Guy Nathan: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — First Reading 
Guy Nathan: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — First Reading 
[Volume:638;Page:8562] 
NATHAN GUY (National) 
: 
 I rise to take a call on the State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill. This bill is all about the merger of two State-owned enterprises that are in direct competition with each other. We in the National Party think that competition is quite a good thing. These two State-owned enterprises compete for a variety of services. They compete for TB testing. Asure has about 40 percent of that market share; AgriQuality has most of the remainder. They compete for biosecurity work they compete for livestock inspections and now AgriQuality wants to move into red meat inspection. Of course the Labour Government and the Minister for State Owned Enterprises say no. They say that this is terrible because they say we cannot have State-owned enterprises competing. So the Minister says no to competition yet there is a whole list of State-owned enterprises already competing against one another. 
We have had AgriQuality and Asure in front of the Primary Production Committee since I have been in Parliament in the last 18 months. We went down and visited Asure in Belfast on the outskirts of Christchurch. It is doing a fantastic job and it is a very very good operation. We have had AgriQuality out on our farm doing our TB testing and doing a very very good job. It has a very professional approach and it gives great service. So when I look back through the collection of financial reviews in 2004 and 2005 one really strikes a chord. I quote from the comment made by the select committee on the merger in the bill that is in front of us now: “This merger will reduce competition in the provision of the quality assurance services significantly disadvantaging the New Zealand primary sector.” So up will go the meat inspection charges up will go TB testing up will go the price that people pay at the supermarket counter and so it will flow on. 
Then I looked through the Bills Digest particularly with regard to this bill. I will quote from it: “The Government would prefer to see SOEs collaborate and coordinate their activities rather than compete against each other at a cost to the Crown and taxpayers.” Well what about this? We have Meridian Energy we have TrustPower we have Genesis Energy—the list goes on and on. 
R Doug Woolerton 
: That’s a bit ho-hum sometimes too. 
NATHAN GUY 
: That is exactly right. But they are all competing to try to bring the cost down not to remove competition so that the cost will go up. 
It is interesting when I followed on from looking at the Bills Digest to find that the business case for this merger still has not even been established. So we do not know what will happen in the business case. We do not know the economic benefits of this merger. We have not seen those. We did not hear about them when Mr Mallard stood up and spoke in front of us today. He did not talk about that. He was silent on any economic benefits he believes it may have. So I think we have some serious flaws in this whole merger of these two State-owned enterprises. 
It is ironic that Minister Mallard wrote in June 2006 within the last year to all the chairs of State-owned enterprises suggesting that they should go ahead and invest in areas outside but related to their core business. In other words he said: “Here is the chequebook. Get out there and diversify.” When I put on my rural hat and think about it I would ask whether farmers would want public sector entities such as Landcorp diversifying into milk production. Would farmers want Landcorp setting up a milk plant in competition with Fonterra? 
Here we have a Minister saying we do not want competition and we do not believe that it is very good with regard to AgriQuality and Asure but on the other hand we actually want to see all State-owned enterprises diversifying. Mr Mallard believes that this role will bring about economic transformation. Well is that not a buzzword? It is very like the buzzwords about carbon neutrality that we hear—it is more hollow words more bumper stickers from this Government. 
Yet Treasury has concerns with this move. The Ministry of Economic Development has concerns with Mr Mallard’s approach and it states that State-owned enterprises should be able to diversify. So we in the National Party have real concerns about this matter. 
When I did a little bit of research on what the Labour Government thinks about these State-owned enterprises I came up with this comment from Graeme Hunt: “In former times the Labour Government acquired business influence by nationalisation or licensing. Now the Government extends its reach into the private sector by regulation and through the power of State-owned enterprises.” 
Labour was founded about 90 years ago on a wild socialism sort of agenda. It is immensely distrustful of business but it is willing to let it prosper in a State-owned enterprise straitjacket of regulation and high taxes. When I looked at this matter I also noticed that Dr Richard Norman a senior lecturer in human resource management and industrial relations at Victoria University did a study in August last year—just in 2006—and it was not one where he was going to damn the public sector. What he did was to go out and survey all those directors to see what they thought of the State-owned enterprises. 
He did a survey of 62 directors who are currently on the boards of State-owned enterprises. He found that two-thirds of those who responded—28 directors—had serious questions about the process of selecting directors. There were rumblings about directors being chosen to satisfy the political correctness of the Labour Government and not for their skills and experience. Here we have the Minister Trevor Mallard wanting State-owned enterprises to diversify yet he goes around and handpicks his Labour lackeys to put on these State-owned enterprise boards. Mr Norman found that the competence of these boards is left floundering. It is a long and sometimes unprofessional and embarrassing appointment process—that is what Mr Norman found when he looked at State-owned enterprise boards. 
Darren Hughes 
: Like Jim Bolger. 
NATHAN GUY 
: Some of them are very good but some of them are actually left floundering. That is what his study confirmed when he researched and got 28 replies from those directors on State-owned enterprise boards. 
Right now a big part of this bill is that the national biosecurity response capability will somehow improve under the merger of these two entities. It needs to because Biosecurity New Zealand is an embarrassment—it is an embarrassment to the landowners of New Zealand. Recently we had a GE corn outbreak that got into this country somehow because of human error. The Ogden report found that there were big problems with the computer system at Biosecurity New Zealand and with the human resource capability of its staff. As a result 18 farms in New Zealand planted 260 hectares of corn contaminated with GE. So there are big concerns about Biosecurity New Zealand’s response—and I cannot see how merging these two State-owned enterprises will improve that. Didymo has broken out right throughout the rivers of the South Island. We have real concerns. 
Let me tell members what I think is really important when we look at this whole State-owned enterprise debate. Recently 400 millimetres of rain fell in Northland. I as a farmer who was flooded in the Manawatu floods of 2004 am very sympathetic towards those people and I hope they are bearing up OK. But when we look at the Meteorological Service which is a State-owned enterprise and the National Institute of Water and Atmospheric Research which is a Crown research institute we see that those two organisations need to work closer together. The institute has a multimillion-dollar Cray supercomputer that can forecast weather bombs and flood events 12 to 36 hours ahead of the Meteorological Service yet the service has the contract for weather forecasting in New Zealand. If ever there was a case for a State-owned enterprise and a Crown research institute to get together and work more collaboratively then there it is. There is the evidence. If the institute can get that information to the Meteorological Service and stop Mr Maharey and Mr Mallard from fighting then that will deliver a better response to rural New Zealand landowners. 
In looking forward National has some real concerns about this bill and we will have to iron those out in the Commerce Committee. What I have identified today is that the Minister for State Owned Enterprises has double standards. He does not want competition. He is willing to open up the cheque book and say that State-owned enterprises should diversify. At the end of the day the public do not trust Mr Mallard because he has closed so many schools and has made a complete shambles of the Rugby World Cup stadium in Auckland. Right now he wants to see less competition which will drive up the costs for rural New Zealand.