New Zealand Horticulture Export Authority Amendment Bill — First ReadingText is incorporated into the Bound VolumeNew Zealand Horticulture Export Authority Amendment Bill — First Reading[Sitting date: 29 March 2016. Volume:712;Page:9964. Text is incorporated into the Bound Volume.]New Zealand Horticulture Export Authority Amendment BillFirst ReadingHon NIKKI KAYE (Minister for ACC)on behalf of theMinister for Primary Industries: I move That the New Zealand Horticulture Export Authority Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider this bill. I am pleased to read the New Zealand Horticulture Export Authority Amendment Bill a first time. Before explaining this bill in more depth I want to first acknowledge the stakeholders who have been involved in developing this bill and thank them for their valuable input. Getting this bill into Parliament has taken some time as officials have worked with the New Zealand Horticulture Export Authority to develop new provisions that will work for the industry and futureproof a piece of legislation that has worked well for the horticulture-based industries over many years.Nine horticulture-based export industries operate under the New Zealand Horticulture Export Authority Act 1987. The combined value of their exports was close to $300 million in the year to 30 June 2015. This has risen from $50 million in the year to June 1988 the first 12 months after the passing of the Act in 1987. The export framework provided by the New Zealand Horticulture Export Authority Act 1987 more commonly known as the HEA Act is highly valued by the industries operating under it. The rising export values from these industries demonstrates the Act’s effectiveness as a tool for industry coordination in export markets. For example over the last 10 years avocado exports have increased almost fourfold from $28.9 million in 2005 to $115.4 million in 2015. Similarly summer fruit exports have increased from $15.8 million to $58.3 million over the same period.Both these commodities are exported under the Act’s framework. To remain internationally competitive New Zealand’s horticulture-based industries require an export framework that enables growers and exporters to deliver the produce most valued by diverse consumer groups in different markets while minimising compliance costs. This bill seeks to fine-tune the Act to better achieve this.The New Zealand Horticulture Export Authority Act is an enabling framework that allows industries to choose whether or not their product will be exported under the Act. If an industry chooses to operate within this export framework it first establishes a product group representing both growers and exporters. The product group then applies for an export order and develops an export marketing strategy that establishes export requirements such as product size quality standards and chemical residue limits.The Horticulture Export Authority export framework licenses exports and requires that exported produce complies with industry-developed standards. Enforceable export requirements enable businesses to effectively brand and market their produce. Horticulture commodities are experienced goods and possess unobservable characteristics that are valued by customers such as taste. Without branding it can be difficult for consumers to tell the difference between high-quality and low-quality products prior to consumption. New Zealand horticulture exporters pride themselves on being able to provide high-quality horticultural commodities in the global market and attracting premium prices for their products.What are the changes to the Act and why are we doing this? The bill does not substantially alter the current Act’s framework; rather it provides more flexibility for industries to develop their export marketing strategies and provides additional clarity around administrative processes. One of the key proposals in this bill is to allow industry groups made up of growers and exporters to develop their export marketing strategies with up to five tiers of export licences to target high-value markets and reduce costs for exporting to low-value markets. This will give industries greater flexibility in designing their export marketing strategies.Businesses that export to higher-value markets will have to meet more stringent requirements and meet the costs of doing so whereas lower-value markets will have less stringent requirements and therefore lower compliance costs. Each tier will have a different licence fee to reflect the different costs to the regulator the New Zealand Horticulture Export Authority in relation to different markets.The bill also sets the requirements for industries to enter or exit from the Act’s framework. The Act is currently silent on how to determine the support and that can generate uncertainty and impose unnecessary costs on an industry seeking to enter or exit from the framework. The Act currently permits regulations to be made for the authority to collect fees and/or levies from growers and exporters. The authority works with exporters and industry groups that represent growers and exporters and the authority does not work directly with growers. It is therefore not practicable or efficient for the authority to collect fees or levies directly from growers.To rectify this funding gap the bill provides powers for the authority to collect fees or levies from the industry groups and for the industry groups to collect fees or levies from growers and exporters. The industry groups also have a role in developing and implementing their industry’s export marketing strategy and the bill provides new fees and levy provisions for growers and exporters to fund their industry groups.The bill also updates the penalties for offences under the Act. The penalties were last set in 1987 and are no longer considered adequate when inflation the growth in the value of commodities exported and the costs of investigations are taken into account. The penalty for exporting without a licence—the main offence—will rise from $10000 to $50000 bringing the Act into alignment with the Kiwifruit Industry Restructuring Act 1999. This is the first substantive review of the New Zealand Horticulture Export Authority Act since it was first enacted in 1987.The global market for horticultural products has moved on in the last 30 years and the supply chain has become much more innovative and complex. This updating of the Act is essential to catch up on the changes since 1987 and to futureproof the export framework for these industries to be global leaders in the export marketing of horticultural commodities.I remain interested in stakeholder views on whether we have got the changes right and I encourage those with an interest in this area to contribute to the select committee process that will now follow. I commend this bill to the House.Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I rise as the first speaker in Labour to indicate to the Government that we will support the New Zealand Horticulture Export Authority Amendment Bill to select committee but we will as always scrutinise it very very carefully. We in Labour can be very proud of this piece of legislation which has served a number of sectors in the horticultural area so well since 1987—going back a wee way. That was when Labour was in Government and it saw the wisdom of showing some leadership and coordination in a sector where a lot of small growers have struggled at times to actually make a profit let alone get out and reach into the real world.I pick up a horticultural magazine—the latest NZ Grower—and here is a quote: “The nightmare situation for any grower or exporter is for a perishable shipment to be held up at the border of a foreign country.” That is just one of the risks that exporters of horticultural products from New Zealand face when they go out into the big wide world. Getting payment for their product making sure that no low-grade exporter is going to come in and undercut them—these are the kinds of challenges that exporters of primary production from this country face as they try to generate export dollars for this country.What Labour did in its wisdom in 1987 was develop a piece of legislation that said that if a group of growers were to come together and agree on a strategy as to how they would act how they would operate and how they would coordinate their efforts into a particular market then Government would endorse that plan bring some disciplines to that plan and enable the product group to effectively tax its own growers. Parliament does not offer to anyone the right