Muller ToddTODD MULLER (National—Bay of Plenty): Thank you Mr Speaker. I rise to talk to the Dairy Industry Restructuring Amendment Bill (No 3). At the end of the Minister of Agriculture's speech he posed a question. He said that in his Government's view there will be a time in the future where Fonterra and the dairy industry have reached the point where it doesn't need significant regulatory impost but that time is not now. The National Party holds the view that with respect to open entry and exit provisions and the obligation to provide a hand up for those who are wanting to put additional stainless steel at scale into the New Zealand dairy industry and then compete against Fonterra in the world market we have reached that point that those regulations in particular are no longer required and therefore the balance that the Minister talks about that he has sought to strike through this legislation from the National Party's perspective has not been met. We therefore will oppose this legislation going to the select committee and oppose it here at first reading. Of course we will debate it at select committee and look forward to the many many submissions that we get from the agriculture sector and the dairy industry in particular.I would like to spend a bit of time reflecting on why we have got to that position. It is important to reflect a little bit on history. In 2001 when this company was established clearly with remarkable market power at 96-97 percent it made a whole lot of sense to put some regulations over the top of that company to ensure that the right balance was struck in terms of ensuring a fair price paid back to farmers and in particular the New Zealand domestic liquid milk and retail market was competitive and there was the opportunity for new competitors to be able to move into the market.But fast forward now to 2019 and Fonterra's market share is around 80 percent. There are a significant number of competitors who have come into the market. Interestingly when this legislation was initially established the language that was used by the Labour Government at the time was that this regulation or requirement to assist new start-ups would particularly assist the domestic competition with respect to liquid milk and the retail brands. Well what has happened ladies and gentlemen is that every single one of those new stainless steel competitors has got New Zealand milk and understandably commercially immediately turned their eyes to the opportunity that exists around the world and from day one have competed with Fonterra vigorously not only for New Zealand milk supply but particularly in the market.So we hold the view from the National Party perspective that the market is working particularly well. There is a strong competitive tension that exists in this country with respect to access to New Zealand milk. Fonterra now should be freed from the obligation of giving a hand up essentially to new stainless steel at scale to come into New Zealand to immediately compete against them on the world stage. The National Party has no problem with the obligation to provide milk to those small niche players that have cheeses and yoghurts—often in a New Zealand context they sell some plus a little bit offshore. That's not what we're talking about here. We're talking about a strategic conversation on behalf of a critical industry in this country—25 percent of mercantile exports huge value to the economy.It's not just a huge value to us. All those who compete in the global food space see New Zealand see its milk pool and see opportunity. Surely we must put together a set of legislation and regulations that ensures that New Zealand can compete effectively in that context as opposed to creating the obligation on Fonterra year after year to provide hand-ups and start-up opportunities for those. I acknowledge the Minister has reduced some of the obligation but from the National Party's perspective it hasn't gone far enough.Equally with respect to the open entry and exit obligations we acknowledge aspects of this bill which are in the right space particularly the freeing up of Fonterra's ability to be able to design commercial terms in terms of its annual supply conditions with its farmers that reflect the need to be able to expect from those same farmers best management practice with respect to environmental outcomes animal welfare and the like. I think it makes sense that they have now clarified through this legislation regulations the ability to be able to do it. It does make sense that they also now don't have to take new conversions that appear in the context of the New Zealand industry although if what we hear is true coming from the other side with respect to water I suspect there will be very few opportunities for conversion and in fact I think the whole conversation around which side of the House supports primary industry to be able to build and be sustainable and actually be successful on the world stage is going to become an acute focus over the next few weeks.But a part of the open and entry part that is proposed in this bill that we disagree with is the continuing obligation on Fonterra to take back those who have left. Again I think this needs to be painted out very clearly. You have farmers who leave who sell up and go to a competitor and then if it doesn't work and they want to return back Fonterra has no choice other than to have them back on exactly the same commercial terms as exist for those who have stayed with the co-op forever. That does not work well in rural New Zealand and there are many people on the other side who know that. It doesn't work it doesn't make sense and it certainly doesn't make sense in the context of a highly competitive domestic milk supply context.We have some other issues that I will touch on and I'm sure my colleagues will explore in great depth. A particularly interesting focus from Minister O'Connor to put in here at the last minute some requirement to approve a ministerial appointment on to the Milk Price Panel. I think this is personal. I think that he has always had in his view deep suspicion that somehow the milk price manual despite the fact that the Commerce Commission has had review after review around its efficacy—he still wants to have his person on there to be able to see what's going on to look under the lid to really make sure. Well I think that New Zealand politics surely has gone beyond that sort of behaviour. We have a milk price panel required under this legislation. It has proven efficacy over many many years. Let it do its business. Don't then try and say Well actually I want to put my own person in there as the Minister." They cannot help themselves. The only way issues get resolved from the Labour Party's perspective is to put their own hands into the till if it's a tax conversation or into the engine if it's the New Zealand economy. It ends up I think ultimately cutting their hands off and making the engine go slower and this is another example. They don't need to make this appointment. I don't think it adds any value. Again we intend to push back quite strongly.In terms of the components in this legislation which talk to the liquid milk and domestic retail space in New Zealand—and I'm talking here particularly the obligations on Fonterra to supply Goodman Fielder with historically 250 million litres but here it is suggested moving to 350 million. This is one part of the legislation that we are broadly comfortable with and we can signal support with respect to that.But in conclusion this is a position that we have reflected on and landed on very clearly as the National Party that the time has come because that is indeed the question that the Minister put. We're having a conversation as to whether these regulations and legislation are fit for purpose for the 2020s. That's what we're talking about. So let go of the view of the world around constraining Fonterra that existed in this House in 2001 in the context of that market reality of a business with 97 percent. It now has 80. It is a hugely competitive space New Zealand milk supply. It is part of a global food chain which has huge value to other players who want to come back and come from their countries and integrate back into our supply chain because they see opportunity. That's fine. That's the New Zealand way. We are open to the world. But let's not add additional—we think unacceptable—regulation and obligation on Fonterra with respect to requiring them to give that new stainless steel a further opportunity when they're already under huge competition from those already in this market and then for those who leave the co-op say "Welcome back and you can come back and have the same terms and conditions of those many many thousands who stay with them thick and thin."We will be opposing this but we look forward to a very very productive conversation in the select committee. Thank you."