Burns Brendon: Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill — Second Reading In Committee Third Reading 
Burns Brendon: Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill — Second Reading In Committee Third Reading 
[Volume:661;Page:10142] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 This bill the Dairy Industry Restructuring (Raw Milk Pricing Methods) Bill is a natural evolution. It follows on from the Dairy Industry Restructuring Act passed by the previous Labour Government. As the previous speaker Shane Ardern indicated in some detail the bill addresses some of the problems in the domestic market supply which came through in the industry review initiated by the Labour Government. The bill will in essence mean that Fonterra’s farmers will get a fair price for the raw milk that they deliver. 
One of the points we want to make is that this bill should have been passed some time ago by this House because it will help to improve the performance of an industry that is the most important industry to this country in many many ways. The dairy industry provides 27 percent of export receipts so for every dollar we spend as a nation 27c comes from the dairy industry. Therefore this bill should have had priority status attached to it. When we consider that this House has debated bills to cut the seats on polytechnic councils for instance instead of considering this dairy industry restructuring bill we have to ask where the Government’s priorities were. This bill was on the back-burner and other lesser bills were given front-status treatment. 
This is a refinement bill: an ongoing refinement of the dairy industry regulations and legislation that Labour introduced and continues to support. It is only one of the larger issues that the Government will face in terms of the dairy industry. At some point the Government will have to bite the bullet and make decisions about the capital restructuring of Fonterra. Last year we saw that the Prime Minister and his good mate the chief executive officer of NZX looked at proposals for quite considerable change in the dairy industry capital structure. They were defeated by the dairy industry stakeholders themselves and that was a welcome move. But that issue will come back and I think that sooner or later the Government has to give some signals as to what its position will be. It has to think very very carefully about those issues. 
Fonterra is our only multinational company. It is 100 percent owned by farmer shareholders and is our biggest player in international markets. I think I have heard figures tonight about the amount of the international dairy industry trade. I think 40-plus percent was the figure coming from this one company with its 10500 shareholders across New Zealand. Fonterra does a fantastic job. It is indeed our prized jewel. We need to make sure we protect it not expose it to the vagaries and fluctuations of international capital markets. Fonterra needs to remain in New Zealand hands in New Zealand ownership and deliver back to New Zealand every dollar that it gets. 
Whatever benefits foreign investment brings it brings other consequences. Every dollar that has to be repatriated to foreign shareholders is another dollar we have to find as a nation in terms of our balance of payments. Every dollar that we repatriate is another push on our New Zealand dollar keeping it high. Every dollar that we repatriate to foreign shareholders represents another pressure on our interest rates. All of those things end up costing New Zealand— 
Hon Rodney Hide 
: What rubbish! 
BRENDON BURNS 
: The member says “What rubbish!”. This is absolutely fundamental. Every dollar that we send overseas we have to find somewhere else and the member is telling me that that does not impact on our balance of payments. Is he telling me that that does not impact on the level of the New Zealand dollar? Is he telling me that it does not impact on New Zealand interest rates? 
Hon Rodney Hide 
: Correct. 
BRENDON BURNS 
: I find that extraordinary—no I do not actually coming from the leader of the ACT Party. He believes that the market delivers everything. He does not believe in Fonterra. He thinks the market does better. 
Hon Member 
: That’s why he got 2 percent. 
BRENDON BURNS 
: That is right. That is why he got 2 or 3 percent of the vote. 
We need to make sure that Fonterra gets some measure of protection and I think this bill does that. 
Hon Rodney Hide 
: Why don’t you sit down until you’ve got something to say? 
BRENDON BURNS 
: Why do you not stand and take a call Mr Hide rather than sitting in your chair like a chump? 
Mr DEPUTY SPEAKER 
: The member will not bring the Chair into the debate. 
BRENDON BURNS 
: The point about this bill is that it gives a measure of protection to the Fonterra shareholders. There are 10500 hard-working New Zealanders who every day go out and deliver for New Zealand. 
