International Finance Agreements Amendment Bill

This is debate on clauses 6 to 11.

Part 2 of the International Finance Agreements Amendment Bill is about the membership of the infrastructure bank. It makes the substantive changes that enable New Zealand to become a member of the Asian Infrastructure Investment Bank. Again, I would like to talk about why we should become a member of the bank and why we are supporting this.

In that respect, just to touch on some of the comments made by my friend and colleague from the New Zealand First Party about whether this brings in only intangible benefits, I think Fletcher Tabuteau drew on the analogy that China would have traded with us anyway, so we therefore did not need to have a free-trade agreement with China. Well, I am sorry; that is absolutely wrong. I know that New Zealand First opposed that agreement at the time. But it was not about intangible benefits; it was about very tangible things in terms of removing the tariffs. Actually, making it tariff-free meant that you could increase your trade. Also—and maybe not quite as objective but certainly as strong a factor—there was the profile that it gave us. China always talked about the four firsts. That was in reflection of the relationship that we had with that country. That is why our exports went from $2 billion a year to over $10 billion a year.

It is the same thing for this agreement. What would have happened—or what would happen—if New Zealand was the only substantial country in the Asia-Pacific region that did not participate in this bank? What message would we be sending to our colleagues in the ASEAN region? The message we would be sending is that we did not care about their infrastructure needs, we were not really part of their region, and we did not have an interest in helping them with either the technical assistance this bank will give or with the infrastructure investment assistance. Next time we went along to one of those countries and said to it “OK, we’d really like to develop this relationship. We’d like more students, we’d like more tourism, we’d like to trade more with you.”, it would scratch their heads and ask whether this is a country that is really committed to its region. It might still buy our products, but it would be less inclined to regard us favourably and to give us the benefit of the doubt at times when a relationship really demands that we need the benefit of the doubt. So I think you cannot simply dismiss our involvement and our commitment to the Asian Infrastructure Investment Bank as being something that is simply an intangible benefit.

The fact of the matter is that the greatest tangible benefit is that if we invest in this bank along with other countries that are giving the bank much more capital, we will help the development of those countries. They will develop their middle class and their taste for New Zealand products, and they will buy more products off us. To consider that New Zealand is an isolated island and can act without regard to the global environment within which we participate is a wrong view and, I believe, a naive view.

What are the tangible benefits, then, of becoming a member of the bank, which is what this part of the bill is about. First of all, it is about increased economic development in the Asia region and the flow-on benefits that that will bring. Every study that has been done, including by other development banks like the World Bank and the International Monetary Fund, has said that there is a huge lack of capital for investment in infrastructure and that that is holding the region back. If they can get that capital, if they can develop, that makes the whole region better off, it makes it more stable, it makes it more prosperous, and New Zealand benefits.

Secondly, it is in support of increased integration of the region. When we did the international treaty examination at the Foreign Affairs, Defence and Trade Committee, that was a key point made by officials reporting to us on our national interests as to why we would benefit from participation in and membership of the bank. It also augments our existing relationships in the region. For years, speaking as foreign affairs Minister and trade Minister, we were actively involved in the region at ASEAN regional forums, at APEC meetings, and so on. It is critically important. The majority of our trade flows now not to Europe but to the Asian region. [Bell rung]

I will give the Hon Phil Goff the call in a second, but—I apologise to the members again—I misdescribed the debate. We are now debating Part 2, which includes the clauses I mentioned but also the schedule. Given the size of the schedule, it is a fair proportion of the bill.

We can indeed talk about the schedule. I thought we would be having a separate debate on the schedule—

The CHAIRPERSON (Hon Trevor Mallard): No, we are not.

OK, so let me address some of those things too, because what is in the new schedule 8 in the schedule is important—that is, the articles of agreement. It is 30 out of the 34 pages of the bill. It is, therefore, pretty critical.

