Copeland Gordon: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
Copeland Gordon: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
[Volume:639;Page:9225] 
GORDON COPELAND (United Future) 
: 
 On the first reading of this bill—the State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill which United Future supports—I proceeded on the assumption that Asure New Zealand Ltd was undertaking red meat inspection services on behalf of New Zealand meat exporters in a manner akin to what the Customs Service undertakes for imports. I was probably misled by the name “Asure” into thinking it provided assurance to exporters that our vitally important meat exports meet all relevant health safety and quality standards as set by the regulators within those markets—the main markets being the European Union China and the USA. 
However that has proved not to be the case. The New Zealand regulator is actually the New Zealand Food Safety Authority. That agency sets the quality standards and other standards for our red meat exports. The inspection services themselves are carried out by Asure and are audited by the Ministry of Agriculture and Forestry. Importantly the costs involved in providing the services of the New Zealand Food Safety Authority and the Ministry of Agriculture and Forestry are met by the taxpayers of New Zealand but—and this is an important point—the cost of the actual meat inspections are met by the meat growers themselves. It is Government policy—and this was actually reaffirmed by the Minister in charge of the New Zealand Food Safety Authority the Hon Annette King a couple of years ago—that such red meat inspection services can be undertaken only by the Crown. So when those realities became clear to me it likewise became clear that the effect of this bill will be the deliberate formation of a State-owned monopoly for red meat inspection services. 
The bill enables that by overriding the Commerce Act by forbidding AgriQuality Ltd also a State-owned enterprise to compete with its fellow State-owned enterprise Asure in the provision of meat inspection services. That in itself is contrary to the provisions of the Commerce Act. So in forming this monopoly it is necessary to override the provisions of the Commerce Act. That is unacceptable to United Future. We believe in free and competitive markets which is why we voted for example to bring an end to Telecom’s monopoly over the local loop for telecommunications services. 
It is obvious I think to anyone who has studied competition law that a monopoly always carries with it the risk that price gouging will follow and also that quality will drop. In the absence of a competitor why should a company not try to get from the market the maximum possible price and why should it care too much about quality? In this particular case quality will not be an issue. I have no doubt about that because as I have mentioned we have the New Zealand Food Standards Authority and the Ministry of Agriculture and Forestry auditing the quality of red meat inspections. Nevertheless the creation of a monopoly in terms of the price that can be charged along with the possibility of price gouging put New Zealand farmers—the producers of our multibillion-dollar meat exports—in an untenable position. They cannot sell meat until it has been inspected so a monopoly in those services means that they are forced to pay whatever Asure chooses to charge. Asure in the absence of competition has no incentive to minimise costs and no incentive to be efficient. That in our view is completely unacceptable. 
Accordingly United Future has made its support for the bill subject to two conditions. The first of those is that 3 years from the enactment date the Commerce Commission will review the position to ensure that the prices being charged conform with the general principles of the Commerce Act. The second is that the New Zealand Food Safety Authority will be authorised to continue to negotiate with New Zealand's trading partners for the competitive supply of export red meat inspection services by private sector organisations. Should those negotiations be successful the Government will then permit competitive tendering to occur for those services. 
I need to give some background as to what has been happening. The Meat Industry Association in association with the New Zealand Food Safety Authority has been in negotiations and discussions with our major export markets—the European Union China and the United States of America—for some time. The association has been saying that because of the quality assurance that is already in place through the New Zealand Food Safety Authority and through the Ministry of Agriculture and Forestry it would make sense to open up red meat inspections themselves to private sector operators. The association is gradually convincing those markets that that could go ahead. If that happens then of course the association wants competition to come in for the reasons I have mentioned so that farmers prices remain reasonable. So we were delighted when the Government saw fit to agree to those conditions and I will move an amendment to that effect in the Committee stage of the bill. 
I am grateful that both New Zealand First and National have signalled that they will give their support to the amendment ensuring it they will be accepted with wide cross-party support in this Parliament. This kind of initiative is becoming a bit of a habit for United Future in bringing some much-needed rationality to the polarisation that sometimes occurs when the two old parties fail to address issues in a reasonable way and instead go back into their ideological bolt-holes. It is very good from that point of view to be working with people like those from the Greens and the Maori Party who are also prepared to come to things with somewhat more of an open mind. That is a good initiative. 
The net result of this is that subject to those conditions that I have outlined which will be in my amendment it will ensure that costs to farmers are minimised through competition between Government and private sector providers to the benefit of New Zealand’s vital multibillion-dollar meat exports. 
I thank in particular the Meat Industry Association and also Federated Farmers Business New Zealand and the Deer Farmers Association for the very sound submissions they made to the Commerce Committee on this issue. Their arguments were well presented logical and reasonable and I am very pleased that the House seems now to be on track to accept those arguments which will enable the bill to proceed. 
The bill also provides for a merger between AgriQuality Ltd and Asure. The bill does not mandate it; it simply says if a feasibility study a cost and benefit study and so forth support a merger going ahead then the legal authority will be there for those two State-owned enterprises to become one. United Future has no particular view about that. We would be guided as the bill provides by those preconditions being met. It may be that merging these two State-owned enterprises is a move in the right direction. Our position is one of neutrality in that regard. 
So really having addressed the issue regarding the important meat inspections aspect having assured ourselves that the pathway is there to at least open up the possibility of competitive services for red meat producers—thus ensuring that we continue to maintain our competitive advantage in respect of our meat exports—we are generally speaking very satisfied indeed with this bill. 
I mentioned earlier that our three main export markets for red meat are the European Union China and the USA. It may be for example that China is the first major market to agree to the provision of red meat inspections by private companies something that the Chinese Government—amazingly given it is still officially a communist government—is now very open to. Should that occur and when it occurs those plants that are producing meat exclusively for the Chinese market for example with Government support will be able to seek competitive tenders for red meat inspections in those plants. On the other hand a plant that is producing red meat for let us say both the Chinese and the European Union markets may or may not be able to avail itself of those competitive tendering processes at that point in time. One can foresee a situation where China may agree in a year’ s time but the European Union might be 5 years away and the USA might be 7 years away. But eventually I think because of the logic of the case it should happen. When it does happen our red meat producers will be assured of the best possible prices and the most efficient delivery of red meat inspection services whilst continuing to adhere to the high standards now demanded by those markets—standards that today mean that those markets basically want traceability from the farm paddock right to the plate of the consumer. We will be able to deliver that kind of assurance to our important overseas customers. Thank you.