New Zealand Horticulture Export Authority Amendment Bill (No 2) — First Reading 
New Zealand Horticulture Export Authority Amendment Bill (No 2) — First Reading 
[Volume:607;Page:4675] 
New Zealand Horticulture Export Authority Amendment Bill (No 2) 
First Reading 
Hon DAMIEN O'CONNOR (Associate Minister of Agriculture) 
: 
 I move  
That the New Zealand Horticulture Export Authority Amendment Bill (No 2) be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Primary Production Committee. The bill provides amendments to the New Zealand Horticulture Export Authority Act. The Act establishes the Horticulture Export Authority to promote the effective export marketing of horticultural products. In particular the Act provides for the Horticulture Export Authority to approve export-marketing strategies for the horticultural products prescribed under the Act and to license exporters to implement those strategies. Almost $170 million of horticultural products were exported under the Act in the year to 30 June 2002. The major horticultural products exported under the Act are squash avocados and summer fruit. 
The bill provides for five amendments to the Act. The first amendment is to enable kiwifruit exports to Australia to be prescribed by Order in Council under the Act. This amendment was proposed by the kiwifruit industry to allow the industry to better coordinate exports of kiwifruit to Australia. It is not possible simply to prescribe kiwifruit under the Act because it would result in a conflict between the Act and the Kiwifruit Export Regulations 1999. Those regulations govern all kiwifruit exports except for kiwifruit exported for consumption in Australia. They provide for only Zespri Group Ltd and approved collaborative marketers to export kiwifruit to these other markets. 
Kiwifruit exports are New Zealand’s single most important horticultural export accounting for almost 30 percent of the total value of horticultural exports in the year to 30 June 2002. Australia was the sixth most important market for kiwifruit exports and was worth $31 million. However the price received for kiwifruit exported to Australia was 29 percent less per kilogram than the average price received for kiwifruit exported to the rest of the world. 
Lower kiwifruit prices in Australia have a wider negative effect. The price differential between Australia and other markets especially Asian markets encourages illegal re-exports of New Zealand kiwifruit from Australia. Such re-exports are illegal because kiwifruit exports from New Zealand other than for consumption in Australia must comply with the kiwifruit export regulations. Higher prices in Australia would reduce the incentive for this activity and licensing exporters to Australia would aid enforcement. 
It is important to note that this bill does not in itself regulate kiwifruit exports to Australia. Once the Act is amended an industry body representing growers and exporters of kiwifruit to Australia would need to seek growers and exporters support and then apply to the Minister to prescribe kiwifruit exports to Australia by Order in Council under the Act. The time line for the bill is driven by the kiwifruit industry’s desire for kiwifruit exported to Australia to be prescribed under the Act as soon as possible and certainly in time for the season commencing April 2004. 
The second amendment in this bill is to remove the ability for quantitative restrictions to be imposed under the Act. Such quantitative restrictions could limit either or both the number of exporters and the volume of exports. The Government proposes this amendment for two reasons: first as exporters generally oppose the use of quantitative restriction provisions they are neither currently being used nor likely to be used in the future; second these provisions potentially could be used in a way that would be inconsistent with New Zealand’s international obligations. 
The final three amendments in this bill are administrative in nature. The first of these improves the transparency of the Horticulture Export Authority’s statutory decision-making processes through allowing applicants to seek a reconsideration of the authority’s decision. The second administrative amendment relates to the powers of the arbitrator who under the Act considers appeals of the Horticulture Export Authority’s statutory decisions. The last administrative amendment is to allow the Horticulture Export Authority to revoke redundant export licences. 
This bill is necessary to achieve these changes. The Horticulture Export Authority supports these amendments and most kiwifruit growers and exporters support enabling kiwifruit exports to Australia to be prescribed under the Act. I welcome the support of most parties in this House for this non-controversial legislation and I commend this bill to the House. 
Hon DAVID CARTER (NZ National) 
: 
 I start by thanking the Minister who has just introduced this legislation for not imposing the guillotine clause on the Primary Production Committee thereby giving us a chance to genuinely hear submissions. That is certainly a change from the treatment the committee has had in recent times whereby we have been given legislation to consider but are expected to treat the submissioners with disdain in order to report it back to the House in a matter of weeks. So I thank Damien O’Connor as the Minister introducing this legislation and as a very valued member of the select committee for allowing us to hear this bill over a reasonable time frame because I have little doubt that submissions will be made on it. 
