Calvert Hilary: Third Readings — 
Text is incorporated into the Bound Volume 
Calvert Hilary: Third Readings — 
[Sitting date: 16 August 2011. Volume:675;Page:20953. Text is incorporated into the Bound Volume.] 
HILARY CALVERT (ACT) 
: 
 The ACT Party is concerned about property rights and members should make no mistake about it: this legislation is intended to force quota holders to relinquish property rights. Our caucus is splitting its vote on this legislation not because we do not all believe in fundamental property rights but because for some of us the advantages of this legislation just outweigh the disadvantages.  
My speech tonight expresses the particular concerns we have about the reduction of property rights for quota holders introduced through this legislation. As a result of recently tabled Supplementary Order Paper 265 those who wish to carry out aquaculture in an area currently used by a quota holder need only show that the aquaculture use is of materially greater economic value to New Zealand than the use by the quota holder. They then are obligated to engage in an arbitration process to determine what will be paid for the compulsory taking. Compulsory arbitration was opposed by submitters including the Seafood Industry Council during the select committee process for good reason.  
Firstly compulsory arbitration will reduce the value of quota rights—individual transferable quotas—and the fisheries settlement. The fundamental contract of the current test commonly known as UAE—undue adverse effects—is that if there is an undue adverse effect on commercial fishing then aquaculture development cannot proceed unless agreement is reached with quota holders. Compulsory arbitration alters this fundamental contract by replacing the absolute legal protection of commercial interests from undue adverse effects with balancing competing commercial interests resulting in a compulsory arbitrated taking.  
The security provided by the undue adverse effects test has been built into the value of the individual transferable quota over the last 25 years. Compulsory arbitration allows the value of the industry’s quota assets which are currently about $4 billion to be reduced without the consent of the quota holders. This reduction in quota value will be immediate upon enactment of a compulsory arbitration provision as quota holders will increase the risk premium to reflect anticipated loss of access to some fisheries. Compulsory arbitration fails to uphold the integrity of the full and final fisheries settlement as settlement assets allocated to iwi could have their value unilaterally reduced without the consent of quota holders.  
Secondly compulsory arbitration is not used in this way in other parts of commerce. In no other sector of commerce do we allow one group of private individuals to compulsorily take away using the powers of the State the property of a competitor on the basis that the price will be determined by compulsory arbitration. It would be unthinkable for example that a farmer or horticulturalist on the edge of a town could be forced to sell part of their land to a developer wishing to build a supermarket on that site.  
Thirdly compulsory arbitration will not achieve the claimed benefits. It will not ensure the best use of coastal resources. Negotiated agreements between the affected parties will determine the best-value commercial harvesting use of coastal space because the parties have the information and commercial discipline necessary to make appropriate investment decisions. It will not provide stronger incentives to negotiate. To the contrary the prospect of compulsory removal of rights is likely to polarise the industry and incentivise affected quota owners to take every step possible to oppose the prospect of aquaculture development. It will not provide a more equitable outcome. There is nothing equitable about an existing legitimate commercial use being compulsorily displaced by a new commercial use and it is not more efficient. The arbitration process will revisit all of the issues traversed during the undue adverse effect assessment.  
Finally compulsory arbitration is inconsistent with agreed seafood industry policy. Seafood industry participants recently confirmed their commitment to retaining the undue adverse effect tests. They agreed that the strong rights needed to support future development of aquaculture do not require a corresponding weakening of commercial fishing rights and agreed that these rights must coexist in a manner that gives legitimacy to rather than undermines other industry participants. In direct contrast compulsory arbitration alters the undue adverse effects test and weakens commercial fishing rights. Compulsory arbitration is inconsistent with the agreed industry position.  
The process of the progress through the House of this legislation is also disturbing. The idea that a major issue which could have gone to the Primary Production Committee and been properly consulted on has been introduced in a Supplementary Order Paper after the select committee process is a weakening of parliamentary process especially in an urgency motion on an issue that is in no way urgent.  
The issue is essentially one of competing commercial interests and the Government is intervening and taking sides. This bill could well encourage others to lobby members of Parliament in the hope that a Supplementary Order Paper could be introduced after consultation and without proper scrutiny in the commercial interests of some but against the interests of current property rights holders. Perhaps most important industry players oppose this amendment. The Supplementary Order Paper will not sort out problems if the industry has no confidence in this solution proposed by the Government.