van de Molen TimTIM VAN DE MOLEN (National—Waikato): Thank you Madam Speaker. Pleasure to take a call on this bill in its first reading here before the House today. I would like to start by also acknowledging the results announced by Fonterra today a record milk price of $9.30 per kilogram of milk solids. That is a fantastic result. But actually I think it's really important also alongside that to note that whilst that's a record we're also seeing costs at record high levels—Mark Cameron: Going through the roof.TIM VAN DE MOLEN: —as well. Going through the roof Mr Cameron; absolutely right. At a time when farmers are facing significant pressure on that front having a record milk price thankfully helps to offset some of that cost—you look at it whether it's fertiliser electricity fuel interest rates of course labour if they can get labour of course as well. There's a whole range of areas where farmers are getting hit with increased costs. So it's important that we do recognise that aspect for anyone listening who doesn't necessarily understand the farming system. A record milk price doesn't just mean lots more money for farmers or lots more profit I should say; it actually means that you know things are OK. They're able to get through because we have seen that massive cost increase.I also just want to highlight the fact that our food and fibre sector is absolutely vital for the future prosperity of New Zealand's economy. We need to keep that front and centre as well. You know there have been some challenges within that space and a number of pieces of proposed legislation a lot of uncertainty for the industry that's making it really tough quite aside from the financial aspects to be in the food and fibre sector as well. So I do want to acknowledge everyone involved in that sector particularly the dairy farmers on the basis of today's piece of legislation. I thank them for their hard work and for most of them coming out the back end of calving hopefully a bit of weight starting to come off the shoulders.But just on the report back—and I do want to pick up on that because it's something that the previous speaker Jo Luxton commented on. We are seeing an incredibly short report-back period being proposed by this Government. Now they are doing this time and time again on legislation across a whole range of different areas where it's totally unacceptable. Why are they not prepared to give the industry sufficient time to consult in detail? It reeks of an arrogant Government that thinks they know best and aren't interested in hearing the opinions of anyone else in the industries that are actually being impacted by the legislation brought forward. Seven weeks is ridiculously short at a time when yes they're coming out the back of calving but actually they'll be going into mating in only a few weeks' time. There's a lot of pressure on-farm. They're not going to necessarily have the time and we risk missing out on valuable opinions or valuable insights because the Government has put in a very short time frame. I don't know why they've chosen that time frame. Perhaps we'll hear more about that and we may end up debating this point as well because I think it is worth a discussion as to why we are shortening it so much in this regard as well. On top of that I do just want to I guess pick up on the fact that there are some concerns that have been raised. We're supporting this bill at its first reading but there are some concerns that have been raised by some players within the industry around some aspects of this piece of legislation. Now as we heard from the previous speaker 85 percent of Fonterra shareholders approved or supported the restructure at their vote last December. So that's a very strong mandate—75 percent was the threshold not 50 percent so 75 percent. They got 85 percent—very strong mandate—and they want change so this is looking to enact that. That's all well and good and on a number of aspects I absolutely support that making it easier for sharemilkers or contract milkers to be able to be Fonterra suppliers in terms of reducing the requirement to purchase Fonterra shares. That comes at a pretty high capital cost for those businesses that are frequently lacking in capital. You know they are usually young businesses not particularly well advanced in their life cycle and therefore don't have significant equity behind them. So having to fork out what has been up until now a very high dollar price but also backing every kilogram of milksolids with a share has put a significant capital cost on those farmers.And obviously then from the banking perspective you look at debt-to-equity ratios the security aspect in behind that as well. Simon Watts: How are those interest rates?TIM VAN DE MOLEN: And of course with rising interest rates Mr Watts that's becoming challenging.So these are all aspects that support the argument for changing this to enable better access for those younger farmers typically to be able to get into Fonterra to be part of Fonterra if they so choose.I do just want to pick up on one other comment that was made around some of the other competitors not having the same model so the barrier to entry of buying shares not being there or that may be the case—not in every instance; in some instances—but actually that comes down to different entity structures. Right so in this model it's a cooperative. Suppliers are looking to buy shares. That gives them then more input and more say in how that business is run. When you look at some of the other models out there from dairy companies they are different. They might be privately owned companies and therefore their suppliers have less control or less input into the management of that entity.So of course those structures are quite different and reflect potentially different values or priorities for why people may choose to support one company over the other. It's not just about whether or not they can afford to buy shares in Fonterra or choosing to be part of Fonterra on the basis of that; there are those other considerations that they may consider more important in selling the price point—i.e. around their ability to have more say in the nature of that business or indeed aligning more with the values of one particular business over another. A whole range of factors that influence a decision to supply.One of the other aspects that I just wanted to touch on—I think it's probably worth mentioning what that looks like. So what's being proposed here is that instead of having to back every share or every kilogram of milksolid with a share that's cutting back to one-third. So it's a significant reduction and on that basis a significant capital cost reduction as well. And having that fund size then capped at 10 percent of total shareholding allows for some flexibility. There's some concern around well what happens to the trading of shares between farmers in that model? The report I think was commissioned by Open Country Dairy and suggested that there could be a significant devaluation in the share value of existing Fonterra shareholders—because presumably if you move into a model that has more access or more reliance on trading then you start looking at discounted cash flows from a valuation perspective. And therefore looking at that model would suggest that still further reduction in the current share price could be experienced by those shareholders. So that again impacts on their equity positions and potentially bank security positions as well. So these are all things that will need to be considered throughout the select committee process which I will reiterate is exceedingly short—far too short and should be extended in my view to allow for a fulsome consideration of a wide range of views on this topic.But then also some concern around whether we might actually on the flip side also see an increase in land value. We heard comments from the Parliamentary Commissioner for the Environment that maybe this could lead to an increase in livestock numbers. I'm not sure that I support that. As we've heard from previous two speakers my take is that actually we have over a period of time now shifted to a position where most farmers are more aware of value over volume. It has taken some time to get to that position but if we look at the journey of farming how we farm now is not how we farmed 10 20 or 50 years ago and it won't be how we farm 10 20 or 50 years into the future. And we continue to evolve and adapt so we need to be mindful of that in this context as well.So there may be some unintended consequences. And again that's where we need a robust select committee process to make sure we understand the potential implications of that. But within this legislation we've seen a Government—this Government never misses an opportunity to take more control—Hon Member: Right.TIM VAN DE MOLEN: Right and they've done that in this case by saying Hey right we're going to move from just appointing one member on the Milk Price Panel to two. And we want to make sure that we decide who the independent chair is going to be. And we're going to give the Commerce Commission the ability to direct Fonterra to act on any recommendations." So a typical "Government knows best" approach as we've seen time and time again which aligns also with the arrogance of experience with their shortened select committee process too.So I'm looking forward to debating this in select committee. I do sit on the Primary Production Committee and I look forward to hearing a range of views from submitters on what this bill may or may not result in for them.But ultimately on the face of it the Fonterra shareholders are in favour of it. There's some good aspects to it but I'm very keen to traverse those different views from submitters and I would encourage the Government to reconsider their shortened time frame—given the farming calendar—to ensure that we do get the full range of views and can make good legislation. Ultimately that's what we should be doing here: passing good legislation not just passing legislation for the sake of it off the back of what the Government thinks they know best. So we do support this bill and I look forward to the select committee process. Thank you."