Carter David: Debate on Crown Entities Public Organisations and  State Enterprises — In Committee 
Carter David: Debate on Crown Entities Public Organisations and  State Enterprises — In Committee 
[Volume:638;Page:8814] 
Hon DAVID CARTER (National) 
: 
 Just for the sake of the Minister in the chair Trevor Mallard I assure him that I am talking about the financial review of Landcorp of 2005-06. I can say at the outset that this again was another very disappointing examination for the Primary Production Committee. It was disappointing because when we actually got through the financial performance of this particular entity it left us with a real sense of disappointment. We have an entity here with a value of somewhat over $1.2 billion and when we delved through the financial accounts of Landcorp we were surprised and disappointed to note that in fact the farming profit from this very large entity was only $18 million. When we looked further at that figure we noted that $12 million of that—two-thirds of the farming profit—actually came from the sell down of some Fonterra shares. In other words I guess the true attributable farm profit from an entity worth $1.2 billion is somewhere around $6 million. That is a totally unsatisfactory situation. 
Darren Hughes 
: Almost as good as the member’s farm. 
Hon DAVID CARTER 
: No no. If I managed to farm like Landcorp I do not think I would be farming for much longer.  
The point that I do want to make is that although this performance is very very disappointing I would hope that Mr Mallard and Mr Darren Hughes take note that it is an indication of the financial pressure that most of rural New Zealand is under. Darren Hughes may not care to be sympathetic to the sheep farmers who are now facing financial returns of 25 percent less than they had a year ago but in a situation when one’s income is down by 25 percent and one now has massively increased costs—many of them brought about by Government legislation—the situation is not very pleasant indeed. 
Hon Annette King 
: What did the dairy farmers do? 
Hon DAVID CARTER 
: Well the dairy farmers have a little more to be happy about but not much. The payout has been consistently— 
Darren Hughes 
: Never happy. 
Hon DAVID CARTER 
: Well if the member invested his own money—if he ever happened to make any—into a situation it is not unfair to expect a reasonable return.  
But I want to make a couple of comments on the running of Landcorp and they are to assure the Committee tonight that it is a well-run organisation. But when we consider the advantage that it should have for the scale of its operation and its size it should be able to do substantially better. I will give two examples for the benefit of Darren Hughes because he is not well versed in these agricultural matters—but he will not be there as the member for Otaki for much longer; we are assured of that.  
One thing we have with an organisation the size of Landcorp is the advantage of purchasing tractors trucks etc. very judiciously and it has the advantage of selling very advantageously. In fact there has been quite a lot of angst down in areas like Te Anau where Landcorp has certainly been in the position of getting a higher return from PPCS the farming cooperative than other farmers do. So we would think that by amalgamating those benefits of better purchasing power and better selling power Landcorp would be able to manage a far better profit than it did.  
Landcorp is still New Zealand’s largest farming concern and another thing that the select committee noted with huge disappointment was that as New Zealand’s biggest farmer it has no plans at all around climate change. We asked Landcorp about that quite specifically and the answer came back from the new chair of Landcorp—the previous Minister of Agriculture Jim Sutton—that those plans for climate change are still being developed. It is a little like the Government which rushed off and signed the Kyoto Protocol. When we ask the Government what its policy is the answer is that it is still being developed. It is also worth noting of course while we are talking about climate change that the biggest risk New Zealand faces is the huge amount of deforestation that is occurring at the moment. Who is the biggest deforester at the moment? It is one Landcorp Farming with 22000 or 23000 hectares of central North Island land being taken out of trees as we speak to be converted to dairy farming. 
Hon Trevor Mallard 
: Do they own it? 
Hon DAVID CARTER 
: No Landcorp does not. It leases it on a long-term arrangement but who is actually doing the development? It is the Landcorp Farming operation. And for the Minister to sit in his chair and think that he is not responsible because the underlying title of the land is owned by Adrian Burr—well it just defies belief. Nobody else in this country believes that the Minister is not responsible because Landcorp does not own the land. The land has been leased under an agreement; I think it is a 40-year lease. Landcorp is the one that is chopping the trees down it is the one putting the pasture in and it is the one stocking it with cows. All of that means that our ability to meet our Kyoto Protocol commitments becomes harder and harder—and Landcorp is part of the problem.  
But I will conclude by saying that the financial performance of Landcorp was not satisfactory. It should be an indication to every member of the Labour Government that that is the pressure rural New Zealand is under.