I start by saying that we will certainly be supporting this legislation to the select committee but we want to have the opportunity of clearly hearing the arguments from both sides of the fence as to the need for supporting this legislation further. First I will quote from a publication put out by HortResearch in which it makes this statement: “Horticulture makes a significant contribution to the New Zealand economy both through its exports now worth more than $2 billion annually and through its growing reputation for providing fresh and often exotic produce to tempt the tourist’s palate.” I make that contribution because we often forget how important horticulture is to this country. In talking to this bill we are clearly dealing with only one of our horticulture-based industries—the kiwifruit industry which effectively comprises a third of all horticultural exports. 
The kiwifruit industry is a major industry. Last year its export value was close to $620 million. I acknowledge that there is an issue and concern particularly with regard to the quality and price of the fruit being sold through Australia. The difficulty for me personally as we progress this legislation is that over a period of time we have been through a process of trying to deregulate older producer boards and allowing people to get on and do their thing. Having said that I take this opportunity to acknowledge the success of the kiwifruit industry over recent years. 
Before coming to the House I had the opportunity to look at the annual report of Zespri to 31 March 2002. Zespri was able to record record sales in excess of $800 million. It is close to being a billion-dollar industry and that is a credit to it. I am aware as we look ahead to the coming year and as the export season gets under way that things have not been so easy for the industry. I was in the Bay of Plenty in the spring of 2002 and I recall the difficulty some growers faced with the late frosts that had caused in some cases quite significant damage to kiwifruit acreage. I think that this year we will see prices up and that is good but volume down somewhat because of the damage caused by the frosts. 
The evidence before the select committee will no doubt show us that there is a problem with the way the Australia market is being handled. I note that the explanatory note of the bill quotes figures of $2 per kilo free on board in 1999 and that has declined in 2 years to $1.53. 
Ian Ewen-Street 
: That’s outrageous! 
Hon DAVID CARTER 
: Ian Ewen-Street interjects and says that that is outrageous. As a member of the select committee I want take the opportunity to hear submissioners tell us what is going on and if the situation is one of quality not being maintained because of the kiwifruit regulations of 1999 then we need to look at that. 
When I first got to know a little about this bill I was certainly aware of the additional problem of fruit going to Australia and then being re-exported into our market which is currently protected by the single-seller arrangement. Again if that is happening we as parliamentarians need to address that situation. What I remain unclear about is how having identified that situation and having passed this legislation we will still be able to catch up with operators who are determined to break Australian rather than New Zealand law. No doubt as we get under way we will have the opportunity to examine that issue. 
The Horticulture Export Authority has itself been very successful as a means of assisting the export of significant products of New Zealand. The one that surprised me when I was in the Bay of Plenty late last year was the avocado industry. We often consider ourselves to be importers of considerable quantities of avocados particularly from Queensland. In fact we export $28 million worth of avocados a year and that is a rapidly expanding market. That crop is then controlled via the Horticulture Export Authority. I say that if it works there then it is certainly worthy of consideration in respect of kiwifruit if we are having a problem with that particular market. 
It will be interesting for the select committee to see where opposition to this legislation comes from. Late last year in November I recall a visit from Mr Paul Morgan of the Federation of Maori Authorities. He said that if we support such legislation we will make it more difficult for Maori kiwifruit exporters to do their own thing and to create wealth for themselves. Let us look at that argument as it is delivered to the select committee. I have little doubt that quite divergent views will be presented to us and it will therefore be quite a challenging situation for the select committee to then arrive at a solution to the legislation presented to us by Damien O’Connor today. 
In closing I say that I look forward to the opportunity to work through this legislation. I take the opportunity of repeating how important horticulture is to New Zealand; its importance is often under-estimated by many many New Zealanders. Again I congratulate Zespri and the Kiwifruit Marketing Board on the success they have achieved over recent years in making kiwifruit a vibrant industry. It was not so many years ago that this industry was under extreme difficulty. As all New Zealanders I hope appreciate we will improve our standard of living in this country substantially only if we can identify what we are good at producing and then make sure we satisfy overseas markets. We have learnt a lot in recent years about presenting to the overseas markets the fruit and other produce they want. It is no longer acceptable for us to tell overseas markets what they are going to get because of what we have to export. We have moved well past that. 
Zespri has been part of that process. I congratulate it on the stunning effort it has made as outlined in its annual report for last year and look forward to another annual report which must be just about due at the printers to make sure that it is still doing its part to assist in raising the living standards of all New Zealanders. 
LARRY BALDOCK (United Future) 
: 
 On behalf of United Future I rise to support this bill’s progression to the select committee. It is important to understand that this bill amends the New Zealand Horticulture Export Authority Act in two ways. One suite of changes relates to the operation of the authority in general. As it stands the Act allows quantitative restrictions to be imposed on the export of prescribed products. Although those provisions are not used their continued existence in legislation is inconsistent with New Zealand’s international trade obligations. 
