Meat Board Restructuring Bill

I move, That the Meat Board Restructuring Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Primary Production Committee for consideration, and that the committee present its final report on or before 27 May this year. I also intend to move that the committee have the authority to meet at any time while the House is sitting, except during oral questions; during any evening on a day on which there has been a sitting of the House; on a Friday in a week in which there has been a sitting of the House; and outside the Wellington region, on a day the House is sitting, despite Standing Orders 191, 193(a), and 194(1)(b) and (c).

The Meat Board Restructuring Bill restructures the New Zealand Meat Board, and replaces the Meat Board Act 1997. That current Act provides the board with statutory powers to allocate and manage access to meat export quota markets, and to collect levies from livestock farmers for industry-good activities, such as research. The board does not trade in meat or meat products. The bill provides for the Meat Board to focus on its quota management role. It will continue to allocate, monitor, and manage access to markets where New Zealand has access for specified quantities of meat at zero or concessional tariff rates.

The bill also provides for the Meat Board to retain the livestock industry’s reserves. It also enables the meat industry to join with the wool industry to fund industry-good activities under the Commodity Levies Act. The impetus for this reform arises from the meat and wool industries’ desire to combine their industry-good functions into one entity. They would like to do this when the transitional levy on wool, under the Wool Industry Restructuring Act, expires on 30 June this year. The desire for a single meat and wool organisation was demonstrated in a referendum of meat and wool farmers in August last year, in which farmers strongly supported the proposal to bring meat and wool industry-good functions into one entity funded under the Commodity Levies Act. Bringing together meat and wool industry-good activities will assist the two industries to achieve synergies and cost efficiencies. The industries will also benefit from the better accountability provisions in the Commodity Levies Act, particularly the requirement to seek a levy payer mandate every 6 years for the continuation of the levy.

The bill retains and enhances the board’s powers to allocate, monitor, and enforce access rights and conditions in relation to meat export quota markets. These markets are of significant value to the New Zealand meat industry and to the economy, and access to them must be safeguarded. Given that quota administration is a regulatory activity, and the fact that quota rights are owned by the Crown, it is appropriate that quota functions remain with a statutory body like the Meat Board.

The bill contains new provisions for compliance audits of the board’s quota management systems, set against the yardstick of New Zealand’s international treaty obligations relating to meat export quota management. The audits will increase the board’s accountability to the Government for its role in ensuring compliance with international obligations relating to quota market access. Like the current 5-yearly performance and efficiency audits, which the bill discontinues, the compliance audits will be funded by the board. The board will have the power to recover the costs of its quota management systems, including the costs of audits, from meat exporters to whom the board allocates quota.

The Meat Board holds around $100 million in reserves. These reserves ultimately belong to livestock farmers. Livestock farmers have voted in support of retaining the reserves in the Meat Board. The bill strengthens the provisions around the spending of the reserves, and provides for the board to hold the industry’s reserves for three key purposes: to assist the meat industry in responding to any major industry crisis; to safeguard quota markets and the integrity of its export quota management systems; and to fund specific industry-good projects. The bill provides for the board to maintain and make available its reserves policy, and to consult farmers on any changes to this policy.

The Meat Board will have a board of directors comprising eight or nine directors who will also be directors of the meat and wool industry-good body, plus another two independent directors appointed by the Minister. The two ministerial appointees will ensure that the board has directors with in-depth expertise in the international meat trade, quota management, and international trade relations. Six of the eight or nine directors to come from the industry-good body will be elected by meat and wool farmers.

The bill applies normal tax rules as far as possible. This treatment of tax issues is largely consistent with how tax issues were handled in previous producer board reforms. The key differences relate to the meat industry’s desire for the Meat Board to hold the industry’s reserves, but enable the industry-good body to spend reserves on specific projects. To facilitate this, the two entities will be consolidated for tax purposes. This means that any movement of funds between the Meat Board and the industry-good body will have no income tax, gift duty, or GST consequences.

This bill has a high level of industry support, as demonstrated in the farmer referendum in August last year. The bill will enable greater safeguarding of the benefits flowing from access to quota markets, greater accountability to levy payers, and the capture of synergies and cost efficiencies in the joint delivery of meat and wool industry-good functions. The Government would like to see the bill enacted by 30 June 2004, to enable the meat and wool industries jointly to commence their levying and industry-good functions under the Commodity Levies Act on 1 July 2004. I commend the bill to the House.

