Penk ChrisCHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much Madam Speaker. It's a pleasure to speak to the Dairy Industry Restructuring (Fonterra Capital Restructuring) Amendment Bill aka DIRA bill. I join my colleague and friend across the House—and colleague within the electorate the wonderful Kaipara ki Mahurangi—Marja Lubeck who has rightly acknowledged the importance of the sector to the whole area including as she says Wellsford as recognised in a couple of particular cases recently. So that's very pleasing to hear that acknowledgment and I join her in making it to the people of our area. It's worth noting as well—zoomed out so to speak geographically at least—the importance of the rural sector the primary sector to our nation most obviously the goods and services themselves the importance of dairy to sustain us all. And in an economic sense the export dollar that comes with those goods earning well for New Zealand—particularly well recently I understand. And the primary sector in general dairy within that and of course within that again—concentric circles coming in—focusing on Fonterra itself. Of course that's only a part of the dairy sector but it's a large part—some 79 percent I understand so nearly four-fifths of the market and the supply and so forth within New Zealand. So obviously hugely important subject matter for a piece of legislation. The legislation itself is significant because the way in which Fonterra—as something of a special case business or entity within New Zealand—is dependent on what the rules of the game that are set by this place allow it to do. Of course in corporate law generally that's the case. But Fonterra—our largest company I understand and a particular set-up and arrangement deserving of this particular attention—of course needs certainty to be able to operate in a way that is in accordance with the rule of law in accordance with statute and in a way that allows all of its key players to interact with the system in a way that is fair and reasonable for them but also maximises the gains and the production and the supply of the sector as a whole. Because as we've discussed already at some length in this House—previous speakers including on the first occasion of it being debated the first part of the first reading—we all know how important it is to this country. So thinking about the process as a whole others have touched on the fact that there has been consultation. Across the other side of the House they've said rather breezily that the Government's been working with Fonterra and is keeping it very much happy. My colleague and friend the Hon David Bennett has struck a slightly more cautious note suggesting that's important—and of course he's right to say that it's important that the Government remain in step with Fonterra and those key players within that set-up and in fairness to the market more generally. So that's a note of caution which all policy makers would do well to heed as the process goes forward. From here we look forward to a select committee process second reading committee of the whole House stage and so forth. The select committee process that's coming up will be so important because that's the opportunity for this institution to hear from those who are on the ground those who have muddy boots who know exactly what is needed they are experiencing—pardon me?Maureen Pugh: Red Bands.CHRIS PENK: Oh Red Bands; I've had that clarification from Maureen Pugh who's worn a pair of Red Bands or two in her time. I don't often wear red clothing or attire on this side of the House but I think it's the one exception that's allowable. So those who know most will contribute well to that process. Our role in this House of course is to decide at the first reading whether the intentions seem worthwhile—if the basic detail is workable—and we've concluded in the National Party that it's a case of so far so good. Obviously the detail is to be scrutinised carefully going forward. So just considering what that basic level of detail is it's about enabling different ways of shareholding different levels of accountability and scrutiny within the company. For example we've seen—in the way that the bill is put together—a number of safeguards I suppose we could say. So we're going to have an increased number of ministerial nominees to the milk price panel from one to two—a doubling if my maths doesn't desert me—and the requirement for an independent chair appointed with the approval of a Minister. Of course there's a certain amount of Government input to these decisions with ministerial nominees and approvals being required. We expect and hope that the Minister from time to time will exercise their responsibility in a cautious way in a considered way one that reflects not only the importance of the certainty that is needed to be enjoyed by the sector to continue to operate well but to reflect the ambition of the sector as well—we've seen that the restructure is being justified in terms of seeking to attract and retain supply in an increasingly competitive environment. Other safeguards if I may call them that: the powers being given to the Commerce Commission to issue binding directions to Fonterra following reviews. There's been perhaps the closest it's come I think to a difference of opinion across the House in terms of the value of that. David Bennett may or may not be on the Christmas card list of the Commerce Commission but actually he's right to express a healthy degree of scepticism about the performance of any Government agency. I think it's fair to describe them as that albeit one that has a role of scrutiny—considering in particular whether there are anti-competitive practices. We're talking after all about a company that enjoys a nearly 80 percent share in the market; it's almost anti-competitive by very definition. So the role of the Commerce Commission to be able to consider carefully the role of Fonterra is appropriate and to be able to issue binding directions—well we'll see how that power is exercised and of course it's always important that that is done in a reasonable and knowable fashion. So we've had as I say a bit of consultation already and that will continue. I think it's worth noting however that what we are entering into in this legislation this new regime is actually a continuation of an existing regime and an evolution of that rather than a revolution. So for example in 2012 Fonterra commenced its capital structure with those two markets as they've been described: Fonterra's shareholders' market and also the unit fund the latter being where farmer shareholders are able to trade units in economic rights and shares—of a non-voting nature I understand—in Fonterra. So they have skin in the game so to speak as well as mud on their boots if you'll excuse the extended metaphor. I'm trying to avoid the look of Maureen Pugh; she's going to give me some grief about it no doubt. No doubt I deserve it. Anyway the purpose is to provide the certainty as I canvassed earlier. I didn't really go into what's meant by certainty but there's a huge value in players in a market being able to know what the rules of the game are so they can act accordingly. If we think the purpose of a market is to maximise the gains—and I don't just mean economic gains although in this case it is of an economic nature as well as a social good that we have a strong dairy and rural sector. But for the rules of the game to be known it's important that there isn't the unwarranted prospect of a legal challenge. I understand that the current Act—that is to say the Act prior to the amendment that's going to be made by this legislation—doesn't exclude or prohibit Fonterra from undergoing this capital sort of restructure if you like explicitly. But there's enough doubt about it to be a reasonable use of this House's time to want to exclude that possibility. Not in a way I think and not in a way I hope certainly that would deny anyone existing legal rights. But rather just to create a more certain regime and to ensure that those who are involved in acting in good faith in a way that's rational according to the rules of the game as they understand it and they honestly believe that to be the case they won't be dragged through the courts with all the uncertainty as to time cost and outcome that would be implied in that. So I'll just conclude my remarks on a more general nature such as I began with having delved into at least a little bit of the detail which is to note the strategic importance for rural communities. Again I acknowledge that Marja Lubeck has made that comment in relation to the community which we both are able to represent. I think it's worth noting that the community as a whole will benefit and thrive and prosper when the dairy farmers are able to do the things that they do because they provide in turn business and support for others who in turn provide business and support for others and so on. So for all those reasons we commend in good faith this bill to the House. We look forward to further discussions at select committee and beyond.