Hughes GarethGARETH HUGHES (Green): Kia ora Madam Chair Tolley. Ngā mihi nui ki a koutou kia ora. I'm glad the National members are supporting it. I'm glad they are because on one hand it's quite surprising. If you listened to the debate last night David Bennett himself said it was the biggest attack on the New Zealand farming industry in the next three years—the biggest attack in the next three years—but David Bennett and the National Party voted for it. Now I don't want to call them up on their inconsistencies of language but I'm glad they're voting for it because what we've had for a long time is an approach where policies and rules have been rammed through. What we actually need to do is have a whole-of-the-country discussion because it's really important when we're dealing with the dairy industry that we get all stakeholders around the table. Instead of a one-sided debate that has seen the massive intensification the massive problems we've seen in New Zealand we should be working collaboratively over those solutions. What we need is to hear from all those stakeholders that have had their voices ignored. It's incredibly important because Fonterra you know is the world's biggest dairy exporter company the second-largest by volume responsible for 40 percent of our primary industries and a huge number of jobs—tremendously economically important but also you could put an argument a tremendously missed economic opportunity. Now what we haven't heard in this debate in the committee stage is a comment on the environmental implications of what Fonterra's done. What we've seen is two-thirds of our waterways in New Zealand are considered unsafe for our kids to swim in. Our kids are risking getting sick if they swim in our rivers and we've got to acknowledge that Fonterra and all those dairy farms are a major contributor to declining water quality—in fact the dirty rivers that are making us sick across the country. Other countries have their factories which are quite visible with their smokestacks and pollution; this is our equivalent in New Zealand responsible for half—half—of our total greenhouse gas pollution. So this is such an opportunity to address those issues. How do we encourage more value-added products from our agricultural sector? How do we tell that national story and leverage off our clean green" brand? How can we clean up our environment and make sure that our rivers are safe to swim in? So that's why I'm glad that all parties are supporting it because essentially all this bill does is give us a little bit of time a little bit of breathing space so that we don't have to do what the previous Government used to always do which is ram stuff through to actually get all the parties around the table.So in Part 1 by delaying the implementation of sections 147 to 150 of the Dairy Industry Restructuring Act (DIRA) we allow the open market entry and exit and the milk price monitoring regime to have a bit of time to have that review. At the moment what we know is they would have expired in May of this year. Now we did have concerns originally with this. What we wanted was for the industry to be able to crack on with the changes to the open entry and exit because at the moment one of the major problems facing our environment in New Zealand is that automatic entry and automatic requirement for milk to be picked up. When you drive across country be it Canterbury or the central North Island you can see these massive dairy conversions and I think quite simply you could argue we've been seeing dairy in the wrong place. It's not suitable for the environment. What it has done is it's encouraged peak cow—this fantastic growth in the numbers of dairy herds which some experts say is the equivalent of tens of millions of people's effluent flowing into our waterway. This is what these rules have achieved. So we are urging the Government to crack on with this review because we do need to call a halt to the massive and I put it crazy intensification in conversions we've seen in this country's recent history.Alastair Scott: Ah you are closing down the dairy farms.GARETH HUGHES: No we're not talking about closing down the dairy farms. We're talking about a smart rational approach that actually sees dairy in the right places and other agricultural industries in the right places because when we've seen the massive environmental consequences we know something's gone incredibly wrong. That's something that has been totally ignored by the previous Government. It's something that their original legislation which these clauses are changing would have ignored. The National Party's always said that environmental issues shouldn't be dealt with by this but when you've seen a structural body in the form of Fonterra—with the massive market power and influence it has it hasn't acted as a force for good. In fact it's acted as a force for declining water quality in New Zealand and dirty rivers that are making our kids sick. So that's why we want to make sure all the stakeholders are around the table. We can actually design a system where it acts as a force for good. Now we're a huge supporter of cooperatives in New Zealand. We want to see more cooperative activities. It's a great model that's succeeding on the world stage but let's take it to the next step and make sure it's a force for good. That's why we were glad when we were delaying these sections—only for the year review—that the Minister has agreed to some of the ideas that the Green Party has been pushing because we want to make sure the sustainability and environmental protections are contained in that review. So the Minister's agreed over that 12-month period to talk about organics. Now what we know is it's a higher value - added product. It receives greater export earnings and less environmental impacts. There's some fantastic work being done by conventional and organic dairy farms in New Zealand. What we want to make sure is that Fonterra as a cooperative is set up to encourage us to approach those greater value - added products. When you look at those 10500 dairy farms in New Zealand aggregated—you know the world's largest exporter—but when you look at a different comparator we're the 18th in the world for sales volume per kilogram of milksolids. That's a common measure of value. What that means is we're very good at producing milk but we're not that great at actually producing value out of it. So when we are exporting products all around the world we're focusing on these low-value commodities these essentially brown paper bags of milk products—products that have a high greenhouse gas intensity. Now when you've got a system that the DIRA encourages which is for Fonterra to accept every single drop of milk being produced what you've seen is negative environmental consequences. But on the flip side because the system has been driven by volume they've gone for these low-commodity low-value products. So to process those milk products—the milksolids—they've turned to coal and we know that Fonterra's the largest coal consumer in New Zealand. So not only are we trashing our environment and not only are we trashing our climate but we're not even getting the most out of the product.So we've got a vision that we can achieve a sustainable dairy industry in New Zealand. We could leverage off that great—$18 billion is the estimate—"clean green" brand. We could tell a fantastic story in traceability of dairy products back to the story of those family farmers who produced it. We could be focusing on innovation and I put it to this committee that Fonterra's lack of success at innovation and focusing on R & D has been a primary driver of our country's terrible standings as we saw at the end of the National Government after nine years—in the bottom half of the OECD for R & D.I guess our theme tonight is we can have an opportunity by passing this legislation—these key critical sections we're debating right now—so that we can have that national conversation. We can actually make sure that Fonterra is a force for good. We can focus on more income for New Zealand. We can focus on cleaner rivers. We can focus on innovation and R & D. So basically what we're talking about is that if we listen to National and their arguments—never mind the inconsistency that they're voting for it but the way National went about it was if you didn't support this you'd see very little change and very little change for good. So what we're talking about is let's have this review let's get all the people around the table and let's sort out the solutions and have a cleaner richer New Zealand."