of taxation lightly. I know colleagues—and I go a way back—and I refer to my former colleague the Hon Jim Sutton who was in Government at the time who I think was probably part of the formation of this legislation. He would always remind Parliament that the right of taxation—it is actually given to Fish and Game New Zealand and probably should be looked at very closely but anyway—is not offered lightly to anyone in this country but it is through this New Zealand Horticulture Export Authority Act.It has been a while since 1987. There are probably a few people in this House who might have still been at primary school or actually might not have been born—I look over at the other side of the House—so it is indeed time for a review of the Act. This has been going on for some time so we welcome it back into this House—actually the Government does not have much else going on so it is good that we have got at least a worthwhile piece of legislation. As the Minister said it does a lot of tidy-up operational issues but the reason that we need an Act like this—and indeed in my view need more Acts of Parliament—is that it allows coordination across the primary sector. In fact one for the meat industry would be an excellent idea if the Government had the courage to show some leadership in that area but again it fails to do that.We go back to the wisdom of a Labour Government in putting this legislation in place. The fact that the current National Government is reviewing it I welcome that if not applaud it. It is a very smart piece of legislation. We effectively have an organisation—the Horticulture Export Authority—costing $227000 a year which in export terms is not a lot in order to protect assist and discipline a sector that creates $300 million of revenue for this country. That is a pretty smart investment by anyone’s measure.At the moment the authority covers nine product groups. These are nine different product groups—actually I cannot list them all off and I have got to be very careful because I might miss some out—exporting from New Zealand in a coordinated disciplined way that enables each and every one of them to get more benefit than they would if they were doing it themselves. I think that is clearly proven time and time again. In fact the next step up from the Horticulture Export Authority kind of discipline would be a Zespri model. If anyone was to have a look at that—having been though Psa and its challenges—this year Zespri announced almost record exports and record profits for its growers proving once again that coordination discipline and cooperation deliver more for primary producers in this country than an all-out battle through open competition as we see in the meat industry and as we see in wool where the sectors are failing.There are 54 exporters covered by this piece of legislation and maybe over time more might come in. This bill will tidy up some of the provisions around them working under the Act. As the Minister said there will be—and I think they are needed—higher fines so that anyone who breaks the rules will have a far higher penalty imposed upon them. This is because in fact the reputation of anyone exporting from this country is often based on the lowest common denominator. Because it is “New Zealand Inc.” and we are so small in the international arena of food production in fact any food safety scare or any impact on our reputation affects every exporter. The people who use this Act understand that full well and so they have come to Government and asked whether they can have this tidied up to make sure that what they are doing is fit for purpose in today’s modern world.The amendment bill does not make any major changes to the legislation. It enables exporters to develop different market strategies for different areas and different groups. I welcome that. It also sets out in the explanatory note “how the product group must demonstrate the required level of support among producers and exporters of the product.” There has from time to time been firstly a basic requirement that the groups must come to the Minister with a clear mandate from the groups that says that “the vast majority of our exporters agree with this and therefore can you assist us with a strategy endorsed through legislation and we will take a levy for that.”There has been debate from time to time. Unfortunately in any democracy although people are offered the opportunity to vote many do not take up that opportunity. Indeed a number of exporters have different scales and different sizes and one or two exporters may in fact cover 40 or 50 percent of the export of the crop but the votes are usually based on individuals not necessarily on the volume of the export here. What the bill does is it clarifies for the Minister the knowledge that actually there is a clear mandate from these exporters. Neither Government—Labour or National—would want to impose an unnecessary or Draconian penalty or imposition on anyone who has an innovative idea to export a product from New Zealand. But if in doing so as an individual they were to potentially undermine a strategy of a group of growers then I think—and Parliament probably thinks and we will have a look at it through the select committee—that on balance we support the greater number of exporters.So it will from time to time mean that individual exporters with a bright idea might just have to look again and might perhaps have to work with a group when they might not otherwise have done so. That is smart discipline. It is not imposing as I say Draconian regulation. I hope that the bill as we deal with it at select committee and bring it back to the House will have—I guess we will tinker with it and improve it in a way that does promote innovation in exporting but does not allow the undermining that we see in the meat industry and that we see in the wool industry where people just go out and bid one another down in an attempt to win over a customer in a foreign country. We want coordination. We have to understand and be reminded that across the world most primary producers are either peasants—The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member but the time has come for me to leave the Chair for the dinner break. This debate is interrupted and I shall resume the Chair at 7.30 p.m.Sitting suspended from 6 p.m. to 7.30 p.m.Mr DEPUTY SPEAKER: Tēnā koe e Te Whare tēnā koutou te whānau o Te Pāremata kia ora mai tātou tēnā tātou katoa.[Acknowledgments to the House to you the family of Parliament and to us all; cheers.]Members when we broke for the dinner break we were debating the New Zealand Horticulture Export Authority Amendment Bill. The Hon Damien O’Connor was speaking and had the call and he has 25 seconds remaining to speak should he wish to avail himself of the privilege.IAN McKELVIE (National—Rangitīkei): Thank you Mr Deputy Speaker—I will take his 25 seconds for him. What a pleasure it is to get up and follow a very positive Minister the Hon Nikki Kaye and a very positive contribution interestingly from the primary production spokesperson for the Labour Party Damien O’Connor on a bill that will make a difference to some small but very good players on the world stage—on a very big world stage.The purpose of this bill is to amend the New Zealand Horticulture Export Authority Act to provide more flexibility and clarity around processes and export strategies. It currently enables nine different horticultural-based industries to operate under the Act—more can join if they so wish. The changes are necessary to bring the Act into line with legislation that governs the industry in its broader sense such as the Kiwifruit Industry Restructuring Act 1999 and a number of others. This bill allows for regulation providing the sectors the ability to set levies in accordance with the Commodity Levies Act 1990—that Act of course enables a number of other primarily agricultural organisations to set levies and they do of course. The principal organisations I guess are Beef and Lamb New Zealand and Dairy New Zealand who utilise such levies and have contributed massively to the respective industries’ prosperity over the years.The ideaof setting levies as the previous speaker referred to is to enable the producers to structure themselves in a manner that promotes efficiencies and gives them advantages in the world market that they would not otherwise be able to achieve on their own. Any farmer who produces stock or milk and sends it to the factory or the processor will well know the cost of these levies and you pretty quickly sharpen your vision as to what