Farmers’ Mutual Group Bill — First Reading 
Farmers’ Mutual Group Bill — First Reading 
[Volume:639;Page:9853] 
Farmers’ Mutual Group Bill 
First Reading 
Hon STEVE MAHAREY (Labour—Palmerston North) 
: 
 I move  
That the Farmers’ Mutual Group Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Primary Production Committee. This is a bill promoted by the Farmers’ Mutual Insurance Association and I think the House will forgive me if I acknowledge that members of the association are in the gallery today. The organisation has its head office in my electorate in Palmerston North and it gives me a lot of pleasure to therefore bring the bill before the House. 
The bill supports and strengthens one of New Zealand’s long-established and proud rural service companies. The bill updates the legislation under which the mutual operates and will undoubtedly assist it to continue to flourish in the future. 
The mutual and its predecessors have provided general insurance and risk protection services to farmers and members of the rural community for more than 100 years. Mutual associations were first formed in 1905 after the passing of the Mutual Fire Insurance Act 1903. That Act allowed associations to be established to offer fire insurance to farmers and owners of isolated properties. These associations were called mutuals because they were owned by their policyholders or members. 
In 1955 the Mutual Insurance Act was passed which allowed mutuals to be incorporated and to merge. That Act also prescribed their powers and governance requirements. The Farmers’ Mutual Insurance Association is now the only mutual that is subject to the 1955 Act. In recent times it has become clear that the provisions of the 1955 Act are outdated and inappropriate for the operation of a modern insurance and financial services business. They are after all from the middle of the last century. Among other things the Act inhibits the mutual from providing relevant products and services and from competing effectively with its competitors. 
The principal purpose of this bill therefore is to modernise the mutual’s powers and governance regime so that it can operate as a sophisticated modern business consistent with contemporary corporate governance principles. At the same time the bill preserves the association’s mutual status and ownership by members and its principal business of providing rural risk insurance and advice which is the business that the mutual was first established to provide. In essence the bill gives the mutual the same capacity and powers as a company and a modern governance regime based on the Companies Act 1993 while retaining its mutual structure. It also gives the mutual a new name—Farmers’ Mutual Group. 
The bill removes the mutual from the jurisdiction of the 1955 Act and the outdated requirements in that Act and repeals the Farmers’ Mutual Group Act 1998. That 1998 Act proved to be incapable of delivering the required results and will be repealed with the passing of this new legislation. This current bill has no impact on existing members’ rights to membership or on existing insurance and other business. 
The modernisation of organisations by means of private bills is not new to this House. We have seen it with others from time to time especially trustee and insurance companies. This bill has been advertised in accordance with the Standing Orders and all persons who have a direct interest in the bill have been notified of the intention of the mutual to promote it. In addition the mutual has written to each of its 35000 members advising of the bill and its contents and inviting comment. Those comments were overwhelmingly positive and support the changes sought in this bill. 
This is a bill that we hope will proceed rapidly through this House. I know that my colleague Simon Power who has a direct interest in this bill too—not only because he is also a local MP for Palmerston North but because he worked in that building for some time—is keen to see it expedited. I have spoken with David Carter chair of the Primary Production Committee and he has kindly undertaken to progress this bill through his committee with all possible speed. So I commend the bill to the House and look forward to its short and speedy passage. 
SIMON POWER (National—Rangitikei) 
: 
 The National Party will be supporting the passage of the Farmers’ Mutual Group Bill and will be doing so along the terms outlined by the Hon Steve Maharey. We too want to see the matter proceed with some haste. I know that those from the Farmers Mutual Group who have been listening to and watching the Parliament for the last hour or so will be reassured that from time to time the Parliament does agree on certain pieces of legislation and important matters; this bill is one of those. 
There is no doubt that the Farmers Mutual Group has a very strong place in the lives of the farming community in New Zealand. It has a very major presence at different field days around New Zealand and as the Hon Steve Maharey rightly pointed out the Farmers Mutual Group has been providing insurance to the farming community of New Zealand for more than 100 years. During that time the focus has been on providing farmers with products that are relevant to the New Zealand culture. 
