Anderton Jim: Dairy Industry Restructuring Amendment Bill (No 2) — Second Reading In Committee Third Reading 
Anderton Jim: Dairy Industry Restructuring Amendment Bill (No 2) — Second Reading In Committee Third Reading 
[Volume:644;Page:13742] 
Hon JIM ANDERTON (Minister of Agriculture) 
: 
 I move  
That the Dairy Industry Restructuring Amendment Bill (No 2) be now read a second time 
. The Dairy Industry Restructuring Amendment Bill (No 2) was introduced into the House on 14 August this year. It was read for the first time on 21 August and was referred to the Primary Production Committee for consideration. The committee received and considered 10 written submissions on the bill. The bill amends the Dairy Industry Restructuring Act 2001. It provides for the export rights to 11 designated dairy export markets at the expiry of the rights currently held by the Fonterra Cooperative Group. The bill will complete the transition begun in 2001 to a new industry structure without the monopoly powers of a statutory marketing board. It will also provide certainty to all the dairy industry’s stakeholders about the future access they have to these markets. 
As well as provisions relating to dairy export markets the bill also extends existing regulation-making powers relating to the New Zealand Dairy Core Database. This is an important industry-good asset containing information on dairy herds and their production performance. The key issues raised in the submissions on the bill related to which export markets should have all restrictions removed and which should continue to be regulated under the new system the term of allocation for export licences how long allocated export licences should be valid for and the scope of powers given to the chief executive of the Ministry of Agriculture and Forestry for the purposes of monitoring and enforcing compliance with new allocation rules. 
Issues about the current management of the New Zealand Dairy Core Database were also at issue. Of the current 11 designated markets the bill provides for all export restrictions to be removed from two markets and from parts of four other markets; in other words these two markets will no longer be designated markets. In the case of four further designated markets new narrower definitions are provided for. The bill provides for export licences to all remaining designated markets to be reallocated periodically among New Zealand dairy companies on the basis of each company’s share of total milk solids collected from New Zealand dairy farmers. The new arrangements will come into effect as the initial allocations made to Fonterra in 2001 expire from now through to 2010. 
Some submissions to the committee strongly supported removing export restrictions to certain markets as this would complete the transition begun in 2001 and provide more export opportunities for dairy companies. However one submission strongly opposed removing export restrictions to some markets on the basis that this could risk destruction of some value to New Zealand interests. The committee has not recommended any change to which market should remain regulated and which should have restrictions removed. I believe that the committee has considered this matter carefully in the context of the relevant purposes of the principal Act and I commend its final decisions and recommendations to the House. 
The fact is that for some markets because of the particular import arrangements operating export licences allocated to multiple participants would not be legally enforceable. The New Zealand Government could therefore not guarantee that licence holders would be able to exercise their rights even if those rights were actually given. Therefore the New Zealand Government by removing export restrictions for these markets will be providing opportunities for a wider group of New Zealand - based companies to expand their export activities. For one other market the benefits of regulation are not sufficiently large to justify the cost of continuing a regulation. 
The bill provides for export licences to be allocated to multiple participants on a periodic basis. This was to be done annually for the next 3 years which was proposed in the bill but moving to every 3 years—that is triennial allocations—from 2011 onwards. The proposed triennial allocation period was intended to provide a balance between the interests of growing companies which would tend to favour a shorter allocation period of course and those of established companies which would tend to favour a longer allocation period. The committee has recommended that export licences should always be allocated annually; in other words the committee recommends not moving to triennial allocations in later years. As the committee points out no matter what the allocation period is companies will be able to predict with relative accuracy what their share of export licences will be as each allocation approaches. 
The bill provides a number of powers to the chief executive of the Ministry of Agriculture and Forestry for the purposes of monitoring and enforcing compliance with the rules of allocation for export licences. These include powers of entry search seizure and the power to require certain information. After seeking clarification of the rationale and scope of these powers the committee has recommended a number of amendments. These amendments aim to clearly define when and how these powers will apply and to generally make the monitoring of the compliance regime more workable and effective. I believe they are all in the spirit of good legislative practice and I am therefore appreciative of the committee’s work in this regard. 
The bill extends existing regulation-making powers relating to the New Zealand Dairy Core Database so that if a copy of the database is vested in an entity other than the current operator which of course is the Livestock Improvement Corporation regulations can be made to apply to any new entity. This will ensure the ongoing integrity of the database for the benefit of the whole industry. 
This bill represents an important step in the evolution of the New Zealand dairy industry. It provides a fair and equitable mechanism for a wider group of companies to access designated dairy export markets. I would like to thank the chairman and members of the Primary Production Committee for their expeditious but thoughtful consideration of the bill and for their timely report which was tabled on 31 October this year. I commend the bill to the House.