those levies are used for. I have got no problem defending the use of levies; I think they are a very practical way of enabling the industry right across the board to structure itself in a manner that creates advantages for New Zealand.New Zealand is a small highly productive food processor and provider many kilometres from our markets. It is necessary for our Government to provide every opportunity for collaboration and efficiency for our producers. It is also the Government’s role to facilitate the environment to allow our export-driven economy to perform as well as possible. As the Minister said in her introductory speech the sector is growing rapidly with exports shifting from some $50 million in 1988 to some $300 million last year. I am confident that this growth will continue or dramatically increase in the near future as transport becomes more efficient and cost effective and as our industries seize the opportunity to trade in the Asia and Pacific regions.As they are introduced to the amazing quality of New Zealand produce I can imagine a time when our world-class products in the Rangitīkei are venturing straight into markets or the shelves of Hanoi Jakarta or Beijing superstores 36 hours after leaving the farm in New Zealand—pretty much as quickly as it could leave the farm in New Zealand and get into the centre of Wellington. I think that is our great opportunity in the future. This bill of course enables that to happen and will certainly firm up our opportunity to achieve that. It facilitates the ability to achieve this more effectively and efficiently and also enables the participants to monitor quality and much better take opportunities as the market place changes.The horticulturalists are a particularly proud group of people in an industry with a great track record in quality. As a matter of interest I am going to list the nine industry groups that currently operate under the principal Act. There is summer fruit—a sector that interestingly contains nectarines peaches cherries plums and apricots; it does not interestingly contain the apple and pear industries as those groupings are separate and operate under their own producer board at one stage and alone have provided some $570 million in export earnings to New Zealand. Other participants are kiwifruit exporters avocados blackcurrants buttercup squash chestnuts tamarillos truffles and persimmons. You can see why we need to have an Act that gives these very small sector participants the opportunity to participate in a much greater world market. It also gives them the opportunity to utilise the “New Zealand Inc.” brand better and plan the future. The revamp of this Act will assist in this.Anyone involved in the primary sector knows only too well that there is only about 1 percent in supply terms between an undersupply and an oversupply in a very fickle market place. This can result in crops being left in the paddocks—an undesirable situation. It can also result in unsustainably high prices—an equally undesirable situation ironically. Although this bill will not prevent those things it will assist the participants to lessen the risk of their occurring. I have great pleasure in recommending this bill to the House and look forward to progressing it through the Primary Production Committee in conjunction with my excellent team-mates. I look forward to hearing their take on the bill as the evening progresses.Dr DAVID CLARK (Labour—Dunedin North): It is a delight to get up to support this bill. We in the Labour Party can see the benefit of exploring this area. The Act has been in place since 1987 I understand and in those 26 years the horticultural industry has changed significantly. So it seems timely to revisit the Act and to make sure that we are setting up the appropriate structure to support horticulture exports from New Zealand.It is no surprise and it will come as no surprise to anyone in this House that as a country it benefits us to work together to achieve scale and to be able to market our product abroad in a way that draws attention to its many benefits. If I can draw a parallel I know that when I sat on a board in Otago that was concerned with growing the region one of the better initiatives to come out of it in the time that I was involved was to market apples from the region and market them as organic which achieved a price premium. That marketing was achieved only by the agreement of all of the players in the area who had the say in whether an initiative would be put forward for this. From memory the apples achieved a 15 percent price premium as a result of being marketed as organic and the change in behaviour that was required to market these products was nothing—absolutely nothing. The area where the apples are grown is relatively free of pests because it is an area that is sufficiently cold at the right times of year so the apples were being grown in an organic fashion; they simply were not being marketed in that way. But by achieving scale by achieving agreement across the region to market a product in a certain way it could achieve a market premium.This is part of what I imagine will be achieved by this bill. It will enable producers to come together to pool resources in a modern way to market products abroad and to make sure that minimum standards are being met so that the products can legitimately be marketed in a way that will be attractive overseas. So let me have the rare privilege of congratulating the Government on updating some legislation. It is good that it is doing this. New Zealand is too small to operate at a smaller scale and compete in many of these areas.There are other areas of course that ought to have similar treatment applied and some Government leadership would go a long way—for example in the meat industry where we know that many producers are struggling as they have overheads that make the area less profitable over time and yet they have capital barriers to achieving effective market structures and a Government that has been unwilling to show leadership in that area. That should not stop me congratulating the Government on this particular initiative which does show some leadership in this area—albeit rare it is a thing that should be welcomed because overall this Government is failing to achieve its export targets.That is something of a background to this bill. It was the Government’s target and I believe it still is to raise New Zealand exports to 40 percent of GDP. When the Government started New Zealand exports were over 30 percent of GDP; they are now below 30 percent of GDP. The Government is actually going backwards and is forecast to go backwards further in the area of exports as an overall portion of our gross domestic product. The Government has as one of its central agendas something it calls the Business Growth Agenda which is supposed to achieve this 40 percent target but in fact as I have just explained the Government is moving in the opposite direction. Overall unfortunately the Government’s unwillingness to lead in the area of economic diversification and its unwillingness to make real progress in this area is hampering New Zealand as a country in terms of our future prosperity and in terms of being able to achieve the Kiwi Dream which every New Zealander used to have of having a secure income and opportunity throughout their lifetime to make the most of life. We have the lowest homeownership rates in New Zealand since 1951—there is one example of how that Kiwi Dream is drifting away. Labour of course has a vision to bring back that Kiwi Dream to actually grow our exports to have increasing prosperity as a country and to afford the kind of lifestyle that we think all New Zealanders ought to be able to have.This bill itself does aim to enable product groups to develop more flexible and targeted export marketing strategies and it does that through the permissive mechanisms of collecting levies. It establishes a relationship with the bodies the different horticultural product groups rather than directly with the producers and exporters. In the past the levies were allowed to be directly received only from the producers and exporters as I understand it but now the New Zealand Horticulture Export Authority will be able to charge fees to horticultural product groups and they will be able to then onwards levy their members. This mechanism will of course make the whole process a little more efficient a little more modern and it has got to be practical if our exporters are to be left free to get on with doing what they do best: to grow the products that we want to