Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

I rise to speak in response to the proposed International Monetary Agreements Amendment Bill 2009 and indicate that the coalition will be supporting this bill. It proposes to amend the International Monetary Agreements Act 1947 so that the process for Australian acceptance of amendments to the articles of agreement of the International Monetary Fund, the IMF, and the International Bank for Reconstruction and Development, the IBRD, is simplified.

At present, when an amendment to the articles of agreement is agreed to by the IMF or the IBRD an amendment of the IMA Act is required to change the schedules to reflect the new articles of agreement. This bill proposes to alter the definition of ‘articles of agreement’ in the International Monetary Agreements Act to include any amendments that enter into force for Australia, without the need for further legislation to amend the act. This will not have any financial impact. In our view, it makes a great deal of common sense for this action to be taken because it will allow governance changes approved by the IMF and the IBRD to be accepted by Australia without an amending bill having to pass through parliament. An example of the benefit of this in action is the speedy approval of the new funding model for the IMF. The current financial crisis is an example in point. It has only served to highlight the need to respond very quickly to changes introduced by these global bodies. Expediting Australia’s formal acceptance of amendments to the IMF and IBRD agreements will ensure that we continue to work together with these bodies in a seamless manner.

I am aware that there is some force to the concern that this bill will undermine parliamentary democracy and national sovereignty by allowing legislative changes to occur without reference to parliament. That is a very reasonable apprehension on the part of certain persons. But we must also acknowledge that there are already similar provisions in place that allow updates to international treaties to which Australia is a party, and it is this latter category that makes the coalition confident that this is an appropriate way to deal with this bill. In addition, as the IMF and IBRD agreements are international treaties, amendments to the agreements will still be tabled in parliament and considered by the Joint Standing Committee on Treaties, so there will be an opportunity for particular concerns to be raised and for there to be both scrutiny and, potentially, review. Also, if there are any funding requirements arising from amendments to the IMF or IBRD agreements, they will still be dealt with through an appropriation bill, ensuring that nothing will slip through the cracks.

We in the coalition support the role the International Monetary Fund and the International Bank for Reconstruction and Development play in assisting and supporting global financial stability, particularly in times such as those we have now encountered and, in some views, are still encountering as the global downturn works its way through. We also acknowledge the need for swift reaction to enable the full potential of the powers and authority of these important international bodies to be realised and activated when required. For those reasons we support the bill as drafted and commend it to the Senate.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens have concerns with the International Monetary Agreements Amendment Bill 2009. We have a long-held and very public interest in the International Monetary Fund and the World Bank, because we believe that the track record of both these organisations leaves a lot to be desired. We are very aware that the United States, for example, has had an extraordinary and untoward influence on the boards of both organisations and therefore the outcomes. We are also very aware that the true interests of not just the developing countries but the poorer people in the world, not least those one billion people living in great poverty, have been set aside to the interests of both the wealthy developed nations and very often the already wealthy minority in countries that are developing.

This bill will amend the International Monetary Agreements Act 1947 to introduce a range of recent changes to the articles of agreement of the International Monetary Fund and the World Bank and to simplify the legal process for Australia to accept future agreed amendments. The articles of agreement are the treaties that set out the obligations of members to both organisations. They cover issues like funding governance and voting rights. Currently, a legislative amendment is required to incorporate into Australian law any changes to the agreements. This bill will allow future changes to International Monetary Fund or World Bank articles to be automatically enacted for Australia once they come into force in either of those organisations. This will be achieved by updating the schedules of the International Monetary Agreements Act that set out the current versions of the articles of agreement of the fund and the bank.

The government is of course arguing that this will be an improvement because the current legislative process is largely administrative and because the Treasurer, as Australia’s representative on the fund or bank, is required to vote on any proposed changes of their institution. The agreements that will form schedules to our Australian International Monetary Agreements Act will still be tabled in parliament by the Joint Standing Committee on Treaties. That is the point: the problem here is that this is a transfer of power from the parliament to the executive, in particular from parliament to the Treasurer. I am surprised that the coalition thinks that that is a good thing. The Greens do not agree. We believe that parliament should be taking a very close interest in the World Bank and the International Monetary Fund and should be able to look at any changes to the operations of those organisations and to go beyond that and be able to respond to those changes in a way that draws our attention to them beyond just tabling changes that the Treasurer of the day has agreed to.