Three other general amendments to the Act suggested by the authority itself are aimed at improving its administrative efficacy. There is a hearing process for Horticulture Export Authority decisions on export licence applications and also where the authority believes on reasonable grounds that a licensed exporter has conducted export operations that prejudice the current product group’s export marketing strategy. However there is no provision for hearings to be held on other statutory decisions of the Horticulture Export Authority so the bill will change that. The bill also allows costs to be awarded to all parties in the case of any dispute under the Act overriding the precedent set by the recent arbitrator who did not award costs to all parties. Finally the current Act does not allow the Horticulture Export Authority to revoke redundant export licences and therefore the register of exporters includes some redundant information. The bill tidies that up. 
Beyond those changes to the general operation of the authority the bill also contains specific amendments relating to the kiwifruit industry. It provides the kiwifruit industry with an option to coordinate the export of kiwifruit to Australia through the Horticulture Export Authority. Kiwifruit exports to the rest of the world except Australia are managed by Zespri in a single-desk export regime. Here I would like to echo the comments made by the member who spoke previously to me in congratulating Zespri on the fine work it has been doing in recent years. As a resident of Tauranga in the Bay of Plenty I welcome the transfer of Zespri’s head office to Mount Maunganui where it will continue to make a significant impact on the economy of the Tauranga region. 
The bill amends the definition of “product” under the Act to include a specific reference to “kiwifruit for export to Australia” otherwise all kiwifruit exports could be prescribed conflicting with the Kiwifruit Industry Restructuring Act and the Kiwifruit Export Regulations that regulate all exports except those for Australian consumption. Since the Australian market for kiwifruit was deregulated in 1988 it has been swamped with low-quality kiwifruit coming from New Zealand which has damaged the market. There is also a problem with the re-exporting of New Zealand kiwifruit from Australia to other countries where it competes alongside high-quality Zespri product. 
The industry considers that bringing kiwifruit exports to Australia within the Horticulture Export Authority framework will allow marketing to be coordinated and quality standards to be applied leading to increased returns. The move will make it possible to limit or end illegal re-exporting because exporters will be required in their export licences to comply with an agreed marketing strategy. Increasing returns from the Australian market will reduce the margin between this and higher-value Asian markets thereby reducing the incentive for re-export. 
The problem of re-exporting was highlighted by a recent Commerce Committee report that found that Zespri had withheld payments to 20 growers it suspected of illegally exporting fruit to Asia and the Middle East. This was the only recourse available to Zespri in the absence of the solutions that this bill will provide. Zespri claimed that some exporters were sending fruit to Australia which they were entitled to do but were then involved in this fruit being sent to other countries for example Taiwan and China where it competed on price with Zespri’s fruit. Only the Ministry of Agriculture and Forestry has the legal power to investigate suspected breaches of kiwifruit export regulations and Zespri was acting outside its statutory authority in this instance. However it was able to suspend payments because it has a monopoly on export except to Australia. We are hopeful that this bill will ensure that Zespri is not forced to take those actions in the future. 
However it also has to be said that this problem has been around for some time. When the Government decided in 1989 not to include Australia in its kiwifruit regulations because it was deemed to contravene the principles of closer economic relations kiwifruit industry leaders were unhappy at the prospect of an open slather Australian market. The Chairman of the Kiwifruit Marketing Board Paul Heywood predicted that “grower returns from the Australian market are likely to be poor as a result of this decision which is not in the long-term best interests of the industry.” The Managing Director of Fruitfed Export John Mangon warned: “If the Australian market is flooded with fruit exporters over there are quite likely to buy it cheap and fly it somewhere else.” Regrettably those prophecies came to fruition. Low-quality New Zealand exports had a far-reaching effect on much better lines of New Zealand fruit on the same market where sceptical buyers forced the price down. At this time Australian kiwifruit also began to appear on the market. 
Things have not improved. In the 1999  
Gazette 
 trade standards for kiwifruit were revoked and in the same year the Kiwifruit Export Regulations came into force to regulate all New Zealand kiwifruit exports except exports to the unregulated Australian market. Because Australia is the only unregulated market for kiwifruit some growers and exporters tend to treat it as a dumping-ground for low-quality product undermining the price while returns from other export markets have increased over time. Declining quality has led to a downgrading of kiwifruit in supermarkets with very little promotion and the Australian consumers are therefore substituting other better-quality fruit for kiwifruit. Low returns in the Australian market encourage the illegal re-export of kiwifruit to Asia damaging returns from New Zealand exports to these high-value markets. Zespri has estimated that this activity cost it $1.9 million in 2001 alone. Details of the volumes involved are difficult to obtain given the re-export of product via Australia. 
