Patterson MarkMARK PATTERSON (NZ First): It's with great pleasure that I rise to speak to the Dairy Industry Restructuring Amendment Bill (No 2) on behalf of New Zealand First. I must have read a different bill because I heard David Bennett the member opposite misrepresent completely—Hon David Bennett: I raise a point of order Madam Speaker. I take offence at that—the misrepresentation comment. ASSISTANT SPEAKER (Poto Williams): The member has taken offence. I would ask the member to withdraw and apologise. MARK PATTERSON: I withdraw and apologise—ASSISTANT SPEAKER (Poto Williams): Thank you.MARK PATTERSON: —and I apologise to the member. Right the aim of this is as we have heard to prevent the expiry provisions on 31 March as the threshold of under 80 percent is breached in the South Island. But dairy farmers who may be alarmed after that presentation can rest assured tonight because the cavalry has arrived in the form of New Zealand First. But we do support this bill. We do so strictly on the proviso and the understanding and the goodwill of Minister Damien O'Connor that there will be a thorough and comprehensive review of this bill. We know that the terms of reference will be such that it will be of benefit to this very important industry. We did have concerns that this is a bit of kicking the can down the road but when we looked at the previous legislation that was put up by the National Party it was half measures. It was full of half measures and it is time that we took a proper and comprehensive look at this legislation. I think when you look at the 12 months that the Minister has given us assurance that it will be carried out within that is a blink of an eye. We are talking about multigenerational businesses. It's really important that we get this legislation right and future-focused and not half measures to get through before 31 March. That will be a thorough review I'm sure and that will give the industry certainty. It might not be exactly what they want at this time but it is certainty and we of course are a Government that is looking to provide business with confidence and certainty. The Commerce Commission report of course contended that there was not enough competition. I think the review will challenge that assertion and we will see where that takes us. The background of this of course is that Fonterra was formed out of farmer recognition of the importance of the Dairy Board and the single-desk seller and the merits of sticking together and when that National Government—the previous one before the last one—looked to strip that away and open it up in a neo-liberal way to open competition the dairy farmers pushed back. Great leaders in that industry the Sir Henry van der Heydens the John Roadleys and the Greg Gents would not take that. They led their co-ops towards a merger. The Clark Labour Government listened to their request and pulled Fonterra together and this enabling legislation allowed a monopoly of 96 percent. Now that is a pretty extraordinary development in itself in a free market. It was a big step for that previous Clark Government to take. When you think about it there would be no country in the OECD that has a company as significant to their economy as Fonterra is to ours. This is a major company. It is a behemoth—$19.2 billion worth of turnover last year. It dwarfs any company on the NZX. We do not want to rush through this legislation—Hon Nathan Guy: But you are tonight.MARK PATTERSON: —this review in haste. Well the previous Government was able to live with this quite comfortably over the last nine years so what's the panic just at the moment? Just going back to the significance of this company this is over 30 percent of the world's tradable dairy products. This is significant in the sense that it has been compared to the OPEC of milk. So it is important we get this right and we do a thorough review and we don't rush this through. Hon Nathan Guy: You are rushing it through. MARK PATTERSON: We are not rushing through a proper review as is being misrepresented here at the moment. The 10600 shareholders in Fonterra are owed the courtesy of us doing this properly. These people are national heroes. They each have on average over $1 million worth of shares. How many urban people are prepared to hold that level of investment within their business investing in the value chain? It is an incredibly important investment and we much cherish that because the other end of that is foreign ownership and being at the end of a supply chain controlled by foreign multinationals and that's where this is heading if we don't get this right. So it's pertinent that we do take a little bit of time on this issue. We have to look at the cooperative model and why it is so important. It is the only model that is set up to maximise returns to its suppliers. Private companies have a raw material that they are looking to get for the cheapest-possible price so that they can return to their shareholders. Dairy farmers on the whole know the benefit of the cooperative and that's why they have stuck with it through thick and thin. Even though their market share is down I might say that certainly their kilograms of milksolids have gone up significantly. They're now at $1.25 billion up from $1.2 billion when it first emerged. We've seen the value of the cooperative shown in other ways too. When the commodity prices fell a couple of years ago Fonterra stumped up with a 50c a kilogram advance payment interest-free. They mined their own balance sheet for those family farms that support them through the good times. That is why we must get this legislation right to protect this valuable institution and business.It's worth noting that Fonterra also sets the benchmark. You know there's a lot of talk about some of these foreign companies and they come in and they're adding value here and adding there but they don't pay any more than Fonterra—Fonterra sets the benchmark. So if we weaken Fonterra we weaken the whole industry.This is quite significant for me personally because my pathway to this House came through trying to set reform for the meat industry. I have seen this movie before. I have seen what foreign ownership and lack of control of supply chains can do. There is destructive competition companies trading off against each other to the detriment of their suppliers and you end up as price-takers at the end of supply chains.Now we're looking here at some of the provisions: the open entry provision—I think we are going to have to have a look at that. Fonterra are required to take milk wherever it comes from. That is unsustainable. It has led to a situation where they have had to take a wall of milk coming at them when all those dairy conversions—they had to put up those dryers. They have been locked into a commodity track because they have had to do it basically—they have had to accept that milk. They have made great strides and I acknowledge the Hon Nathan Guy. He mentioned a very good example at Clandeboye with the mozzarella but I believe they've been held up by this open-entry provision that has seen them have no control over the amount of milk that they've got to provide.The provision of raw milk to foreign-owned companies as raised by the Hon David Bennett—totally agree with that; that has to end and that must be part of that provision. Fonterra at this stage has got its hands tied behind its back and that is not the place where we want it to be. I note that Federated Farmers have lobbied in that direction as well so that will certainly be part of the view. New Zealand First will be asking plenty of questions on that particular issue which is of course fundamental to our core philosophy.So we look forward to a new Fonterra after the review is concerned. A higher performing innovative and value-adding Fonterra as the Minister pointed out in his opening address. We will get there. It's important we get this review right that's why we have to roll this legislation over in the short term. We support that but only under the provision of this comprehensive review. So thank you Madam Deputy Speaker for your time. Cheers.