Katene Rahui: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Third Reading 
Text is incorporated into the Bound Volume 
Katene Rahui: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Third Reading 
[Sitting date: 11 May 2011. Volume:672;Page:18608. Text is incorporated into the Bound Volume.] 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 I will take just a brief call on the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill which seeks to extend the market share thresholds for the expiry of pro-competitive provisions in the Dairy Industry Restructuring Act 2001. The bill also provides for a new process for the expiry of the pro-competitive measures when the new specified market thresholds are reached. 
The key driver in this bill is that there is unlikely to be sufficient competition in the dairy industry to ensure the efficient operation of New Zealand dairy markets and I want to put forward an alternative frame. The lack of domestic competition in New Zealand has I suggest little to do with a lack of local market profits. The barrier to entry is straightforward and well known. It is related to the monopoly domination of Fonterra and the undue influence it controls both in terms of cost lines and milk and its revenue line—that is its retail prices. 
James Wheeler the acting chief executive of the Federation of Maori Authorities in a recent letter stated it quite clearly: “Fonterra are in a dominant position originally created to compete with the world rather than this be used internally against suppliers and processors. Their track record of being the recipient of numerous complaints against uncompetitive behaviour to the Commerce Commission indicates that Fonterra actively works against independent suppliers.” In other words Fonterra’s dominance means that it effectively controls both ends of the business because of its scale. It is able both to set the cost of milk and to control the retail price’s revenue which in effect might have the undesirable result of squeezing any other domestic players out of the market. That is the unique power held by Fonterra and this legislation is undeniably influenced by its monopoly stronghold on the consumer market. 
Every party in this House is aware of the intense level of public concern about milk prices and the level of competition in our domestic dairy market and this is essentially where we must agree to differ from the Government on this bill. Although we might accept that the changes proposed in this bill do not affect the particular issue about the price of milk they do fall into the wider context under discussion—that of milk price and domestic competition. I recall a statement made by Kingi Smiler the chair of Taupo-based Miraka Ltd 2 months ago. Mr Smiler in his submission about Fonterra’s Trading Among Farmers proposal noted: “As a majority Maori owned company we are in the dairy industry for the long haul as our land cannot be sold. It is therefore vital that any change to the competition rules to assist Fonterra preserves the integrity of the system for the benefit of everyone.” This is the essential balancing of interests that we believe has been ignored in this bill. 
Although the Minister may suggest this bill is necessary to ensure a stable milk market while the broader issues of the matter are being considered our view instead is that while the Trading Among Farmers proposal is out there changes to the governing legislation will bring with them an undesirable level of risk. That is of great concern for Maori because as we all know the Maori Economic Taskforce last week released a report by Business and Economic Research that pointed out the Maori asset base. We know that agriculture forestry and fishing—in fact primary produce—is a huge area for Maori investment. With Maori getting more and more involved in the New Zealand economy it is very necessary that we have a competitive environment and that we do not have monopolies that are keeping the industry held by the throat as it is now. We cannot support this bill while that is happening and while such levels of anxiety exist in the dairy industry sector. Thank you.