Street Maryan: Dairy Industry Restructuring Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Street Maryan: Dairy Industry Restructuring Amendment Bill — In Committee 
[Sitting date: 17 July 2012. Volume:681;Page:3551. Text is incorporated into the Bound Volume.] 
Hon MARYAN STREET (Labour) 
: 
 I rise to speak on the Dairy Industry Restructuring Amendment Bill. I particularly want to focus on the proposed amendment in the name of the Hon Damien O’Connor and I will come to that in due course. 
Fonterra is our largest company. It employs 15000 people and it is known internationally for not only the quantity of its product but the quality of it as well. In 2010-11 Fonterra’s exports were worth in excess of $10 billion. I suppose I am coming at this from having previously been involved as a shadow trade spokesperson but it seems to me that anything that risks any of the operations of Fonterra needs the closest possible scrutiny. I am not satisfied not having been on the Primary Production Committee but having heard from my colleagues and having read the minority reports of the Labour Party and the Green Party that that due diligence has been undertaken in respect of this legislation. Quite a lot of the commentary around the passage of this bill has been to do with haste to do with inadequate advice and to do with advice that did not take all considerations into account. So I have an anxiety that our very largest company and one that is unique and internationally renowned could be at risk of some of its own profits going away from New Zealand. 
The proposal that my colleague the Hon Damien O’Connor has put up is to limit the proportion of Fonterra shares that can be sold into the shareholder fund and bought as securities by outside investors. He has put the limit at 23 percent slightly higher than Fonterra’s requirement which would provide a cap and a protection on the quantity of shares that could be onsold. This is worthy of consideration. I do not think it should be dismissed out of hand as the Minister for Primary Industries in his contribution previously did. I think it is worth consideration because there is something—as the speaker before me Steffan Browning from the Green Party said—that rings true. He called this bill the cousin of the State asset sales legislation—the cousin. I wonder whether this Government has any method of dealing with any major money earner in New Zealand other than selling it. Is there any other possibility that this Government might consider for the treatment of those enterprises in New Zealand that earn a dividend that goes back in the case of Fonterra to the cooperative members? This is a wonderful model that has been in existence for a very long time for something in the order of a century and this cooperative model has served Fonterra and therefore by extension New Zealand extremely well. 
The cooperative model is admired elsewhere around the world and to carve off some of it and to make some of it open to foreign investors presents risks in our view that there will be something of the cooperative nature of the organisation lost in the process. That is not something we believe that a clearly demonstrable majority of farmers want. I heard the Minister refer to a 66.5 percent majority vote but clearly there has been concern that the vote of those who were present to vote or who did return a vote does not represent a majority. It is not clear that that represents a majority of the actual farmers. It seems to me that we are beginning to see from this Government a redefinition of the word “majority”. The Government thinks it has a majority of support for the sell-down of 49 percent of State assets. Well many people around the country do not believe the Government has majority support for that and having a majority of one in the House for controversial legislation such as that does not denote a wide underpinning of broad-based support. 
The same thing might be said here. There are parallels with the State asset legislation. In other countries that have looked to the cooperative model they are coming out of a different environment. They are coming out of a business environment that relies on foreign investment and relies on foreign ownership and therefore succumbs to the divesting of profit out of the country. I think about Uruguay in particular where Fonterra has had interests previously. There is a farmers association in Uruguay that is looking to the cooperative model in order to retain the interests of the farmers and the profits that they produce within that country. 
So it seems to me that the Trading Among Farmers option in this legislation is something that does not sufficiently guard against the disruption the corrosion and the final debilitation of the cooperative model and will allow profits to go offshore when one of the most compelling things about this cooperative model is that the farmers themselves have been able to benefit from it by extension their immediate communities have been able to benefit from the profits going back to the farmers and by extension the whole of New Zealand profits from that as well. Unless this cap is put on in accordance with the Hon Damien O’Connor’s Supplementary Order Paper we will have enormous difficulty agreeing to the passage of this legislation. Thank you.