I rise on behalf of the National Party and certainly do support, on behalf of those 26 good members of Parliament, this bill going to a select committee. Who would fly in the face of the overwhelming support of farmers, as expressed in the referendum held in August 2003? A huge majority of farmers clearly said that this was the direction in which they wanted their industry to go. No one with any sense will fly in the face of those farmers—certainly, not in light of what happened over the flatulence tax. That was an issue where the Government flew in the face of every farmer in New Zealand. The Government did that, and it got a big lesson from it, because it realised that not only do farmers—those in the agriculture, horticulture, and forestry sectors—pay the country’s bills but all the people in the towns and cities know it. When farmers say they want something, and they have considered it at length with some common sense and pragmatism, then we should support them. National is not foolish about that. So we support this bill going to a select committee.

But we do have reservations regarding the process. Interestingly, that referendum was taken in August 2003. At that time, it was overwhelmingly clear, as I said, that farmers wanted to head in this particular direction. This bill has just come into the House. The Minister of Agriculture expects a report back by 27 May, which is roughly 3 months away. He wants to pass the legislation by 30 June. That begs the question of why it has taken from August last year until now to introduce this bill to the House. I know that the Minister had 6 or 7 weeks off during the Christmas period to sun himself in the South Island, but why did it take as long as that to make the decision that the Government would support the way farmers want to go? Yet the Government is asking the select committee, in the period of 3 months, to advertise for submissions, hear submissions, consider submissions, ask questions, fully investigate, and bring the bill back to the House. Why is the Minister asking us to do that? It puts us under tremendous pressure.

He might argue that he has requested the House to bypass the Standing Orders—that is to say, he has asked the House to bypass due process—in order to have us meet on Mondays and Fridays, and at any other time that is not question time in the House. I am willing to help pass this legislation. I know that my colleagues on the select committee are largely willing to help pass this legislation. But riding roughshod over due process is not the way to do it.

I bring members’ attention to Standing Order 191, “Meetings on Fridays”. It states: “Except by leave of the committee, a select committee may not meet on a Friday in a week in which there has been a sitting of the House.” I will not go into the reasons for that. We all know what they are. Apart from the detailed reasons related to the running of the House, we represent electorates as far-flung as Whangarei and Invercargill, and we need to be in those electorates, serving those people, on Fridays. But, apart from that, the fact of the matter is those are the Standing Orders, and this Government has asked us to ride roughshod over them so that we can get this bill through Parliament, simply because the Minister did not pay attention to the fact that farmers overwhelmingly said last August that they wanted this legislation passed. I raise that with you, Madam Chair, so that you can make a note that rushing legislation through the House should not become a habit with this Government.

Sure, farmers may agree with it. I understand that, on weighted stock numbers, 76 percent voted for the sheepmeat proposals, 77 percent for the beef proposals, 72 percent for the wool proposals, and 67 percent for the goat meat proposals. So there is overwhelming support amongst the farming sector. But that is no excuse for cutting through due process and rushing the legislation through the House. We need to get it right. The meat industry is hugely important to New Zealand, and by rushing the bill through the House and not paying attention to detail we could make mistakes that would have massive repercussions for our export industry and for our economy at home if we fail, particularly in relation to our trade obligations with other countries. I raise that with you, Madam Chair, and wish you to note it.

On the substance of the bill, it is to—

💬 Madam DEPUTY SPEAKER: The member should not use the term “you” to the Speaker, and it is “Madam Speaker”, not “Madam Chair”.

That is rather petty, Madam Chair, but I do apologise.

💬 Madam DEPUTY SPEAKER: The member will withdraw and apologise for that remark.

