Mackey Moana: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
Mackey Moana: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — Second Reading 
[Volume:639;Page:9233] 
MOANA MACKEY (Labour) 
: 
 I am happy to take a call on the second reading of the State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill. I agree with the previous speaker Lindsay Tisch that the Meat Industry Association Chairman Mr Bill Falconer is indeed a highly regarded individual. I was most pleased to read his comments about the amendments to the bill which he says take away the bulk of the industry’s concerns. That is very good news and I thank Gordon Copeland for the amendments he brought to the House. 
This is a very important bill. I was not a member of the Commerce Committee but I am a member of the Primary Production Committee which has dealt with the financial reviews of AgriQuality Ltd and Asure New Zealand Ltd over a number of years. Asure has come before the select committee on a number of occasions. I think AgriQuality has come before the select committee every year for about the last 5 years at least. They are certainly two organisations that we on the Primary Production Committee know very well. Of course I also used to work for AgriQuality Ltd. It is an organisation that I have quite a bit of knowledge about. 
Certainly one of the concerns that has been raised over a number of years is the idea of two State-owned enterprises coming into the same market together. I do not believe that this ensures real competition in that area and let us not forget that this is a unique area. It is not really an open market. A lot of what we can and cannot do in this area is dictated by international agreements and international regulatory authorities that prefer to recognise Government authorisation schemes. It is also true though that the Government is not in any way opposed to the private sector being involved in this but it would need to be accepted by the overseas international regulatory authorities that decide whether our processes are good enough to allow our products to be imported into their countries. That is the most important thing. The last thing that anyone in this House across the board wants is for our export markets to be affected. So we do need to tread very carefully. 
But let us be quite clear that this is not open slather in the open market right now anyway. What we are asking is where is the sense the logic and the value for taxpayers’ money in having two State-owned enterprises―two taxpayer-owned enterprises―going into the same area. This is not an uncommon problem in the sector. Great changes happened in this sector in 1998. AgriQuality split away from MAF Quality Management into its own company. One might have thought that at that stage people would anticipate some of these problems arising. My understanding is that at that stage the meat inspectors all worked under one ministry. What we have seen since then with the splitting off and the corporatisation of this area is big problems when contracts are lost by one company and picked up by another with workers potentially being laid off and redundancies being paid out of that taxpayer investment only to be then picked up by the other State-owned enterprise and re-employed. I do not think there are many people out there who would think that is a good investment of taxpayer money at all. 
Of course this legislation also deals with a possible merger of AgriQuality and Asure. It is by no means certain and a lot of water will go under the bridge before that happens. It is certainly not a new idea. It has been kicking around for a long time. AgriQuality through its annual reports and statements of intent has made no bones about the fact that it has been very keen on a merger with Asure for a long time. It sees a lot of strategic value in that because after all AgriQuality works on the premise of “from the farm to the fork”. It has a fantastic network across all the farms of New Zealand―a great database. I am sure the services provided by Asure could be greatly enhanced by the intellectual property that AgriQuality already owns. I think that over time we have seen a continuing overlap of the services that these two organisations provide. 
Last year the select committee visited Asure in the process of its financial review. I have to say that it is an enormously impressive organisation. The service that it provides really is first class. Of course it is not just the inspection of the meat that is carried out. There is also inspection of the plants in order to ensure that we never face barriers into overseas markets because of the quality of the product and the quality of the plants that the meat is going through. When one goes there to see the work that is carried out one realises as the staff in the plants go over thousands and thousands of carcasses looking for a single speck of dust just how efficient and just how careful they have to be in carrying out that work. 
When we visited the plant we talked to meat inspectors who were on the floor while they were having their break. They told us that it is a constant concern to them that they may be shifted from one organisation to another with very little notice. Often these contracts are handed over quite abruptly. It is a very work-intensive area. When they have a lot of work going through they work very very long hours. Certainly they relayed their concerns that in terms of their job security they were constantly worried about contracts being handed over. They accepted that that was an important part of that process and that those services needed to be tendered out but they felt that this was made even harder in the knowledge of the fact that it was another State-owned enterprise that was tendering against them. The question about whether that was appropriate was being asked even back then. 
Coming back to the United Future amendments I think they are very sensible. It is important that if we come down to one organisation and if Asure is the only organisation carrying this out we can have an assurance from it that the prices are not going to spiral because we now have this enormous monopoly. I have seen Asure staff come before our select committee; I have seen their work ethic and the work they carry out in their business and how seriously they take their commitment to the primary production sector. They really do see themselves as a very important part of that sector. They hold enormous respect for it as the rest of us do. They appreciate as the rest of us do the importance of that sector to the New Zealand economy. I think it is unfair to suggest that they are suddenly going to want to strip—to gorge—the sector of cash and to damage the sector in any way. Any one who has visited Asure and who has talked to its board and its management team would be able to say that the commitment of Asure staff to this sector is undeniable and that they are not out to rort the sector for every cent they can get. But I still think it is wise to have prices subject to Commerce Commission scrutiny and I am sure that that will be welcomed by many members in the House. 
The second amendment just reiterates that the Crown will permit competitive tendering for services if those overseas authorities that we talked about recognise the private provision of export meat inspection services. I think it is important not to put the cart before the horse here. It is important that we continue to get our product into overseas markets. If overseas regulatory authorities are not going to accept private provision of these services for any reason then that has to be the guiding factor in any decision by the New Zealand Food Safety Authority to allow private provision in that area. As we know the New Zealand Food Safety Authority is negotiating with overseas authorities to gain acceptance of these private sector operations. I think that would be a good step forward and I welcome the amendment that makes it explicit that there is nothing precluding that from happening. It is important also to point out that it has been questioned that the quality of this meat inspection might suffer if there is a monopoly—if Asure New Zealand only is carrying it out. Of course this is audited by the New Zealand Food Safety Authority and by the Ministry of Agriculture and Forestry and the quality will not drop in relation to that. 
One final thing is TB testing which is one of the concerns that has been raised again if there is to be a merger of AgriQuality and Asure. There is a lot of water to go under the bridge before that happens but a lot of the contracts to 2009 are set. The conditions in those will remain the same and there are already actual and other potential private providers of this service who could come into the TB industry. So it is not really comparing apples with oranges to compare the meat inspection industry with the TB testing industry. 
I reiterate that I think these were inevitable pitfalls in the corporatisation of this sector. They should have been thought of at the time and we are working through them now. Both AgriQuality New Zealand Ltd and Asure New Zealand Ltd definitely view themselves as an integral part of the primary production sector. They both work very much as a cog in that wheel and I think any suggestion that they would be out to sabotage the sector is grossly unfair.