O'Connor Damien: Wool Industry Restructuring Bill — Second Reading Instruction to CommitteeCWH In Committee Third Reading 
O'Connor Damien: Wool Industry Restructuring Bill — Second Reading Instruction to CommitteeCWH In Committee Third Reading 
[Volume:609;Page:7125] 
Hon DAMIEN O'CONNOR (Associate Minister of Agriculture) 
: 
 I move  
That the Wool Industry Restructuring Bill be now read a third time 
. The bill was introduced into the House on 11 December 2002. It had its first reading on 19 March 2003 and was referred to the Primary Production Committee on that day with the instruction that it present its final report on or before 16 June. The select committee reported the bill back to the House on 16 June as first indicated. 
The bill restructures the New Zealand Wool Board into a company New Zealand Wool Board Disestablishment Company Ltd to wind up the affairs of the board and to distribute its assets among woolgrowers. The board was originally established in 1945 to undertake wool research and development technology transfer education and training wool promotion and other issues. Since that time the board has operated under various legislation and with an assortment of functions including operating a minimum prices scheme for wool from the late 1970s to the 1990s. 
Today the board is engaged in industry-good activities and through its subsidiary Wool Equities Ltd and its associate company Meat and Wool Innovation Ltd it is engaged in commercial wool activities. When the board was established the industry was predominantly focused on the UK which took the vast bulk of New Zealand’s wool. Today the main market for this country’s wool is China which takes about 23 percent of our exports. The UK now takes 15 percent of New Zealand’s wool exports. Greater attention is now being given to innovation and to adding value to our produce prior to export. We have seen developments in the wool industry for example with respect to keratin proteins in wool fibres and now the time has come for its commercialisation through the new company Keratec New Zealand Ltd with its grower ownership stake through Wool Equities. The bill will enable growers to participate in the potential financial benefits from this commercialisation over the coming years by being allocated shares in Wool Equities. 
The bill not only facilitates regulatory and structural reform in the wool industry it also enables separation of industry-good and commercial activities. This means that the industry can be more responsive to changes in the commercial environment facing its business and to business opportunities. It should also mean that those businesses become more profit-focused. 
The industry still faces challenges ahead. They are exciting challenges if growers get behind them. However there can of course be no guarantees. The bill provides for the allocation of the Wool Board’s assets to growers split between the grower companies Wool Equities and Merino Grower Investments. It is going to be over to the directors management and grower-shareholders of those companies to ensure that the decisions in future are such as to realise the potential returns that exist on growers’ investment. 
The process of wool reform has not been a quick one. It was the Wool Board’s annual general meeting in 1999 that decided to hire McKinsey and Co. to undertake an independent review of the wool industry that has led ultimately to this bill. Some say that this process has taken too long while others want to drag it out further. The Government is convinced that the majority of growers support the bill and that is evidenced by the number of submissions the select committee received: a total of 33. Among those Federated Farmers Meat and Fibre Producers supported the bill. I wish the Wool Board Disestablishment Co. well in winding up the affairs of the board and allocating the board’s assets to growers. I also wish Wool Equities Merino Grower Investments and their subsidiary and associate companies all the best for the future. I would also at this point like to thank the officials for their very difficult work. I would particularly like to congratulate Ken Armstrong from the ministry who has been a key part of this oversight process. He will be pleased to see this bill pass through the House and place responsibility in the hands of woolgrowers instead perhaps of having it on his broad shoulders—as has happened from time to time. 
Most of all I wish New Zealand woolgrowers well. Growers have waited patiently for Parliament to enact this bill. Non-merino growers will need to decide whether to convert their preference shares to ordinary shares in Wool Equities as a future investment or to cash them in. Merino growers will get their preference shares in cash in any case. In August all growers will have an important vote to participate in under the Commodity Levies Act to determine whether they have a levy on wool post 30 June 2004 that will be used to fund industry-good activities. 
The future of the industry is in growers’ hands. As individuals they have very little chance of having their wool compete with non-renewable manmade fibres in the international marketplace. However collectively as an industry united in its objectives and vision they can maintain their place in New Zealand agriculture through innovation and growth and develop new innovative international-market opportunities. I commend the bill to the House.