But I want to also address one amendment that the committee made, which was to clause 9. Under clause 9 we deleted new section 8(1A). I want to talk about the reasons for that. New section 8(1A) basically gave article 19(1) of the articles of agreement the force of law in New Zealand. So a layperson reading this might ask why we would delete that. What article 19(1) does is prohibit members of the Asian Infrastructure Investment Bank from imposing restrictions on currencies held or used by the bank. That will still govern our actions anyway, but the advice that the select committee was given was that it was not necessary. This article and the restrictions that it imposes do not need to have effect domestically for us to still be bound by it, so it was not necessary for that to be included. Secondly, it would be inconsistent with all of our other agreements with other international financial institutions if we were to include that clause. So not too much should be read into the fact that that clause has been taken out. It is simply that it was not necessary and it would have been inconsistent.

Can I come now to the schedule of the bill, which is really important. First of all, article 1 sets out the purpose of the bill, which is to “(i) foster sustainable economic development, create wealth, and to improve infrastructure connectivity in Asia by investing in infrastructure in other productive sectors;”. Also, I think the second factor is significant—“(ii) promote regional cooperation and partnership in addressing development challenges …”. So that sets out clearly what the purpose of this bank is and why we would want to be a member of it. It makes it clear that membership is open to members of the International Bank for Reconstruction and Development—that is, the Asian Development Bank, as we know it. It talks about the amount of authorised capital stock that the bank shall have. The sum set out under article 4 is some US$100 billion—that is, US$100 billion. So what that gives us is a sense of the size of this bank and the significance that it will have in achieving the purpose for which it is set up.

We are investing in this bank, remember, because the Asian Development Bank and the World Bank were not meeting the level of demand in the Asian region for investment in infrastructure, and that US$100 billion is clearly large enough to make a difference. Article 5 sets out the way in which we make our subscription to the organisation, which is in five instalments each of which is 20 percent of the amount that we have to pay. That represents US$18.4 million a year. So it is a significant sum that we are contributing, but compared with the larger countries, like the US$30 billion that China is putting in, it is relatively small, but symbolically it is important, and that is deemed to be our fair contribution.

Article 13 sets out the operating principles, and I think it is important that the bank shall be bound by sound banking principles. If this bank was not going to operate according to those principles and if we had not been involved in the negotiation and we were not confident in that, then we would not be making this investment. So that is also pretty important.

I want to touch on one other section, if I can find it, in terms of the election of the president of the bank, which is really important. It sets out the principle that the election should be by an open, transparent, and merit-based process. If we need to have confidence in the way that this bank operates, it needs to operate according to best international practice. I think the articles of agreement in front of us can give us that confidence—

I would like to speak to Part 2 of this bill, and mainly to new section 3(3), inserted by clause 6(2), and new section 10(2)(da), inserted by clause 10(1). New section 10(2)(da) talks about schedule 8, which sets out the text of the Infrastructure Bank agreement, as Mr Goff alluded to.

I would like to say to Mr Tabuteau that I know he is not in agreement with this bill and he is not supporting our membership of this bank, but if New Zealand First is ever in a situation where it has the power to withdraw New Zealand’s membership, it can be done. There are clauses, under chapter VII, “Withdrawal and suspension of members”, where a member can withdraw simply by delivering a notice in writing to the bank that we are gone. You get 6 months, and you are still liable for all the liabilities and promises that a country has made, but the bottom line is that I could not see a case where New Zealand would withdraw from such an agreement, especially when you look at schedule 8 and the articles of agreement—why it is being undertaken.

If you look, for example, at schedule 8, “Articles of Agreement of the Asian Infrastructure Investment Bank”, one of the main ones is “to remove the financing bottlenecks faced by the individual economies in Asia, and will complement the existing multilateral development banks, to promote sustained and stable growth in Asia;”. So this is not saying it is an either/or—that a country applying for money from this bank has to choose between this bank and the Asian Development Bank, the World Bank, the IMF, etc. This is just filling a gap that is perceived—well, not perceived—it is acknowledged that it does exist.

