SpeechMARK PATTERSON (NZ First): I also rise to support on behalf of New Zealand First this Dairy Industry Restructuring Amendment Bill (No 3). It has been as referenced earlier a bill that has been well traversed through the select committee and I'll come to that as we assess this through the second reading.But of course the Dairy Industry Restructuring Act or DIRA was absolutely imperative in allowing the formation of Fonterra at the time. As has been referenced earlier 96 percent to 97 percent of the supply of New Zealand milk went through Fonterra in 2001 when it was formed essentially replacing the old single-desk dairy board and the processing companies sitting underneath that that had amalgamated to the point where they were down to two. So this is enabling legislation but it was time for a tidy up.But Fonterra is incredibly important to New Zealand. It is a behemoth by New Zealand corporate standards but it is our behemoth. It is owned by 10000 or so New Zealand dairy farmer shareholders who control that company. But not only just the processing in New Zealand—they own a lot of offshore assets in a value chain well beyond these borders that allow them to capture the profit from further through the market and bring it back to New Zealand for the betterment of our economy. We absolutely owe a debt of gratitude for the far-sighted vision of our industry leaders in the dairy industry that set Fonterra up. For all its warts and all—and it has had its troubles in recent times which it's now working its way steadily out of but it's important to note that it is our company or it is owned by the 10000 New Zealand dairy farmers who have an absolutely intrinsic vested interest in bringing and making this company the best it can be for the wider New Zealand economy.I note that other industries that have this sort of collegial approach—the kiwifruit industry for example through Zespri—have also thrived through this time. If we look at the wool industry that Minister O'Connor is busy trying to assist to resurrect at the moment we have lost complete control of those value chains and fragmented industry where trying to pick up those parts is incredibly difficult. So it's important that we respect the fact that the dairy industry and particularly the farmers of Fonterra have maintained their structure maintained their wider vision and haven't sold out to corporate and short termism. This bill will assist in many ways.Of course the major change to this as has been traversed is the repeal or almost total repeal of the open entry provision that meant Fonterra was compelled to take any milk offered to it which—at the time with 97 percent supply we needed pro-competition; we needed other companies to come in and sharpen Fonterra's pencil make sure that it was competing effectively and wasn't just a big lazy monopoly and to the most part they've done that. There's been some great companies get off the ground some—to my chagrin and New Zealand First's chagrin probably—with foreign ownership involved but also the likes of Open Country Dairy that are New Zealand-owned through the Talley's have grown and kept Fonterra honest.It's got to the point now with Fonterra down around the 80 percent mark which was always where it was intended that these provisions would drop away within the Dairy Industry Restructuring Act that now we're at that point that we take the opportunity to do just that and free Fonterra from the shackles of having to take all milk offered to it because they then become the default provider of stainless steel. So the Fonterra farmers are essentially subsidising through having to run their business at a less efficient level because they're holding overcapacity of stainless steel which in a manufacturing business is hugely inefficient and a genuine cost on that business so that other farmers could wash in and out of the co-op as they so wished which is not fair. It certainly was the view of the select committee that the time had come for that provision to be repealed or almost totally repealed.In terms of the exception we did work quite hard and I share Barbara Kuriger's frustration in the sense that we did manage to beat out a provision for first farmers to still have access because we felt that it was incredibly important that new farmers entering the industry are encouraged and have a pathway into Fonterra ownership shareholding ownership and supply and often the expense of buying shares up front is prohibitive. There is the MyMilk scheme with Fonterra that they do. They are actively encouraging but we wanted to make sure that those first-time farmers did have that right to entry where possible. I respect the fact the Minister has taken that away looked at it hasn't been totally satisfied with that and you know through some wider consultation has come back with a tidier version which I think gets to the same ends in a slightly different and tighter way.I think in terms of the competitors and the select committee process here we are in the second reading talking about the select committee. Whilst the farmers particularly the Fonterra farmers and Fonterra itself obviously were keen for open entry to go some of the domestic competitors were not so keen. But I think the time has come. They've got their businesses up and running. They need to be competing on commercial terms. They need to have a value proposition to talk to farmers to say that if you're going to change companies to us there is some certainty for them that that is a value proposition that is worth their while making that move. They shouldn't necessarily need the default position of being able to say Well if it doesn't work out you can go back to Fonterra." I don't think that is a sustainable proposition and the select committee certainly felt that the competition had matured enough where we didn't need that provision to be left.The phase out of regulated milk over 50 million litres a year I think over five years from memory down to 30 million litres and once a company exceeds regulated milk for that one year they then become ineligible—that is an elegant solution. There was some talk I think early on of getting rid of regulated milk altogether. But we did hear through the select committee process—and I can't remember; someone will remind me—that small Bay of Plenty dairy company that came and made an incredibly persuasive submission around how important that regulated milk was for smaller companies that may grow over time but they're not big foreign overseas corporates coming in to try to take a big chunk of the market or big domestic players. They made a compelling case why there should be a threshold. We agreed with the 30 million litres that was originally proposed and that survived the select committee process.I guess the other thing—there are a few other bits and pieces. I think the regulated milk for domestic consumption the Goodman Fielder provision—I've been quite uncomfortable with that. Having a once again foreign-owned company that's got regulated access to milk is not something that sits comfortably with myself or potentially New Zealand First. But it is once again an elegant solution. Throwing it round there does not appear to be a more effective way of doing that. You need a competitor of some scale that's prepared to invest in stainless steel and supply chains to allow the domestic market to be competitive. We know for the—well this is incredibly important legislation for dairy farmers. For the greater population the price of milk at their local supermarket is their overriding interest in this bill and they want to know there's plenty of competition. So we did traverse issues around Goodman Fielder but we could not and certainly I could not come up with anything to put to the select committee that was a better solution to what we've got in front of us. So I will look forward to the Supplementary Order Paper in the committee of the whole House. But we welcome the certainty that this legislation will now bring to the commercial decisions made within the dairy industry. Thank you Madam Speaker."