I withdraw and apologise. The substance of the bill provides for the restructuring of the board while maintaining the board’s quota and reserve management functions. I am interested in how the board is to fund itself now, given that its ability to levy will be extinguished. I notice that clause 36(1) provides that fees can be charged in relation to quota management systems, and I will be interested, when the bill is before the select committee, in checking whether that will be the sole or major way that the board funds itself. I understand that it is allowed only to charge fees that: “(a) are fair and reasonable; and (b) provide the Board with adequate funding to carry out its quota management function for the relevant quota management system, including general administration costs.” I am not sure how far that extends to other activities of the board that are so minor that they are not even mentioned in the bill. That will be quite interesting. As a member of the Primary Production Committee, I will be checking that those things in clause 36 have been considered.

I do note that the Regulations Review Committee, under the Regulations (Disallowance) Act, will have the ability to scrutinise those fees in the future. The Minister will correct me if I am wrong, but I believe that is the case. Those entities or individuals being charged fees will be able to go to the Regulations Review Committee annually and have those fees reviewed, if they should go through the roof without justification. It will be interesting to see that. I am pleased to see that there will be a check on those fees. Levies, by their nature, provide a check because, with the board structure, farmers can directly challenge them, but now that the levying powers are being taken away, I note that the fees can be readdressed through the Regulations Review Committee, and I am pleased to see that.

The New Zealand Meat Board will remain in existence. It is authorised to distribute the assets of livestock farmers. Currently, I understand those assets to be about $100 million, in terms of reserves—which is an awful lot of money. I am sure lots of people in the industry have lots of good uses they could put it to. But as long as the board remains prudent, it will certainly have the support of this House.

The bill also provides for the board of directors to comprise eight or nine farmers and meat-processing representatives. It is interesting that the Minister of Agriculture may appoint two directors, and I encourage the Minister to pay a lot of attention to the industry over the next few years, so that when he nominates those two directors he does not just put in party hacks—it is not just a quango—but puts in those who will honour the industry with integrity and attention to detail, and who will have some sort of experience or interest in the industry itself. I encourage the Minister of Agriculture to pay attention to the meat industry. He does not have to fly overseas every week for meetings to do with his trade responsibilities, but I encourage him to pay attention, for the very reason that he will have a direct influence, due to his appointing those two directors, on the process.

I rise to support the first reading of the Meat Industry Restructuring Bill, which is an important bill and one that I know will be welcomed in my electorate of Otaki, where there is a significant economic sector in this area. The bill meets the Government’s criteria for this kind of reform. It has the support of the participants of the industry. That was made pretty clear in the referendum, in which farmers voted overwhelmingly for the new structure. It is fair to minority interests—nobody is disadvantaged by the changes—and, of course, it is in the economic and national interest of New Zealand. So it meets the criteria that we have put up for reforms in this sector, and it will enable the New Zealand Meat Board, after its restructuring, to enhance its ability to manage meat export quotas for the country. It is very important legislation, and I am sure it will receive the full attention of the Primary Production Committee as we continue this series of important reforms for New Zealand agriculture. I support the bill.

New Zealand First, likewise, will support this bill to the select committee. In doing so, I say that people in New Zealand tend to forget that meat, wool, dairy, and all the other forms of agriculture, in spite of all the initiatives we have had over the years, are still—

💬 Phil Heatley: Are not the sunset industries of this country.

R DOUG WOOLERTON: —are not the sunset industries of this country; they are the main things that bring money into the country for us to spend on our lifestyles. We depend on those things, and they set the benchmark for how well we live in this country. What is less understood are the efficiency gains that farmers have made over the years. For example, meat and wool exports are up 35 percent to $6.3 billion—

💬 Phil Heatley: I raise a point of order, Mr Speaker. Annette King and the Minister of Agriculture have had a liaison now for at least 7 minutes, with Mr Sutton standing there speaking to Ms King with his back to the House. I ask that Mr Sutton pay some sort of respect to those on this side of the House—and to himself. Perhaps next time when they liaise, he could sit and speak to the Minister.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member for drawing that to my attention. I was somewhat diverted by other issues within the Chamber. I am sure the honourable Minister is well aware of Standing Order 82.