But when we talk about New Zealand’s membership, and this is what article 3 does—approval is also given to the New Zealand Government to become a member of the Infrastructure Bank in accordance with the Infrastructure Bank agreement. There are a number of reasons why we would join this. We have talked about this before, but one of the things that surprise me is that people have said that the Americans, in particular, have seen this as China having undue influence over the development of the region. Well, the Chinese are incredibly smart as well. They understand that as citizens of the countries that are members of this bank will draw down funds to help their infrastructure move from subsistence living into consumerism, the Chinese ability to service that, and the Chinese economy’s ability to grow, will grow along with these economies.

As mentioned, we are talking about Malaysia, the Philippines, Thailand, India, Viet Nam, and Uzbekistan—there is massive growth potential in this region for all the countries that are investing in this bank. As I mentioned, Australia is, Great Britain is, but the United States is not. It is one of the main ones. But there are a number of New Zealand companies that may not only be able to take advantage of the growing consumerism in these economies but also be able to take advantage of the infrastructure development as it occurs. We know that there are a number of New Zealand companies and consultancies that are world-leading experts when it comes to the development of, for example, geothermal energy, cadastral mapping, and any number of other infrastructural projects that may be required or that may come from the funding from this bank to these growing economies.

The other thing also—I always agree with Mr Goff, and I certainly do here—is we have got to stand for something. If New Zealand said: “We only care about ourselves. We don’t care what is going on in the rest of the world.”—and I am not talking about from an economic perspective; I am talking about a social perspective—then that would go against what I believe is a very important part of our global brand and what we actually stand for in the global market, and that is for a fairer, more equitable society. We do know that infrastructure projects deliver the sorts of social outcomes required to move people from subsistence right through to consumerism. We only have to look at China to see what a developing economy can achieve in the space of a very short period of time. As mentioned, this is what we stand for.

The economic benefits to New Zealand of membership—as one organisation used to say, there are benefits in membership. I think the benefits in this agreement or in being a member of this bank far outweigh the costs. Mr Tabuteau—well, not only Mr Tabuteau, but a number of speakers have talked about the cost. It is only, I think, $156 million over 5 years—Mr Goff?

💬 Hon Phil Goff: Yes.

As Mr Goff pointed out, it is less than we are spending on the flag referendum. So the cost to New Zealand is minimal per year—the cost to New Zealand is minimal, but I think the economic benefits are absolutely substantial going forward.

Not to labour the point, but everything that has been spoken of in these contributions I actually tend to agree with. Investment in China and in the neighbouring Asia-Pacific region is essential for the development of that region. I concur with the previous contribution from Stuart Nash that investment in infrastructure development in those underdeveloped regions will bring up the social capacity of those memberships.

What I wanted to point out, and what I still insist on, is that the underlying commitment on behalf of this Government to this infrastructure agreement bank is based on lies told to New Zealanders. The Government has sold off our assets and told us they would be used for New Zealand, but they are most clearly not being used for investment in New Zealand. That is our issue with this legislation. We cannot agree with the cries about what message it would send to China and what message it would send to the regions when we do not contribute. I contest that New Zealand First, as the name might suggest, is more concerned with what message it sends to New Zealanders when our commitment to this bank is based on lies from this Prime Minister.

I just want to finish my contribution with a very technical question to the Minister in the chair, the Hon Craig Foss. You will forgive me, Mr Chair. It is actually in relation to our commitments under the joint statement of principles of partnership. New Zealand is expected to ensure adequate consultation with Tokelau on any treaty, such as this one, that we are committing ourselves to. My understanding is we have not undertaken that consultation. I would be happy—and I would hope—if this could be proven to be incorrect. But we do have a commitment. I would like to understand what consultation has been undertaken on the part of this Government, because we are expected to do so under our own legislation when it comes to these financial trade agreements. So I put it to the Minister, and I hope I am proven wrong, that we have not consulted as per our obligations. I would be intrigued to know what that feedback from consultation is. Thank you for your forbearance, Mr Chair.