sell offshore.In the 1980s of course when the Act was first brought in we know that we had some big issues in this area. We had fly-by-night exporters who would send one crop off on a boat not caring about the reputation of the country. This Act and its updated version also enables fines for misbehaviour for things that do harm to the industry as a whole and that is important if we are to present a “New Zealand Inc.” image abroad if we are to continue to establish our clean green credentials and to sell our products at a premium on the international stage. That is after all what we would like to do as a country to move towards that more prosperous future that we I think across the House would like to see—albeit that we may differ on the ways that we might get there. I may have some criticisms of the Government’s particular approach but I think we all share the desire to see a more prosperous future.As I said at the outset we will be supporting this bill. We will be supporting the more flexible and targeted export market strategies that we think will result from this bill and also the intention which I have not spoken to yet of clarifying the requirements for product groups to enter and to exit the export framework which seems again a sensible modernising move. In the papers that we have been supplied so far that is part of what the bill sets out to achieve. All of these things will be examined at the select committee and we will have the opportunity as members to contribute—those who sit on the Primary Production Committee and those who want to substitute in to refine the Act—and make sure that it actually does get on with the job of making sure that those credentials the ways of entering and exiting that particular framework are as good as they can be to make sure that the process is set up optimally and to make sure that when the powers of those bodies to levy are set they are set up in a way that actually clarifies the Act and makes it more user-friendly for the groups that will be doing the exporting.Although the Government overall is failing to meet its export targets we see this as a small positive step in the right direction and it is nice to see that the Government is not in this regard distracted by hair straighteners over-expensive TV screens barbecues sun decks or blow-up sheep. Here is one occasion where it is taking a small step in the right direction and making sure that New Zealand’s exporters are supported through up-to-date legislation. We will be supporting this bill and the promotion of the “New Zealand Inc.” brand abroad in respect of horticultural products.STUART SMITH (National—Kaikōura): I almost heard a Freudian slip I think come from the other side of the House. I almost heard the Primary Growth Partnership spoken about quite positively.Dr David Clark: No not that slush fund.STUART SMITH: Well I think we will let you away with it. It is early in the night though.Look it is a pleasure to speak on the New Zealand Horticulture Export Authority Amendment Bill which as has been alluded to earlier amends the Act of the same name that was passed in 1987. There are in fact 11 fruits that are able to come under the Act but boysenberry exporters and nashi pear exporters have elected not to take up their right to operate under the Act at this moment. It is important that we get the flexibility that exporters need to be able to operate to their fullest advantage and this bill will allow that to happen.The premiums for our fruit are really very real and demonstrated I think by the exports which grew from $50 million in 1998 to $300 million in 2015. That shows the effectiveness of the Act—that is a 500 percent increase and for those who may think that the CPI would have played a part somewhere well it did but it was only an 84 percent increase. So that is a magnificent increase in value for fruit exporters. Avocado exports earned an almost fourfold increase from $28.9 million in 2005 to $115 million and I think summer fruit which most people do not think a lot about and was alluded to by colleague Ian McKelvie earlier—there was a very good summer fruit orchard in Marlborough in fact that did a great job but unfortunately that is now in grapes.I think one of the things I would like to focus on this evening is the voting mechanism that is called into play in order for this to be taken up by an industry. I think the meat industry has been mentioned twice across the other side of the House and it was said it should be brought to bear in that industry but you still have to get 60 percent of the producers to actually agree before you can get an order. The Minister cannot proceed an Order in Council without that and without 60 percent of the production votes also going in favour of it. That is quite a significant task and I know from going through that myself several times with a commodity levy order—twice in fact—that it is quite a task to get people across the line. I think there would be a significant challenge in trying to get the meat industry across the line to do that.But anyway that is by the by. I think what they are after is a single-desk seller and that is really another kettle of fish altogether. I think there is far more to be gained by niche marketing and that can be effected quite adequately as it is now in that particular industry.Nimble industries do need flexible legislation and this amendment bill will give us that. It is right that we need 60 percent of the production as well as 60 percent of the producers to vote in favour of this because it is very important that the scale operators also have a say in what goes on not just the small operators. It is also taken over a 2-year average and I think that is really important because there is an agricultural risk in growing fruit as with most agricultural crops—that is why it is called an agricultural risk. There could be a number of operators that could miss out through a frost or some other significant weather event and not be able to partake in the vote in a particular year. That would not be fair on anyone’s books I do not believe.The bill also allows exit provisions for product groups as well and it sets out mandatory considerations that the Minister must take into account before he signs an Order in Council. Again I think it is just tidying up around the edges. It was a good Act but it was not quite fit for purpose. After this bill has gone through the process it will actually make it a much better environment for exporters to operate in. With that I would like to commend this bill to the House. Thank you.EUGENIE SAGE (Green): I am pleased to take a short call on the New Zealand Horticulture Export Authority Amendment Bill. The Green Party is pleased to be supporting this bill. When you look at the latest annual reports of the New Zealand Horticulture Export Authority the previous five annual reports have highlighted the need to amend the principal Act to provide more flexibility in the sector and to appeal to a broader range of sector groups. I wonder just what priorities the Government has that it has not moved faster to introduce this bill given the much-trumpeted objective in the Business Growth Agenda to double primary sector exports by 2025 and to increase the ratio of exports to GDP to 40 percent by 2025—especially when the changes that are in this bill are based on a review of the Act that started in 2010 and there has been wide consultation with the sector.So why the delays for nearly 6 years? I would posit that it is due to the Government being totally seduced by the dairy industry and the formerly high dairy payouts by Fonterra’s strategy of growing the milk supply by 2 to 3 percent annually and its myth that there are no limits to growth that it could continue to push for increased milk production by allowing the dairy industry to freeload on the environment through the weak rules the Government has in relation to land use and water pollution and the exclusion of agriculture from the emissions trading scheme. The Government’s preoccupation with dairy as the way to grow exports and the way to grow GDP has meant that it has neglected the horticultural sector and the need to better market our fruit and vegetables and nuts and the need to update this 30-year-old legislation.The current Act passed as Damien O’Connor noted in 1987 by the last Labour Government promotes the export marketing of horticultural products by providing a structure under which to have recognised quality standards and a structure to allow marketing to be coordinated through export marketing strategies and export