Carter David: Dairy Industry Restructuring Amendment Bill (No 2) — Second Reading In Committee Third Reading 
Carter David: Dairy Industry Restructuring Amendment Bill (No 2) — Second Reading In Committee Third Reading 
[Volume:644;Page:13744] 
Hon DAVID CARTER (National) 
: 
 National will be supporting the Dairy Industry Restructuring Amendment Bill (No 2) through all its stages and I thank the Minister for his comments. To my mind this legislation shows the maturity of the dairy industry and the way it has moved a huge amount since the late 1990s when we considered whether there was a better way than the old mechanism of sale through the New Zealand Dairy Board. Following the initial restructuring of the dairy industry we saw the formation of a very large company called Fonterra which collects 95 percent of all milk produced in this country. The company has clearly done very very well in the last few years and I congratulate Fonterra on its performance. 
I also share the celebration of dairy farmers who now find themselves seeing a record payout. This is driving the whole of the economy and if members want further proof of that they can just look at the comments made by the Governor of the Reserve Bank when he reviewed interest rates a couple of times ago. He made the comment then that interest rates would remain high because of the Fonterra payout. It was interesting that he made those comments as the payout was being predicted by Fonterra and certainly before any dairy farmers had actually received the benefit of that additional payout. 
What the statement proves and what all New Zealanders need to realise is that the economy of New Zealand is hugely affected by the success of the whole of the dairy industry. Because of Fonterra’s dominance within that industry the success of Fonterra affects the livelihood and the standard of living of all New Zealanders. So National is pleased at this further step in the maturing of the dairy industry and is certainly heartened by the performance of the dairy industry since that time. 
The Minister said that the Primary Production Committee handled its role efficiently and reported back on time. Again it is a disappointment to me to find that we are in urgency—the final rush before Christmas—having to now put this bill through all its stages when it has been sitting on the Order Paper for the whole of November and could have been done under the normal process. But the legislation must be passed by the end of this year. If members look at the commencement date which is covered in clause 2 they will see that the legislation will come into effect on the receiving of the Royal assent. We all know that even the Governor-General requires his Christmas holidays so here we are in urgency making sure that this bill is actually put through. I acknowledge that the whips rang me quite recently to say that we would be changing the Order Paper this morning as a means of making sure that this legislation would go ahead of the taxation legislation. That is how critical it is that the bill be passed. 
I will make a couple of comments about the procedure through the select committee and about one or two of the changes we made. As the Minister said there is the issue of the allocation period for licences. We heard submissions both ways as to whether it should be on a 3-yearly or a 1-yearly allocation basis. Although we were persuaded in the end that there would be an additional cost associated with an annual allocation process—we did not think those costs would be huge—we were very keen that the industry maintained a system that allowed maximum efficiency within the industry. That means that we are encouraged by the dairy industry restructuring legislation and by the way that new players have been coming into the scene and competing against the dominance of Fonterra. 
I do not think that Fonterra has much to worry about because it is such a dominant player but these new players—the likes of Synlait and Open Country Cheese—have been good for the industry by giving the farmers of New Zealand other choices as to where they may decide to send their milk. We were keen to make sure that the allocation process reflected what we predict from the select committee point of view will be ongoing new entrants into this industry. This has to be good for farmers and also for the whole of the New Zealand economy. 
The committee was certainly also concerned initially about issues around the powers of entry search and seizure. We put a lot of effort into this but at the end of the day the committee was convinced that whilst the measures within the legislation are quite severe they are necessary. Under no circumstances can the Government entertain not being in a position to carefully monitor compliance with the actual figures by which these quota allocations are finally made. They will be made on the basis of the milk collected from individual farmers. On that basis it will be a direct proportional share of the dairy industry and the Government needs to have the ability to make sure that that system is sound and complied with by the industry—not that I suspect any of the players who are responsible would attempt to cheat that system. 
The final issue I will touch on is the core database. We received submissions—particularly from one company Ambreed New Zealand—that argued that what is in place now has not delivered fairly as was expected by the select committee when it heard the original dairy industry restructuring legislation back in early 2000 or 2001. Having listened to the arguments from Ambreed I sympathise with the position it finds itself in. As it clearly said to us price equals access and I think there is an issue around whether we got that legislation right in the original Dairy Industry Restructuring Act. Having said that I point out that the committee was quickly made aware that the very issue raised by Ambreed was actually outside the scope of the bill. I think it is important that Parliament notes the words in the report from the select committee: “This matter however is outside the scope of the bill but needs further investigation.” I suspect that over time that will occur. 
This legislation is necessary. It has to be passed by the end of this year—in other words within the next few days so that the Governor-General can put his signature to it and then himself have a holiday. I think the select committee did a very admirable job with this complex legislation. This legislation will put the dairy industry in good heart for the future. This industry is also of vital importance to New Zealand.