Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of this bill. This bill gives effect to an agreement with the International Monetary Fund to provide a standing appropriation and authority to borrow for payments to meet drawings made by the IMF, under the decision to renew the new arrangements to borrow made by the IMF executive board in November 2016. The previous five-year arrangement will expire on 16 November 2017, with a new arrangement to go from 17 November 2017 to 16 November 2022. Under this agreement, the maximum amount of Australia's lending commitment to the IMF's special drawing rights is $2.22 billion—around A$4.05 billion.

The SDR is an international reserve asset which can be allocated to member countries in proportion to their IMF quotas. The agreement is only activated when additional funds are required to support lending to member countries. This requires agreement from the participant countries that make up 85 per cent of the total credit committed under the NAB and the IMF executive board that the quota resources available to the IMF for lending are not sufficient for its lending needs.

The bill has no direct impact on the budget bottom line. However, if the agreement is activated and the funds are provided, there is an indirect impact due to the government's lending to the IMF increasing our borrowing requirement, and where the interest payable on any money borrowed by Australia to meet an IMF drawdown exceeds the interest paid by the IMF in regard to that drawdown. This agreement will be included in the budget papers as a quantifiable contingent liability.

The NAB became operative in November 1998, arising out of concerns first raised in 1995 that more resources might be required for the IMF to respond to future financial crises. Australia has been a participant in these arrangements since their commencement. This updates an arrangement that we made in government, which arose out of the IMF quota and governance reforms, in 2010. That legislation passed the parliament in September 2012 for the same special drawing rights amount of $2.22 billion, worth around A$3.2 billion at the time. This represents an important aspect of our international obligations as a member of the International Monetary Fund, and Labor will be supporting this bill.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

I have deep concerns about our ongoing commitments to organisations like the IMF and the United Nations, in particular, where we are pledging what is effectively borrowed money to support the bailout of nations that can't manage their own financial affairs. I don't have that much confidence in the IMF as the arbiter of responsible financial management. If they were having a positive role in international affairs, you would expect that they would pre-empt and be able to forecast some of the crises that have captured the globe—for example, Greece, which was on a trajectory to bankruptcy for many decades. The problem we have right around the world is that the level of debt is far too high, because governments of all persuasions insist on giving people the impression that there can be a magic placement of cash that they don't have to work for, that they can just receive, and everything will be all right. There is this perception of: 'What's in it for me?'

One of the great tragedies is that Australia is heading down the same path. About 50 per cent of the people in this country receive more in benefits than they pay in taxes. It operates such that the top 10 per cent of earners pay in the region of 40 or 50 per cent of the taxes, or even more. That's simply not sustainable. Those on the other side of the chamber will say that they should be taxed more to provide more benefits. Well, that's wrong. It is absolutely wrong. We need to get our own house in order before we can be better, more responsible contributors to the global economy, and pledging access to some billions of dollars for the IMF—about $8.6 billion, I understand, of money borrowed from Australian taxpayers—doesn't seem very prudent to me. In fact, it's less than prudent. It's foolish; it's inane.

First of all, we have obligations to repay the intergenerational debt that has been clocked up by those on both sides of the chamber in the past 10 years. That is expected to peak at $726 billion, but I can tell you now, that will not be the peak. The runaway debt in this country shows no signs of abatement at all, and I would lay London to a brick that the debt incurred in the last 10 years will not be repaid while any of the current members of this place are still here. We'll all be long gone and leaving it to others to pay for the activities and the actions that successive governments have responded to. I'm opposed to the International Monetary Agreements Amendment (New Arrangements to Borrow) Bill 2017, because we are pledging borrowed money to give to an organisation that is unaccountable and unelected and that then gives the money to countries that have been unable to manage their finances. It's imprudent; it's illogical. There is a better way. So, I oppose this bill.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

The International Monetary Agreements Amendment (New Arrangements to Borrow) Bill 2017 allows the Treasurer to borrow $4 billion on which we will pay interest at around 2½ per cent so that the Treasurer can lend it to the International Monetary Fund and receive interest at 0.4 per cent. Let me repeat that: the bill before us today allows the Treasurer to borrow $4 billion on which we will pay interest at around 2½ per cent so that the Treasurer can lend it to the IMF and receive interest at 0.4 per cent. As you can see, I am almost alone here in the Senate. Almost no-one else has any concerns about this lunacy. Once I sit down, the minister will speak for about 30 seconds, and 30 seconds after that the bill will have been passed by the parliament, through indifference. Minister, you've had your introduction. Let the madness begin.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank senators who have spoken in this debate for their contributions. The new arrangements-to-borrow legislation form part of a broader global effort to ensure that the global financial safety net remains strong and resilient in the face of economic crisis. The IMF's mandate to support global economic and financial stability is of critical importance given continuing risks to the global economic outlook. For Australia, as an open trading economy engaged with and exposed to the world and to global economic and financial conditions, it is very much in our interests to do all we can to ensure that the IMF has the resources it needs to fulfil its role, which is why I commend this bill to the Senate.

Question agreed to.

Bill read a second time.