Thank you for this opportunity to contribute in the Committee stage on Part 2 of the International Finance Agreements Amendment Bill, and I reiterate that Labour is supporting the bill. Part 2 contains a number of operative provisions in clauses 6, 7, 8, 9, and 10—and, importantly, clause 10 is the linking section that attaches schedule 8, which is the Articles of Agreement of the Asian Infrastructure Investment Bank. I will make only a brief point about clause 8, which is to note that subclause (2) inserts new section 5(e), which says “all payments required to be made … to the … Bank under the terms of the Infrastructure Bank Agreement.”, and new subsection (2), which says “Expenses … may be incurred without further appropriation …”. I would like the Minister in the chair, Craig Foss, to clarify for the Committee whether that means there is a contingent liability risk on New Zealand beyond the US$92.3 million, I think it is, to which our initial contribution amounts; if so, what is the nature of that liability risk, and can he put a top-end quantum on it. I think it is important for the Committee to be aware of that.

Turning to new schedule 8, and with the preface that I understand that a former New Zealand Secretary to the Treasury Mr John Whitehead was instrumental in contributing to these articles of agreement, I say that it is clear that they have been carefully worked through, and I wish to turn in particular to the operating principles in article 13. This contains, I think it would be fair to say, a blend of banking principles and principles that reflect the international nature of the bank. The bank will be guided by sound banking principles; it will not finance any undertaking in the territory of a member if that member objects to such financing; it will pay due regard to the ability of the recipient to obtain financing on reasonable terms from other sources—which I think is important, because what that says is that this bank is trying to fill in the financial funding gaps for Asian regional infrastructure not—

The CHAIRPERSON (Hon Trevor Mallard): I apologise for interrupting the member. I have been consulting with Standing Orders and I do want to talk to Mr Tabuteau about a comment that he made previously. I want to refer him to Speaker’s ruling 48/2, which states: “The offence of calling another member a liar, or implying that another member of the House is a liar, is an offence against the House …”. It then goes on to make it very clear that that is not acceptable. I therefore require the member to withdraw the comment and to apologise.

💬 Fletcher Tabuteau: I withdraw the comment and I apologise.

Clause 5 of article 13 talks about the ability of the recipient to obtain financing from elsewhere, which goes to the point, as I said, that this is a supplementary or gap-filling fund, and that reflects us back on the earlier debate that we had in the first reading of this bill when we were debating whether the creation of this bank represented in some ways a vote of no confidence on the existing Bretton Woods institutions, and the sufficiency of the World Bank and the Asian Development Bank. From there that led us into a discussion of the relative interests of the United States as the sponsor of the Bretton Woods institutions and to reflect upon the rise of China as a very important country in the region, which had been the principal driver of the creation of this additional institution.

I think it is important to turn to chapter V in the articles of agreement and, in particular, the governance section in articles 22, 23, 24, and 25. What that does is it separates out the composition of the board of governors from the board of directors, and I want to reflect upon those two different roles. New Zealand, in agreeing at the outset to be a founder member of the Asian Infrastructure Investment Bank, acquires a seat on the board of governors and an alternate governor if our regular member is not able to attend. That allows New Zealand to participate in exercising the powers under article 22, 23, and 24, which include appointing directors, and the powers thereof are set out later. It includes appointing under article 29 the president, and overseeing the role and functions of the bank.

It is instructive that in appointing the board of directors the governors are divided into two groups: nine shall be elected under article 25 by the governors reflecting regional members and three shall be elected by governors representing non-regional members, thus making it clear that in all ordinary circumstances it will be regional members who will hold the power of appointment over directors or the board of directors. That is significant because it goes to the point of the shifting balance of influence between the non-regional Bretton Woods powers and the regional powers that are largely sponsoring this initiative, but with whom New Zealand is pleased to associate on this occasion. The powers of the directors are set out in articles 26, 27, and 28 and it is important to note the allocation of voting under article 28. Founding members are allocated 600 founding member votes and then other votes that are proportionate to their financial contributions.