The key question that the select committee will need to grapple with is whether the Horticulture Export Authority is the most suitable mechanism for controlling kiwifruit exports to Australia. The authority serves horticultural product groups that do not have single-desk marketing. Its powers under the Act are minimal since the spirit of the legislation is that it should be used to enable industries to succeed not restrict them. The 1998 review of the Horticulture Export Authority resulted in the Ministry of Agriculture and Forestry receiving 203 submissions with 85 percent of respondents supporting the authority’s retention. 
If the bill is passed kiwifruit exporters and growers would need to form a product group and apply to the Minister of Agriculture and the Minister of Foreign Affairs and Trade for an Order in Council to prescribe exports to Australia under the Act. The Minister must be satisfied that there is industry support for this application. The product group would then be responsible for developing its export marketing strategy obtaining industry support for it and submitting it to the Horticulture Export Authority for approval. The authority can then license exporters allowing the industry to put standards in place lift returns and stop exports. 
The advantages of working under the Horticulture Export Authority lie in the existing legislation the authority’s independence and the experience that exists within the authority. Industries are free to decide whether to use the Horticulture Export Authority and are free to withdraw. The select committee process should determine whether the kiwifruit industry is genuinely supportive of working under the authority. 
The alternatives seem to be limited. For the Australian market there is no desire to replace the current multiple export environment with a modified single-desk system like Zespri. The industry could work together to maintain standards but attempts to do this voluntarily have met with only limited success partly because it is not enforceable without statutory backing. Our hope is that this is the best-available mechanism to ensure that growers exporting to Australia receive adequate return for quality product and we shall be looking with interest to the return of this bill from the select committee following the submission process. 
R DOUG WOOLERTON (NZ First) 
: 
 I will say at the outset that New Zealand First will support this legislation to the select committee where we will listen to the debate with interest and in particular hear what the select committee will do about the concerns that the Federation of Maori Authorities has regarding this bill which they see as an attack on free enterprise or the free market. In particular the federation sees this as disadvantaging Maori. 
Hon Damien O'Connor 
: What do you reckon? 
R DOUG WOOLERTON 
: I will tell the member what I reckon in a minute. We would like to hear what the select committee has to say on that but before I go into that subject I would like to say that this industry along with all the other producer boards had the once-over heavily by the Hon John Luxton at the time of the review of the producer boards. 
I was told by people close to the Federation of Maori Authorities that this industry wanted to be deregulated that it wanted to go it alone into the free market and do all those sorts of things. In fact when the vote came this industry voted for a similar structure to that which the dairy industry opted for which was to change the board and the other structures surrounding it into a corporate to be called Zespri and it has continued more or less as a single seller since then. Therein lies the problem for some of the people namely the Federation of Maori Authorities which does not believe that that was the way it should go. But that was what the industry voted for. The industry went back to the Minister of Agriculture and so it turned out to be and that is what we have at this point in time. 
If a corporate like that with the backing of the industry decides that it will set standards and a marketing strategy and put value into its brand it will insist that that value is retained by the selective choosing of products. In other words only the highest-quality product will get through to the market. That situation is harmed enormously when some people use the one deregulated market in Australia to then export on to other markets and therein lies the problem. 
The legislation we are considering now which we support going to the select committee will be looking at whether that is the case whether it is being used quite deliberately and whether it is like the monkey with his hands over his eyes ears and other parts saying “I don’t want to see this evil I don’t want to hear about this evil and I don’t want to know about this evil”—let alone any other evils that the Greens might think up. 
Hon David Carter 
: The Prostitution Reform Bill. 
R DOUG WOOLERTON 
: We have an interjection from the numbers man in the National Party. I would have thought he had far more work to do in that corner than to spend time interjecting on my interesting speech. 
We in New Zealand First believe that if the majority in an industry is intent on retaining a market sector and brand value and on creating more money for New Zealand and New Zealanders the majority should be backed. People who do not agree with that stance need to have a very good case and we would be prepared to look at some alternatives that may progress the Federation of Maori Authorities’ desire to have a freer market. In order to have their ideas accepted we think they should come up with some fairly entrepreneurial points of difference. However we will look at that in the select committee. I look forward to this bill getting to that point so that we can do business with it. 
CLAYTON COSGROVE (NZ Labour—Waimakariri) 
: 
 As a member of the Primary Production Committee I rise to take a short call in support of this bill. This bill is about retaining the integrity and benefits of cooperation within the industry rather than putting that sort of benefit at risk through a pure market model. The industry has come to the Government and Parliament and asked for reforms—as have other industries like the dairy and pipfruit industries. The Government and the select committee will listen to those submissions but we would obviously like to get the job done as soon as possible to signal to the industry that it must abide by the principles of the regulations which state that all marketing should be cooperative and collaborative. It is about enabling the kiwifruit industry to retain its quality and its standards maximise its benefits and maintain its integrity. I support the bill on that basis. 
