Hop Industry Restructuring Bill

I move, That the Hop Industry Restructuring Bill be now read a second time. This bill facilitates the regulatory and structural reform of the New Zealand hop industry. It removes the New Zealand Hop Marketing Board’s single-desk powers to procure and export all New Zealand hop products and it restructures the board into a producer-owned cooperative company. The bill is consistent with the Government’s policy for producer-board reform. It is supported by all 26 hop producers and by the board itself, and is in the national interest. The bill will give producers the autonomy to raise capital and to make their own investment decisions in a contestable, commercial environment.

The Hop Industry Restructuring Bill was introduced into the House on 19 March 2002. It had its first reading on 1 October 2002, after which it was referred to the Primary Production Committee for consideration. The committee received one written submission on the bill, which was from the Hop Marketing Board. The board gave its support for deregulation of the hop industry and restructuring as per the bill, subject to an amendment to the date of the restructuring day. The board’s preferred restructuring day, and the date specified in the bill, was 1 August 2002. However, that day had passed by the time the bill was referred to the select committee. The board proposed a new restructuring day of 1 August 2003, the first day of the board’s 2003-04 financial year, and that has been recommended by the committee.

I would like to thank the board for its support of this bill and for its constructive comments on it. I would also like to thank the members of the Primary Production Committee for their consideration of the bill and for the report tabled in Parliament on 4 December 2002. I commend this bill to the House.

As I start my contribution to the debate on the Hop Industry Restructuring Bill, I take the opportunity to congratulate that member both on his remarkable renaissance and on now agreeing to support yet another deregulation of a producer board.

💬 Hon Damien O'Connor: Supported by the producers.

Absolutely, but I thought I would take the time to quote from Hansard, when we had a similar debate back in 1999. Mr Damien O’Connor said then that a blind ideology was driving the Government to deregulate producer boards. “Blind ideology”, the member said. He made comments like: “This will be the death knell of the dairy industry.” He said: “This legislation will lead to”—

💬 Mr SPEAKER: This is about the hop industry, not the dairy industry. Would the speaker come to the point.

I raise a point of order, Mr Speaker. I am outlining my congratulations to the member on supporting this bill and pointing out the remarkable change in the member’s own philosophy on producer board deregulation.

💬 Mr SPEAKER: The member is perfectly entitled to do that, but not when referring to another industry. He must refer to this bill, which is the Hop Industry Restructuring Bill.

In referring to the Hop Industry Restructuring Bill, I want to again congratulate the member Damien O’Connor on his remarkable about-face since, only a couple of years ago, we last deregulated another producer board, the name of which I will not refer to in this particular debate. But I say to you, Mr Speaker, that I am thrilled that Damien O’Connor has matured so greatly and so remarkably in a relatively short period of time.

Of course, National whole-heartedly supports the deregulation of yet another industry that for too long has been shackled by legislation produced by this House. I was intrigued by the comment the Minister himself made, when he said: “This legislation gives the company power to raise capital and to make its own decisions.” I have no problem at all supporting legislation that gives an industry the power to establish a company, to look after its interests, to raise the capital that it then decides it requires, and, most important, as the Minister himself has said, to make its own decisions. The Minister also referred to the fact that there are only 26 hop producers in this country, so I guess, to be fair to the Minister, it was relatively easy for them to present a united position and to come to Parliament and ask to be unshackled from the burden of legislation. It is interesting that the industry has been able to make that move, and I support it whole-heartedly.

The other thing that should not be forgotten is the significance of the hop industry to New Zealand society. It is essential, clearly, in the brewing of beer, and it has had a remarkable impact on the social fabric of this country. Therefore, we must not underestimate its significance.

It is relatively easy in the hop industry to get a consensus position. There are 26 producers, as the Minister said. Of those producers, only one made a submission to the Primary Production Committee, and as I go through my notes, I see that the committee took just 38 minutes to consider that submission and the officials’ report, to deliberate, and to present the report-back to the House. It is with some regret—although I guess we are getting used to it—that yet again we have had to change the enactment date of legislation because of the Government being unable to present it earlier.

💬 Paul Adams: Why not?

Why not? The Leader of the House would have to be asked, as well as the Associate Minister of Agriculture, who does not seem to appreciate the urgency with which those 26 hop growers have waited with baited breath for us finally to address their very valid concerns.

We have worked very hard. I do not intend to take too much more of the House’s time, except to congratulate the Minister on his renaissance. I am thrilled to see that he now realises the benefit of allowing producers to get on and do their own thing. May that renaissance live long and hard in the Labour Party philosophy. National, of course, supports the second reading of this bill.

I congratulate the hop growers on forming a cooperative company to market their produce and to sell their hops.