R DOUG WOOLERTON: I was saying that people may well be aware of the importance of the meat industry, but I do not think they are aware of the efficiency gains made by some of the industries in the agricultural sector. Meat and wool exports are up 35 percent to $6.3 billion, with 8 percent less stock. Lambing is up from 100 percent to 123 percent, and more than that in parts of the country, so there is a huge gain there. Beef exports are up 17 percent overall. These are the sorts of efficiency gains coming off a high base that are hugely important to this country, and I have—

💬 Phil Heatley: I raise a point of order, Mr Speaker. There are now—

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you, I know exactly what is being said. I will rule. Can I just say to members that under—

💬 Hon Annette King: I raise a point of order, Mr Speaker. The whip has just come to speak to two members of the House, which happens all the time with whips from any party, and I think the member is being incredibly precious. He is showing off.

The ASSISTANT SPEAKER (H V Ross Robertson): I understand the situation with the whip helping out on that occasion. I think the member was referring to other members. Can I just say to members that under Standing Order 82, it is not permitted to stand while in the Chamber. Members must take a seat.

💬 Hon Brian Donnelly: He’s deliberately trying to break up your speech.

R DOUG WOOLERTON: I have forgotten where I was up to, but I think I was talking about the efficiency of the meat industry.

It is hugely important for us to guard our quotas overseas. I have spoken about efficiencies, and now I want to speak about quotas and how valuable they are to this country. We have seen a much-lauded “free-trade agreement” that was to be negotiated by the United States and the Australian Government. We note with some concern but no surprise, unfortunately, that meat is not part of that, although it will be in 18 years or something, I think. Sugar is the same, which is not a matter of interest to New Zealand, but it certainly is in Australia. In other words, countries are very keen to do deals when it comes to manufactured goods, but certainly not when it comes to agriculture.

Across the world, unfortunately, and especially in the countries that we trade with, there is a situation of huge tariffs and huge protection for the home industry. Therefore, quotas have been negotiated with blood, sweat, and tears, and I applaud the Minister for Trade Negotiations and the Government, as I applaud the international trade Minister in the previous Government of a different persuasion, because they do a very, very difficult but hugely important task for New Zealand.

These quotas must be guarded to the nth degree, because they are gold. They are our only guarantee into countries with high tariffs, and they must be nurtured. Therefore, like Mr Heatley, I have no problem with the Minister, on behalf of the Government, appointing a couple of directors to the New Zealand Meat Board. I have no problem with the extent of the legislation that ensures the Meat Board will nurture those quotas, for without them we have no guarantees. We sell a huge amount of meat over the quotas in various countries, but it is quotas for which we get the most valuable amount of money. Unfortunately I do not have the figure with me, but I am sure that subsequent speakers will tell members the exact difference in price between quota meat and other meat, but it is huge and it is valuable.

I commend those who are searching out—and the Meat Board is one of them—trade with China, Taiwan, and lots of other emerging economies that will be hugely important to New Zealand in the future, and in the near future as well. I make a plea to remind members that it is Europe, the United States, and countries of that ilk that have the taste for the products we sell in New Zealand. We understand those markets, and we have traded with those markets for years—sometimes hundreds of years.

They are countries with high levels of disposable income, a high standard of living, and they are carnivores—they eat meat. We sell meat, and the more we can sell to them, the better. Mr Donnelly is giving me a look. I do not know what he is thinking of at the present time, but no doubt he is thinking of some steaks on the barbecue, or something like that. But that is an important point, because when one talks about new countries, it takes a wee while to get those markets going. It is the countries that we have traditionally sold to and where we hold quotas that we need to protect and nurture, because that is where the main amount of good dollars comes from. Those quotas need to be looked after because they have been hard won.

I want to talk for a couple of minutes about the danger of a high dollar to the farmers of this country, and in this case to meat exporters. For every rise in the dollar, there is a subsequent erosion of the spending power of our agricultural people. New Zealand First, as opposed to some other people, does differentiate between the export dollar that comes into our country, and we would like to see economic activity generated by our exports. We believe that consumer-driven economic activity is a different thing altogether. It leads to inflation and to false pricing within our country. It is simply not based on productive enterprise, so it is false. The bubble is doomed to burst at some stage if economic activity is looked for from that area. With productive exports from farms and agriculture, we are not so reliant on imports, and so there is a larger percentage of that dollar returned to this country. It is the one that sets our standard of living and the one that we must seek.

