Katene Rahui: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Second Reading 
Katene Rahui: Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill — Second Reading 
[Volume:672;Page:18263] 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 Tena koe Mr Assistant Speaker Robertson. A fortnight ago in Rotorua at the New Zealand Dairy Business Conference Waikato-Tainui’s Te Arataura chairman Tuku Morgan told delegates that farmers and iwi shared an intergenerational interest in the land and what it produced. He went further and laid a simple challenge to the industry: work with us; work with iwi across the country in genuine partnership. In his korero he referred to Maori cultivation of the land prior to its alienation and seizure. He also brought out the critical role that Princess Te Puea played in establishing New Zealand’s dairy industry when she bought land and began building a dairy herd in the 1920s. The Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill threatens to disrupt this relationship by introducing uncertainty about Subpart 5 in Part 2 of the Dairy Industry Restructuring Act 2001. This subpart is the one that promotes the efficient operation of dairy markets in New Zealand by regulating the activities of Fonterra to ensure that New Zealand markets for dairy goods and services are contestable. The bill states it will provide for a new process for the expiry of the pro-competitive measures when the new specified market thresholds are reached. In its effect the new legislation provides for a more detailed approach in determining when the threshold is met and increases the threshold to 20 percent. The new legislation effectively empowers the Minister of Agriculture to forcibly enact the expiry of this subpart in the event that the threshold is met. 
So why is there such a concern? Let me go back to the points raised by Tuku Morgan. A review of the Maori commercial asset base for Te Puni Kokiri in November 2003 showed that there were 436 Maori authorities with substantial businesses. We know also that by farming an area of 720000 hectares worth an estimated $7.5 billion Maori are the largest natural grouping of pastoral farmers in New Zealand. In fact given the collective nature of their landholdings and the number of shareholders they support there is also a strong case for saying they are the most sustainable farmers in New Zealand. Mr Morgan’s challenge to the dairy sector was to take the relationship between iwi and farming to a new level. He promoted the urgent need to recognise Maori concepts associated with the land such as tikanga or heritage; kaupapa or conceptualisation of Maori knowledge; and kaitiakitanga or guardianship to work together and create a more environmentally culturally and socially sustainable dairy industry. Enter Miraka Ltd. 
Miraka is a new entrant to the dairy processing industry and is constructing a plant at Mokai in the heart of the Waiariki electorate 30 kilometres north-west of Taupo. It will commence operations in August 2011. Miraka is backed by a group of Maori trusts and incorporations that have a combined asset base of over $1 billion. These organisations include Wairarapa Moana Inc. Tuaropaki Trust Waipapa 9 Trust Hauhangaroa Partnership Tauhara Moana Trust and Huiarau Farms and the Maori Trustee is also an investor. As a majority Maori-owned and Maori-controlled dairy company Miraka is here for the long term. Miraka’s owners share a vision of sustainable business practices that secure long-term returns for current and future generations from land that will never be sold. Yet if this legislation proceeds unchallenged it may well be that the unique partnership Miraka can bring to the dairy sector is compromised—in fact sacrificed—under the possibility of a restricted public market. 
In the current arrangements there are consistencies between the current Subpart five of the Dairy Industry Restructuring Act 2001 and the kaupapa of rangatiratanga as the current subpart provides for effective regulation and transparency of Fonterra’s activities within the dairy industry. So it ensures that despite its dominant market position Fonterra operates within an environment that is contestable such that it faces potential competitive pressure. But this new legislation proposes to provide for the subsequent expiry of Subpart 5 to be timed to enable any future Government to review and/or amend if required the pro-competition provisions of the Act to meet the policy objectives of the time. In short various dairy operators in the sector are telling us that it is unwise to leave the door open in a way that may expose the dairy industry and independent processors such as Miraka to an unacceptable level of risk. 
As the House will know there is currently a significant amount of attention on the dairy industry particularly relating to Fonterra’s capital restructure proposal the review of raw milk regulations the domestic retail price of milk and the way in which Fonterra calculates the price it pays its farmers for milk known as the farm-gate milk price. The Maori Party is acutely aware of the heightened levels of public concern about the level of competition in the domestic market as well as the claims of anti-competitive behaviour by Fonterra and the effects these have on the price of milk. I acknowledge the initiative that has been taken by the Commerce Commission in undertaking some preliminary work to determine whether a formal investigation into the price of milk is warranted. That was great news for our constituents. The Maori Party had called for a commission investigation into milk prices because of the claims that Fonterra had an effective monopoly in collecting over 90 percent of the milk produced in New Zealand. The advice we received from consumers and dairy producers alike was that the concern related to the proposed share-trading proposal in that it would sacrifice a fundamental principle that guarantees farmers easy entry into and exit from Fonterra the world’s largest dairy exporter. As is now well known of course the Commerce Commission decided it would not hold an inquiry into milk prices but it did suggest it was open to hearing arguments. 
This debate has ranged far and wide across the impacts and effects of the dairy industry legislation and although one might say that this legislation is not specifically focused on Fonterra’s plan to introduce share trading amongst its farmers I have to say that there is simply too much uncertainty around for us to be able to agree to repeal and replace the provisions that promote open markets. This bill is being read in a volatile environment. We know that the Federation of Maori Authorities for instance has indicated concerns about the Ministry of Agriculture and Forestry’s discussion paper on a regulatory regime to accompany Fonterra’s capital restructuring. The underlying premise in this legislation is that there is unlikely to be sufficient competition in the dairy industry to ensure the efficient operation of New Zealand dairy markets yet as the Federation of Maori Authorities will tell us there is significant scope not only to lift the performance of dairy producers but also to build on linkages between producers processors and marketers to capitalise on value-chain opportunities within the dairy industry. We agree with the Federation of Maori Authorities that an open entry and exit mechanism is essential for a competitive dairy market. We also believe that a full and informed investigation needs to be completed by the Commerce Commission before we can be in a position to support this bill going through. To this end the Maori Party cannot support this bill at its second reading.