licensing. Whether you are a grower a pack-house operator or an exporter of particular products such as avocados you opt to work within the Act’s framework through the Horticulture Export Authority which licenses exporters and monitors compliance. So the principal Act and the changes in the bill are important because they help to give growers some control and influence over exporter behaviour in order to protect the reputation of their products.I note that in 2012 only 15 percent of our fresh horticultural exports were done under the principal Act. As at September last year there were 76 export licences issued by the authority and they were held by 54 different entities across the nine different product groups like avocados blackcurrants boysenberries buttercup squash nashi pears summer fruit and tamarillos. They are only some of the fantastic fruit and vegetables that New Zealand produces that are suitable for export. Certainly this is a growing sector up by 12 percent in the year to June 2015 a 25 percent increase in total export receipts and record earnings of nearly $300 million. So that is a major improvement on 2013-14 when the high New Zealand dollar really hurt exporters.But we need a regime and this bill helps to provide it that allows and helps the growers pack-house operators and exporters to increase their market share to develop new markets to add value to their products and to coordinate their marketing. The bill helps to do this by for example allowing an exemption from the licensing requirements for a year. If there are exporters that have a joint venture.They are exempt from getting a licence if they already hold a licence as individuals. The bill is making only small changes to the Act but it will provide more flexibility and clarify some of the Act’s current provisions. It replaces the one-size-fits-all approach with a multi-tier system that provides for different requirements. It also significantly increases the fees up from $4000 to $10000 for offences under the Act. It means that there will be greater information sharing between the Horticulture Export Authority the Customs Service and the Ministry for Primary Industries.The delay in introducing this bill is not the only example of the Government failing to respond to the needs of the horticultural sector and failing to help it reach its potential. The Horticulture Export Authority has long called for country-of-origin labelling for fresh fruit and vegetables because it believes that this will help benefit quality production. And yet the National Government has resolutely opposed this and we do not have mandatory country-of-origin labelling. That means that fruit and vegetables in local shops do not have to have any identification of where they have come from. We had the hepatitis A scare last December which was associated with imported berries but that hit local producers because there was no way of consumers knowing whether they were buying imported or local berries unless the company had chosen to label the products itself. The Green Party will introduce mandatory country-of-origin labelling of fresh and single-ingredient foods so that consumers will know how their food is produced where it has come from and what food they are choosing to buy and eat and feed to their families.In Australia any food product must identify the country of origin of whatever makes up more than 50 percent of the total production costs of that product. Given the similarities between the markets if we had similar rules to Australia it would simplify it a lot for both food manufacturers and exporters who are sending their products to both markets. New Zealand is such a small market that it is often uneconomic for the large food manufacturing companies to change their labels just for us.This bill is a good one but there is much more that the Government could be doing to grow horticulture exports to protect the reputation that we have when we market our primary production overseas by doing much more to ensure that we have clean water. We cannot market summer fruit boysenberries and avocados as coming from clean green New Zealand unless we do much more to give integrity to that brand by protecting water quality and reducing our greenhouse gas emissions to ensure that we have a stable climate.RICHARD PROSSER (NZ First): I am very pleased to rise to take a short call in this first reading of the New Zealand Horticulture Export Authority Amendment Bill. New Zealand First supports this bill at least to the select committee and very probably beyond it.At first glance the bill appears to be well-intentioned and not overly imbued with controversy in spite of the comments from my Green colleague Eugenie Sage who I think has given what is possibly the grumpiest speech in support of a bill that I have heard in quite a while. National members can rest assured that they are doing it right but they are doing everything else wrong. But doubtless we will go through this in more detail as the bill progresses. I do like the Green member’s suggestion of country-of-origin labelling. That is something we generally support but whether it is within the ambit of this bill or able to be within it remains to be seen.The general policy statement proclaims that “The purpose of the … Act is to promote the effective export marketing of horticultural commodities. Groups representing growers and exporters of a specific horticultural commodity eg avocados choose whether to export within the framework established by the Act. If a group opts to export under the Act the group develops an export marketing strategy that contains grade or quality requirements for its products.” which is eminent common sense. I am surprised in actual fact that it is not something that exists to a greater degree across the board.“The New Zealand Horticulture Export Authority (the Authority) then licenses exporters of the specified commodity and monitors exporters’ compliance with the relevant requirements.”—all of which is well and good. The authority’s website for the uninitiated and for those of us who were not around making laws 30-odd years ago or 29 years ago—in fact Mr Barclay was not around 29 years ago so he certainly was not making laws—outlines some of the machinations of the authority. It says that “The primary purpose of the HEA is to promote the effective export marketing of horticultural products. We do this by providing an export structure and support network …”—blah blah blah. “This structure requires these groups to develop an Export Marketing Strategy (i.e. their rules for exporting).”Iain Lees-Galloway: Clause 2(c)—blah blah blah.RICHARD PROSSER: Blah blah blah yes. Well a lot of these bills do contain a lot of blah blah blah particularly ones created by previous Labour Governments.It also says that “The HEA also liaises with sector stakeholder groups on matters relating to market access trade barriers and their removal and plays a role in lobbying government on such matters on behalf of the industry.” which is a good thing. It is a very good thing because it makes it a kind of voluntary single desk. Mr Smith mentioned the single desk as if it was almost a separate issue from this; in actual fact it is not. This is a voluntary single desk. It is a virtual and voluntary single desk and we know that this type of marketing works very well for New Zealand.We know from examples such as Fonterra and Zespri and ENZA—current events notwithstanding—that there is a great power that collective marketing brings to a nation of New Zealand’s size and make-up the construction of our economy and where most of it is focused in terms of production export. Dr Clark mentioned the possible benefits that could be given to the red meat industry if it was to follow a similar strategy. So it is gratifying to see that Labour is picking up on yet another one of New Zealand First’s policy initiatives and I am sure that Labour members will be supporting our bill when it does get drawn from the ballot unless of course the Government wants to sneak in and steal a bit of thunder and select the bill and bump it up the Order Paper all by itself. We would be most happy if it was to choose to do that.So the single desk works very well for importers and regulators in overseas jurisdictions as well because they have a single point of contact to deal with and because they know that they are then dealing with a Government-accredited agency that can be trusted to set and maintain standards. They know what they are buying and they know that it will be true to label.It works for producers and exporters for