New Zealand does indeed get a seat at the table of an important new institution. New Zealand does get visibility to governance—or, at least, high-level governance—documents. I guess in the articles of agreement we have yet to see the precise nature of the reporting from the board of directors to the board of governors and we would, of course, anticipate that it is mainly the directors to whom management information will flow. It will be very interesting to see—and the Minister may wish to comment on that—whether New Zealand as one of the smaller founding participants could expect to see New Zealanders on the board of directors of the bank. If that is not the case, could the Minister please let the Committee know the extent to which New Zealand will have visibility to reports and paperwork that are going to the board of directors as opposed to the board of governors. We would not want to see New Zealand in a situation where because it is on the higher-level appointment board but not on the day-to-day governance board, it loses some degree of visibility to the operations of the bank. So we would like the Minister to take a call on that point.

The Foreign Affairs, Defence and Trade Committee has commented on a number of the features of the founding documents of draft policies contained in the schedule. It comments, for example, on the innovative governance mechanisms and attests that the model has adapted from and learnt from the World Bank and the European Investment Bank, noting the non-resident board of directors, which is less expensive to operate, it says, than some of the models requiring resident investors. It notes that New Zealand advocated for open, transparent, and merit-based appointments and that the Asian Infrastructure Investment Bank agreed to write that into the articles of agreement, that the president is required to come from a regional member country, and that a range of other safeguards have been inserted. The select committee report notes that a lot of emphasis was put on ensuring that the bank has the right safeguards in place, including environmental, social, and procurement safeguards.

I have a couple of notes on that. Firstly, the articles make clear that procurement can be openly conducted from any regional country, which includes New Zealand, so we would hope to see New Zealand contractors and service providers getting a share of procurement, and I invite the Minister to comment on whether the national interest analysis background documents contain any estimates of the value of the procurement flows in which New Zealand might be expected to participate. The select committee notes that it will be expected to collaborate with global and regional institutions, and I do believe that we are going to need reporting on that in the future. The Minister may wish to comment on how he expects to keep tabs on that issue, because there is both the potential for constructive gap-filling by the Asian Infrastructure Investment Bank and some degree of overlap and/or competition with the Asian Infrastructure Investment Bank and the World Bank. So exactly how the New Zealand Government would seek to form a view, given that it is on the board of governors of the Asian Infrastructure Investment Bank and the IMF - World Bank system, to tell whether those relationships are constructive or destructive would be a very important, I think, thing to consider.

I turn the attention of the Committee to article 31, about the international character of the bank. I think there are some important safeguards there. Clause 1 of article 31 states: “The Bank shall not accept Special Funds, loans or assistance that may in any way prejudice, limit, deflect or otherwise alter its purpose or functions.” It is important that its purpose, which is infrastructure and other productive development in the region, be underlined. There is a very important statement in clause 2 of article 31, especially given the controversy on its founding.

Just briefly, I will answer a question the member had regarding Tokelau. Tokelau was informed of our intention, and feedback was sought from it regarding our intention to join the Asian Infrastructure Investment Bank. The member may know that Tokelau is not eligible to be a member as it is not a member of the Asian Development Bank or the International Bank for Reconstruction and Development, for his interest. Just quickly, I note that those shares will go on to the Crown’s balance sheet as an asset, and any capital that could be called would be there as the member described, as a contingent liability. Thank you.

Thank you, Mr Chairman, I do appreciate your indulgence—just to wrap up a couple of technical points in respect of the articles of agreement. Article 31(2) states: “The Bank, its President, officers and staff shall not interfere in the political affairs of any member, nor shall they be influenced in their decisions by the political character of the member concerned. Only economic considerations shall be relevant to their decisions. Such considerations shall be weighted impartially in order to achieve and carry out the purpose and functions of the Bank.”

