Heatley Phil: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Heatley Phil: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Third Reading 
[Sitting date: 11 May 2011. Volume:672;Page:18599. Text is incorporated into the Bound Volume.] 
Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) 
 on behalf of the  
Minister of Agriculture 
: I move  
That the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill be now read a third time 
. The bill was tabled in the House in October 2010. It had its first reading on 14 October 2010 when it was referred to the Primary Production Committee for consideration. The select committee reported the bill back to the House on 22 February 2011. The bill has now had its second reading and passed through the Committee stage.  
The dairy industry is an integral part of the New Zealand economy. The industry contributed $12.1 billion or 29 percent of New Zealand’s total merchandise export value in the year to December 2010 and the industry continues to grow. As a result of productivity improvements and the expansion of dairy farming over the past few seasons New Zealand’s milk production is growing at around 3 percent per annum and there is potential for further growth over the next 10 to 20 years. On the back of this strong milk growth we have seen increased investment in the industry through the entry and expansion of dairy processing companies and specialised food producers. The increasing diversity of business models entering the dairy industry is providing choice to New Zealand farmers as well to domestic and international customers and consumers.  
The Dairy Industry Restructuring Act has provided the regulatory framework in which new companies are able to enter the dairy processing industry and test the efficiency and profitability of their different business models. The purpose of the pro-competitive measures contained in the Act was to promote the efficient operation of New Zealand’s dairy markets by ensuring that New Zealand markets for dairy goods and services were contestable. The contestability of milk supply provides incentives for all dairy companies to seek innovative opportunities and drive cost efficiencies and therefore improve the value of New Zealand milk and the returns to New Zealand farmers and the wider New Zealand economy. Upon the passing of this bill the market-share thresholds that trigger the expiry of the pro-competitive provisions of the Dairy Industry Restructuring Act will be extended. This will ensure that the Dairy Industry Restructuring Act will remain in place for a while longer contributing to the promotion of the efficient operation of dairy markets in New Zealand.  
The bill also provides for a new process for the expiry of the pro-competitive provisions whereby the Minister will request a comprehensive competition analysis of the industry. This will provide the opportunity for the Government of the day to consider whether when the new market-share thresholds are met the dairy industry is indeed ready to move to a regulatory regime consisting of generic competition law only rather than the additional industry-specific Dairy Industry Restructuring Act.  
As the industry continues to evolve the Government needs to have a mechanism by which to regulate the behaviour of its participants at least until we are sure that the industry is ready to move to a less regulated environment. It may be that at some point in the future the industry will have evolved to the extent that the pro-competitive provisions of the Dairy Industry Restructuring Act are no longer needed. Until then we do need them. This bill extends the life of the Act so it will continue to promote a contestable market for farmers’ milk and ensure that dairy markets in New Zealand operate efficiently. I commend this bill to the House.