I am advised that the Farmers Mutual Group grew from modest beginnings. During the late 19th century when farmers became more prosperous—those were the days—and began to look for fire insurance to protect their properties they were astonished at the prices offered by established overseas-owned insurance companies. In the best traditions of the New Zealand agricultural community they did not sit around and whine about it but rather took matters into their own hands and formed the mutual group that we are now dealing with today as part of this bill. 
I know that members of the House are keen to see this bill progress with some haste. I am delighted that the Minister has had an opportunity to speak with David Carter. The bill itself is not overly complex but one of the things that I was keen to be reassured of was the fact that farming members of the mutual group had been given the opportunity to express their views on the matter and the Minister rightly points out that somewhere in the vicinity of 35000-odd letters were sent out. Farmers must have been happy with the proposals because as I understand it very few responded to that initiative and those who responded did so in a very positive way. 
It is probably timely for the Companies Act to become the applicable legislation for the way this organisation runs and for a more corporate governance and legislative model to take hold. I assure those members who have an interest in this bill that the National Party will do its part to make sure this legislation has a speedy process through this House and I re-emphasise National’s support for the bill. 
Dr ASHRAF CHOUDHARY (Labour) 
: 
 As a former resident of Palmerston North now living in Auckland it is my great pleasure— 
Simon Power 
: It’s not too late. 
Dr ASHRAF CHOUDHARY 
: Yes indeed I do miss Palmerston North— 
Hon Member 
: John Cleese visited it too. 
Dr ASHRAF CHOUDHARY 
: That is right. I shall be back there this Saturday meeting my old mates. It is a great pleasure to stand up and support the Farmers’ Mutual Group Bill which updates the powers authorities and requirements of the Farmers’ Mutual Insurance Association. It will also allow for a quality service to be provided to farmers and the rural community for general insurance risk protection and financial services. 
The bill repeals and replaces the Farmers’ Mutual Group Act 1998. It gives the association the same capacity and powers as a company incorporated under the Companies Act 1993. The group however retains its ongoing mutuality. It can operate only within the limited powers conferred on it under the Mutual Insurance Act of 1955. The powers the group has in the 1955 Act are outdated which restricts its ability to compete with others in the industry. The new Act will allow the group to operate more competitively and provide a quality service. 
The bill continues the present identity and existence after incorporation of Farmers’ Mutual. It provides for the continuation of existing legal and other proceedings on and after the date of incorporation and makes it unnecessary to amend any application notice or other documents to continue legal and other proceedings in respect of the group. The legal effect of the contracts and other instruments made by the association prior to the date of incorporation continues after incorporation. The appointments of the directors and the auditor made before incorporation are continued under the bill subject to the terms of the bill and the constitution. The bill continues the employment of all its officers. The terms and conditions of employment of each employee must remain the same as the terms and conditions of employment immediately before the date of incorporation. 
I am delighted to support this bill. In particular I welcome the people from Palmerston North from Farmers’ Mutual who are here today listening to this debate and I will be delighted to meet with some of them tomorrow to discuss this issue further. It is my great pleasure to be able to support this bill. 
Hon BRIAN DONNELLY (NZ First) 
: 
 As a former teacher who spent most of his teaching career in rural schools I am very pleased to be able to make a short contribution to the Farmers’ Mutual Group Bill. New Zealand First will be supporting the bill going to the select committee. We believe it is simply a modernisation mechanism. It is really a bit of motherhood and apple pie so we do not think we should waste a lot of time in debating it here. Obviously the select committee will scrutinise its detail; that is what select committees are for. 
I point out that one of the things the bill does is give the association a new name. It brings the newly named entity under the Companies Act whilst at the same time it confirms its mutuality. In doing so it removes some of the shackles that bound the group under the 1995 Act and subsequently the 1998 Act. 
It certainly provides us with a great deal of confidence that 35000 members have been advised of the proposed changes. As Simon Power said the response to that although small was quite positive. That certainly concurs with the experience our caucus members have had because not one of those 35000 members has come banging on any of our doors to say they want this bill stopped or to ask for us to vote against it. Once again I say that New Zealand First hopes to facilitate the speedy passage of this legislation. 
Bill read a first time. referred to Primary Production Committee 
Bill referred to the Primary Production Committee.