O'Connor DamienRt Hon DAVID CARTER (National): Madam Chair thank you for the opportunity to ask two blocks of questions of the Minister in the chair the Hon Damien O'Connor. I do so acknowledging that the number of times the dairy industry restructuring legislation has been before the House it's been largely a bipartisan issue whereby the two major parties anyway have a genuine interest in the importance of the dairy industry to New Zealand and the significance of Fonterra as our biggest company and the fact that Fonterra's performance actually affects the livelihood and standard of living of every New Zealander.My first question is in relation to the milk price panel and the fact that in this legislation or the first time the Government has the ability to appoint somebody one person will be on a panel then of five as the milk price is determined. My questions are: what are the qualifications that the Minister has in mind for that appointment? What sort of person are we looking at? Are we looking at a person with an economic background for example? What then is the process for appointment of that person? Is it just a normal Government appointment—Cabinet appointments and honours committee (APH) process initially? And finally before the appointment is finally made what's the consultation process? Is the Minister required to consult with the dairy industry dairy farmers with the company Fonterra and in fact with other companies before that appointment is finally made? So that's my first block of questions for the Minister.My second issue is the issue which he's just addressed in relation to questions from Barbara Kuriger regarding the tricky issue they had in ending open entry open exit and ensuring that this did not disadvantage new potential entrants into the industry. Whilst I understand—I wasn't on the Primary Production Committee as I say—the select committee spent some time trying to come up with suitable wording it went back from the select committee to the Government for them to have a look at it and I think correctly the Government said Listen this wording that you've arrived at we know the intent of what you're trying to do but the wording you've arrived at in fact is too woolly. It's not definitive enough." Therefore the Government or the Minister has tried very hard to come up with replacement wording—new section 73(3A) set out in clause 20B of Supplementary Order Paper 547. My question in looking at this wording—I know exactly what the Minister's attempting to do but it is still in effect fairly undefined. Fonterra has to have regard to "(a) the effect … on the ongoing viability of the farm to which the application relates if new co-op had a supply agreement in respect of the farm at any time in the previous season;". It's not very exact wording Minister. Fonterra has to have a look at the land-use opportunities available to the applicant. It means that somebody entering the industry expecting to be able to become a supplier to Fonterra—the very decision that person is making in buying the farm is with the expectation that he or she will be a Fonterra supplier and then they've got to step through this regime which while I accept the Minister's made every attempt to define it still lacks exactitude. I'd like the Minister to comment on those couple of points.Hon DAMIEN O'CONNOR (Minister of Agriculture): Thank you Madam Chair. The Hon David Carter raises a fair question. It is virtually impossible to be exact in this area. The intent of course as we understand is that if someone buys a farm and converts it and then says that you know "This is the best land use. I have an expectation of Fonterra picking it up."—no they shouldn't. I guess that's what we're trying to achieve. But if someone buys a farm in a similar area that has been a dairy platform they paid a price per hectare on the basis that it produces dairy then there's a reasonable expectation that Fonterra should. Can I say that as officials reminded me I referred to the Commerce Commission's oversight but in fact section 120 of the Act provides access to Commerce Commission protection and review of any decision by Fonterra. So it is in the legislation there. Look I accept that. Can I go back to the issue of the milk price panel. In fact I nominate a person but it's still appointed by Fonterra. That may not give comfort to all the independents but the process is one still of Fonterra appointing the milk price panel but a nominee will come from the Minister. I would notify probably through APH but it's not strictly speaking a legal appointment by the Minister; it's a nominee from the Minister. The skills of that person in my view as the member would know as a Minister—we make judgments all the time and I would hope that any Minister into the future gets the right mix of skills. I imagine they are audit skills. They are commerce skills with some knowledge of perhaps the dairy industry. It may or may not be appropriate but trying to achieve a fair outcome in what is possibly one of the most contentious areas of the dairy industry which is that milk price. The independents have said for a long time that Fonterra has adjusted the milk price to serve its own purpose. We want to make sure that indeed its obligation to establish that milk price is a fair process. Then the companies can build off the opportunities from that.Rt Hon DAVID CARTER (National): A very quick supplementary question to that. What the Minister in the chair the Hon Damien O'Connor is saying there is the Government appointee to the milk price panel is effectively a nominee of the Minister to the panel the rest of the members obviously being appointments by Fonterra. My question then is having made the nomination I assume the panel or Fonterra must accept that nomination so it's an appointment rather than a nomination I'd suggest. We haven't really had confirmation as to the consultation process that's involved in making that nomination. I accept it presumably goes through an APH process but more importantly if the Minister was in the unlikely event in the position to continue after the election on 19 September and he's moving to make this nomination what process would he undertake in the way of consulting with the industry before making that nomination? Or would he simply have a name run it through an APH process nominate it to Fonterra for the panel and then the expectation in fact the outcome is that person is then on the panel?Hon DAMIEN O'CONNOR (Minister of Agriculture): Just to clarify thank you Madam Chair. It doesn't require an APH process—it does not. So it's a fair question around consultation. In the end it will be the judgment of the Minister who I would always hope is doing the best thing for the dairy industry across the board and would appoint someone with the right mix of skills. Ultimately that's the judgment that many of us as Ministers as you would know make from time to time or in fact quite often. We must trust this democratic process here in the appointment by a Minister who has the right objectives for the dairy industry to appoint the best person for the job."