I really would like the Minister in the chair, Michael Woodhouse, to share with the Committee some examples of the policies that the New Zealand Government would be expecting to see implemented under that all-important provision, because for those, particularly in the western hemisphere, who have alleged that this new institution would be in some way a tool of creeping political influence, this safeguard would seem to weigh against that in a healthy and constructive way—but, of course, it is only as good as its implementation. So, Minister, if I could turn your attention to that very important clause in the articles of agreement, clause 2 of article 31, how will we know—how will the New Zealand governor know—whether that has been implemented in practice and how will it service any concerns that might subsequently take place?

There is a range of technical articles going on in chapter VII; in chapter VIII, around suspension and termination of operations of the bank; in chapter IX, around status, immunities, privileges, and exemptions; in chapter X, on various interpretive sections; and then in chapter XI, on signature and deposit, and ratification and enforcement provisions. Schedule A—the schedule to the schedule—commences on page 30, and then it sets out New Zealand’s relative number of shares, which, I think, is interesting for us all to see—4,615 shares, being US$461.5 million. That raises a very important point, because, of course, earlier in this debate the House had been tossing around the number US$92 million, which converts to approximately NZ$140 million. Here we see that the actual liability is US$461 million, which is closer, of course, to 600 and something, or—I have not got a calculator—NZ$700 million. As they say in the language of governance, it is a non-trivial amount of liability.

It is instructive, I think, that that comes from the Future Investment Fund, a fund of some $16 billion, one-twentieth of which, approximately, would be covered by this liability or fully funded from it. That is a very significant proportion of the funds raised by the Government’s so-called mixed-ownership model asset sales programme, the proceeds of which were repeatedly stated to be for the development of New Zealand infrastructure and New Zealand health, education, and social services. If this—and it is a significant proportion of it; close to one-twentieth of it—is instead to be allocated to the underwrite of the Asian Infrastructure Investment Bank, then we need to know exactly what benefits will flow to New Zealand.

I would ask the Minister, through the chair, to comment on what estimates have been provided to the Government on the economic flows to New Zealand that pertain to this subscription. Will it be a measurable flow of procurement services to New Zealand service providers? Will New Zealand qualify for infrastructure projects within New Zealand using Asian Infrastructure Investment Bank funds? Mr Joyce in question time today was celebrating the Crown’s investment of NZ$3 million in a harbour project in the Eastern Bay of Plenty. Would that project, which is designed in the first instance to service a marine farming project—I think it is called Eastern Sea Farms, a large aquaculture project, which I understand is around 50 percent owned by Chinese interests—qualify for Asian Infrastructure Investment Bank funding if the Government does not follow through on what it is quietly indicating may follow in time for the election, which is the balance of, I think, the $29 million or $30 million required to make that project happen?

That raises, in turn, the larger question of whether other infrastructure projects in New Zealand would qualify for Asian Investment Infrastructure Bank funding. The Government seems very reluctant to do major economic development regional infrastructure projects, except perhaps some roads. But even those have been concentrated in semi-urban roads of national significance, and regional roading has often been put on the back-burner as a result. So I think that is an important question.

Will New Zealand get consulting or service-providing contracts from the procurement streams of this bank; if so, do we have any idea how much? Will New Zealand service providers be eligible to provide infrastructure construction and expertise in third-party countries? Just for example, some of our State-owned enterprises are best world practice, I understand, in geothermal technology. Will that qualify; if so, what estimates have been made in our national interest analysis about the cash flow back to New Zealand? Because US$461 million of liability out of the Government’s Future Investment Fund—so-called—is a big chunk of change. What are we getting for it?

That is not to say that Labour opposes the bill. We support the bill, and I have taken some time to go through the articles of agreement to indicate provisions that we are, by and large, comfortable with and, indeed, New Zealand has materially contributed to. We are comforted with the proscription on political interference. We are comforted with the well-set-out transparency requirements and the layering of the role of the board of governors, on which New Zealand will sit, and the board of directors. But we ask exactly what level of transparency will be provided to the governors in terms of the operations of the bank as opposed to the board of directors, on which it is less likely we will sit, and what estimates have been provided to the cash-flow benefits to New Zealand.

