Prosser Richard: Dairy Industry Restructuring Amendment Bill (No 2) — First ReadingText is incorporated into the Bound VolumeProsser Richard: Dairy Industry Restructuring Amendment Bill (No 2) — First Reading[Sitting date: 15 May 2013. Volume:690;Page:10001. Text is incorporated into the Bound Volume.]RICHARD PROSSER (NZ First): I am pleased to rise on behalf of New Zealand First to speak on this the first reading of the Dairy Industry Restructuring Amendment Bill (No 2). New Zealand First is proud to support this fine member’s bill and we commend the Hon Damien O’Connor for introducing it to the ballot and we congratulate him on having it drawn. This bill has come about because of the Dairy Industry Restructuring Amendment Bill which was passed by this House last year. We spoke against that bill. We voted against it. New Zealand First voted against that bill because of the possible ramifications that we could see it having for New Zealand’s dairy industry.Without wanting to relitigate that Act or the entire process of that Act we are happy to support Mr O’Connor’s bill. Indeed we are grateful for the opportunity to support it because we see it as having the potential to circumvent some of the worst possible effects the most deleterious effects that the Dairy Industry Restructuring Act could potentially see visited upon the dairy industry. The concerns we hold are essentially the same as those Mr O’Connor holds and they are chiefly centred on the Trading Among Farmers scheme—the TAF scheme—which is one of the major planks if not the major plank of the Dairy Industry Restructuring Act.Trading Among Farmers allows for the formation of what is somewhat euphemistically called the new co-op fund. The name “new co-op fund” gives the impression that it is a fund owned and controlled by the co-op—by the farmer shareholders who comprise and own Fonterra. The name gives that impression. In reality however it is anything but. In fact it is almost the polar opposite of that. The new co-op fund is the fund into which existing Fonterra shares may be transferred and into which farmer shareholders may sell their shares in the cooperative which is Fonterra so that external investors and speculators may trade in them and may receive dividends from them. External investors do not buy the shares themselves of course. They buy the unit securities that are attached to each share and they buy the dividend income stream that would normally be associated with the share. But the trade in the unit securities will dictate the value of all shares in the co-op which in turn will affect the relative ease—or not—with which new suppliers may enter the cooperative and may provide additional incentive for some farmers wishing to cash up their shares and exit the co-op.This in turn will create further fiscal pressure on the company and its farmer shareholder owners. In either event the Trading Among Farmers scheme will allow for the redirection of dividend stream revenue away from Fonterra’s New Zealand resident owners to offshore speculators and other foreign carpetbaggers. Indeed the first tender of Fonterra unit securities was oversubscribed and already more than 40 percent of units have gone to overseas buyers. We do not think this is a good thing. New Zealand First does not want to see Fonterra’s profits disappear overseas. We want to see them retained in New Zealand by the fine hard-working private business people who are the farmers who created the company.Mr Ardern asks whether we the Parliament trust the farmers of New Zealand. Well personally yes I do if they have all of the information. We do not believe that if Fonterra’s farmer shareholders had had all the relevant information to hand and sufficient time to digest the Trading Among Farmers scheme to fully grasp and understand the potential ramifications of it they would have voted in favour of it. New Zealand First believes that had the time given for the select committee to examine the bill not been truncated from 6 months to 4 weeks—3 weeks of which Parliament was in adjournment for—Fonterra’s shareholders would have had sufficient time as well as all of the relevant information much of which was provided only at the last minute to see the scheme for what it is and they would have voted it down. But that did not happen and the Dairy Industry Restructuring Act with its Trading Among Farmers scheme is the result.Fonterra claims that it has no plans to build a shareholder fund that is any larger than around 10 to 15 percent of the total number of shares in the co-op but there is no provision in the Act to prevent the shareholder fund from growing larger than that. There is currently no protection against the size of the fund growing to any level at all up to and including 100 percent other than the provisions contained within Fonterra’s constitution which can be changed by a 75 percent majority vote of shares held. This is an important distinction because shares held and individual shareholders are not the same thing.Mr O’Connor’s bill seeks to insert a measure of protection for Fonterra and its shareholders into legislation where currently there is none. It is a stopgap measure. It is handbrake on the drive to divest New Zealand of its dairy industry and it would give some protection until a change of Government is able to reverse the folly that was and is the Dairy Industry Restructuring Act. New Zealand First congratulates Mr O’Connor on bringing this bill to the House. We commend it to the House and we are proud to support it.