I have just a couple of comments on the points made by the previous speaker. This is not the sort of structure that the previous National Government and the former Minister, the Hon John Luxton, would have suggested for this industry. This is a move to form a cooperative that retains the single seller in all but name. Why? Because it is the sensible thing to do in a small country like New Zealand when we are competing worldwide with other countries that are subsidised. This very small industry has done the sensible, pragmatic thing. This is not what was proposed by the previous National administration, and I congratulate the hop growers on doing what they have done. New Zealand First supports them in their endeavours. New Zealand First supports this bill and wishes the hop growers good luck, long life, and great wealth.

I rise on behalf of United Future to support the second reading of the bill. To quote the secretary of the Hop Marketing Board: “The restructuring of the New Zealand hop industry is pretty much a non-event.” The industry has been waiting for this for 20 years. There was some initial reluctance to change, as the industry growers, all 26 of whom farm in the Nelson region, felt that the board gave them more protection than a limited cooperative company, but there is also recognition that the regulations the industry is working under are over 60 years old and are virtually unworkable in today’s climate.

The underlying objective of the bill is to enable the hop industry to position itself so that it can respond positively to the challenges of the international market. Whereas the shrinking domestic market once sent grower after grower into the red, these days about 90 percent of the annual hop crop is exported. However, it is worthwhile to remember that New Zealand’s annual crop represents less than 1 percent of the global total.

The old board structure is viewed by the industry as outmoded, and even a hindrance to innovation and entrepreneurship in the industry. The reforms are similar to the deregulation that has already taken place in the apple and pear industry and the dairy industry, though perhaps I should not mention those industries. The bill restructures the New Zealand Hop Marketing Board to create a cooperative company in its place, known as New Zealand Hop Marketers Ltd. As a matter of interest, the original marketing board was set up by a hop grower by the name of Keith Holyoake, which gives us some indication of how old this marketing board must be.

The basic day-to-day operation of the industry will not change, as everything currently under the board’s control will fall under the cooperative. Shares will be allocated to growers on the basis of production, rather than the current situation of one vote per grower. There will be no levies under the company. Instead, voluntary charges will be used to pay for industry-good items, like research, which it must be said is a very innovative approach.

The bill also liberalises the export and acquisition of hops and hop products. Under the Hop Marketing Regulations of 1939, the board is the mandatory sales agent for New Zealand hop growers. This bill removes the compulsory element and will encourage exporters to compete to export hops and hop products. Thus, growers and exporters will be able to arrange their own commercial activities as they see fit, since the export of hops will be part of the normal business environment. This has the advantage of removing the costs and requirements associated with the current regulatory system.

There will be some minor transitional costs involved in the registration of the new company. However, unlike the restructuring of the kiwifruit industry in 1999, the proposed restructuring of the hop industry does not require a restructuring plan or a referendum, because hop producers unanimously support the proposal. This saves some costs for the board in seeking the consent of growers.

The committee received only one submission, from the board itself. Not surprisingly, it was in support of the restructuring. Anyone who heard the first reading debate on this bill would have witnessed Labour and National MPs arguing about whether the Government had changed its view on the deregulation of industries like hop production. We were not disappointed today, when previous speakers sought to raise this point yet again. United Future, however, thinks that the most important thing is to ensure that when industries seek to improve the way in which they operate, they should be fully supported by the Government, whatever their ideological stripe. After all, that is the common-sense position. United Future supports the recommendations of the select committee, and supports the second reading of this bill.

Along with my colleagues I take some considerable delight in welcoming this bill back to the House for its second reading. Indeed, I will remark on the fact that on occasions we do have unanimity, but on this particular occasion there is a large degree of unanimity about the need for deregulation of what was once a producer board—an absolute creature of Government. The previous speaker referred to 1939 as the year when the Hop Marketing Regulations first came through. That was over 60 years ago. It has taken a while but we have finally got here, and I am delighted to see it.

I will take a moment to reflect on the fact that this marketing board was a direct creature of Government. It was a creature of a former Prime Minister, Mr Palmer, and also of Mr Caygill, who decided in 1989 that they were going to get rid of these quangos, as they saw them to be at that time. In fact, what happened was that they left the hop board, and indeed the raspberry board, and got rid of a heap of other quangos. But in getting rid of them, they also gave us commissions for everything else but. That is just a little bit of history. However, I think it is also worth reflecting that the hop board did a very good job in that early stage.

