Bennett DavidParts 1 to 3 Schedule 1 and clauses 1 and 2Hon DAVID BENNETT (National—Hamilton East): Thank you Madam Chair. This is a bill that has just gone through the Primary Production Committee. It had its genesis in the New Zealand First Party originally and has been taken over by the Government in this stage of the parliamentary process and it gives a little bit more strength to the bill in having the officials around it to actually enable it to get to a more genuine place. The National Party has supported the bill through the process and in select committee has been very active in trying to resolve some of the smaller issues that are in the bill.The nature of the bill is such that it provides a mediation process for farmers that may be in a position of default or before default in some kind of debt issue with their bankers. It's a mediation process that is very much based on an Australian model that had been used in New South Wales for a number of years and we had submitters to that effect—around the effectiveness of that regime in Australia. When it comes to New Zealand the agricultural lending market is somewhat different from Australia in the sense that you have a large amount of debt per farm which is quite different from over there. You also have a big sharemilking process in New Zealand which means there's quite a different debt loading in the sense that people can lend and borrow on cows whereas for example in the Australian market you don't have that ability. So there are some differences and the bill doesn't really incorporate those differences to any great degree.It does take into account the fact that there could be multi-party mediation and also the meaning of security interest which was something that the National Party had a particular concern around because that does take it much wider than just the normal banking arrangements. The definitions of farmer" and "primary production business" were a big part of what the National Party looked at in the select committee stage and that was to really make sure that we covered off situations where there was a partner of a potential debtor so that they would also be included in the legislation. That had effect and all parties of the House agreed on that process.I guess the real issue for the National Party around this bill is the actual potential need for it in reality. You know as I said there's quite different banking arrangements in New Zealand from Australia and also in the nature of the pressure that is on the farming sector. In New Zealand for example we have a very big cooperative nature of our business arrangements with cooperatives like Fonterra Silver Fern Farms Alliance Ravensdown—you name it; the cooperatives are all through our agricultural sector which is another point of difference. The New Zealand agricultural sector doesn't face some of the challenges that we would see in other countries and the use of this bill we think might be actually quite minimal because a lot of the banking arrangements are made in a way so that the banks do not get into position to have to use legislation like this which is as I said quite different from overseas.We just have to look at the pressure that is on that farming sector. For example just yesterday the largest dairy processor in America went bankrupt. Last year we saw the largest cooperative processer in Australia go under and there are immense pressures on the corporate and cooperative sectors of our rural and provincial areas. This bill is an attempt—and I do acknowledge that the member for New Zealand First has made a genuine attempt in this bill—but the reality is it's not going to have a lot of effect in the New Zealand market. It is more a bill of symbolism rather than a bill of significance. It is something that has attempted to try and cover a situation which is quite different than the New Zealand economic situation.Now I just want to take you back to those two major cooperative and corporate dairy companies that have gone under in a very short period of time. If we look at the pressure that's on Fonterra for example—and we'll be doing the Dairy Industry Restructuring Act legislation in this House later in the year or early next year—the competitive pressure that's in the New Zealand economy isn't coming at the banking stage to the extent that it is actually coming at the regulation stage. There is a real point of difference here in the sense that regulation in New Zealand is really stifling our agriculture and horticulture industries. I see the Minister in the chair Damien O'Connor writing something down and he'll be saying "Oh no banks are getting tighter" and all those things. That is true; there is an element of that and Reserve Bank legislation changes that will come will tighten that even further. But essentially it's a work-through arrangement in New Zealand banking relations between bankers and farmers. It's not the nature of the relationship that we see in other countries where bankers take a here and there approach necessarily to farmers. So this bill is built on a premise that I think actually won't be used as much as it possibly is intended to be used and if it does get used in that way it would actually take away from an existing banker-farmer relationship which is quite effective and has proven to be so over good and bad times. The New Zealand dairy industry and kiwifruit industry and suchlike have had tough times in the last decade and those banking arrangements have stayed through that period of time. Now I know the officials may be questioning that as well but the reality is that that arrangement has worked and it is a competitive commercial arrangement that does achieve its purpose. Legislation like this might if anything encourage banks to take advantage of another regime to deal with that relationship with farmers who may have debt when in fact the current relationship may have been much more effective and much better and something that has proven itself to be effective in good and bad times. So we will support this legislation because anything that can be done in the rural sector is to be supported—it's very rare that we have a good bill going through this House for the rural sector—but in this case it's not going to be a bill that's going to make a huge lot of difference. If farmers out there think that this bill will actually save them in a situation where there is a high debt level and they have an inability to meet their mortgage it won't. It's part of the process but that process could already be engaging through other mechanisms currently in our agricultural and rural lending sectors. So although we are supporting this bill its effectiveness is yet to be seen in the market and if anything it will probably achieve the opposite from its purpose and will encourage more banks to take on these kinds of mediations rather than to work on their relationships which have been the effectiveness and strength of our system up to now. The real issue we need to face is the pressure that's being unrealistically put on our rural sector through legislation. That pressure is mounting. It's caused a lot of distraction in the industries when there have been higher prices received for their products. There is still no confidence out there and that confidence is a direct reflection of what they see coming from this Government. As I say you just have to look around the dairy world to see how difficult it is for processors around the world and yet in this Parliament we do our damnedest to make sure that our dairy industry is on its knees just to meet certain Government ambitions. So if the Government were truly wanting to help out the New Zealand agricultural sector it wouldn't be in legislation like this; they would be getting rid of some of the other legislation that's coming that will actually affect farmers and put them in a very vulnerable position where whether you've got a farm debt mediation bill or not it's going to make very little difference because the Government regulations will force a lot of farmers to the wall. Thank you Madam Chair."