Maxine McKew (Bennelong, Australian Labor Party, Parliamentary Secretary for Infrastructure, Transport, Regional Development and Local Government) Share this | Hansard source

I thank honourable members for their contribution to this debate on the International Monetary Agreements Amendment Bill (No. 1) 2010. The purpose of this bill, as has been pointed out, is to amend the International Monetary Agreements Act 1947 to allow Australia to accept the changes to the IMF’s new arrangements to borrow, which was adopted by the IMF executive board on 12 April of this year. These changes to expand the new arrangements to borrow and make them more flexible will deliver on the G20 leaders’ commitment to strengthen the IMF’s capacity to assist countries in future economic crises.

The new arrangements to borrow act as a backstop to the normal quota resources of the IMF by allowing it to borrow from its members when supplementary resources are needed to forestall or to cope with an impairment of the international monetary system. The bill will increase the size of the IMF’s line of credit with Australia. As part of an international effort involving 39 countries, including 13 new participants, the total size of the IMF’s credit arrangements will increase to $367 billion on special drawing rights from the current size of SDR of $34 billion. Australia’s contributions will be capped at a maximum of $4.37 billion special drawing rights.

In addition the bill will reflect the internationally agreed amendments to make the new arrangements to borrow more flexible and a more effective crisis management tool. The bill will have no direct impact on either the underlying cash balance or the fiscal balance. Indeed, Australia’s increased contribution to the new arrangements to borrow will be in the form of a contingent loan and recognised as a contingent liability as it was in the 2010-11 budget papers. In the event of the IMF drawing on its credit line with Australia the loan would be repaid to Australia in full with interest within five years. Any loans to the IMF would represent monetary assets and the associated transactions would be classified as financing transactions.

In conclusion, Australia’s prosperity will rely on a return to strong and stable growth within the environment of the world economy. The IMF played an important role during the global financial crisis in helping to stabilise financial markets, to boost confidence and usher in a recovery from the severe global recession. Passage of this bill will ensure the IMF has sufficient resources to continue to support the global recovery and global economic stability from which every country, Australia and others, will benefit. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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