Eckhoff Gerrard: Wool Industry Restructuring Bill — Second Reading Instruction to CommitteeCWH In Committee Third Reading 
Eckhoff Gerrard: Wool Industry Restructuring Bill — Second Reading Instruction to CommitteeCWH In Committee Third Reading 
[Volume:609;Page:7124] 
GERRARD ECKHOFF (ACT NZ) 
: 
 I would like to comment on clause 19A “Constitutions” and specifically on the constitution of Wool Equities. I bring this to the Committee’s attention because some concern has been expressed at the possibility that growers will lose control of the industry within a couple of years. The bill states that a shareholder must not sell shares in Wool Equities to a person other than another grower; a person who is not a grower must not buy shares or become a shareholder in Wool Equities; a shareholder and an associated person must not acquire hold or control voting rights for directly or indirectly in concert or otherwise more than 5 percent of the total number of shares in Wool Equities. 
I think this is a very sensible part of the constitution of Wool Equities that does give what one might call a stand-down period—a shake-down period—that allows farmers a couple of years to see how things are progressing and how things are moving. If they are moving in the direction the farmers think they should be moving then they can vote accordingly after the 2-year period. I am well aware that the bogeyman—if one could call it that—of corporate raiders taking control of farmers’ assets rears its head from time to time and the example has been used of the Guinness Peat Groupbuying into ENZA and taking control of that company. 
 I must say that I thought: “Well gosh is this a good thing?”. The reality is that if we ask the growers who are shareholders and sellers of their product they say that it has been a good thing. I make the point that as I have said before what these companies need dramatically is capital to develop. It is like having a farm but no money to put fertiliser on fence or build water supplies. The companies must have access to capital to be able to develop. Whether a company like the Guinness Peat Group is coming in for some benign purpose some productive purpose or otherwise really does not matter because farmers are not compelled to be members of Wool Equities if they do not wish to be. They can sell their shares get out of the industry and perhaps invest in some other aspect if they so choose. 
I do not think it is appropriate for myself as a woolgrower to tell other growers that I believe they should leave their money in or take it out. That is entirely for them to decide. But the constitution under this clause 19A allows for this very important stand-down period—for want of a better expression—in which farmers will see the trend starting to develop whether or not it is appropriate and react accordingly. I do not see the injection of outside capital and the potential—and I emphasise that word—for outside control to be something that farmers should be overly concerned about because if that industry becomes terribly successful they as shareholders in Wool Equities will benefit from that as well. Indeed the demand for their product on the auction-room floor or by private sale will also be reflected in the price they receive for their product. 
So I do not think that we should be overly concerned about the prospect of non-woolgrowers or those who are not currently industry players taking some sort of a controlling or a 20 or 30 percent stake and injecting much-needed capital into this industry. It is something that probably will be needed. But I also make the point that this is the very reason that Canesis has developed to ensure that the capital it needs comes pretty much from New Zealand sources rather than having outside capital come in to develop these quite exciting products that the Wool Research Organisation of New Zealand has developed on behalf of the woolgrowers of this country. 
The question was put that the amendments set out on Supplementary Order Paper 101 in the name of the Hon Jim Sutton to clauses 20B(2) and 20C(2) be agreed to. 
Amendments agreed to. 
Part 3 as amended agreed to. 
Bill reported with amendment.