Banks John: Dairy Industry Restructuring Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Banks John: Dairy Industry Restructuring Amendment Bill — First Reading 
[Sitting date: 03 April 2012. Volume:679;Page:1568. Text is incorporated into the Bound Volume.] 
Hon JOHN BANKS (Minister for Regulatory Reform) 
: 
 For the record I declare an interest in these matters considered by the bill on behalf of my family trust which holds shares in New Image Group Ltd which is involved in dairy-based product manufacture and onselling.  
I rise on behalf of the ACT Party to support the first reading of the Dairy Industry Restructuring Amendment Bill. Even if there were numerous provisions in this bill that the ACT Party did not like the ACT Party believes in the best interests of the tradable sector the farming community and dairy farmers. Of course we would support the referral of the bill to the select committee so that we could hear from the farmers as to what the farmers—dairy farmers—up and down the country would think about the provisions in this bill which dictate much of the farmers’ financial viability and future. Labour members stand up in this Parliament and say they support dairy farmers but they are not going to support this bill because they do not like what is in it. Well why not support the bill in its first reading so it can go to a select committee and you can hear from dairy farmers: real people men and women salt of the earth down the country road on the stone roads up past the driveway through the gates past the dogs into the woolshed and beyond to the house? Those people work the farms and milk the cows.  
Hon Trevor Mallard 
: These are dairy farmers not sheep farmers. 
Hon JOHN BANKS 
: They milk the cows. The cows are being milked every day so that the farmers can pay the bills of this country.  
This bill seeks to amend the Dairy Industry Restructuring Act 2001. The Act was supported by the Labour Party. I was in Parliament when the Labour Party supported that bill back in 1999. The Labour Party then believed in supporting farmers—men and women on the other side of the House supported dairy farmers. What has changed in the last—how many years has it been since I have been here? Is it 30 40— 
Shane Ardern 
: A long time. 
Hon JOHN BANKS 
: A long time. What has changed in those times? What has changed is that the Labour Party in Opposition belongs in Opposition as far as dairy farmers are concerned. That is what has changed. I do not know of one dairy farmer who would support a parliamentary Labour Party member of Parliament at the ballot box—not one.  
ACT supported the bill because it was an improvement on the existing arrangements at the time in 1999. ACT wants farmers to control their own destiny. Let us get that up the mast. ACT saw the bill as enabling and empowering farmers to make their own decisions and shape their own destiny. We want farmers to be able to shape their own destiny. We also supported some reform to the Dairy Industry Restructuring Act last time.  
This amendment bill now seeks to further empower farmers to make their own decisions. Fonterra is their business. The first feature of the bill is to permit share trading between the shareholders of Fonterra. We understand that 80 percent of farmers support that. To the 20 percent of farmers who do not support that we do not say—like the Labour Party Opposition—that we are not going to support this bill. We want those 20 percent of farmers to come along to the Primary Production Committee and say why they do not support it. Is that not a better proposition in a constructive parliamentary democracy?  
The bill will also allow others to invest in Fonterra by taking the beneficial interest in the shares while the farmers retain the legal interest—the legal interest. This complex set of arrangements is intended to make Fonterra more like any other company and less like a co-op. If that is the choice of the shareholders—if that is the choice of the shareholders—it is their business.  
The second feature of the bill requires statutory transparency—we love that—over the method used by Fonterra to set the base milk price. Statutory transparency. It does so because of the dominant role that Fonterra plays in setting the price of milk for all processors—the dominant role in this economy that Fonterra has. So we want transparency—statutory transparency. We want to make sure that everything is being done right and the right thing is being done.  
Owners will also need to know how the milk price is determined. Farmers want to know that. The bill creates a statutory panel to supervise how Fonterra calculates the base milk price does it not Minister? 
Hon David Carter 
: Yes it does. 
Hon JOHN BANKS 
: The base milk price formula is published in a manual that is publicly available—a transparent document. Is it not Minister? 
Hon David Carter 
: It is. 
Hon JOHN BANKS 
: The Commerce Commission can then review that manual and issue a report that we can all see—transparency. Is that not right Minister? 
Hon David Carter 
: That’s absolutely right.  
Hon JOHN BANKS 
: The commission cannot issue a determination on the base price of milk under the Dairy Industry Restructuring Act itself or calculate its own price. Fonterra must get the price right with this oversight. Is that the proposition? 
Hon David Carter 
: That’s critical. It’s critical. 
Hon JOHN BANKS 
: However an adverse commission report could be used to provide evidence for an investigation under the Commerce Act if anything was being done tricky by half. I cannot understand the parliamentary Opposition. Why would they not support it at the first reading? Why would they not be much more constructive? 
Hon David Carter 
: They hate farmers. 
Hon JOHN BANKS 
: That is not what they said.  
Hon David Carter 
: David Parker will speak next. He’s the worst. He hates farmers. 
Hon JOHN BANKS 
: He would not know a farmer if he saw one on Remuera Road. They parachuted him into the Epsom electorate and he failed dismally. He came up there and said he was the frontrunner; they said: “Yes to get out of town.” Anyway we will get back to the bill. I know that member quite well. I got to know him quite well.  
The milk manual disclosure regime expires when the level of competition increases and Fonterra is no longer dominant in the market and that will not be a bad day. It will not be a bad day. The ACT Party says we want competition. The ACT Party says we are on the side of the farmers. At that point Fonterra would no longer set the market price of raw milk and that is quite a good day to look forward to. That is the position ACT would like to achieve in the milk market: a range of viable processes for farmers to choose from—a whole range. They will look out over the paddocks past the Jersey cows down the gateway over the road and past the milk tankers to see the viable processes that they can choose from.  
The ACT Party wants—you will not be surprised at this and I want the Opposition to listen carefully—more competition and choice for farmers and we want less regulation. All in all this is an extensive regulatory regime over the production of milk. ACT is the less regulation party. We want business minding its own business. We want the Government out of the business of business. That is why there must be a clear public interest that warrants the processes proposed in clause 13 and we are going to be interested in that. Such a clear interest would be to address the risk that Fonterra prices milk in a manner that might substantially lessen the chances for competition or that there is a real risk of anti-competitive behaviour. In the ACT Party we do not like anti-competitive behaviour. In that case ACT would want to see something done. ACT’s objective has always been to see competition in the dairy sector. Ideally that is best achieved by a range of viable processor options for farmers. That is what we are heading for. If the Dairy Industry Restructuring Act is currently hampering viable competition for Fonterra because of the way it sets the base price of milk then this House will need to act to try to make the Dairy Industry Restructuring Act better. Much as ACT dislikes regulation because we need to get off the backs and out of the pockets of businesses ACT dislikes anti-competitive behaviour even more.  
I want that member to get up on his hind legs and tell us that the Labour Party does not want anti-competitive behaviour in this tradable sector of the New Zealand economy and why it will not support this bill at its first reading so that it can hear from the real men and women of this country who earn the foreign exchange earnings to pay his wages and to keep the parliamentary Opposition in the business that it is not very good at. ACT will be looking for public interest that warrants further regulation of Fonterra. We await the deliberations of the select committee. The only way we can get the deliberations of the select committee Minister is to support this bill at its first reading. What is wrong with that proposition? I ask the front-bench member of the Labour Party soon to get up and tell us what he thinks.