Shaw JamesHon JAMES SHAW (Minister for Climate Change): Well always a pleasure to follow the Hon David Carter second time today.So I'd actually just like to start by following on from some of the things that the Hon David Carter was saying. Bill Birch John Luxton Bill English men of that ilk would perhaps be the headline line of this debate so far. I'm not a man of that ilk.What I want to say about the Dairy Industry Restructuring Amendment Bill (No 3) is that the Green Party will be supporting it to select committee. There are some changes that we're looking for. At the very least we want some assurance that the changes that are proposed in the bill go as far as we would like because our view is that this bill is a good start but actually it needs to go further actually to remove the restrictions around open entry completely. The reason for that and I think we may be arguing from a different spot and strange times do end up with strange bedfellows but the Green Party has a view that the existing provisions have led to a situation—and it was interesting hearing the Hon David Carter saying that he thought that we had reached the maximum number of dairy cows that the land and could sustain in New Zealand because we share that view. In fact we think that we probably passed that point a while ago—that the existing regime means that an investor in Queen Street could buy a patch of land in a place that was completely inappropriate for a dairy farm like say the Mackenzie Country for example and go and convert that into a dairy farm and then require Fonterra to pick that milk up. If there were sufficient numbers of conversions in an area what that meant was that essentially Fonterra had to create a drying unit in the area otherwise it was completely uneconomic to do so. So it had to build the infrastructure in order to do that. And so what you had is a regulated environment that essentially enabled investors to force conversions get a guaranteed buyer for their product create all of that infrastructure and cause environmental havoc in places that were completely inappropriate for dairy farming. There's lots of parts of the country where you know it's fine within certain boundaries but there are parts of the country where you had huge conversions and it was completely inappropriate. So in our view that regime was responsible for actually a lot of the overcapacity that we've seen and a lot of the strain on the environment that we've seen in New Zealand in relation to the industry.It's also a completely production-led approach rather than a consumer-led approach. Of course Fonterra has to actually sell products to the rest of the world so it is a consumer- and a business-to-business business in that it actually has customers and so it's got to work out what do they want where's the value and then in an ideal world they would actually be passing that back down the chain and saying to farmers Look this is the kind of product that we're looking for. This is the amount that we're looking for." and so on. That's actually how markets should operate not one that's led entirely from a production end and say "We're actually going to create this volume. Now you have to push it out there almost no matter what the market wants." I think that some of the performance issues that David Carter was referring to are caused by that. I mean I know that there are other issues but part of it is actually that the entire design of the legislation is set up for a production-led approach not a consumer-led approach. Actually marketing-led consumer-facing companies who are much more responsive to market requirements—I think if you start at that end of the value chain you would end up with a better result.Related to that of course given New Zealand's overall strategy because we are limited in terms of the amount of productive land that we've got we're only ever going to be a niche producer of anything in terms of the global marketplace. Then obviously the way for us to improve our livelihoods is to move up the value chain. And I know that we've got an economy that over the past century and a half of the modern period has been built on essentially commodities and has been at the whim of the commodity markets then you're not going to create more wealth that way particularly when you get to capacity. So I would argue that the existing regime has led to a situation where we've chosen production over value creation and that what we need to do through this legislation in freeing up Fonterra would actually enable Fonterra to take those consumer insights and say "How do we get value?" and then pass that back down to farmers and get a much more dynamic value-led situation which also happens to be way more environmentally sustainable than the model that's been allowed to perpetuate over the last 18 years.So we are going to be supporting this legislation through to select committee. At the very least we want some assurances that the draft legislation of the bill that's been presented to the House will actually enable the kinds of changes that we're looking for the kinds of results that we're looking for. If we're not assured of that we'll be proposing changes to the legislation perhaps in line with some of the other speakers who have gone before in terms of actually removing some of those constraints completely and really freeing it up. So I think it'll be a very interesting and lively debate at select committee in terms of how we move forward on that.If the bill was to remain as has been presented one of the things that I think would be important for us would be to—Fonterra's actually got quite sophisticated environmental reporting but that would actually need to become legislated I think in order to incentivise the use of the proposed exceptions to open entry that are outlined in the bill. Again we think that that would be a poor second choice because ultimately if you just free it up then those incentives would get passed through anyway.So that is what we're hoping for from this bill. We do think that there is a real opportunity. I noticed again the Hon David Carter pointed out that this has been 18 years since it was first created as such and that in fact it wasn't designed to go on this long. It was supposed to be deregulated some time ago. But I do want to point out that of the 18 years that the Act has been in place National were in power for half of those years. You have to wonder what they were doing with their time given the passion and the energy that they have devoted to their speeches tonight about the urgent need for reform and the extent of reform that they're outlining. You have to wonder if this legislation was supposed to have expired and the industry was supposed to be deregulated some time ago and this is urgent and it is critical and they want to free Fonterra and unleash the shackles and so on what were they doing for half the period of time that the legislation was in place? I just find that kind of extraordinary. You would think given the critical nature apparently of everything that they've been talking about given that they only left office a couple of years ago you would think that they would have taken the opportunity to push through those major reforms in the period of time that they actually had.But having said that as I said the Green Party supports this bill through into select committee. It is time for some deregulation. In fact ideally a greater level of deregulation in order to take away that existing regime around the open entry and so on which we think has produced some really perverse outcomes in New Zealand. We will be looking for a stronger regime to ensure that actually we get the kinds of outcomes that New Zealanders want. Again I have to say that this is one of those apparently rare times when people who are environmentalists when the industry itself farmers and so on actually appear to be pretty united on what needs to happen in order for the kinds of outcomes that we all want to take place. So I do think that this deserves a good working out at select committee because I do think we've got an opportunity to create some real change here. Thank you Madam Speaker."