Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

I thank those honourable senators who have taken part in the debate today on the International Monetary Agreements Amendment Bill 2009. The purpose of this bill is to simplify the process through which Australia, in domestic legislation, comes to reflect agreed amendments to the articles of agreement of the International Monetary Fund and the International Bank for Reconstruction and Development, commonly known as the World Bank. The International Monetary Agreements Act 1947 established Australia’s membership of the IMF and the World Bank. The articles of agreement of the fund and bank are schedules to the act.

This bill proposes to alter the definitions of the IMF articles of agreement and the World Bank articles of agreement to automatically reflect amendments to the articles that enter into force for Australia without the need for further legislative changes. Similar provisions are commonly used in Australian legislation to allow updates to international treaties to which Australia is party. Currently, an IMA amendment act is required each time there is an amendment to the fund or bank articles of agreement. However, this legislative process is largely administrative, simply aligning the legislation with Australia’s treaty obligations once these obligations enter into force for all IMF or World Bank members, including Australia.

All proposed amendments to the articles of agreement are required to go through rigorous approval processes both at the institutions and in Australia. The Treasurer, as Australia’s governor of the IMF and World Bank, is required to vote on any proposed amendments to the articles of agreement. For the amendment to enter into force, three-fifths of all members of the IMF or World Bank—85 per cent of the total voting power—must accept the amendment. If accepted, the amendment enters into force for all IMF or World Bank members, whether or not a particular member has accepted it. The articles of agreement constitute international treaties for Australia and as such, irrespective of the requirement for legislation, any amendments to the treaties will be subject to Australia’s treaty processes and still require tabling in parliament and consideration by the Joint Standing Committee on Treaties.

The bill will not reduce parliamentary scrutiny in any meaningful sense. Under current legislative arrangements, if parliament did nothing or disagreed with proposed changes to the articles, the changes would nevertheless come into force for Australia with effect from the date that they entered into force for all IMF or World Bank members. The result would be a confusing gap between Australia’s legislation and Australia’s treaty obligations. The bill provides for updating of the IMA Act only with effect from the date that the amended treaty obligations become binding on Australia, not earlier. The real parliamentary scrutiny—the substantive scrutiny—will continue to be provided by the JSCOT process.

While the bill is of general application to all future amendments to the IMF and World Bank articles of agreement, three amendments to the IMF and World Bank articles of agreement will be reflected in the IMA Act. These amendments will implement governance and financial reforms that were approved by the IMF and World Bank boards of governors in April-May 2008 and January 2009. The reforms aim to enhance the voice and participation of developing countries in the two institutions and support a new income model for the fund, aimed at providing it with a more robust, stable and sustainable income base into the future.

As the governor for Australia of the IMF and World Bank, the Treasurer voted in favour of each of these proposed amendments. Australia has a significant interest in seeing these reforms implemented, as they will enhance the effectiveness and legitimacy of both institutions and support the robust, stable and sustainable financial position of the fund into the future. A national interest analysis was tabled in parliament on 20 August 2009 outlining these proposed amendments for scrutiny by the Joint Standing Committee on Treaties. The bill does not alter the way in which Australia’s financial relationships with the IMF and World Bank are conducted.

Reform of the international financial institutions has been a key priority for G20 leaders, finance ministers and central bank governors to help deal with the current global crisis and to prevent any future crisis. The bill will help Australia deliver on commitments made by G20 leaders at their meeting in London on 2 April. The G20 is also seeking further reform of the IMF and World Bank, and this is likely to require further amendments to their articles of agreement. The bill provides flexibility to ensure that future amendments may be reflected in the IMA Act in an efficient and timely way, minimising the administrative burden while maintaining policy and parliamentary oversight.

Question agreed to.

Bill read a second time.