The
The ayes
The ayes are 63, the noes are 56, urgency will be accorded. I call on
Government Order
Government Order of the Day No. 2. Dairy
Dairy Industry Restructuring Amendment Bill (No 2)
reading. The Hon Simon O'Connor. I move that
reading. The Hon Simon O'Connor. I
(Infringement System) Bill. I move that the Dairy Industry
that the Dairy Industry
Restructuring Amendment Bill (No 2) be now read a first time.
The speaker deals with an important
and urgent matter to
prevent the expiry of certain key provisions
in the Dairy Industry Restructuring
Act 2001 or DIRA, as I will refer to it,
from expiring in the South Island
on 31 May 2018. The
Government recognises that the dairy industry
is important to the economy and to
the wellbeing of New Zealanders.
The dairy industry is
New Zealand's largest export earner and it is
essential that it performs well. It
generated
essential that it performs well. It
2017. This is expected to increase to
2017. This is expected to increase
June 2018. The dairy industry's also a significant
a significant employer and contributor to regional economies.
It employs over 50,000 people,
37,000 on farm and over 14,000 in
processing and marketing. The
DIRA was passed in 2001 to
enable the formation of Fonterra. At that time
Fonterra had a dominant market share
country. Madam Speaker, given Fonterra's dominance the DIRA was
Fonterra's dominance the DIRA was
put in place to ensure that the New
Zealand dairy industry remained
contestable and that
Fonterra performed efficiently for
the benefit of consumers and farmers.
The DIRA provides
disciplines on Fonterra to perform efficiently
in the absence of strong competitive
pressures. The DIRA contains
automatic expiry provisions
that were triggered in 2015 when dairy
processors other
processors other than Fonterra contributed more than
processors other than Fonterra
solids in the South Island. At that point the DIRA required a review
of the state of competition
that was done by the Commerce Commission. The
DIRA needed an active
Government decision as to whether they would
expire in the South Island
decision as to whether they would in place. Key provisions will no
longer apply to the south
Ireland after 31 May the year if DIRA is
not amended. Open entry and exit
provision, Fonterra must accept
an application to become a
supplier to Fonterra
Fonterra except in circumstances where the milk might
be too expensive to collect. Fonterra must
allow any farmer to
supply another company for any reason
to exit and take their invested capital. These
take their invested capital. These
open entry and exist provisions are
a key element to
ensure that Fonterra is both fair and efficient.
Secondly in the DIRA bill, the milk
price monitoring
price monitoring regime, the Commerce Commission must each year
Commerce Commission must each year
review the calculation
of Fonterra's farm gate milk price
for the dairy season that has just concluded. The
commission must review Fonterra's
commission must review Fonterra's
farm gate milk price man you. It
sets out its methodology for
sets out its methodology for
calculating the farm gate
milk price poor the season. The milk price
monitoring regime is intended to
monitoring regime is intended to
promote greater transparency
of Fonterra's farm gate milk price
promote greater transparency of setting processes. Thirdly, the
rule by which Fonterra suppliers are permitted to sell
season's milk production to another processor. This provision primarily
ensures that smaller specialist
producers of dairy products such
as cheese and yoghurts are assured of
milk supply. In December last
year I announced my intent to undertake
a comprehensive review of the DIRA as
a matter of priority and committed
to consulting fully with the dairy
sector on further policy decisions
in this year, 2018. I want to
ensure that the registry settings
around the dairy industry support a
high performing, innovative and
performing, innovative and
sustainable sector that meet the
Government strategic objectives
for the sector. Passing this bill
under urgency will allow a major review
of the DIRA to be conducted this
year. The review will give the public and
industry players the
opportunity to give us their views in a
substantive and meaningful way. Those
submissions will guide
the Government's considered
Government's considered and strategic approach to the changing
needs of the dairy industry. I
believe it is
important to give industry certainty while this
review is undertaken, particularly for
South Island dairy farmers an dairy
processors who need to
know what registry environment will apply to
them in the coming dairy season when
they make decisions on who
to supply or buy their milk from. I
therefore do not believe that allowing these
key DIRA provisions to expire now in
the South Island would be
in the best interest of the farmer, the
dairy processor, consumers
or the wider economy. That is why this
bill needs to be
wider economy. That is why this bill
existing DIRA legislation. In 2016 the Commerce Commission review
the Commerce Commission review
looked closely at the
DIRA regime and found that competition
was not yet sufficient to
warrant the removal of the DIRA provisions.
The Government considers that the
DIRA provisions should be retained
pending further comprehensive
review. For
review. For this reason, I'm satisfied that it is appropriate to
retain the existing provisions
while the Government considers DIRA and
other strategic dairy industry
issues during the upcoming review,
that we hope for the members'
question, will be conducted
in 12
In short, this bill prix cents DIRA In
In short, this bill prix cents DIRA from expiring so that the
Government can undertake a comprehensive review
of the DIRA regulation. I
will now turn to the key provisions
in the bill. As explained briefly by the
member in the House, it, in
technical terms, and
I disappoint, some may go to sleep, it
repeals section 147 to 150 of DIRA
that sets out the triggers and process for
expiry of the key DIRA provisions in
either the North or South Island
or both. It repeals provisions
relating to further review of DIRA
given that I have already committed to a
comprehensive review of the
legislation. Thirdly,
legislation. Thirdly, it makes consequential changes to other
sections in DIRA. Fourthly, it
revokes the Order in Council that
would otherwise effect expiry
in the south island on
would otherwise effect expiry in the
year. The bill does not make any other changes to
regulatory settings, in effect, it just
stops the countdown to expiry in the South
the countdown to expiry in the South
Island so that the dairy industry
can have certainty and the Government can undertake a
Government can undertake a
considered review with full
opportunity for consultation with
and input from, all
interested parties. I therefore
consider this bill should be passed as quickly as
possible to enable certainty for
the dairy industry, for
the Government and to conduct the DIRA review. I'd
dairy industry, for the Government like to take the opportunity
to acknowledge the Coalition partners
who we have worked with
to ensure the smooth passage of this
legislation. Can I acknowledge the
opposition parties,
opposition parties, generally speaking dairy industry legislation
been a unity of purpose and ultimately a unity
in passing legislation through the House.
legislation through the House.
I'm hoping that the National Government will see the
wisdom to support this legislation
through under urgency so that we can ensure
that Fonterra and the dairy industry
is stable...
..while enabling us to have a comprehensive
comprehensive review that acknowledges not just the
significant challenges facing
not just fonder iffa but all the
other dairy companies in the country and
the farmers who participate
in the dairy industry. This is a
very important piece of legislation.
We believe passage through urgency will
enable certainty to remain
in the industry and open the door for
a useful and worthwhile
and necessary discussion around the dairy industry
over the next 12 months. At this
stage in one year's time
we will be back in here to make any
necessary changes to legislation
to improve the further and future opportunities
of dairy farmers and their
industry. The question is that the
motion be agreed
The question is that the motion be
Guy. Thank you for an opportunity to address what is a very important
issue in the primary sector of New
Zealand
issue in the primary sector of New
Restructuring Act. We have heard from the Leader of
the House why this needs to be heard under
urgency. Personally, I don't agree.
I find it disappointing that
only one aspect of this