Burns Brendon: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Burns Brendon: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Third Reading 
[Sitting date: 11 May 2011. Volume:672;Page:18603. Text is incorporated into the Bound Volume.] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 Here we are at the final stage of this important legislation the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill. I acknowledge at the outset the contribution the dairy industry makes to this country. It is a $10 billion export earner and that underscores the importance Labour attaches to this bill and some semblance I suppose of regulation around the pricing of milk in this country.  
Having said that I want to express concern. I am a great supporter of keeping dairying in New Zealand hands and that has been the model until the Dairy Industry Restructuring Act came in. I think Fonterra controlled about 96 percent of the milk produced. That has stretched somewhat over the course of the last 10 years and this bill is attempting to provide some final mechanisms to ensure competition in milk supply.  
In that 10-year period we have seen some other changes that we as a House need to note. I particularly point to the increasing presence of foreign investment in the dairy industry. I am no xenophobe. Foreign investment has helped build this country but there comes a point when we have to question the value that foreign investment brings not just in terms of the implications it raises for us as a nation that is short of capital and is constantly needing to import capital therefore effectively providing a mechanism that keeps our dollar high and makes export industries like Fonterra more troubled as they try to compete in foreign markets. Foreign investment also brings questions around environmental matters. Although we are assured that everybody is covered by the same laws I guess we have a feeling an innate belief that New Zealand - controlled companies with a stake in this country and with a commitment to the communities of this country will be better environmental stewards than those that are simply here for the returns the investment can bring.  
In the passage of this bill I have noted the increasing stake that foreign investors have in the dairy industry. I look at the Synlait plant near Dunsandel where the plant itself is now 50 percent owned by a Chinese investment company. I do not think it matters whether the shareholding is held in Sydney or Shanghai the net economic effect is the same. The distance from the communities that underscore New Zealand is reflected in this bill in that 80-plus percent of the milk market is still controlled by Fonterra. Fonterra is 100 percent pure Kiwi in terms of its ownership structure. That is relevant and that is why this bill is in front of us.  
We want to see healthy competition. We want to see Fonterra still able to trade profitably. I note one of the submissions to the select committee—and I was on the Primary Production Committee for at least part of the hearing of submissions on this bill—in which Fonterra put up a New Zealand Institute of Economic Research report that suggested that the cost to Fonterra of the regulations that are in place requiring it to supply its competitors was in the order of half a billion dollars a year— 
Shane Ardern 
: $700 million. 
BRENDON BURNS 
: I am happy to elevate the figure according to my learned colleague across the way from the dairy industry Shane Ardern. The cost was $700 million. That is a big price to pay and if that was engendering competition between New Zealand companies and driving competitive milk prices and the like I do not think we would have too much of a view about it but of course we have seen milk prices rise over the last few years and we have also seen an increasing foreign component in investment.  
We have to look at the bigger nations that are short of food. Strategic investments are being made. We have seen the pin-up case of the Crafar farms and the question of whether they will be sold to foreign investors. We are expecting outcomes on that fairly shortly but that will not be the end of it.  
We have the Chinese investment in Synlait and Singaporean investment in Open Country Dairy and we have had—if we do not still have—a 100 percent foreign stake in the New Zealand Dairies plant down near Waimate. As I say my concern is not about the ethnicity but about the investment. It does not matter whether the investment is from Sydney or Shanghai it still creates two issues. The first is to do with the outflow of capital which keeps our dollar and interest rates high and makes it much harder for companies like Fonterra to remain competitive in very strong and competitive markets and the second is the question about whether something that is purely there for the dollar return without the commitment to the communities of New Zealand as envisaged under this bill will be able to deliver the same sorts of environmental outcomes especially in the light of what I think is still very weak environmental law. That is evidenced by the Environmental Protection Authority Bill which passed through the House only today and in respect of the national policy statement on freshwater management that was released earlier this week by the Minister for the Environment which simply fails to enforce any new regulatory controls on delivering safe and clean fresh water.  
There is another concern that I will refer to. I noted that the Minister of Agriculture answered a question in the House today in respect of irrigation and water storage. Fonterra and other dairy producers will be the major beneficiaries of the Government’s commitment of nearly half a billion dollars to increasing irrigation and water storage. The dairy industry is most likely to be the major beneficiary of that commitment and I think the Minister indicated that benefit in talking about the sorts of export returns we could see boosted by that investment of $1.4 billion over the next 7 years. He went on to say that the commitment was about taking a balanced view to deliver economic growth and environmental sustainability.  
As I said at the start of my speech I believe that the dairy industry as evidenced by this bill can contribute both economically and on an environmentally sustainable basis if it is done properly. But I have to note the issues that were raised last year about Lake Ellesmere / Te Waihora which according to an Environment Court report back in 2005—6 years ago—was found to have been biologically killed by the flow of nutrients and other pollutants into those waterways. The lake was regarded as one of the world’s top trout fishing fisheries only 30 or 40 years ago and we have to ask whether the growth that is envisaged in the dairy industry under this bill which is going through its final stage in Parliament tonight will mean that we will see more Lake Ellesmeres because we are not seeing parallel to this bill strong environmental protection.  
I note that a decision was made by the Department of Conservation last year to refuse a grazing licence to a dairy farmer—I am not sure whether he was supplying Fonterra or Synlait but it will have been one of the two—on the banks of Lake Ellesmere. That decision was overturned after an intervention by the Selwyn MP to the Minister of Agriculture. That underscores the concerns that I have and that Labour holds when we debate bills like this one which will see future growth in the dairy industry and we see the continued repetition of the line that there will be balance between economic and environmental outcomes under this Government. When we see a situation where a lake has died because of nutrients flowing into it the Department of Conservation takes an entirely appropriate decision to say no to a farmer having a lease of land right on the edge of that lake which has died because of nutrification and a Minister gets involved and assists the farmer to overturn the Department of Conservation decision that underscores the very strong doubts that I and others on this side of the House hold in respect of that supposed balance.  
We are constantly told by the Prime Minister and other National members about getting the balance right between economic and environmental policy— 
Sandra Goudie 
: Try and throw a few facts into the equation.  
BRENDON BURNS 
: The old dairy-snorter across the way there might interject but the reality is that that is the definition of “balance”. I gave an example of where balance is only at the environment’s expense and that is why even though we support this bill in respect of the continuance of a competitive model basis for the dairy industry we do so with some very real concerns as evidenced as recently as in question time in the House today and the answers from the Minister. Balance for this Government tends to mean at the environment’s expense.