O'Connor Damien: Dairy Industry Restructuring Amendment Bill (No 2) — First ReadingText is incorporated into the Bound VolumeO'Connor Damien: Dairy Industry Restructuring Amendment Bill (No 2) — First Reading[Sitting date: 15 May 2013. Volume:690;Page:10004. Text is incorporated into the Bound Volume.]Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): In summary this Dairy Industry Restructuring Amendment Bill (No 2) seeks to put into legislation what the board of Fonterra says it is committed to. I say the board should support this through its National Party and I challenge it to commit to this even when this bill is voted down by the National Government and commit to what it said.I am not surprised that the National Party is not voting for this. Some of its members do not even appreciate that the dairy industry is a product of intervention back in the 1930s. I do not have a vested interest in the dairy industry but my grandfather came here with a delegation of farmers in the 1930s to seek legislation to put in place the Dairy Board. I am somewhat ashamed to be in the House now when I see the industry’s destruction take one more step.Trading Among Foreigners is what it will be; indeed of the first $500 million traded $300 million of units was offered to Australian institutional investors. Do not let the farmers think for a moment that this was some friendly float. Corporatisation has been on the agenda for some of those key people in Fonterra for some time. The National Government has been committed since it came into power to offering opportunities to investors. That is why it is selling down State-owned enterprises. That is why it assisted with the set-up of Fonterra and its trading on the NZX. It is in the top 50. This is a significant float.What some farmers did not realise is that the first dairy industry bill introduced into this House had as part of its objective to “strengthen New Zealand’s capital markets”. This was not about supporting and further enhancing the opportunities for dairy farmers. Trading Among Farmers was about offering opportunities for people to buy into Fonterra and take the dividends. Well it has been achieved. As I say for a Government that wants to flog off everything and offer opportunities to its mates it is little wonder it does not stand up for the dairy farmers who have supported that party loyally for many many years.I hope dairy farmers have listened to the last two or three speeches from the National Party. They will be horrified. The redemption risk which we were told was the reason this must occur has been replaced by supply risk. Farmers can no longer afford to increase the supply to Fonterra and many are opting to supply other companies—two Chinese companies in particular. Synlait and Miraka are the beneficiaries of that as well. That is the reality that that member must wake up to if he talks to some farmers. I spoke today on the phone to a farmer who has opted not to buy shares to contract supply and if he had the option he would have gone somewhere else.There is some view within the farming sector that $8 per share is too high. The dividend provided is about 30c at this point. The dividend does not justify the share price. I can tell the member over there that I spoke to someone who has in-depth knowledge of the dairy industry and of the foreign investment sector. What will happenwhen the unit price for Fonterra goes to $12 a unit? That is the question I ask. I put it to this House that without an intervention without the oversight of Parliament through this legislative cap as people know the increase in the unit price and share price will create more internal tension in the No. 1 company in this country—in the company that is the most important for our economy.Ultimately it will be the farmers who ask for the change in the constitution because they will be forced to. Some say those farmers are now stranded. They cannot sell their $8 wet share because there is not a market for it at the moment because farmers do not want to buy it on the basis of milk supply. But outside investors will be prepared to pay that on the basis that they get a dividend suitable to the share price they pay. That means that the milk price will be forced down and the dividend price will go up to match the expectations of the investors. It is as sure as night follows day. The people who are smiling over there are the incompetent managers of our economy who have not shifted the economy on to the tradable sector and who have allowed the dollar to destroy the export sector.Mr DEPUTY SPEAKER: Order! Time has expired. [Interruption] Mr O’Connor time has expired. [Interruption] Order! Order! I have told the member his time has expired. Please sit down. Thank you.