Hereora Dave: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
Hereora Dave: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
[Volume:639;Page:9229] 
DAVE HEREORA (Labour) 
: 
 Kia ora Mr Assistant Speaker. I take this opportunity to stand and take a call in the second reading debate of the State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill. Before I go on to my comments I want to thank the previous speaker for his rendition and his attempt to pull the wool over our eyes by shearing the Maori Party policy on the hoof. 
The Labour Government prefers to see State-owned enterprises collaborating and coordinating their activities to provide a quality service rather than competing at a cost to the taxpayer. The bill will prevent direct competition between the two State-owned enterprises in delivering export red meat inspection services. 
I think it might be good sense to talk about the issue of competition and the fear of a monopoly. I think back and recall that in the late 1960s and throughout the 1970s particularly within the meat industry we were seriously faced with being locked out of the European market. To be phased out of that international market in terms of our red meat exports would have been a huge blow to us as a country. 
I recall vividly that at that time the meat companies gathered together along with the freezing workers to analyse the problem and ensure we maintained the opportunity to export to the European market. Both groups set up a committee that was tasked with ensuring that we were able to meet the various standards required particularly by the European market. The conditions that the committee placed on upgrading the entire export plant were huge. The conditions not only referred to ensuring confidence in the inspection of our red meat but also to the handling of meat the manner in which it was stored and to the whole plant in terms of cleanliness and standards that were required. 
It took about 3 years during the 1970s for us to get those plants up to a standard that was acceptable to the European market. I recall very clearly travelling to the Moerewa freezing works Hellabys in Auckland the Southdown freezing works and the freezing works in Horotiu and Rangiuru as a part of our own internal inspection to ensure that we were meeting those standards and to make sure that those workers particularly the freezing workers were up to the level and standard of meat handling required by the European market. 
We managed to do that and as part of the ongoing inspections from the European market they came regularly like clockwork every 3 weeks to every plant to ensure that the plants were delivering those standards to their requirements. I use the chillers as an example. In those days chillers were buried in concrete. If a chiller buried in concrete was not covered by any white substance then it would be shut down. Hence the plant would be shut down. That was a real threat at the time and there had to be some genuine attempt to ensure we gave the European inspectors confidence that we were able to deliver on the standards they wanted. We went through that process in the 1970s. 
Also as a part of the strategy I suppose with the meat companies we lifted our standard beyond their standards. We had to to ensure we delivered. We found that there was a subtle change to the second tier of the meat inspection criteria through the State-owned enterprises being formed—I think that was in 1998—to perform separate functions. Asure was set up to deliver meat inspection to the meat industry and AgriQuality was established to provide auditing of food production systems laboratory testing—including TB testing—and stock movement control. 
We viewed that as a second tier to implementing our own standards but the importance of that second-tier introduction was to ensure that our meat inspection was maintaining that standard and quality required by those markets. To do that Governments had to have some management and a watchful eye and control over that process. We heard earlier from other speakers that that is done through the New Zealand Food Safety Authority and we are now enjoying the safety of our red meat exports and the confidence of European and international markets. There is safety and confidence—we have no problem dealing with them because they have confidence we are delivering to their standards. The fear with the creation of competition and the issue surrounding a monopoly is that it may damage that standard. It may lower that standard thus putting us back into the awful situation where we may be faced with having to lose that export market. That is the last situation obviously that we want to find ourselves in. 
So this bill is designed to ensure we prevent direct competition between the two State-owned companies in delivering export red meat inspection services. The bill also authorises the shareholding Ministers to issue a direction to AgriQuality preventing it from providing export meat inspection services. It enables more effective and efficient biosecurity response capabilities which is a must and it enables a merger of the two companies should that be viable to benefit shareholders and the New Zealand economy. 
In the very short time I have participated in the Commerce Committee’s hearing of evidence from submitters I took note of the concern particularly from the Public Service Association that a change could bring about a reduction to meat inspectors’ terms and conditions of employment. I do think we need to be conscious that we maintain—particularly if there is a transfer of undertaking—the opportunity for those meat inspectors to enjoy the same terms and conditions of employment. This bill is designed to ensure that they stay within those ramifications—those limits—and that they enjoy the confidence of being assured that their terms and conditions stay in place. Also I do not think we should put ourselves into a situation where we become vulnerable and might be faced with redundancies that may cause an extra cost if we were to look at another opportunity or option. Without specific legislation the Minister cannot order a direction to AgriQuality to prevent it from providing export red meat inspection services. The competition between both companies may erode shareholder value through potentially high redundancy costs as I mentioned. The legislation is required to allow for a possible merger providing that shareholder Ministers are satisfied that such a merger is viable. 
I also want to talk about the position taken by United Future as noted in the report of the Commerce Committee. United Future made two points in the amendments it put forward. The first is: “That three years from the enactment date the Commerce Commission will review the provision of meat inspection services to ensure that the prices charged conform with the general principles of the Commerce Act 1986.” It appears that we do not have a major problem with that. I think we should have an opportunity to review it and I am sure there should not be any problem supporting that. The second point is: “Notwithstanding this Act the New Zealand Food Safety Authority is authorised to continue to negotiate with New Zealand’s trading partner or partners for the recognition of the competitive supply of export red meat inspection services by organisations other than the Crown. Should such negotiations be successful the Crown shall permit competitive tendering to occur for those services.” That primarily relates to the option that the bill provides as time progresses of merging if that is the case. I think the bill before us is a good bill. It provides some confidence and some security in our red meat inspection. I commend it to the House. Kia ora.