I do not want to upset my Green colleague too much, but it was the hop board that ensured the genetic modification of hops and that is not disputed. I am sure that the next time Mr Ewen-Street gets his jaw around a tankard of high-frothing beer he will reflect on the fact that that small grouping of people, under the auspices of the board, genetically modified hops to ensure they became a high-yielding alpha resin. I think it was through the then Department of Scientific and Industrial Research, but I do not have the particular date. Those who are interested in beer, and I am sure that most people in this House are at some stage, would find that very interesting and a sign of the future as well, once we get past this fetish about genetic modification.

As I said earlier, the Hop Marketing Board has run its course. It was a completely unanimous decision of all the members of the select committee, not to mention the members of the hop growing board who decided that the board was no longer appropriate. I take issue with Mr Doug Woolerton, and I regret having to do so, but this is clearly not just some hybrid, single-marketing board. I draw the member’s attention to the commentary on the bill, which states that the bill removes that compulsory element and gives growers the commercial choice of marketer and exporter. No single desk gives a commercial choice of marketer and exporter. Along with Mr David Carter, I applaud the good work of Mr Damien O’Connor in ensuring that the hop industry has reached this new 21st century.

In fact, from what I hear, the industry has a very exciting future. It has the control of its own destiny. It is not relying on Government; nor is it relying on Government to wipe out the $26,500 that it asked for. It is appropriate that the new cooperative—once it becomes so—will be standing on its own two feet. It will find that $26,500 and can say that it is truly an entity it can be proud of—not having to rely on Government, but on itself.

It is really encouraging to hear the ACT party’s philosophy, which has been vilified for so long in this House—and I pay tribute again to my colleague Owen Jennings who pointed out to this House many, many years ago, when I was a mere farmer from Coal Creek, the futility of having statute-controlled producer boards. We still have a few relics to my right. However, it is nice to see that the majority of this House understands that deregulation equates to individual responsibility, and indeed, collective responsibility, if the growers so wish.

I am not about to tell growers that they should not be in a cooperative and that they should be in some other arrangement. If they wish to be in a cooperative, selling their hops, that is absolutely wonderful. I am a member of some other cooperatives in terms of my farming career and selling my products, so I understand how cooperatives work.

It is important to see in the commentary on the bill that the select committee did ask the board to address subsequent shareholding changes to ensure that the industry is indeed very, very well structured. This is so that the industry can progress and not have a run on capital, for example, if others decide to leave the industry, which can happen in a cooperative. It is not a perfect answer, but it is certainly a lot better than a single-desk structure where statute demands not performance, but just this thing called accountability. With every industry, whether it be the hop industry or any other in this country, we demand of ourselves and of our industry a thing called performance, not just accountability. With those few words, I certainly welcome the passage of this bill and commend it to the House.

I would like to take a very short call in this debate. I will start by congratulating the hop industry, and sharing my sympathy with it for the time it has spent waiting so patiently for this day to arrive. I also take issue, again, with my colleague the “member for Upper Coal Creek”, Mr Eckhoff, who talked about genetically engineered hops.

💬 Gerrard Eckhoff: Genetically modified hops.

There are no genetically engineered hops in New Zealand. There is a difference between genetic engineering, and selective breeding and hybridisation. They are different concepts. It is quite simple. [Interruption]

💬 Mr SPEAKER: The member may interject if he wants to, but he should move out of that quarter.

In terms of the passage of this bill through the select committee, as other members have said, we were unanimous—finally. However, I did raise with my colleagues the question of ownership of the shares of that cooperative company. In the end we decided that we would not change the legislation to impose a limit of shareholdings on individual members or the cooperative, but it would be of benefit to the hop industry as a whole to bear in mind the example of what happened to ENZA, formerly the Apple and Pear Marketing Board. When that was privatised and corporatised—

💬 Hon David Carter: Are you mounting a takeover?

There was a takeover. There was a maximum holding of 19 percent, and people assumed that any company that had a maximum holding of 19 percent would not be able to take control of what was a monopolistic export body. However, history has shown that two companies got together 38 percent of the votes and took a controlling interest in ENZA, to the very great disadvantage of the members.

I suggest to members of the hop industry that in the immediate future they set their own regulations to limit the number of shares that anyone, or any group of owners, can have. The cooperative structure obviously is very powerful, but if one allows an organisation, a corporate, or any individual to take control of the industry, it will be to the disadvantage of everyone else.

I commend this bill to the House, and look forward to the third reading in the near future.

I know there are some wine buffs in this House. I confess to being a beer buff. The hops that are produced by the hop industry in the Nelson region go to the core of some of the best-quality beers in the world, and this Parliament should be proud of the producers of those hops and of the quite unique industry that exists in the Nelson region to support that international reputation.