GERRARD ECKHOFF (ACT NZ) 
: 
 This bill as has been alluded to by other speakers is about an export-marketing strategy—amongst a few other minor details—for exports to a country called Australia. I have a couple of rhetorical questions I would like to ask any member of the House. What happens if the strategy is wrong—and indeed what happens if it is wrong over a period of years? I ask members to cast their minds back to just a few short years ago when we had an organisation called ENZA which was exporting New Zealand apple crops to the world and was getting good prices for a time. But what happened? It got fat and lazy. It did not bother getting out there and doing the yards doing the selling. The apple industry was absolutely brought to its knees. 
I have another question for any other member in this House. What is the marketing strategy of Zespri or the Kiwifruit Marketing Board for New Zealand? At the Coal Creek dairy I can find exactly the sort of fruit that every other member in this House is complaining about. I can buy second-grade or third-grade fruit in Coal Creek or in Alexandra or in any other part of this country yet the kiwifruit grower is not allowed to export that fruit to another country. That is absolutely nuts. I am sure that Mr Damien O’Connor will pick up on that and will probably take a call if he can to explain to us why the kiwifruit industry does not have a first-rate marketing strategy for our own country. 
R Doug Woolerton 
: It does—send the rubbish. 
GERRARD ECKHOFF 
: It does—there we go. Again I am slightly perplexed here. Why is it OK to sell second-grade or third-grade fruit to our own people but not OK to export it to Australia? 
I have another question for this House. If somebody decides to export a product to another country I would presume that that person had been paid for the product; who then owns the product? If I sell kiwifruit to my colleague on the other side of the House and he gives me some money for it who then owns the kiwifruit? I say that any exporter who wants to sell a product to another country will lose the marketing rights once that product is sold. When I hear this nonsense about how we have driven the market down because there is second-grade fruit there I think that I could probably take people to meet a few million Australians who are very happy to pay a lesser price because that is what they can afford. But they still like kiwifruit. They still like to put it on top of their pavlovas and they still like it for their early morning constitutionals—which is very important; that feature being one of the great attributes of kiwifruit. Why can we not export fruit of a lesser quality to allow those who have a lesser income to enjoy the fruit? Why do we have to sell just the top-quality fruit to those people and say: “If you can’t afford to buy our gold or green kiwifruit—tough! We’re not going to give you our slightly lesser grade fruit which might be slightly misshapen because Zespri says it does not like it.” 
It might come as a surprise to members of this House to learn the basis on which we sell other products overseas like our New Zealand wine. We sell New Zealand wine on the basis of quality and price. We have New Zealand wines side by side in shops in Australia the UK and throughout the world and a buyer can come along and say: “Gosh there’s a nice bottle of Cloudy Bay at $45 a bottle.”—or probably $85 a bottle in the case of that particular wine. Buyers could also buy a bottle of “Coal Creek Chateau Something-or-Other” for $15 or $100 a bottle. Our wine competes on price and quality. So why is kiwifruit so different? I am getting some sort of stunned silence here. I am asking some pretty fundamental questions and I am not really getting any answers. 
This bill is about a constraint on trade. I expect to hear from the Maori members on this. We have already heard Mr Woolerton speak of the Federation of Maori Authorities which demands the right—as it should—to sell its own fruit without having to get permission to do so from somebody in Wellington. Is that so wrong? What is so wrong about having the right to sell one’s own fruit wherever one wishes if one can find a market? 
I go back to ENZA. A few years ago the growers in Roxburgh complained because they had a bad year when the fruit did not swell up. They said: “We’ve got small apples and ENZA won’t take them. We’ve got to dump them or mulch them and feed them to the pigs.” An enterprising grower went to America knocked on the door of one of the education boards over there and said: “I’ve got these small apples. Is there a market in your school for them?”. Someone on the board said: “How many containers can you give us a week? Our children take one or two bites then bung the apple out.” 
So there is a market for everything. There is a market for second-grade wool for all sorts of purposes including carpet. We do not have to sell first-quality products all the time although we strive for that. Of course we want to hit the top but any of us who have been in the production game know that there are such things as seconds and that we cannot always achieve 100 percent quality whether we are growing wool beef kiwifruit or whatever. 
