Copeland Gordon: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — First Reading 
Copeland Gordon: State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill — First Reading 
[Volume:638;Page:8568] 
GORDON COPELAND (United Future) 
: 
 United Future will be supporting the State-Owned Enterprises (AgriQuality Limited and Asure New Zealand Limited) Bill at least for the first reading and referral to the Commerce Committee on which I serve as deputy chair. The whole question of assurance particularly with regard to New Zealand’s meat export products probably takes on an added significance today compared with the recent past. The development of new technology is one of the reasons for that. 
I remember when the House was debating very vigorously the microchipping of dogs about a year ago. At that time I attended a meeting in Hamilton where vets were saying to farmers that it was necessary for New Zealand to microchip cattle and other animals that produce red meat because our international markets demand the ability to trace a particular cut of meat from the plate of the consumer whether in France Britain or elsewhere right back to the exact animal it came from. That has happened because of the way in which mad cow disease and other transmitted diseases have been highlighted and the consciousness of consumers today who want to be assured that the products they consume are safe to eat. 
The spotlight is also on the question of carbon miles I think it is which is the amount of carbon used to send meat from New Zealand for example to export markets in Europe. 
R Doug Woolerton 
: “Food miles”. 
GORDON COPELAND 
: I thank the member very much; I knew I had the term slightly wrong. I think that is a smokescreen. New Zealand will successfully defend itself I have no doubt because we will be able to demonstrate exactly the amount of carbon used in producing meat in New Zealand versus the amount used by our major competitors overseas. In that regard we have the very temperate New Zealand climate on our side. 
I say though that this bill highlights some problems for United Future in respect of the present arrangements for State-owned enterprises. Let us not forget that the shareholders of these two State-owned enterprises are the people of New Zealand and under a normal corporate model the shareholders of a company are its proprietors. So the reality for both AgriQuality Ltd and Asure New Zealand Ltd is that the people of New Zealand should be exercising proprietorship for these two organisations and they do that through their shareholding Minister—in this case the Hon Trevor Mallard. 
But when we come to the State-owned enterprise model we find as Keith Locke of the Green Party has pointed out that in some ways these organisations are neither fish nor fowl. They are somewhere in between a truly corporate model and a Crown entity. That is highlighted by this bill because we find that the proprietor of the company—the shareholding Minister on behalf of the people of New Zealand—is not able to give a directive to AgriQuality Ltd that it should not enter into competitive arrangements and into the patch that is presently occupied by Asure New Zealand Ltd. That is why the Minister has to come to Parliament to get our permission to give a directive to AgriQuality Ltd that it is not to compete with Asure New Zealand Ltd when it comes to red meat inspection. 
That says to us that we have something a little bit wrong with this whole State-owned enterprise model. If these were publicly listed companies a majority of the shareholders could exercise their proprietary rights and give a directive to the board of a company that it is not to engage in certain activities and it is to engage in others. But this is not able to be done under the present State-owned enterprise model. That is why United Future believes that the model itself needs to be changed in the interests of better outcomes for the people of New Zealand. 
United Future is proposing a suggestion that is different from any other party’s suggestion to my knowledge. We think it is time to sell down a 40 percent interest in State-owned enterprises to mum and dad investors but to have the Crown retain the other 60 percent and thereby always ensure that the Crown will be in control of State-owned enterprises. I add that in respect of the 40 percent interest sold down to mum and dad investors and for example the New Zealand Superannuation Fund those shareholders would have the ability to onsell to non-resident shareholders only up to a maximum of 20 percent of the total shares in a State-owned enterprise. 
In other words the model we propose has the safeguard that 80 percent of the ownership of State-owned enterprises would continue not only to be controlled from New Zealand but also to be owned by New Zealanders. I should add that in the case of Television New Zealand we would raise that to 90 percent. But that would actually change the face of the whole State-owned enterprise model quite dramatically. 
We could adopt a genuine if you like public company model where directors would be elected by all the shareholders of the company and would not be appointed by the Minister and the Government of the day. Indeed the Crown would have a 60 percent say but potentially a 40 percent interest would be the view of other shareholders who are independent of the Crown. I know for a fact that State-owned enterprises would welcome that change because the confidential survey undertaken by Victoria University about 18 months ago indicated that even the directors of State-owned enterprises themselves say that a major problem they see with the model is political interference. Ministers cannot direct State-owned enterprises what to do but of course they can change the composition of the board which I guess is another way of sanctioning various activities. 
We believe that this change would give a far better outcome not only for these two State-owned enterprises but also for others. We would then see boards comprised of people who were elected at an annual general meeting and it would be more representative. It would depoliticise the appointment process to some extent and we think that is all very positive for State-owned enterprises not to mention the fact that they would also start to answer to the financial disciplines that would accompany the listing of those 40 percent shareholdings on the New Zealand Exchange. 
Also of course I cannot overemphasise the importance that we attach to building a genuine ownership model in New Zealand. In this economy an unusually large share of all commercial activity is Crown-owned. The debate that has gone on for years between the two major parties about 100 percent Crown ownership versus 100 percent privatisation has I think become counter-productive and we need to look for a new and different way forward. 
Having said that the other provisions of the legislation seem to be quite sound—that we should look to the possibility of merging these two State-owned enterprises into one single seamless organisation. That makes sense to us. I liken it a little bit to the Customs Service. I do agree wholeheartedly in normal circumstances with the idea of competition to get costs down but we do not have a competitive arrangement for customs because it is an official function. On the other side of the ledger when we are giving assurance to our export markets and overseas consumers competition does not make a lot of sense there either because those involved are carrying out something that is official in nature. 
I think Keith Locke made the point correctly that we need to put quality assurance at the top of the list in this area otherwise our getting this wrong has the potential to jeopardise our entire meat exports. That of course is something that none of us can take a risk with. So with those remarks I again signal United Future’s support for the bill’s referral to the select committee and for the compressed time frame in that regard.