I shall make a few comments about the bill, because it brings with it a huge irony. So many of the agricultural debates that we have had in this Parliament over the last decade have been about marketing structures. It seems extraordinary to me that just 6 years ago, when we had the first of those debates about single-desk selling, they were like a political mantra; they were an absolute. In fact, I shall repeat to the Minister who sponsors this bill—Mr Damien O’Connor, whose name is on the front of the bill—what he said about those who opposed single-desk selling. He said that they were traitors. He said that there were traitors in this Parliament who opposed single-desk selling. I shall quote the Minister. He said: “And these traitors will one day attempt to deregulate the hop industry.”

💬 Hon Damien O'Connor: Who was that?

Damien O’Connor said those words. Now I have in front of me a bill that is in the charge of the Hon Damien O’Connor. What is honourable about saying in this Parliament that others who talk about deregulating the hop industry are traitors? When Mr O’Connor says that, it is OK. Would Mr O’Connor like to provide some explanation?

💬 Hon Damien O'Connor: Yes, happy to.

Will the member provide an explanation?

💬 Hon Damien O'Connor: I’ll do it during the third reading.

I hope he does. I also think that he owes the House an apology. Effectively, what we see in the House today, which is unanimous support for the bill, is that National won the argument. So well have we won the argument that even—[Interruption] Can that new young member from Kapiti explain for me why members of the Labour Party said that anybody who wanted to dismantle a single-desk selling operation was a traitor? The word “traitor” is the strongest word one could possibly use. It is the strongest argument one could make. On our criminal law books, being a traitor is the strongest offence one can commit against one’s country. Yet members of the Labour Party accused members of National of being traitors because they dared to suggest deregulation and the free market. Mr O’Connor owes the House an explanation. I also remind him that he stood at the top of Trafalgar Street and said that the Labour Party stood for single-desk selling.

💬 David Benson-Pope: Does that member support this bill?

Yes, I do support this bill.

💬 Clayton Cosgrove: What about the numbers man?

We always know when Labour does not want to debate the issues. I want to know from Mr Benson-Pope why Mr O’Connor stood at the top of Trafalgar Street and said that Labour stood for single-desk selling. He said that Labour is a cooperative party, and it wanted single-desk selling. Now, as a Minister of the Crown, he says the opposite. I think the House is owed an explanation.

If he is going to flip-flop on that, what other things can we believe about anything that Damien O’Connor and members of the Labour Party stand for? If he can flip-flop on that, what else is he going to flip-flop on? I have heard the pathetic explanation from Mr O’Connor. He said: “Oh, the difference is because, in this case, the hop industry wants it.” Well, if that is the case, why did Mr O’Connor not stand at the top of Trafalgar Street during the apple industry restructuring and say: “It is not that we are in favour of single-desk selling; it is just that we believe it should be for the industry to decide.”? But that is not what the Minister said, and if that is the case, when we debated the apple and pear restructuring legislation in 1999, why did you accuse Mr Luxton—

💬 Mr SPEAKER: I did not do anything. The member will come back to the bill.

I ask the member opposite, Mr Damien O’Connor, who is in charge of the bill—and this issue is at a the core of it—why it is that when Mr John Luxton debated single-desk selling being changed in 1999 he was accused of being a traitor but now, when Mr O’Connor does it, it is different?

💬 Hon David Carter: It will be the “Maharey principle”.

I think it is indeed, and I am pleased we have Mr Maharey here. I think it is the “Maharey principle”—saying one thing when in Opposition, and doing exactly the opposite in Government. I say that that is a complete abrogation of integrity. Then we heard from my colleague Mr Doug Woolerton. He said: “Oh, the reason New Zealand First has changed its position is because this is different.” Well, I have to say to the member that this is deregulation in every sense of the word.

R Doug Woolerton: This is not the model you proposed, and you know it very, very well. They know it is different.

What is the difference?

R Doug Woolerton: Every difference in the world—and that just shows the stupidity of you guys.

Well, Mr Woolerton needs to explain to the House why it is, when it comes to other areas, that New Zealand First members have taken a completely different point of view. They flip-flop all over the place. There is no consistency at all in their position. This bill says that it is for ever more the decision of hop growers as to how they are to structure themselves. It is a complete deregulation of that industry, and it provides a sensible structure. I think that the credit for this must go to the previous National administration, because it set the agenda.

💬 Hon Damien O'Connor: Aw!

Mr O’Connor argues against it when he is in Opposition, then does it as a Minister. I tell Mr O’Connor that I have not, in my 12 years in this Parliament, ever seen a Minister flip-flop so badly on what he said. I want some explanation as to why he criticised those who said that the removal of single-desk selling was appropriate to hops. I want to know why he said that in Opposition, and why there is now a bill in his name now that he is in Government.

Bill read a second time.

Procedure