Street Maryan: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
Street Maryan: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
[Volume:639;Page:9220] 
MARYAN STREET (Labour) 
: 
 I rise to speak to the State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill particularly in the wake of the previous contribution which was more a form objection than anything else. It was really difficult to discern what the key objections of the National Party are to this legislation. 
To give a bit of background I say that the two State-owned enterprises were created in November 1998 out of the corporatisation of MAF Quality Management’s business units. For the benefit of people listening outside of this Chamber I say that AgriQuality’s core business is the provision of food safety and biosecurity services while Asure’s is the provision of export red meat inspection services. The two State-owned enterprises also overlap in their work—for example in TB-testing services which the Minister Clayton Cosgrove referred to in his second reading speech and in biosecurity response services. 
AgriQuality advised the shareholding Ministers in November 2006 that it intended to provide export red meat inspection services in competition with Asure. Shareholding Ministers wish to prevent competition in the export meat inspection market as they consider that competition between the two State-owned enterprises in that area is undesirable and would result in a net cost to the Crown—and I will develop that point a wee bit further in a moment. Therefore legislation was required: firstly to mitigate the possible Commerce Act implications of the AgriQuality board’s decision to withdraw its intention to enter the export meat inspection market—and that is the argument around section 2 of the Commerce Act—and secondly to enable the possible merger of the two companies at some time further down the track. This legislation does not create that merger but it creates the possibility of the merger should Ministers decide that this makes sense. 
The shareholding Ministers had written to AgriQuality and Asure informing them of decisions taken and inviting them to collaborate to develop a business case for a proposal to merge the two organisations and they agreed to do that. Let me just explore some of the rationale behind this because it is important. The Labour-led 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. There was no particular purpose in having two State-owned enterprises competing with each other to provide the same service and we have not heard any argument from the Opposition to gainsay that. There was no overt or even covert purpose in having these two State-owned enterprises compete with each other. 
The issue about the reduction of cost is one I will come back to in a moment because one of the key premises of the National Party’s opposition was that the prevention of any competition would keep costs high and not allow costs to reduce as one would normally expect to be the case in the event of a competitive market. In considering that point I put it to the House that competition frequently does two things. Frequently it does indeed lower the cost of services or goods and a competitive market can ensure a better price for services. But in this instance it was not only meaningless to have two State-owned enterprises compete with each other to deliver price reductions but I would suggest also dangerous. It is also dangerous in this instance because competition in the pursuit of lower prices frequently means lower standards and corners being cut. This is an area that is far too important for the export industries of New Zealand far too important for consumer protection and far too important for New Zealand’s reputation overseas to allow meaningless competition for the sake of competition only. That is the critical point and that is the key difference between our position on this side of the House and that of the National Party. 
New Zealand’s reputation around the delivery of food standards and the safety of our produce overseas is intimately bound up with this legislation. If we have one State-owned enterprise and the possibility of a merger to make it even more sensible as to how we deliver the standards required to maintain the treaties agreements and contracts we have particularly with the United Kingdom and the United States then I am very much in favour of ensuring that this remains within the domain of one State-owned enterprise and that competition does not reduce the quality of product we deliver to the international market. It is important to note that the contracts we have particularly with the United Kingdom and the United States recognise Government-guaranteed standards. It is the New Zealand Food Safety Authority that verifies the inspection services on our red meat exports. The New Zealand Food Safety Authority is the one that guarantees to our international contract partners the standard and the quality of the produce we sell to them. 
Clearly we do not object in any way to the two amendments Mr Copeland is introducing. The first amendment simply asks that there be a review within 3 years of the passage of this bill. It is always good to make sure that legislation is doing what it was meant to do. The second allows the possibility of competitive tendering should overseas regulatory authorities change their policies to recognise the private provision of export red meat. Should that happen then indeed let us see whether competitive tendering will cut the mustard. At the moment it is not a relevant consideration because the overseas regulatory authorities require a Government guarantee of quality for the product being sold. 
I have one further comment to make. I want to respond to some of the points made about the New Zealand Public Service Association (PSA) by the speaker who resumed his seat a moment ago. The PSA does have an agreement with this Labour-led Government—it is true. It is called Partnership for Quality. The PSA is an independent union. It is the biggest union in the country as the member who spoke a moment ago said but it is absolutely committed to quality services within the public sector in New Zealand. Its support of this legislation is based not on any sycophantic kowtowing to a Labour-led Government but on a long-held commitment to the delivery of quality services in the public sector. That is the nature of this Labour-led Government’s agreement with the PSA in the signed Partnership for Quality. 
This bill allows for the consideration of a merger at some time in the future. That may be a good thing. I for one if I were to express a personal opinion would be very happy to see such a merger occur because I consider the extent of corporatisation that resulted in these two organisations in the first place to have been something of an atomising process. I commend this bill to the House.