I have to say that, once again, the national interest analysis that was provided to the select committee was, kindly put, more qualitative—well-written, but qualitative—than quantitative. That is, there are no numbers in it. It says—and the Foreign Affairs, Defence and Trade Committee has summarised—that “New Zealand’s economic future is linked to the Asia region,” and, therefore, it is a good thing for us to participate. It is a very general argument, and in this Committee stage debate, drawing upon the articles of association, I think it is incumbent on us to try to get into the detail of that, so that we can see what attempt has been made by the Government to quantify those benefits.

It talks about, on page 3 of the Foreign Affairs, Defence, and Trade Committee report, connectivity to the market, beginning with the truism that “New Zealand is part of Asia,”. Yes, of course it is, but that argument alone is not sufficient to justify our involvement in this. And it talks about our ability to influence, but even the national interest analysis does not go into the point we have just made in these contributions that we sit on the board of governors, but not necessarily the board of directors, and that therefore there is a limitation on the influence that we can bring to bear.

So on both the financial and the non-financial returns, I would ask the Minister in the chair to take a brief call. What quantum has been provided to the Government in terms of financial returns to New Zealand service providers and what level of transparency pertains to the governors, as opposed to the directors, on the strategy, direction, and operations of the bank? Thank you.

Mr Cunliffe does bring up an interesting point. Mr Cosgrove and I alluded to it, but, you never know, it could arise. Under article 2, “Functions”, in clause (iii) of new schedule 8, it actually says the fund is 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”—and this is the important part—“private capital is not available on reasonable terms and conditions;”.

I suppose there could be an argument that why would private capital invest in a wharf in—Ōpōtiki, did you say, Mr Cunliffe? [Interruption] In a wharf in Ōpōtiki. If the Government backs down from saying we will not invest in this, and yet there are defined social and economic benefits for that reason, then I suppose there is nothing stopping—I do not know whether it would be the Ōpōtiki District Council, or whatever, applying to the bank, and I assume it probably has to be through the New Zealand Government, for funds to build this wharf, on reasonable terms and conditions. And again, what defines reasonable terms and conditions? They may look at the New Zealand market and say: “Well, there’s a risk premium in this and, therefore, it’s going to get quite high interest rates.” Or, then again, it could be at the rates that you borrow money from a bank in China that has negligible interest rates. Who knows? I mean, I find it difficult. It is an interesting proposition, but you never know, it might occur.

What I would like to look at is schedule A of new schedule 8. This lists the countries and the number of shares and their capital subscription to this fund. And it is interesting, because there are 37 regional countries and there are 20 non-regional members that have decided to contribute money in varying amounts to this fund. It really goes to show that, according to the amount of money going in, there really has been a gap in the funding infrastructure or in the funding mechanisms to really drive infrastructural growth forward, hence the need for this bank, because, as a number of speakers have alluded to, America has been dead against this because it thinks the old institutions already fit the bill. But I would suggest that by looking at the countries that have invested in this, perhaps America is on a little bit of a limb when it believes that, in fact, there is no need for such a bank. Time will tell.

But let us have a look at some of these countries. Let us start at the top: Australia. When we say that one of the Americans’ concerns about this is that the governance would not be up to scratch, there are a number of countries here that would not go near this if they believed that the infrastructure or the governance arrangements for this bank were anything but absolutely first-class and in line with the expectations of developed countries. So we have got Australia. Australia is actually putting in $3.69 billion. That is a lot of money. The reason why I think Australia is putting so much money in is—well, it has said it is very much part of this region. It is very keen to see these markets grow because, being a commodity producer, it needs to move its economy from pure commodities towards finished goods and other products, and it sees this market as a very important one. So it is putting in $3.69 billion.