We know that the Treasurer is not the fount of all wisdom, and we know that the Australian parliament will have a diversity of views on the behaviour and processes of and the delivery of policy by both these international monetary and banking organisations and on the outcomes that they deliver. One only has to look at the so-called Asian meltdown of the late 1990s and the intervention of the International Monetary Fund and the World Bank at that time to see that there is a lot to be desired in the performance of these organisations.

The immediate use of this bill will be to bring into Australian law the changes that have been flagged by the G20 deliberations. These reforms are aimed at increasing developing country participation in the two organisations, and we support that, and at reforming the finance model for the International Monetary Fund. We support those changes, because the international organisations have been dominated by richer countries, as I have said. Some redress of that is a good thing. The decision by the IMF board of governors to expand the investment mandate of the International Monetary Fund will allow diversification of income away from lending activities.

The bill will increase the relative power of the executive at the expense of the parliament. The Australian Greens are not going to support such a transfer of authority, responsibility and responsiveness to international organisations, to which Australia pays a lot of money and which have a major impact on the way the world works, away from the parliament into the hands of not just the executive—it is much tighter than that—but the Treasurer of the day. That is bad process. It is antidemocratic in its nature. It is once again shedding the responsibility of this parliament and its collective wisdom to give that to an executive authority. And it goes back further than that. The Treasurer sits on the boards of these organisations. These deliberations occur in Europe or North America, in the main, and are dominated by international monetary organisations. We need to be able to check those. So we will not be supporting this piece of legislation.

It is high time that the parliament took a greater role in Australia’s representation and deliberations through the World Bank and the International Monetary Fund. We ought to have from the Treasurer a much better system of reporting back to the Australian parliament. We are not going to support a process which duds the Senate and the House of Representatives, which, without reflecting upon it, under our single voting system becomes effectively a rubber stamp for the executive of the day. What we are seeing here is part of the rapid process begun under the Howard government now being carried through by the Rudd government of transferring the long-held responsibilities of the parliament into the grasp of the executive. It is an unhealthy process. The big parties might support it, and indeed both of them are the architects of it; but the Greens have a greater respect for this parliament and for the democratic responsibility which we ought to be upholding and expanding, not reducing in this fashion.

I reiterate that the International Monetary Fund and the World Bank and changes to their agreements are part of the emerging global governance which does not have a democratic base. I moved in this chamber in 2002 that we look at the establishment of a global parliament based on one person, one vote, one value, to deal with international issues—not to cut across domestic responsibilities but to deal with international issues. I cite the one trillion dollars spent this year on armaments, of which the United States is the biggest beneficiary, as one of those international issues. Democracy would give us the ability to do better than that. Just a few per cent of that spending would give every child on the planet a school to go to, clean water to drink and food for her or his belly. We have to do better in the field of global governance.

The World Bank and the International Monetary Fund, granted that they have some marvellous officers working within their ranks and some highly motivated people, have nevertheless a record that leaves a lot to be desired. I only have to point to their serial support for massive dams around the world, which lead to the displacement of indigenous people and the destruction of very variable ecosystems and cultural sites, to show that they are not at all strong on governance when it gets down to a local level. Whether you are looking at the local level, or you are going through to the international level, we should be striving for greater democracy, not less democracy. This bill is antidemocratic in its nature. The Australian Greens will not support a bill that effectively says that this parliament will be a rubberstamp to the Treasurer of the day and that gives him or her the ability to fall in line with an agreement struck at an unreported meeting somewhere in the Northern Hemisphere that affects taxpayers’ money in this country and outcomes for the rest of the world.

As I have just explained, the Greens are very strongly in favour of democracy at all levels, not least at the international level. We need the emergence of a much greater democratic system on this globe if the world is going to find a peaceful way forward in an age that is fraught with massive new technologies and not a closure but a growing disparity between the very small numbers of megarich on the planet and the very large numbers of poor people. Let me cite one current case which we do not read about in our media: there are four million people currently facing starvation in northern Kenya due to drought and climate change, with the United Nations having only a quarter of the money that is urgently needed to facilitate the saving of those people, let alone to give them a fulfilling life in the future. Where is the International Monetary Fund and World Bank’s trajectory in dealing with climate change? Where is their trajectory in ensuring that the megadevelopments that they get involved in are not inimical to the best interests of people in long-term outcomes and climate change? Where is the Treasurer’s report back to this parliament on that? We do not have it. We are not about to support this bill transferring parliament out of this chamber and into the hands of the Treasurer, and I am surprised that the opposition is going along with this government move.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to 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.