I come back to the fundamental question: if we are to have some sort of hybrid single desk for this produce why do we not have a similar thing for the meat industry as well? The answer is that we did and it was an abject disaster. It cost the Government of the country at the time millions upon millions of dollars to bail the industry out. It did not work. So why do we not have a wool export authority? Well we did and we had massive stockpiles of wool that we could not sell. It cost the industry; it put that particular industry back years. Again I come back to the principle behind this issue—that is that an individual an exporter or whomever it might be must have the right to export his or her product. Can members imagine for example the massive wall of radiata that we have in New Zealand right now having a single export authority—a timber export authority? And why not have one for cheese as well while we are about it? 
What I am trying to put to the House and to listeners to the radio is that the fundamental right of every grower and manufacturer in this country should be to have the opportunity to export their product whether it be first-grade or second-grade. If they so wish they find the market. The issue is not about flooding markets with poor-quality fruit. One can do that only for so long before one goes broke. There is no question that New Zealand has a reputation for producing quality food and I would demand that that reputation remains but we must also recognise that we do have seconds and that we can and should export those wherever people see fit. 
I make the point that to date Zespri has been a great success. So was ENZA a few years ago. Nobody is suggesting and I am certainly not suggesting that Zespri should be abandoned and the 83 percent of growers who wish to be within ENZA should disband—nothing like that at all. I am saying that the 17 percent of Maori authorities the indigenous people within that grouping who want to export their own fruit should not have to go cap in hand and present a marketing plan to ENZA or the Horticulture Export Authority. Again I come back to a fundamental principle—the right of every manufacturer and every grower to sell their own product. 
MARTIN GALLAGHER (NZ Labour—Hamilton West) 
: 
 I certainly want to congratulate Damien O’Connor on the introduction of this bill. I believe that he as a relatively new Associate Minister of Agriculture is beginning to make his mark in that portfolio and that he is doing a very good job. As the member for Hamilton West I want to commend him for his great work. 
It is relevant that I reflect on a visit I made to Australia the other year during which I spent time with my federal member friend the member for Bendigo Steve Gibbons. Bendigo is a large provincial city in the state of Victoria where orchards and the fruit industry are quite important. He conveyed to me the significant grower sensitivity about any New Zealand fruit imports. I was aware of some of the sensitivities around biosecurity and other issues not all of which I agreed with at the time. 
I draw members’ attention to one aspect of New Zealand fruit exports to Australia be they kiwifruit or any other type of fruit. The previous speaker said that if an exporter exports a poor-quality product the exporter will eventually go broke and the market will somehow self-regulate. The reality is that if one has poor-quality fruit going to the state of Victoria or anywhere else within the Commonwealth of Australia we as a country will in terms of our brand name go down the tube. Quite frankly the previous speaker’s contribution was in my view—and with due respect to him; I am not questioning his sincerity for one moment—somewhat in a fruity way nutty. I commend this bill and I commend it to the select committee. 
IAN EWEN-STREET (Green) 
: 
 I intend to take only a very brief call this afternoon. But I do want to take the time to say to the honourable member from “Upper Coal Creek” Gerrard Eckhoff: “I told you so!”. It is very interesting how fashions come and go. All through the 1970s and the 1980s we had to deregulate. Every single-desk seller had got fat lazy and inefficient and so had to be deregulated. We have done that and look at what happened to ENZA. Mr Eckhoff said that ENZA is a classic case. ENZA of course was corporatised—it actually became a corporate. That was the cause of its demise not the fact that it was a single-desk seller. 
We need to look at what is actually going on here. For years we have been told that the market would dictate prices that inefficient growers would fall by the wayside and that those remaining would live happily ever after in a prosperous nirvana. They would be safe in the bosom of the free market. Well what has happened to these exporters to Australia? The prices have fallen by 24 percent over the last 2 years. At the same time the regulated part of the same industry has had increases in prices over the last 2 years. It is interesting. 
We Greens get dumped on a lot. We have consistently opposed deregulation and consistently supported single-desk sellers. Our reason for doing so is that we believe they provide better returns for growers. Our friends in National told us that we were wrong and that we were just a bunch of long-haired jandal-wearing mung bean - munching potheads and dropouts—myself excluded of course except for the long hair. We have been told that we are wrong. But are we? What has happened in Australia with the kiwifruit is that a whole lot of people have been independently exporting to Australia and the prices have dropped. We know all about the re-export to other countries. But what has happened in respect of kiwifruit going into the Australian market is that it has become a commodity. 
We are told that commodities are great that we live and die by commodity prices going up and down. But we do not often stop to think of what a commodity is. A commodity is simply something we grow or produce in this country that is identical in every way to an equivalent product grown or produced in any other country. When these products which are identical to those from a whole range of countries whether New Zealand Australia Argentina Chile the United States or wherever go on to the open market and when the buyers which are generally big international corporates or supermarket chains have established that they are buying commodities—which members should remember are identical to each other—their sole criterion in making a purchase is price. If people are selling a commodity then by definition they have to accept the lowest possible price for their product. 