the same reason. The single desk helps to maximise returns to the growers and the producers and the exporters and that benefits the entire “New Zealand Inc.” story because it means that New Zealand companies are not competing against one another in world markets.There is a premium that is attached to “Brand New Zealand” which has been estimated at anywhere up to about 15 percent. It helps nobody at all to have that premium left on the shelf because New Zealand producers and exports are competing against each other for shelf space for the same market in the same market for goods that in all honesty would sell anyway and sell for the premium if we were not discounting against each other.So it is good for our companies to have that kind of an advantage. I say “our companies” in a nationalistic sense not in a nationalising sense or a socialist sense. Nobody wants the private businesses that are our farmers our producers and our growers to be brought under any kind of State umbrella but what we do want is the most unfair advantage that New Zealand business can be given—we do. New Zealand First wants New Zealand businesses to have an unfair advantage out there in the world. We want them to succeed to do well and the single desk is a very powerful tool in terms of achieving that.The voluntary single desk is a step in the right direction. The authority’s website describes it as a kind of halfway house between a completely regulated market and a completely free market. That is probably a good thing if nothing else in the sense that it is an acknowledgment from the Government that this free-market ideology thing actually does not work and that the playing field is never actually level unless it is artificially made so by intervention. But like all good things once a system has been in place for a while—and coming up 30 years is probably long enough—one or two areas do show up where there is room for improvement where the bugs need to be ironed out and this bill intends to make some of those improvements.As Mr O’Connor mentioned and others have touched on as well the system for fees collection and the system for fines are two of those things that will enable the authority to operate in a much more streamlined fashion and do its job a lot better and a lot more efficiently. These are good things that need to be sorted. In fact the Minister for Primary Industries in a press release stated that the bill was introduced to update and futureproof the Act—and that can only be a good thing. If it can achieve that then New Zealand First will be more than happy to support it going through the entire process and becoming law.At first examination as I say there does not appear to be anything that is too much of a contentious nature. I will look forward to examining it in the Primary Production Committee under as I have mentioned before the very able and affable chairmanship of Mr McKelvie. That being the case I do not intend to take up too much more of the House’s time at this stage except to reiterate that New Zealand First will support this bill through to first reading and probably beyond. Thank you.TODD BARCLAY (National—Clutha-Southland): I just want to echo Mr Prosser’s sentiments towards our chairman of the Primary Production Committee Ian McKelvie. Before I start my short contribution regarding the New Zealand Horticulture Export Authority Amendment Bill I just want to pass on my comments around how much I am enjoying working on the Primary Production Committee because as you will know Mr Deputy Speaker it is a very pragmatic committee made up of like-minded people all with the best interests at heart with regard to the exporting and the fruition of our exporters and producers and anybody operating from the primary sector. This bill as has been remarked on already is a small step in being able to make life easier for our horticultural exporters.As we know New Zealand is a small export-based economy. We have challenges around distance from our markets transport costs and just the general size of our economy. So anything we can do to modernise and strengthen and support the framework within which our exporters are operating at quite a disadvantage probably compared with a lot of other countries—that is a huge advantage that we can provide for them.The Act as has been mentioned has been in place now since about 1987 and over the last three decades a lot has happened including the birth of myself. So I think that probably provides an opportunity for having a relook at the framework and taking into consideration how the markets have changed and the playing field that our exporters among others are currently participating in.As we know dating back to about 1988 when there were $50 million of exports that arose from the fruit and vegetables exported under this Act that figure has now risen to about $300 million which shows that we have got new producers in the market that our current producers are producing more and exporting more and they are more reliant on the economies that we are exporting to. Enabling our horticultural producers to work together and maintain the integrity of the market and the brand as a premium export both collectively and individually is hugely important not only for them as individual producers and the industry but also for our country as an exporting nation.With that I would just like to offer my support again for the bill and I look forward to hearing submissions and engaging with the submitters over this process. Thank you.Mr DEPUTY SPEAKER: A 5-minute call on behalf of the Green Party—David Clendon.DAVID CLENDON (Green): I thought I would just take a brief call to support in large part my colleague’s earlier speech which in my view had a strong critique and some very positive forward-looking commentary—not in the least bit grumpy I thought.This is an important bill. I think it is fair to say that the horticultural industry has often felt like a poor relation. New Zealand is a food-exporting country and it will continue to be an important part of our economy. Tourism of course is our single largest export earner now. It is quite a good plan as well to bring people here to enjoy our produce our wine and the like and get a premium that way but food exporting undoubtedly is an important part of the overall picture.Yes we have for a long time focused on the export of protein in the form of dairy red meat and so on. The red meat industry has had its problems not least of all because of I would argue a lack of coordination at the producer marketing level. Dairy of course was focused too much on selling low-value high-volume commodity rather than the high-value low-volume commodities.I think we need look no further than Zespri to see the potential for a coordinated marketing mechanism in order that New Zealand producers are not competing with one another in a race to the bottom. We want to present New Zealand produce as high-quality premium products—let people compete on price. Let them come to us with a price. We need to be setting the scene where people want our produce and are willing to pay top dollar for it because it is the very best product. I think Zespri has achieved that through having a single marketing desk coordinating the growers coordinating supply and I think that is an important part of it.I had some direct experience of this in my former life as an academic. The school of natural sciences where I taught at Unitec taught horticulture programmes including organic horticulture which certainly is the long-term future for New Zealand—to present ourselves as the organic producer for the globe essentially. It is true to say I think that the industry always struggled to be heard by Government. My colleague Eugenie Sage did make a very pertinent point that it has taken a long time to see the very necessary and positive amendments made to this legislation that this bill will effect.As I mentioned earlier I think it is important that horticultural products of all products live and die on three things: critically on quality on consistency and on security of supply. There is no point going to market if you cannot assure those three things. I think it is important to have a coordinated approach well organised at this end of the supply chain to have the producers well integrated well organised and well coordinated to present high-quality products consistently high-quality products and to assure the markets that we can hit the button when and where they need the product and when they need it and that we can fulfil our obligations and our promises.I think this bill