Thursday, 20 June 2013
International Monetary Agreements Amendment Bill 2013; Second Reading
The coalition will not oppose the International Monetary Agreements Amendment Bill 2013. This bill amends the International Monetary Agreements Act 1947 to provide a standing appropriation and authority to borrow for payments to meet drawings made by the International Monetary Fund under a bilateral agreement entered into by Australia and the IMF on 13 October 2012. The loan agreement will come into force following royal assent to this bill.
The loan agreement will provide for Australia to lend to the IMF up to the equivalent of 4.61 billion special drawing rights, which is approximately A$6.8 billion. Special drawing rights are a weighted currency basket of four major currencies—the US dollar, the euro, the British pound and the Japanese yen. The bilateral loan will have a term of two years, extendable by the IMF for up to two additional one-year periods, making a maximum total term of four years.
There is a lesson which must be learned from the current financial stresses in much of the western world—if debt is the problem, more debt is clearly not the answer. The coalition understands this. It is clear that the Rudd and Gillard Labor governments have not understood this. But the coalition will not oppose this bill.
I will make a very short contribution on the International Monetary Agreements Amendment Bill 2013. I support the bill but I think it is worth expressing the concerns of a number of leading economic commentators, including Ross Greenwood from the Nine Network. I know this issue was canvassed by Mr Greenwood on the Leon Byner program on 5AA not so long ago. I think it is worth asking some questions on notice. I am not suggesting that there should be an answer now. With the conditions attached to a loan, as I understand it—
Senator Cormann interjecting—
I am conscious—
I will not. Thank you for your protection, Mr Acting Deputy President. The position is this. This is supposed to be non-controversial government business and that is the spirit in which I am taking it. I am quite happy for my questions to be taken on notice.
I think it is fair to say that there have been criticisms of the way the IMF has operated. There are issues of sovereignty. I note that Jeffrey Sachs, an eminent economist and the head of the Harvard Institute for International Development, was critical of a lack of transparency and of the IMF imposing policies with little or no consultation with the affected countries. For instance, Professor Sachs says:
In Korea the IMF insisted that all presidential candidates immediately "endorse" an agreement which they had nodrafting or negotiating, and no time to understand. The situation is out of hand …
I understand the importance of the IMF's role in stabilising the international monetary system but, as I said, I have some questions—on notice, in a sense. What will the level of rigour of scrutiny be if the IMF calls in this contingent loan? Will we know what the money will be spent on? What conditions can we as a nation impose on such a loan? If the parliament is minded to disallow it—it is a disallowable instrument, I understand—will the government be able to put all the relevant information before us? Those are my concerns and I think it is worth noting that a number of eminent economists around the world have criticised the IMF for the way it has gone about implementing some of its policies.
I thank senators for their contributions and their support. Senator Xenophon, we are happy to take those questions on notice and respond. On that basis, I commend the bill to the Senate.
Question agreed to.
Bill read a second time.