That is the problem with our deregulated industries. With Zespri we have a regulated industry that is showing a united front to all those commodity buyers in other parts of the world who are trying to undercut or play off individual exporters within New Zealand. It simply does not work. 
Gerrard Eckhoff 
: What about stockpiles of wool? 
IAN EWEN-STREET 
: That is perfectly true. I would not defend that kind of behaviour. It was unusual behaviour in the first place. 
It is interesting to look at the prices that have happened in Australia. The price has gone from $2 a kilo in 1999 to $1.53. That is a 12 percent decline per year. That is extraordinary. 
A further thing I want to mention just very briefly is the question about Maori growers. Other people have mentioned the Federation of Maori Authorities which quite rightly said that it wished to retain the right to export its product independently to Australia. The majority of growers have voted to be reregulated. That is what this legislation about. 
Gerrard Eckhoff 
: Who needs the tyranny of the majority! 
IAN EWEN-STREET 
: Yes the tyranny of the majority. The Maori authorities want to have something that is good for them. It does not happen to fit the ideology of the day but it is clear to them that it is better for them. The Maori authorities are perhaps a special case. We could probably argue a special case for organics as well. Maybe there is a reason they should be left out of the collective. They should have the right to export either independently or collectively. 
Gerrard Eckhoff 
: Why? 
IAN EWEN-STREET 
: They have qualitatively different product. It is the same with organics. We are not talking about the same product; we are decommodifying it. All the conventionally grown kiwifruit that is going into Australia are effectively the same. But if one has certified organic kiwifruit or indigenous-grower kiwifruit then one has something that is different. It is a different market. It may look the same and taste the same but it is a different market. We have to be very aware of that. The Maori authorities have a very good point. Is their right to export independently covered by their right to self-determination? That is a fairly interesting point. Does self-determination for Maori mean self-determination in exporting their product? It is a reasonable point to put. 
I said that I would be brief so I had better stop before the interjectors get too excited. I look forward to hearing the evidence particularly of the Federation of Maori Authorities in the select committee. I am happy to say that the Greens support the passage of this bill through to the select committee. 
GEORGINA BEYER (NZ Labour—Wairarapa) 
: 
 It is always a privilege to make a contribution to a first reading debate and particularly on this bill. This is good positive legislation that I know that people in my area of Wairarapa will be keenly interested in since we have a fruitgrowing industry in that area. Naturally of course the bill is backed by the kiwifruit industry itself. This bill will be of interest not only to that industry but also to all New Zealanders in the hope that we make better law for their better production. 
SHANE ARDERN (NZ National—Taranaki - King Country) 
: 
 I will start by saying that the National Party will support this legislation to the select committee. I congratulate the leadership of Zespri on going through the process in a thorough way and coming back to this Parliament with a recommendation for some change. 
Jill Pettis 
: How’s the leadership going in the member’s party at the moment? 
SHANE ARDERN 
: The member for Whanganui of course is an expert on kiwifruit and other land-based industries. I respond to her by saying that this has to be the most schizophrenic Government I have seen in the history of this country. One moment it is deregulating industries up and down the country and the next moment it is suggesting in the House that in this case there needs to be further regulation. Which way is it? I guess the answer lies in listening to the previous speaker from the Green Party Ian Ewen-Street. If ever there was a case for how to make money and become a millionaire then people should have listened to the speech made by that Green member. I guess it explains why most Green members of Parliament are millionaires when we listen to the logic behind the debate put forward by Mr Ian Ewen-Street and how people can have a bob both ways and save face politically with their organic growers at the same time as they recommend further regulation providing it does not include Maori or organics. A rort is only a rort if one is not part of it. The reality is that people should take note of that. 
National supports this to the select committee. The New Zealand Horticulture Export Authority Act needs some amendment and the Associate Minister the Hon Damien O’Connor explained the reason that that is necessary. Thirty percent of horticultural exports from this country or something in the vicinity of $800 million are kiwifruit. It is a dynamic industry and it is an excellent fruit. Kiwifruit used to be known as Chinese gooseberries. I wonder whether anybody knew that? In typical Kiwi fashion we identify an opportunity rebrand it find a way of marketing it and do it well. That is what this industry has done and it is doing it exceptionally well. I congratulate that industry on that. 