will make some small steps in that direction and for that reason the Greens will be supporting it. I guess part of my interest is entirely selfish coming from Northland where of course horticulture is a critical part of our regional economy. There has been a lot of investment particularly in avocados in the last couple of years: new planting—Richard Prosser: They’ve got a good MP now.DAVID CLENDON: —well yes he does visit occasionally I believe—increased planting in avocados and some significant investment in pack-houses. We need to make sure that that has got the best chance of succeeding.Horticulture is an employment-rich industry. It requires lots of people. Part of the challenge too is to ensure that the seasonal labour force has something to do every month and every day of the year. That is the challenge that faces that whole industry: to find the degree of coordination within and between the industries that will ensure we can create good and consistent employment in New Zealand for people working in the horticulture industry generally.This bill is useful. It makes positive amendments. It is a little overdue but give the Government credit where it is due: it has got to the table and we are pleased to support it. Thank you.Mr DEPUTY SPEAKER: A 5-minute call on behalf of the Labour Party—Rino Tirikatene.RINO TIRIKATENE (Labour—Te Tai Tonga): I am pleased to speak in support of the New Zealand Horticulture Export Authority Amendment Bill and I am looking forward to hearing submissions as a member of the Primary Production Committee.This is a really good piece of legislation that is long overdue. The horticulture sector has been quite patient. It made appeals back in 2010 to look to amend the New Zealand Horticulture Export Authority Act. Sure enough it has taken over 5 years now but rest assured Parliament is on to this piece of legislation and we will be seeing it progress through this House—hopefully expeditiously.This is as I mentioned a very positive piece of legislation. We are dealing largely with small fledgling-type export industries—some of the product groups in question are truffles and tamarillos—through to the major product groups like avocados buttercup squash and kiwifruit to Australia. So there is quite a range. There are some very small players and with a piece of legislation that they have been operating under for some 30 years it is time to modernise and to ensure that our industries are best equipped to compete in the international markets because that is what everyone in this Parliament would want.We want our primary sector to be profitable to be productive and to be able to compete fairly and make sure that we can increase our yields increase our returns and increase our foreign exchange earnings across all of the product groups. I know that the way that the industries have been doing that and it has obviously been proven to be a successful model being nearly 30 years old is through cooperating: cooperating to compete collaborating and making sure that we have consistent quality standards so that when we do supply our wonderful produce our very much discerning customers who will pay premiums for our wonderful produce know not only that they are getting a wonderful product but that the next order that comes along and the following order after that will be of consistent quality—wonderful New Zealand - grown produce.So it is very important that we have the Horticulture Export Authority just to oversee the entire structure and to collect levies—bearing in mind that this is a voluntary organisation. It is a member-supported organisation via the product groups. There is not one cent of Government funding that goes through to this body. It is entirely driven by the levies and the support that it gets from the respective product groups and in turn their members and from the fees that are collected through the licensing of export pack-houses.This is a small organisation. It needs our support and I am glad that our Parliament is finally implementing some real common-sense amendments. It is one thing to export products to one market but within that market there are many different markets and if you segment that out there may be differing requirements that need to be applied to ensure that we can get very good export returns and increase our yield increase our foreign exchange earnings and increase the profitability back to our growers here in New Zealand and our exporters.Just to conclude this is a very positive piece of legislation. I think of the large Māori participation in the horticultural sector. If I think of kiwifruit obviously Māori are probably one of the biggest players if not the biggest player in the kiwifruit industry particularly up in Tauranga—Seeka Te Awanui Huka Pak. If I think of the buttercup squash there are some significant landholdings of Māori up in Gisborne on the East Coast. So this will benefit not only the horticultural sector but those Māori landowners who are also supplying. I commend this bill to the House.BARBARA KURIGER (National—Taranaki - King Country): It is a pleasure to take a call on the New Zealand Horticulture Export Authority Amendment Bill tonight. I just wanted to start off with a small quote that I picked up today when I was doing some research. It is from our Prime Minister when he was visiting the kiwifruit industry in 2015. He said: “Either we are going to be the people that stand up and sell wine and kiwifruit and lamb and a million other things we are good at or alternatively someone else is going to supply it and if they do we will miss that opportunity.” I really see in supporting this piece of legislation that it is part of taking our opportunities.As previous speakers have mentioned there are nine horticultural export groups that are forming together in this piece of legislation which updates the 1987 Act. It is about collectively promoting the New Zealand Inc. brand. A previous speaker from the Green Party talked before about apologising for being selfish and standing up and supporting his region in terms of what it grows. Well no apology is necessary for doing that. It is something that we do all the time and I know that back home in my electorate of Taranaki - King Country we often talk about the ability to grow things being much easier than the collective ability to put them together and get them into the export market. Everything we do in terms of this piece of legislation is going to help that.I think it is also important as we look at this piece of legislation that it is going to clarify the powers of product groups to collect fees and levies to fund their export marketing strategies. I know from having 11 years of experience in a previous life with the board of Dairy New Zealand the importance of collecting that levy having a farmer vote and having support for the levy. It puts industries in control in terms of determining what they want to spend that money on. So I think it is really important that this is clarified. Another feature of this is it clarifies the requirement for product groups to enter into or exit from this framework. It gives greater certainty for this and reduces costs and I think that is important because it is really easy to collectively do something and enter and it needs to be very clearly understood how to exit at the same time otherwise it brings some grief down the track.The outlook looks good. By 2019 the export revenue for horticulture is expected to grow to more than $4.5 billion and that works out to be 16 percent growth over 4 years. I am part of the Primary Production Committee and I really look forward to being on the group. It is really pleasing to see that people are supporting this through its first reading and I look forward to progressing this bill as it works its way through Parliament. Thank you.STUART NASH (Labour—Napier): I rise to speak to the New Zealand Horticulture Export Authority Amendment Bill with pleasure actually and I have not said that recently. There have been a number of bills that have gone through this House that I do not think have been particularly good for New Zealand but this is a step forward.There are a couple of points that the last speaker Barbara Kuriger made that I would just like to elaborate on. She talked about promoting the ”New Zealand Inc.” brand. I think that is vitally important but the problem we have got is exactly the problem that Dr Nick Smith alluded to in the House today in question time. We have a real problem around Brand New Zealand or the “clean green” 100% Pure New Zealand” brand because it is what we go to the