Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): Mr Chair thank you. I'm delighted to take a call on this very important piece of legislation. As I walked into the Chamber not that long ago Mr Chris Bishop shouted out the word outrageous" and I wasn't sure if he was commenting on my entry into this debate or on the comments of one of my other colleagues or if it was a comment in relation to one of the leadership aspirants in the National Party today but I don't think this bill is outrageous at all. I think this bill is actually a very very important piece of legislation and the Government's very pleased to be getting on with the job and putting it forward today. I think we've heard previously that this is a bill that languished in select committee for some time back in 2016 and actually there's a degree of urgency in proceeding with it.The bill of course amends the Dairy Industry Restructuring Act (DIRA). That Act came about in 2001 under the previous Labour Government and enabled the formation of Fonterra. This goes to the very heart and the very purpose of what we're talking about because why was that Act required to enable the formation of Fonterra in the first instance? The chief reason that it was required was because Fonterra acts essentially in a monopsonist manner in that it is not quite a single buyer but an extremely dominant buyer of a very important commodity product within our economy. The normal competition laws that are in place wouldn't necessarily allow for such a company structure to form and so we needed a special piece of legislation to allow for it. When this House makes those sorts of decisions we need to put in place certain protections to ensure that that market power that is handed in this case to Fonterra has some checks and balances on it and that we don't entirely eliminate the potential for companies to enter that market and create a degree of competition and a degree of innovation.So the situation that we find ourselves in is that that original Act put in place certain provisions that created those checks and those balances but there were essentially sunset clauses put in there that said that when we get below a certain threshold those provisions will no longer be in effect. That was passed last year.So what happened at that point was the Commerce Commission had to undertake a review and what they found—this is really really important; that's why we have to get this piece of legislation through—is that and I'm quoting from the regulatory impact statement here "the current state of competition is not yet sufficient to ensure the efficient and contestable operation of dairy markets in the absence of the DIRA regulatory regime." So that is why we need this piece of legislation to ensure that we have those protections while we get on with the broader business of looking at what the longer-term regulatory regime might be and whether it is in fact possible to move to more of a deregulated situation. But of course we want to be cautious in that area because if we remove those regulations while there is not sufficient competition within the industry we have a lack of competition we have a lack of innovation and we have a lack of protection for some of those smaller players who may well have good things to contribute within the dairy market.So the bill itself is a reasonably short piece of legislation. Part 1 essentially relates to sections 147 to 150 of the primary legislation. The particular provisions that we want to ensure are kept in place to ensure that we have a degree of competition within the industry relate to—I'll just find them here—having an oversight of what is happening within the sector essentially. We're talking in particular about the South Island. The key things that we want to see in place are having an open entry and exit regime. So Fonterra must accept applications from a shareholding farmer in Fonterra and must accept supply of milk from that shareholder. There's a milk price monitoring regime and that's effectively ensuring that the regime that we have in place which has Fonterra as a very dominant receiver of milk a very dominant buyer doesn't result in milk prices being too high. This is really important—the 20 percent rule. That allows Fonterra farmers—farmers who've signed up with Fonterra—to sell up to 20 percent of their milk production to another processor each season. That to me is probably the critical part of this which allows space for smaller suppliers who might otherwise be squeezed out by a very very dominant buyer to have a place in the market to get a toehold to be able to innovate to be able to give good service to those farmers and also to keep Fonterra on its toes. So this piece of legislation does need to go through so that we can ensure that degree of competition and innovation remains in this very important industry which makes up 40 percent of our agricultural exports. Thank you Mr Chair."