Azerbaijan is putting in $254 million. I am not even too sure where Azerbaijan is. I know it is part of the old Soviet Union. I had to ask Mr Goff, who I think has been to 190 of the 192 countries that exist in the world.

💬 Hon David Cunliffe: It’s warm and dry.

It is warm and dry. Even Mr Goff said it is one of the very few countries—one of about three countries in the world—he has not been to. But it has decided—

💬 Hon Phil Goff: They used to test nuclear weapons there.

Oh, did they? Well, they have decided that they need to diversify their economy—their part of this region. They are actually putting in $254 million themselves. I do not know how big the economy of Azerbaijan is, but I suspect it is not particularly developed.

💬 David Bennett: It’s oil, mate. It’s oil.

It is oil? Well, Mr Bennett knows a lot about it, but I would suggest that this is a substantial amount of money or a substantial commitment from an economy that understands the value of development.

Bangladesh—keeping in mind that we committed US$461 million—has committed US$660 million. Bangladesh is a country we tend to see in the newspaper when there is a massive flood that wipes out villages and causes great devastation. It understands the implications of such a bank, and I suspect places like Bangladesh will actually benefit substantially from the infrastructural development that will go on in the region, and it may well happen in its country. It is committing US$660 million.

Brunei—[Bell rung] Mr Chair, there are a few more countries.

The CHAIRPERSON (Hon Trevor Mallard): I am slightly stretched on the relevance. It is not National Geographic.

Well, I am talking about schedule A here. OK, well, what I will do is talk about how some of the really big economies see the development of this and understand the value of development in this region.

We have got China. I mean, we all know that China is one of the driving forces behind this. It is the world’s second-largest economy, and in my view it is not long before it is the world’s largest. But is it putting in nearly $30 billion. Close to 30 percent of all the money committed to this is being put in by China. India is putting in $8 billion. And, again, I suspect that India will be a recipient of a lot of the development that goes on in the region because, you know, it is a country that is on a fast track to developed nation status. Indonesia is putting in $3.3 billion. Even Iran is putting in $1.5 billion. So, as we can see, this certainly is not an American-backed or a Chinese-backed alliance when we have got countries like Iran—Israel is putting in $749 million, which is interesting. Israel comes below Iran in the schedule. I think it is probably the only time you will see them side by side. We have got Korea putting in $3.7 billion. Turkey is putting in $2.6 billion.

But it is not only these countries within the region that are putting in a substantial amount of money—it is about three-quarters, or $75 billion. Well, it is three-quarters of all the money heading into the fund. But the interesting thing, for me, is the non-regional members that are actually putting in a substantial amount of money. These are the ones that recognise the absolute potential for their own domestic markets in growing the Asia-Pacific market. We have got Brazil, which is putting in $3.1 billion. Heaven knows it is spending a lot of money at the moment developing Olympic stadiums and that sort of carry-on. That should be a good tournament. We have actually got France, which is putting in $3.3 billion and Germany is putting in $4.4 billion.

So when the Americans had concerns about the governance or the arrangements or the legitimacy of this bank, I suspect that it is one of very few countries in the OECD that has such concerns. When Germany is committing $4.4 billion to this bank, then you know that there is something going on. Italy—$2.5 billion. We have even got Luxembourg committing $69 million. Again, I do not know the size of the Luxembourg economy, but I suspect—well, I do know it is not a particularly big one, so $69 million is a lot of money for it to put in.

The last thing I would say is there are just a couple more economies from outside the region that are putting in a billion dollars or more. They are the Netherlands, Spain, and the United Kingdom. The United Kingdom is putting in $3 billion.

I suppose the point I am trying to highlight is that this should not be seen as just a regional bank funded by regional players for the benefit of just our regional and local economies. This is a bank that has international buy-in. I think it will play a significant part in the coming years of the development of the economies that are actually going to drive growth within our own economy and, certainly, the region. That is why I am supporting the bill and I am very pleased to support it. Thank you very much.