world with. This started out as a tourism brand and it was so successful that it sort of morphed into our unique selling proposition and our global competitive advantage. But it does not matter what this bill—the New Zealand Horticulture Export Authority Amendment Bill—does or what it achieves or how it drives efficiencies because if we do not live our brand globally then our ability to claim a premium off anything grown here especially in horticulture is greatly diminished.I would argue that one of the things that this Government has done very poorly is actually manage our global brand. I would say that we have got about 5 years to get this right. What we cannot have is another exposé that was done by I think the Financial Times or one of these big broadsheets overseas which actually sent people over here and blew this “clean green” “100% Pure New Zealand” brand out of the water. Luckily it did not get much resonance. The Prime Minister was quizzed on it on Letterman—he made a little bit of a fool of himself but that is not unusual so anyway—and it died a death. That should have been a wake-up call to us. It should have been a wake-up call that said: “Do you know what? If we don’t get this right then we will turn into just another small economy selling commodities into a growing global economy.”I suppose one of the issues I have is—you know we say that we can feed the world. We cannot. We can feed about 40 million people—that is the estimate that I have heard. It could be slightly more or it could be slightly less but it is around about 40 million people. We should be aiming for that ultra-premium end of the market—the Chinese market the American market the European market. Brand New Zealand has to stand for something and if it does not stand for something—if we cannot get a premium off this—then why would people buy it?The last speaker talked about how this bill and the amendments in this bill will help reduce costs. Well this is amending quite an old piece of legislation—1987 it has been alluded to—so there will have been a number of efficiencies already gained by our growers. But the thing for me is that we still live at the bottom of the world. Our transport costs are high whether we airfreight or sea freight and usually the sorts of products we are talking about require airfreight or they require quite expensive refrigerated containers for sea freight. It is still expensive just getting things into the market so if we cannot get a premium on that then why would people buy Brand New Zealand?I say this with a fair amount of skin in the game—70 percent of apples grown in New Zealand come from Hawke’s Bay. Hawke’s Bay at this point in time is absolutely booming because apples are doing well the grapes are doing well and our horticulture is going great guns. We have had a great summer—you know one of those summers where the rain falls but not too hard. There is enough warmth in the soil the grass grows and there is a lot of hay around. It is fantastic. But if we do not get our brand right then there will be no markets to sell this to or if there are markets to sell this to it will be just another commodity where our brand means absolutely nothing.The last speaker was right in saying that we do need to be smarter in how we go to the world. Let me give you one example. We have the New Zealand - China free-trade agreement. It is worth a substantial amount of money to our exporters. But—Hon Nathan Guy: What about TPP Stuart?STUART NASH: Well we have not got the Trans-Pacific Partnership at all Mr Guy—you should know that—at the moment. We have the Chinese free-trade agreement which is a fantastic agreement because it works for both countries unlike some of the others that are out there at the moment. But what I am saying with regard to this bill is that taking a grower out of New Zealand and putting him or her into a market where the culture is different the language is different and the customs are different—let alone the supply chains—is like taking a New Zealand company and putting it on Mars. It is so different. So what we need to be able to do is aggregate supply and go to these markets with a certain offering.We know in some areas like—for example wine is a classic case. If a winery cannot supply enough wine for 12 months of the year then it does not matter how good it is because you will not get these high-end American restaurants for example buying it. And it is the same with our products. That is why the ability to aggregate supply is vital. Keep in mind that this is a voluntary body—there is nothing compulsory about this at all—so if growers do not see value in this then of course they will not be part of it.I will tell you one thing that I will be interested in seeing and that is who submits and on what they submit. I note from the departmental disclosure statement that there has been a fair amount of external consultation including obviously all the relevant Government departments—which have been consulted as is always the case—but I do note that in 2012 and early 2013 there was a discussion paper released and workshops in Mount Maunganui and Wellington. These have been endorsed by the growers so it will be interesting to see the sort of feedback that comes in. It may be one of those bills where the work has been done there is nothing more to add you will get the officials coming in from the various departments and saying “This is fantastic.” and it goes through like that. I would not be surprised and what I think we will see—and I do not sit on the Primary Production Committee I must admit. But what I think we will see is a number of growers coming in and using this as an opportunity to send a message to the Government that we do need to do these things better.We are an export-led economy we are a primary industries - based economy and it is important that we get things right. And this is just one of those steps—it is why we are very supportive of it. As Damien O’Connor alluded to—well most of the speakers have actually alluded to it—the legislation has been around since 1987 but the world has changed significantly since 1987. We know this and that is why we need the mechanisms to be a lot more sophisticated a lot smarter and a lot more engaged in the way we do things.Channel to market is a classic case. You aggregate supply—this has happened well in the timber industry; not so much in the log industry which is a bit of a disaster at the moment. But in the timber industry there is the classic case of a company where what it does is it goes around the various sawmills it aggregates supply and it meets demand so we are basically talking about a trade here. Trade has been around since you know the ancient Greeks and beforehand but this is about doing it smarter. And what it is also recognising is that certain growers and manufacturers have a core competency and that core competency is not necessarily international market development or international marketing. I think that is fair enough because as I mentioned it costs a lot of money for example for even a large grower to have an office in China or to hire an international market development manager or an international marketing manager let alone understand supply chains and all those various things that it takes to actually get product into market.So this bill is timely. It perhaps should have been done a couple of years earlier but that is OK—this is what we are dealing with now. But as mentioned it will be very interesting to see what the submitters do and how this piece of legislation comes back to the House after the select committee process.The one takeaway that I would like to leave is that I would just like to really reiterate that we have got to get our global brand offering sorted. We have got to start living this brand because if we do not and if what we are taking to the market is exposed as a falsehood—and I am not going to say “a lie” but certainly “a falsehood”—then we run the very real risk of not only damaging our global competitive advantage but also destroying it and we simply cannot afford to have that happen. I wonder whether any of the submitters are going to be talking about that because I would urge them to do this. They can digress slightly. Select committees allow them to do that and I am sure the chair would allow this as well.But we do support this bill. It is a timely piece of legislation—bring it on. Let us hope it is in place before too long because this is the sort of thing we need to see. Thank you very much.Bill read a first time.Bill referred to the Primary Production Committee.