King Colin: Dairy Industry Restructuring Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
King Colin: Dairy Industry Restructuring Amendment Bill — In Committee 
[Sitting date: 17 July 2012. Volume:681;Page:3572. Text is incorporated into the Bound Volume.] 
COLIN KING (National—Kaikoura) 
: 
 I have just got to address one or two fundamental issues that have been raised on the Dairy Industry Restructuring Amendment Bill. This part of the Committee of the whole House gives us a good opportunity. We need to remember as a Parliament as the Committee of the whole House that 95 percent of a farmer’s income is the farm-gate milk price. That then leaves that economic return from the fair value share of 5 percent. What Fonterra is talking about is a pool of 12 percent of that 5 percent. So we need to keep things in perspective. 
I thought that one of the most compelling conversations that we had while we were listening to submissions came from the chief executive officer of Fonterra. He was talking about the interest they were forced to pay on the spot market to cover various activities because of the conservative business setting they had to run because of the redemption risk that they were exposed to. They at times had to pay 14 percent interest which is well and truly above what the market rate was or 11 percent interest. In actual fact the market rate was 4.5. I just put it to the Opposition on the other side of the Chamber that inactivity in the present climate will actually deny Fonterra realising its full potential to New Zealand. 
We hear the Opposition members talking about the cooperative model. I put it to the Opposition that from day one of the dairy industry it was a no-brainer but to cooperate because the product itself would not last any more than a few hours. So cooperation is not the invention of this House or of any particular party; it was the invention of those people who entered into that sector and those people today on average would have investments or exposure to the capital markets themselves in which they have borrowed of $3 million and beyond. There are banks that have taken risks with these people and consider them a good risk. 
Here we are being hung up on a piece of legislation that is very good well-thought-through well-balanced enabling legislation. It is legislation that has been brought to Parliament by virtue of the insistence of Fonterra itself. It was voted on originally in 2010 and got a vast majority. It had another vote in June and again it received 66 percent support. I believe that the Opposition when you look at the minority reports took a very inflexible position early on and that has been manifest in the very debates that we have heard during the Committee stage. Fonterra itself within its constitution will have a vote at the annual general meeting. It must trigger 75 percent agreement as to the size of this pool. It is very descriptive. They have put their cards on the table and the farmers I believe at that annual general meeting will support that motion. 
So what is left to say but that we wish this bill all the very best. I just want to say how proud I was to be on the Primary Production Committee which looked towards the future of this wonderful cooperative. I am 100 percent sure that 100 percent farmer ownership is not the issue because when you look at the structure of it that will happen only if the pool of the fund is allowed to become too large and effectively that pool is going to be limited. I would encourage members rather than being like Damien O’Connor the Labour member who speaks what Labour really thinks about farmers and who is in opposition to it to broaden out and get some other members on the select committee who can be futuristic and contribute—