O'Connor Damien: Dairy Industry Restructuring Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
O'Connor Damien: Dairy Industry Restructuring Amendment Bill — In Committee 
[Sitting date: 17 July 2012. Volume:681;Page:3558. Text is incorporated into the Bound Volume.] 
Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) 
: 
 I take the opportunity to counter what the Minister in the chair the Minister for Primary Industries has said. We have been negotiating in good faith with Fonterra for the last 2 months on this issue. In fact the proposal was that Fonterra wanted our support for the Dairy Industry Restructuring Amendment Bill prior to the vote taking place and on the basis that it agreed to a legislative cap on the fund’s size. This was at a time when there were proposals put to farmers that were yet to have any endorsement. 
Well we are I guess lucky to have the clear view of the farmers regardless of the debate over how many farmers support it or otherwise and we have continued to discuss in good faith with Fonterra whether there is value in having a legislated cap. The fact is that the second vote did not reduce the proposed cap from 25 percent as agreed in principle 2 years ago down to 20 percent which is what Fonterra took to the farmers prior to the vote saying that it would reduce to 20 percent. We went back and in good faith negotiated with Fonterra around the technical issues taking advice from Fonterra on how best to structure the amendment. We had discussion as to why we should not legislate for 20 percent which was my preferred option. 
But the Minister stands up in the Chamber and says: “Oh well Fonterra is going to manage it at about 10 percent so the headroom between that and 20 percent is huge.” Well I agree with that Minister. But Fonterra itself came back and said it wanted it at 23 percent because the trigger point is 18 percent at which time it will start to take action—and I am happy to and will later in the debate table this for the Minister’s edification—and we were happy to accept Fonterra’s argument that from 18 to 23 percent was a 5 percent headroom space that allowed it to reduce the fund’s size without any potential for legal penalty. We worked through that process knowing full well that Fonterra was at the same time negotiating with the Government because Fonterra and the Government—rightfully—have been in close association negotiating through this the whole way and that is as we would expect. 
The Minister stood up in the Chamber and firstly claimed that my amendment was late notice. I think he has admitted that perhaps that is not the issue he first said it was because he knew full well what was going on here. In fact I had indicative notice that the Government although not comfortable had not made up a call. I understood that. I was hoping that the Minister might have seen wisdom to do this in the Committee today. He has chosen not to and the question I ask is why. I come back to the point: in good faith we accepted Fonterra’s advice to move from the 20 percent cap that we proposed to a 23 percent cap. Now the Minister is coming back and saying: “Oh well it should be at 20 percent because Fonterra is going to manage it at 10 percent.” I tell the Committee that what this does is question the whole agenda in the passage of this legislation. 
I go back to a proposal put to the Labour Cabinet and that was to float shares in Fonterra. We rejected that—the Labour Cabinet did—and said to Fonterra “Go back and revamp that.” It took the revamped proposal to farmers and the farmers rejected that because they too saw that there was an agenda to get Fonterra shares on the stock market. Trading Among Farmers is a new evolution of that and one might say we are a bit paranoid. The draft Trading Among Farmers legislation as brought to the House by Minister Carter had in the first page of the explanatory note that it was to strengthen the capital markets of New Zealand. That is what the explanatory note said; that this bill was about strengthening the capital markets of New Zealand. Well we accept that there will be a unit fund. 
I suggest that the intentions of the Government and of Fonterra may have been more far-reaching than the Primary Production Committee thought wise more far-reaching than the Opposition thinks wise and—