Roy Eric: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — First Reading 
Roy Eric: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — First Reading 
[Volume:638;Page:8571] 
ERIC ROY (National—Invercargill) 
: 
 I was sitting up in my office and I heard this bill being debated and I felt I should come and make a contribution. I do so for several reasons. I am a little confused as to why we are having this State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill. The bill sets out a provision for a merger or a takeover although that is not actually defined. But before I get on to that I will talk about some important principles that this House needs to engage in before it goes any further with this bill. 
There are perhaps two key elements to our prosperity as an exporting nation of primary produce. One is that we can assure the consumer—the purchaser—of the quality of that produce. Ninety-odd percent of our primary produce particularly in the meat area is exported. We need to have an unequivocal unchallenged assurance that the product is safe and wholesome. After that comes a whole range of things about the processing being done in a sustainable way and the upholding of animal welfare issues. All of that stuff helps but right at the top is assurance. We have had two State-owned enterprises providing that assurance—AgriQuality Ltd and Asure Ltd. 
Is there an issue that the model we have now has not been confirming assuring and asserting the absolute quality and safety of our products? No speaker has stood up and said that is the case. We would hold that AgriQuality and Asure have done it well because they are mandated to do so and because they abide by the Codex Alimentarius laws which are the meat hygiene phytosanitary requirements that must be met before that assurance can be given. Both companies have done that so there is not an issue in that regard. The second thing is the supply to the market which requires farmers to produce lambs at such a rate that it becomes a viable land use option. 
That is where I have some difficulty. As I go round New Zealand and talk to provincial New Zealanders and farmers I hear several cries. But one cry that I hear everywhere I go—and Government members will have heard it—is: “The cost of compliance is killing us. Everything we do is going up a little bit more every year.” I will give one very good example of that. The Holidays Act came into force on 1 April. The meat companies tell us that it will cost them $1 a lamb. OK it is a fine principle. We have actually redefined the cake and the workers are getting a bit of a bigger slice but someone else is getting less. The cost of compliance—that is where it fits. 
Darren Hughes 
: National voted for it. 
ERIC ROY 
: Well that is OK; we did—and we are not going to change it. I would just say to Darren Hughes that we cannot keep on doing it. We cannot keep on changing the wedge shapes of the pie; we actually have to grow the cake. We have to do that. I am not arguing but I am just giving that as an example. 
Here we will do something else. We will merge two companies that provide a valuable service into one. I respect what Keith Locke said about the old Ministry of Agriculture and Fisheries model. He said that was a good idea but that he did not want it to get too bureaucratic. How do we stop that? We stop it by using a competitive model surely. Is there another way that stops too many people sitting in offices fiddling with computers not being productive and having high overheads? How can we get the focus on that? It is the competitive model. 
As my good friend Nathan Guy pointed out there are many examples where we have State-owned enterprises competing. We have just had Quotable Value New Zealand before our select committee and it is now competing in Australia. There is no reason why either Asure or AgriQuality could not go and compete somewhere overseas with their expertise which is world-renowned. But we are actually putting a fence around them and saying that they have to get into one kind of unit in order to deliver. 
The principle we need to remember before we go any further is that there needs to be assurance—no question about it—and there needs to be competitiveness to ensure that. The second principle is that there has to be some viability in the producer. Otherwise there is no point in having Asure or AgriQuality in New Zealand because there will be a diminishing amount of product that will need to be assured. There is a huge question about that. 
I have read the explanatory note. It states: “The Government wishes to prevent this competition from occurring”—that is between the two entities—“as it considers that it would result in a net cost to the Crown as the owner of both AgriQuality and Asure.” No speaker has told us how that happens. No one has come along and said what the reason will be for the cost to the Crown or what that cost will be. Members actually do not know what the reason for this bill is. 
Then goodness me my cousin Luamanuvao Winnie Laban made a speech and said that the merger may not happen. So why on earth are we doing this if it may not actually happen? Yes it may not happen—I am going to talk about the process in a minute—but I saw when I read the bill that there is a sunset clause in clause 11. This legislation will die in 2 years. I am reasonably astute about these matters and I think the Government has a plan to make this merger happen within 2 years. I think we can assume that it is the Government’s plan to actually make it happen. I say to Winnie Laban that she may be my cousin but I think she is misleading members a bit. This legislation will happen. 
There are some other issues about this merger that quite intrigue me. The next point is the methodology by which this will happen. Winnie Laban could be right because the explanatory note states: “The Government is also considering the possibility of merging …”. So why are we doing this if the Government is only considering the possibility? These words are just trying to soften the blow. 
Let us talk about the methodology. If we go to Part 2 of the legislation to clauses 5 and 6 we see that under the State-Owned Enterprises Act 1986 as amended in 1988 it is the responsibility of the Minister to issue an authority for either of these two companies to go and do an Asure or AgriQuality kind of assessment which is the stuff they are required to do under Codex Alimentarius. This bill allows under the State-Owned Enterprise Act for that warrant not to be given. 
So we now have a very messy style of approach to this because the Government is to pick a winner. It will say that it will go with Asure or with AgriQuality New Zealand. We do not know which one it is. The bill has a provision for the Government to pick a winner without telling us which one it will go with. National members would say: “Hang on a minute. If there is to be a merger we need a little more detail about how that is to happen.” 
What I also find rather interesting is clause 9 “Part 3 of Commerce Act 1986 does not apply to the merger of AgriQuality and Asure”. Well does it not apply—or is this clause giving an exclusion for that not to happen? Why should the Commerce Commission not be involved in something that takes competition out of the market when we have a huge cry in the provinces to get the cost of compliance down? I think that the Commerce Act would apply if this clause was not in the legislation. 
Surely if we are taking away the element of competition in an area where producers are crying out about the costs of compliance and saying that they want competition—and we should remember that there is no issue about the assurance side of it; there is absolutely no issue—then why do we have clause 9 which states that the Commerce Act 1986 does not apply? Quite frankly there are so many odd things about this bill that I can see why my colleagues have said that National does not want to support it. 
We have a responsibility to go back to those first two principles that I talked about: that there is assurance—no question—and that there is viability in the industry. This is a very messy bill. We are having this debate on this bill for unspecified reasons. No one in the Government has come out and said that we are being put in a position of allowing winners to be picked. We are excluding the Commerce Commission. There is so much uncertainty on this bill—which has a sunset clause of 2 years—that we certainly do not want to support it. We say that it is a mess and that the Government must do better to protect the producers of this country.