Banks John: Dairy Industry Restructuring Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Banks John: Dairy Industry Restructuring Amendment Bill — Third Reading 
[Sitting date: 24 July 2012. Volume:682;Page:3817. Text is incorporated into the Bound Volume.] 
Hon JOHN BANKS (Leader—ACT) 
: 
 I rise on behalf of the ACT Party to support the third reading of the Dairy Industry Restructuring Amendment Bill. I want to thank the Minister for Primary Industries David Carter for making the officials available to me and my officials at all times and I acknowledge his constructive engagement on the contestability issue. The contestability issue is dear to the heart of the ACT Party and what we stand for. I want to give praise and credit for the work done by the chairman of the Primary Production Committee the member of Parliament from Taranaki - King Country—a long-serving member of this House—and the good work that he did on improving this bill after taking some advice from me and my officials. 
Let me record again for the public record my interests in the dairy industry particularly in the milk-processing business. I also acknowledge the dairy industry representatives who came to see me. I have nothing but praise for the chairman of Fonterra and his leadership and I would not have the temerity of the Labour Party representative to give him gratuitous insults under the cover of this House. 
When I think of farmers Mr Speaker I think of you. When I think of farmers I think of your parents. When I think of farmers I think of the people on the land around you and across Northland whom I know well who have farmed the land industriously since Coates of Kaipara and who have provided the export receipts for this country to enable us to live in the style that we have become accustomed to which we now borrow for to stay afloat. The ACT Party salutes the men and women of the dairy industry. 
I love farmers and why would not someone from Epsom love farmers? If it was not for the farmers we would not be able to pay the interest on the $150 million a week that we are borrowing to sustain the present accounts. Every week we borrow from the savings of the hard-working Swiss the hard-working Germans and the hard-working Chinese so we can keep consuming. New Zealand would be another Greece without farming families like yours Mr Speaker who get up early in the morning and work late into the night to provide the export receipts for the consumables that we consume. So I salute farmers in particular the dairy farmers and the hard work they do. 
I remember aged 12 working in Kaitoke on the farm of Allan McCready one of the great members of this Parliament one of the great farmers of this Parliament one of the outstanding Ministers of Police of this Parliament and arguably the best Minister of Police we have had since the member for Whangarei. Allan McCready was a dairy farmer from a small place called Kaitoke. If you have been through Kaitoke on the way to the Wairarapa you will know what an inhospitable place Kaitoke can be but it was the farmers of Kaitoke who milked cows on the grasslands of Kaitoke who paid for the power that drives the energy in this Parliament—let us get that right—and we salute them. 
Where are the farmers in the Labour Party today? I know that the Opposition spokesman for farming grows blackcurrants in Motueka. I understand that; I know that he once had a business taking people down rivers in canoes. But where are the farmers? Where are the people like—remember that great farmer spokesman this House had once from the Labour Party Colin Moyle? I was here in this Parliament with Colin Moyle. I was here in this Parliament with Jim Sutton. Jim Sutton and Colin Moyle would be appalled at the level of debate coming from the parliamentary Opposition this afternoon. 
In the year to December 2011 dairying generated almost $13 billion in export receipts. It accounts for 25 percent of our exports. Those men and women who get up at 4 o’clock in the morning to milk the cows—to provide the milk for the exports for the foreign exchange earnings—are the people we are talking about today. The ACT Party stands with the productive sector. The ACT Party stands with the wealth creators. The ACT Party stands united behind farming families up and down the country. 
I find it rather gratuitous also to witness the abuse that farmers—particularly dairy farmers—take from the Green Party. I heard a Green Party member of Parliament who has probably never owned any business let alone a farming operation describe them as the dirty dairying industry which of course is in respect of a very tiny minority of farmers. Most farmers are environmentalists. They care about the land they care about the animals they care about the country and they work hard all day and all night to provide the export receipts so that the Green Party members can have lights in this Parliament to conduct their opposition to the export tradable sector of this country. 
Fonterra is a farmers’ business and like any business regulatory uncertainty and creep pose a risk. The ACT Party is wary of regulation. It can sap wealth creation and innovation. We believe less is generally best. However Fonterra was created by statute and would not otherwise exist. It has a dominant market position; therefore there is a public interest in how it conducts its affairs. 
The bill has two features. The first enables Trading Among Farmers or TAF. The ACT Party has no issue with Trading Among Farmers. It is their business after all. It is the farmers’ business—the dairy farmers’ business—to trade their shares in their family farming operation. But the second feature is the regulation of the base price of milk. The bill extends the role of the Commerce Commission so that it has oversight of how Fonterra does this. As someone who comes to this House from this business I know that setting the price is the most intimate thing a business can do. Therefore the public interest in regulating this must be significant. The ACT Party has concluded that it is. The reason is simple. Fonterra sets the default price of milk for all participants in the dairy industry. Although there is no right price for milk there is a range of where the right price should fall and outside that range we have economic distortions. The ACT Party believes in a level playing field for everybody in this tradable sector of the economy. It can also impact on the environment. 
The bill seeks to encourage Fonterra’s efficiency while preserving contestability in the dairy market. Contestability is critical to keep competitive advantage so that New Zealand can sell at best prices for returns of foreign exchange to the rest of the world in a highly competitive business. On contestability we have a slightly different view from officials. We do not think the stretched milk price works the way officials say it does. Nor is it consistent with the body of our competitive law but the ACT Party concedes that this is a highly technical issue that Opposition members will have absolutely no idea about if they grow berries in Motueka. 
The dairy industry universe is not about either Fonterra or small independents; it is about both. The dairy industry is about the small highly competitive industry of small players and large players. It is remarkable that New Zealand accounts for about 2 percent of global dairy production but about 33 percent of cross-border trade in dairy products. That is huge. My view is that Fonterra needs to set its sights on expansion abroad. What I know is that innovation and dynamism on the margins are likely to come from smaller players. Innovation and dynamism in this industry will come from the smaller players not from Fonterra. They have a critical role in the value-added baby formula business products with health additives and organic milks and the like. 
This innovation is good for New Zealand. Competition is good for the dairy industry. Small players we put on a pedestal. They are critical to the competitive edge for the foreign exchange earnings to pay the interest on the $150 million a week we are borrowing for the Crown account. So the ACT Party thanks farmers the ACT Party backs farmers and the ACT Party supports this bill.