There are some people in this House who believe that the market can do better. They are the kinds of people who have taken the axe to the apple industry. We are seeing that industry doing so terribly well! They would now like to see that expand to the kiwifruit industry because they can do so much better! That is despite the way that Fonterra has shown that the shareholding structure that it has the cooperative nature that it has actually delivers real returns for New Zealand. Twenty-seven percent of our export receipts are delivered by that one company. That is a pretty impressive figure. But it is “socialism at work” and some people ideologically think that is anathema. They think the market can always do better even if the evidence strongly shows that that is not the case. I think the debate will happen and we will see people like Mr Hide take a role in it. He has had success today with the bill to gut Environment Canterbury. I hope he does not get his hands on Fonterra because that would be to the detriment of every New Zealander not just the 10500 people in the industry. When we get 27 percent of our export receipts from one company what a bunch of fools we would be to allow market ideology to take control of that. 
Hon Damien O’Connor 
: National fools. 
BRENDON BURNS 
: That would be one way of describing it. 
What we would see from a public float of Fonterra’s shares is ownership going outside of New Zealand outside of the hands of New Zealand farmers. That could lead to Fonterra falling into the hands of foreign investors. If it is going to be described as some kind of myth I tell members to look at the developments of last week when a Chinese company with a cheque book of around $1.5 billion indicated that it wanted to spend up large in the New Zealand dairy industry. It has seen the gains that this industry has delivered for New Zealand. It would like to take out a share of that. That is the way the world works but most nations of the world would say that is a short-sighted approach and that it will not protect New Zealand jobs it will not protect New Zealand investments and it will not protect our returns but will simply open the floodgates to a whole repatriation of money that should be staying in New Zealand. 
The door has opened somewhat. The Minister of Finance in one of his first acts last year as the new Minister ordered a review of the overseas investment legislation. The Overseas Investment Office’s ability to operate in the interests of protecting New Zealand’s sensitive land and resources was streamlined for reasons of speed and efficiency. We are now more open to further buying up of New Zealand’s land and the Overseas Investment Office which is our only protection against that does not have the tools necessary to make sure that it does a proper job to try to protect New Zealand interests. 
We have seen some people take a very strong position on issues like the sale of Auckland International Airport. Some of us happen to believe that there are things that are worth holding in New Zealand hands—like strategic assets. I have to say I list the New Zealand dairy industry as one of those. It would be foolhardy to do otherwise. Already that sort of investment is strongly under way. We have a wholly owned Russian company in Waimate. We have a company with a 22.5 percent Japanese stake in Synlait in the Dunsandel area of Canterbury and we will see more attempts I am sure to buy more of our dairy industry. I say let us keep Fonterra in New Zealand hands. 
We want to get it right as a nation in terms of fundamental industries like Fonterra and we have to get it right in terms of fundamental issues like water. Fonterra I acknowledge has been one of the architects of the Dairying and Clean Streams Accord. It is not delivering as it might and should but I applaud what I hear from the Fonterra leadership. They want to work to get the balance right and I have to say that Fonterra’s farmers are probably doing better than some. 
We are already under some assault in terms of our “100% Pure New Zealand” image.  
The Economist 
 was the most recent international critic of that branding. We have to get it right. When we see potential for big new rapid growth in my region of Canterbury we have to say that that is short-sighted. If we do not get the balance right we will be at risk because the international market place is watching and judging us already. Although that might be unfair because other nations probably have worse water quality than us other nations have not branded themselves as “100% Pure” as this nation has. It is not a bad brand to have but living up to it is now incumbent upon us as a nation. 
Similarly issues of animal welfare are important in the international market place and our reputation will be judged on that issue as well. We have a bill on animal welfare issues before the select committee at the moment. It is mostly focused I think on domestic animals but obviously it is also focused on many millions of stock animals. Animal welfare has to be delivered to stock animals as well as to pets. 
This bill is a start. It is giving the right signals in terms of the new milk-pricing regime. I support it and commend it to the House.