would be built in New Zealand out of money from this fund—it is not needed. We have sufficient capital markets and sufficient private investors to allow the sort of infrastructure needed in this country without having to dive into this whatsoever. But these sorts of banks are not set up to help developed countries maintain or grow their infrastructure; they are really about developing countries, and the flow-on effect from that can be massive. It is already acknowledged that India is an economy growing at a great rate of knots, as is China and a lot of the other economies mentioned. Thank you.

I move, That the question be now put.

I, like other members of the Labour Party—we are supporting this piece of legislation. But I do want to touch on a couple of comments that Mr Tabuteau made—and Mr Nash dealt with some of them. In essence, the argument for opposing this seems to be that there is no hope of any monetary investment in New Zealand from this institution, which, as Mr Nash has pointed out, is quite right. We are a developed country, we are not a developing country, and the moneys that will flow from this bank—its purpose is to fill the gap in the infrastructure and development in the Asian region.

But that does not mean that there is nothing in it for New Zealand. What is in it for New Zealand, if you look quite clearly—as colleagues outlined the membership of this organisation—is that we do have influence, we do have connectivity. We have been right at the base and at the foundation of the genesis of this bank to put in place good governance rules and transparency. And as these funds are invested in Asian developing economies, what is in it for New Zealand, I think, is self-evident. As these economies develop their infrastructure, as they grow—at its brutal best, or simplest—the buying power for goods and services of these nations will increase. They will look to countries like New Zealand to engage in commercial arrangements. We will be a recipient, I am sure, as other developed countries are, of much of the work. And that is, in terms of the growth of our economy, the investment and the jobs and all the ancillary benefits that flow from that, as we are party to other countries as their respective economies develop and grow.

The more access that we can get to an economy that is growing and prospering, the better it is for our nation. So I see this as part of a tradition that New Zealander has had for many, many years. We are members of the UN, the Asian Development Bank, the IMF, the World Bank, the World Trade Organization (WTO), and one could argue, and it is true, that both our monetary contribution, as others have said, and our voting contribution or proportion are very modest. That again is not an excuse for us not being around the table. One could argue that in every international institution—the ILO, the World Intellectual Property Organization, and the others that I have mentioned—we have always had a modest role to play and a modest say. A good friend of mine whom some of you will know, Mike Moore, was fond of saying that New Zealand is—what is it—less than 1 percent of the world’s population; some would argue we have 90 percent of the world’s opinions from time to time.

Of course, our contribution and our voting muscle at these international institutions are modest, but you have to argue that if you look at our seat around the Security Council, the positions that we have had within the WTO and within the Commonwealth—the whole host of international institutions—to use the old cliché, we have punched well above our weight. We have had influence. As the Minister Mr English said, we have been looked to on many, many occasions as the honest broker, as the country that does not have an axe to grind, that can go in between countries in economic dispute, or whatever, and do the deal. Those relationships are priceless. Mr Goff said, quite rightly, as the guy who negotiated the China free-trade agreement, that before you can do business in China and in a number of these Asian economies, you have to build that relationship. We may be small. Our contribution in monetary terms may be small, and our voting rights may be extremely small, but we still are respected and we are around the table and we are participating. That is where New Zealand in part gets a massive payoff.

I just come back to the original point. This bank, its purpose is to target that gap in infrastructure investment within the Asian region. If that gap is plugged, if there is access to capital in developing countries, those countries grow, their economies grow, they reach out across the world for goods and services and expertise—and we have an advantage being one part of this institution, but we have an advantage because of having the reputation as world-class providers of many goods and services—they will reach out to us and other countries. That is the investment. If you are looking for the investment in New Zealand, that is part of a massive payoff—being there, being part of it, being reached out to, and providing those resources that in turn grow our own economy.

So I think, with respect, that it is slightly simplistic to say: “Well, we’re investing $126 million initially with a commitment to $504 million going forward, but because the bank’s not going to flick a bit of money to New Zealand, therefore we should not be part of it.” If that was the case we would never have been a part of the Asian Development Bank or the IMF or the World Bank or other institutions, because the likelihood of us receiving capital is, as Mr Nash said, extremely low. We have good institutions. We have mature capital markets. We can fight our own battle economically. So I think you have got to look at this in its widest possible context.

Again, as others have pointed out, there is always the counter question: what is the cost of not being there? What is the cost of not being around the table, part of a growing international institution, with Asia, the fastest-growing region in the world? You could look to the China free-trade agreement easily and say: what if that had not been in place, in terms of the relationships with China? What if we had not participated in the Asian Development Bank and those others—we have ultimate directors there—what would have been the cost to New Zealand? The cost would have been relationships. The cost would have been those tangible—and I would argue they are very, very tangible—benefits of goods and services and access to markets. That is a huge cost. So the Labour Party does support this piece of legislation. It is part of New Zealand’s international tradition to be a plank owner, a foundation member, of these great international institutions.

I think we can look back, and I do commend those who negotiated this—being in on the ground floor has allowed us to have our say on transparency, to have our say on the structure, and to have our say on the governorship. As others have pointed out, Europeans and others look to this institution with respect. They would not do so if those fundamental arrangements were not in place. And, actually, by being a member of this institution—again, although we are a small nation, we have a massive reputation—I would argue it also gives some credibility and integrity to it. People would ask, if New Zealand and others in the region were not there: “What are we doing? What is our purpose?”. So I commend the bill to the Committee.

I think it is sad that there was not a heck of a lot of public notice taken of it at the select committee, but it is a very, very important building block as New Zealand continues to play its part as a respected and mature developed nation throughout the world, given that we can contribute our expertise. We do not know everything, but we could contribute that expertise. We can continue to act as an honest broker and navigate countries through intricate and complicated procedures. This builds on that tradition.