Statement by the Hon. Dr. Michael Cullen, Governor of the Fund for New Zealand, at the Joint Annual Discussion
Fellow governors and delegates, I am again pleased to participate in this meeting. I would like to begin by thanking the
United Arab Emirates authorities for the excellent arrangements in organising this meeting.
It is multilateral organisations such as the Fund and the Bank that can make sizable and lasting contributions to many
of the problems we face.
Globalisation and Trade
Globalisation takes many forms. One is from increased flows of trade, which assist the development of poor countries,
emerging markets and developed countries. Liberalising trade requires a multilateral effort, and I express my support
for the leadership from the Bank and the Fund in the public and persuasive statements on trade liberalisation in the
Doha round.
The outcome from Cancun was at best, disappointing and, at worst a disgraceful failure of the common will to make
essential progress. It will take time to make gains after losing momentum at Cancun. There is a profound contradiction
in the efforts we make: here, in Dubai, we will talk about progress towards the Millennium Development Goals; at Cancun
we retain trade barriers that inhibit growth in poor countries.
Developing countries need support to take advantage of trade opportunities where they arise, and New Zealand is
committing resources to trade-related capacity building and removing supply side constraints. However, this work will be
wasted unless there is movement on trade distortions. Subsidies and quotas lock in constraints to trade and the
development of poor countries.
There have been calls for an increase of aid of some US$16 billion. This is only four to five percent of the total spent
on agricultural subsidies by the world’s richest countries.
As the finance minister of a small developed nation substantially dependent on unsubsidised agricultural exports, I find
it hard to argue that my country should greatly increase aid while we, along with the world’s developing nations, face
unconscionable subsidies, along with tariff and non-tariff barriers to agricultural trade. Demolition of these rotten
structures will increase the incomes of poorer nations and free up resources in the richer ones to increase aid.
At the same time, progress must be made on other issues, such as trade facilitation, which also stand in the way of
international progress and development. A successful outcome to the Doha round cannot and will not be a one-sided one.
The next year will tell whether the fine words we utter at these conferences about trade liberalisation are meant, and
will be translated into substantial progress, or whether they are merely the cover for the continuation of distortionary
and unfair trade policies, which ironically, reduce total welfare in both the developed and the developing nations.
Effectiveness and Harmonisation
In the Pacific, New Zealand is committed to rationalising institutional arrangements and harmonising aid programmes.
However, there are still issues to resolve in relation to the effectiveness of programmes, targeting of assistance and
careful management of partner sensitivities. We encourage the Bank to move further in this area to assist with
harmonisation, working closely with the borrowing governments and donors.
Last year, my Government established a new aid development agency in New Zealand with a central focus on poverty
elimination – NZAID. The new focus is narrower, but deeper.
Small States
Many challenges face our small state development partners in the Pacific including, isolation from markets, post
conflict stress, and diverse cultural and social settings. We support the Bank’s efforts to develop innovative
approaches to co-ordinating bilateral and multilateral aid agencies in the Pacific.
Earlier this year, the Solomon Islands Government and Parliament invited a regional presence to help restore law and
order, and rebuild governance structures. We welcome the Bank’s involvement and re-engagement, and believe that it is an
important example of the role for the Bank in the Pacific region.
The Bank’s revision of its Pacific Strategy in 2004 will be important in setting the future development agenda for the
Pacific, and we look forward to increasing dialogue with the Bank and our development partners on the revision to the
strategy.
Voice and Representation
The representation of members at the IMF and the World Bank is central to the credibility of the two organisations. A
strong voice for developing countries is fundamental if the Bank is to function effectively. Equally, we need to
recognise changing relative economic positions.
Internal Reform
New Zealand is an advocate of the internal reforms at the Bank and the Fund. We would like to voice our support for the
President’s work and the Managing Director’s work in relation to strengthening internal governance.
However, with this support and commendation comes an acknowledgement that further work is required. We have seen a drift
in the relationship between revenue and administration expenses and growth in the transaction costs of doing business
with the Bank. Flexibility is necessary in the short term, but balance is required over the medium term if the
institution is to function well.
Conclusion
New Zealand is a firm proponent of economic, social and environmentally sustainable development. As the Fund and Bank
work to improve the development of low income and middle income countries, I congratulate the President and Managing
Director on their personal leadership on trade issues. But our sense of frustration is mounting as we see few signs that
the gap between promise and performance is closing.