The problem the industry has is that under its current regulatory frame with free exports into Australia there are those who are using that to export what would be described as seconds in most industries into Australia then on-exporting those through various structures into countries like China. The claim is that up to $300 million worth of export opportunity is being lost as a result of that. In fact in one market alone it has been claimed that $3 million was chopped off the potential export opportunity of exporting a branded quality fruit called Zespri. For those reasons alone the select committee is the right place for this legislation to go through a robust and close scrutiny process to come out at the other end with some solid recommendations for the Government to proceed with. 
If the select committee comes out in favour of proceeding with the bill and strengthening regulation then the Government will have some problems with Maori authorities. There is no question about that. Maori authorities up and down the country that have been involved in this industry have lobbied successive Governments over a long period of time saying: “We want the opportunity to export outside of the single desk. We don’t know why we should be constrained by this. We can’t understand the logic around this.” Of course the industry itself runs the argument that the only way people can maintain good quality accurate market records and solid reliable service to markets that take years and millions of dollars to build up is to export through a single authority. 
There is the debate. There is the philosophical divide. I am pleased that in the Opposition we do not have to have a strong view on that at this point. The select committee is the correct place for that to happen. I know that under the very capable leadership of the Hon David Carter and of course aided and abetted by some of the luminaries on that committee such as the president of New Zealand First my good colleague over here and Ian Ewen-Street I am sure this committee will get to the bottom of the issue that is before us. 
The issue that Ian Ewen-Street touched on of having concession for differential products will need some investigation. There are a number of reasons that somebody might be able to develop a market for a certain product—and they do—but there may be some reasons that people are being constrained by the current regulatory framework or the proposed regulatory framework. 
I notice that the Minister over there on the Government benches is nodding his head; I am not sure whether that is in acceptance or in disbelief—and that is the place for that to be sorted out. The Horticulture Export Authority last year handled exports worth $170 million—not an insubstantial amount. The most notable area where it is involved in terms of the regulatory framework that controls quality is the avocado industry. That industry is growing and going well. A lot of people are moving from kiwifruit in some of the areas where they have discovered that the fruit does not grow as well into avocados. Clearly that industry has a huge opportunity to be another growing export industry for this country which is very important. 
I know that the Government has very little affinity with most of these industries simply because it does not understand them. There are probably about two people in the Government who have any idea how the commercial world works in that regard and I hope the Government will give the select committee the time and resourcing and allow submitters to come before the committee because people who will submit to this committee I am sure will be people who have spent a lifetime studying the whys and wherefores of the various regulatory frameworks and markets and who have spent millions of dollars in this industry developing what was a fledgling industry about 15 years ago to the industry it is today. They developed the kiwifruit through genetics to brands that are now world-known and unique to this part of the world through the use of research and development and some of the excellent work that has gone in in those areas. 
I know that the chairman of Zespri in the company’s recent annual report commented that the industry had enjoyed strong growth since the formation of the Zespri brand and he is absolutely right. If members look at the figures they will see that they are overwhelmingly strong and the industry has returned a very very good return to its shareholders. 
So having said that I think that what needs to happen now is that this bill needs to go to the select committee. The select committee needs to be resourced in a way so that it can give this bill the due process it deserves. Representatives of the industry itself need to have time to come in and submit to that committee and talk about the reasons they think the industry’s regulatory framework is necessary. The Horticulture Export Authority needs to be given an opportunity to talk about why it believes it is the best body to handle that. Those marketers who have markets they have developed in international arenas around the world need to be given the opportunity to tell the select committee why there is a vacuum in some of the special areas. If all that is allowed to happen—and I trust that the Government will allow that to happen—we will end up with a thorough piece of legislation at the end. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 I am pleased to support this bill and to speak to it briefly. Once again the most helpful thing we can do for the industry is to get this legislation to the select committee so we can improve the situation for the industry. I repeat that this bill is in front of the House at the request of the kiwifruit industry. Their representatives have brought to the Government’s attention the concerns they have with the export of kiwifruit to Australia following the deregulation of that market in 1998. The issue that became of concern was the low quality of some of the kiwifruit going on to that market which was impacting upon our very good reputation here in New Zealand as kiwifruit producers and exporters. 
This is a good bill. As I said before it was drafted in consultation with the industry itself and is certainly not imposing things upon it that it does not wish to occur. We look forward to the bill’s rapid passage through Parliament and its return to the House for its third reading in as quick a time as possible. 
A party vote was called for on the question  
That the New Zealand Horticulture Export Authority Amendment Bill (No 2) be now read a first time. 
Ayes 109 
Labour 52; New Zealand National 27; New Zealand First 13; Green Party 9; United Future 8. 
Noes 8 
ACT New Zealand 8. 
Bill read a first time and referred to the Primary Production Committee. referred to the Primary Production Committee