Kaye Nikki: New Zealand Horticulture Export Authority Amendment Bill — First ReadingText is incorporated into the Bound VolumeKaye Nikki: New Zealand Horticulture Export Authority Amendment Bill — First Reading[Sitting date: 29 March 2016. Volume:712;Page:9964. Text is incorporated into the Bound Volume.]Hon NIKKI KAYE (Minister for ACC)on behalf of theMinister for Primary Industries: I move That the New Zealand Horticulture Export Authority Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider this bill. I am pleased to read the New Zealand Horticulture Export Authority Amendment Bill a first time. Before explaining this bill in more depth I want to first acknowledge the stakeholders who have been involved in developing this bill and thank them for their valuable input. Getting this bill into Parliament has taken some time as officials have worked with the New Zealand Horticulture Export Authority to develop new provisions that will work for the industry and futureproof a piece of legislation that has worked well for the horticulture-based industries over many years.Nine horticulture-based export industries operate under the New Zealand Horticulture Export Authority Act 1987. The combined value of their exports was close to $300 million in the year to 30 June 2015. This has risen from $50 million in the year to June 1988 the first 12 months after the passing of the Act in 1987. The export framework provided by the New Zealand Horticulture Export Authority Act 1987 more commonly known as the HEA Act is highly valued by the industries operating under it. The rising export values from these industries demonstrates the Act’s effectiveness as a tool for industry coordination in export markets. For example over the last 10 years avocado exports have increased almost fourfold from $28.9 million in 2005 to $115.4 million in 2015. Similarly summer fruit exports have increased from $15.8 million to $58.3 million over the same period.Both these commodities are exported under the Act’s framework. To remain internationally competitive New Zealand’s horticulture-based industries require an export framework that enables growers and exporters to deliver the produce most valued by diverse consumer groups in different markets while minimising compliance costs. This bill seeks to fine-tune the Act to better achieve this.The New Zealand Horticulture Export Authority Act is an enabling framework that allows industries to choose whether or not their product will be exported under the Act. If an industry chooses to operate within this export framework it first establishes a product group representing both growers and exporters. The product group then applies for an export order and develops an export marketing strategy that establishes export requirements such as product size quality standards and chemical residue limits.The Horticulture Export Authority export framework licenses exports and requires that exported produce complies with industry-developed standards. Enforceable export requirements enable businesses to effectively brand and market their produce. Horticulture commodities are experienced goods and possess unobservable characteristics that are valued by customers such as taste. Without branding it can be difficult for consumers to tell the difference between high-quality and low-quality products prior to consumption. New Zealand horticulture exporters pride themselves on being able to provide high-quality horticultural commodities in the global market and attracting premium prices for their products.What are the changes to the Act and why are we doing this? The bill does not substantially alter the current Act’s framework; rather it provides more flexibility for industries to develop their export marketing strategies and provides additional clarity around administrative processes. One of the key proposals in this bill is to allow industry groups made up of growers and exporters to develop their export marketing strategies with up to five tiers of export licences to target high-value markets and reduce costs for exporting to low-value markets. This will give industries greater flexibility in designing their export marketing strategies.Businesses that export to higher-value markets will have to meet more stringent requirements and meet the costs of doing so whereas lower-value markets will have less stringent requirements and therefore lower compliance costs. Each tier will have a different licence fee to reflect the different costs to the regulator the New Zealand Horticulture Export Authority in relation to different markets.The bill also sets the requirements for industries to enter or exit from the Act’s framework. The Act is currently silent on how to determine the support and that can generate uncertainty and impose unnecessary costs on an industry seeking to enter or exit from the framework. The Act currently permits regulations to be made for the authority to collect fees and/or levies from growers and exporters. The authority works with exporters and industry groups that represent growers and exporters and the authority does not work directly with growers. It is therefore not practicable or efficient for the authority to collect fees or levies directly from growers.To rectify this funding gap the bill provides powers for the authority to collect fees or levies from the industry groups and for the industry groups to collect fees or levies from growers and exporters. The industry groups also have a role in developing and implementing their industry’s export marketing strategy and the bill provides new fees and levy provisions for growers and exporters to fund their industry groups.The bill also updates the penalties for offences under the Act. The penalties were last set in 1987 and are no longer considered adequate when inflation the growth in the value of commodities exported and the costs of investigations are taken into account. The penalty for exporting without a licence—the main offence—will rise from $10000 to $50000 bringing the Act into alignment with the Kiwifruit Industry Restructuring Act 1999. This is the first substantive review of the New Zealand Horticulture Export Authority Act since it was first enacted in 1987.The global market for horticultural products has moved on in the last 30 years and the supply chain has become much more innovative and complex. This updating of the Act is essential to catch up on the changes since 1987 and to futureproof the export framework for these industries to be global leaders in the export marketing of horticultural commodities.I remain interested in stakeholder views on whether we have got the changes right and I encourage those with an interest in this area to contribute to the select committee process that will now follow. I commend this bill to the House.