O'Connor Damien: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — First Reading 
O'Connor Damien: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — First Reading 
[Volume:667;Page:14505] 
Hon DAMIEN O’CONNOR (Labour) 
: 
 Although I was somewhat distracted throughout that speech from Maurice Williamson I am guessing from what I heard the Minister say that the speech was written a week or so ago probably by officials. It is somewhat redundant now because just yesterday—and the Minister may not know this—his Government announced a review of all these regulations believe it or not. 
The one thing I can say about the Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill is that it proves that the Minister of Agriculture is intelligent because it has been said to me that anyone who does not change his or her mind does not have one. I can tell members that the Minister of Agriculture has changed his mind on this particular issue. A number of months ago he was saying on the advice of his officials that we had to bring this legislation into the House and extend the thresholds and time lines for dairy regulations because that is the best way to ensure that we have an efficient dairy industry. Well Fonterra got on the phone. It rang around a few people put on a bit of pressure and lo and behold yesterday the National Government announced that it will review the regulations. 
Minister Williamson has unfortunately been left to carry the baby because the Minister of Agriculture is way over in Europe at the moment. That is a shame really because he might have been able to bring some explanation to the House. I am sure that Mr Ardern will do so. He knows of the stupidity of the whole process. He knows that on the basis of the officials’ advice this legislation is being extended to guarantee the supply of milk from New Zealand farmers through their own company Fonterra to their competitors when and where they want it. It is an absolutely bizarre situation. This situation involves companies like Synlait of which Ruth Richardson was a director and Open Country Cheese of which Wyatt Creech was a director. I am not saying for a moment that any political pressure was brought to bear in this case but the fact is that those two companies in particular—Open Country Cheese and Synlait—get a guaranteed supply of milk where and when they want it almost and it is supplied by the farmer-owned company Fonterra. That is unfair. 
If we go back to the situation of why these regulations are in place we note that when Fonterra was formed it would have effectively been the monopoly supplier of milk to the whole dairy industry—with a couple of exceptions: Tatua and Westland Cooperative Dairy—for people who needed milk to manufacture milk-based products such as chocolates other cheeses other high-value products you name it. The regulations were needed so that those small purchasers of milk were able to guarantee supply and certainty for their business and their shareholders. The officials advised at that time that an amount of milk should be supplied to the industry. Those companies could ring up and get a ready reliable supply and run a business of value-added products. We want to create—and the Labour Party still supports—innovation and growth in the dairy industry. Value-added is exactly where we have to go. 
There was a reconsideration of that process and consideration of another process of supplying the milk because the analysis said that the supply was not only reliable and regular but also underpriced so a subsidy was going to the competitors of Fonterra. We recommended in Government that there be an auction system; I acknowledge the Hon Jim Anderton’s consideration of this issue. We arrived at the position that we needed a proper auction system and that we would move towards that system but we did not get there quickly enough and an extension was needed. However this bill lifts the threshold. The bill in the House at the moment is effectively redundant given the announcement yesterday. We are wasting the House’s time but never mind that; the National Government has wasted the House’s time on most of its legislation and we will have to fix up the mess when we come back into Government. 
On this particular issue the alarming thing about this bill is that the Government has effectively said that Fonterra should be at maximum 80 percent of the market in this country—Mr Ardern knows this—down from about 95 percent. Some say that dominance is a monopoly control while others say that the strength to negotiate with supermarkets around the world has made for the success of the dairy industry in the past. If the National Government is determined to reduce the size of Fonterra to 80 percent of the market and it is determined—or was; I am not too sure now given yesterday’s announcement—under this legislation that Fonterra will continue to supply milk on demand to Synlait Open Country Cheese Cadbury’s and other worthwhile users of milk then clearly there is some unfairness. Many many questions will be asked in the select committee. 
It is perhaps good that the Minister has changed his mind because one of the things that has emerged more recently is that with the changing international market place for funds flowing around New Zealand has a sound economy because of good management by the previous Labour Government. People appreciate that if they invest in New Zealand then they are likely to get a return on that investment. They will get their investment back. That has not occurred around the world in all areas of investment I have to say. We are a good bet and we are a good place to invest in so the funds floating around at the moment are likely to consider New Zealand for investment purposes. 
In fact just a couple of days ago the Government allowed the single biggest sale of farmland in this country ever—the single biggest sale—to occur without a murmur. There was not a murmur. Federated Farmers—no doubt prompted by their chief executive Conor English—came out and said something. They did not have to. Why a farmer organisation would come out and endorse at first announcement the sale of the Maniototo farm is beyond me. Why would they endorse it? It means that their farmer members will have to pay more for farmland into the future and it will make the viability of the operations less and less certain. It is bizarre that Federated Farmers should have said anything about it. They came out in my view because they had to support their Tory mates in Government on a sale that should have been intervened on. This was the single biggest sale ever less than a month after the insincere John Key said he would toughen up in this area. Yes right! 
Bill English has said that he is quite happy to have a sale go to anyone anywhere for any price; John Key said that he was not quite so sure. Then the Crafar farms situation came along and he said that we do not want to be tenants in our own land. The National Government has just shown that it has two faces on this issue. Mr Ardern who should have been Minister of Agriculture knows the truth in my argument. There is real concern about what is happening. 
This bill is a waste of time because the National Government announced a review into all of these regulations yesterday—the day before it brought this legislation to the House. What a waste of time. 
Hon Maurice Williamson 
: Not all of them. The member is wrong. 
Hon DAMIEN O’CONNOR 
: Mr Williamson got up and made a speech on behalf of a Minister who is swanning around in Europe or Japan. He knows it was a crock. He knows that what was announced yesterday makes this bill redundant. What a bizarre situation. The National Government has made a mockery of this House. 
We need to show more consistent oversight for the dairy industry and the primary production sectors into the future. Those sectors need to know whether there will be massive foreign investment. Will Fonterra be allowed to thrive or will it have to keep supplying its competitors? What is the situation? If the Minister is not prepared to ask the questions then I assure members that the select committee will be. I know that the chairman of the select committee will allow those questions. He knows they have to be asked. His ministerial colleagues have been too afraid to do so because they do not know what they think about foreign investment and they do not know what they think about Fonterra—who should own it and how big it should get. Until those questions are answered our economy is under threat.