It is important that we at least see the Government trying to talk our dollar down. We cannot continue to have the dollar at US70c and prosper. New Zealand is coming down off the back of the Kiwi at US45c, which created a huge amount of economic activity in this country, but going into the year ahead with the dollar at US70c, all New Zealanders—I repeat, all New Zealanders—will notice the lack of income that that creates. We support this bill to the select committee.

The Greens are pleased to support the progress of the Meat Board Restructuring Bill to the select committee. Members will be aware that this legislation became essential when the Wool Industry Restructuring Act passed into law, as the meat and wool industry-good bodies were to be combined under that Act.

I am personally very pleased that the farmer vote on this bill was considerably less equivocal than the vote on the restructuring of the New Zealand Wool Board. Some members may recall that the Greens voted against that bill for a couple of reasons. Firstly, we perceived that there were doubts over the farmer mandate for the proposed new structure in terms of the numbers of farmers who voted, and, secondly, the new governance network as outlined in that Act appeared to at least have the potential to disenfranchise farmer shareholders.

Subsequent events have shown that at least some of our fears have been realised, but this is probably not the time to debate them. So, yes, I am relieved that there is a mandate from farmers, and that it is more secure for the New Zealand Meat Board than for the restructuring of the Wool Board.

In essence, this bill is quite straightforward. It divides the Meat Board functions into two. The board itself remains, with a number of functions. First of all, and perhaps more important, as my colleague Doug Woolerton said, the quota management functions, especially in respect of sheep products to the European Union and beef to the United States. The quotas are hugely important, not just to the industry but to New Zealand as a whole, and they must be protected. I think everybody recognises that.

The board will also have responsibility for management of the industry’s financial reserves in response to the wishes of the farmer shareholders, and I am really pleased to see that that remains. They will also have accountability for the actions of the board, which is more than I fear may happen in the Wool Board restructuring. They are also responsible for the registration of exporters.

On the other hand, the Meat Board will lose a number of functions. First of all, its industry-good function; secondly, the power to collect and spend levy moneys; and, thirdly, its 5-yearly performance and efficiency audits, which are to be replaced with compliance audits and the farmer vote—although, I remain unconvinced that a farmer must have such a high minimum number of sheep or cattle to be entitled to vote. I still have trouble with the idea that a farmer must have had a minimum of 250 sheep to vote, even though farmers have been paying levies, in some instances, for many, many years.

The Greens are very pleased to note that the financial reserves of the industry will be managed by the board and spent by the industry-good body. I am not sure whether it has a name yet; the most recent one that I have heard is the Single Organisation Ltd. Is that still the case?

💬 Darren Hughes: It’s quite catchy.

Yes, whatever. The kind of spending that is being mooted is to cope with crises such as outbreaks of foot-and-mouth disease, or BSE—mad cow disease—or something of that order that would obviously bring the meat industry to a standstill overnight, and probably bring the whole of the New Zealand economy into free fall very soon thereafter.

The industry-good body should also spend money on the integrity of the quota functions. First of all managing the quota functions is important, but, as I said earlier, maintaining their integrity is also essential.

The third issue that the industry-good body is to look at is projects. Now, these are not very explicit, but I have thought about them and personally I would like to see these projects include research into the costs and benefits of moving the meat industry into an increasingly organic regime, for instance. I know that many farmers, and a number of members, like my colleague Mr Eckhoff who is sniffing at me—

💬 Gerrard Eckhoff: I haven’t said a word.

—who is about to sniff at me, take fright at the very word “organic”. They think there is something desperately wrong with it. Maybe they still have these outdated—

💬 Gerrard Eckhoff: I’m organic.

The member is genetically engineered. Maybe they are locked into their outdated perceptions of the people who practise organics, rather than the organic processes themselves. Almost all farmers are intuitively aware that for the industry to survive in the longer term, it must embrace sustainability, not only in an ecological sense but in an economic one as well. For many years now we have been embroiled in a constant pursuit of higher productivity: more and more productivity from the same area of land. But that, I am sure, will eventually be replaced by the realisation that we have to live within the capacity of the planet, and, more particularly, in respect of farmers, to live within the capacity of the soil to sustain the industry.

In this industry in particular that, of course, means pasture crops. At the same time as living within the carrying capacity of the land using organic techniques, we also get the benefit of having lower input costs, because chemicals cost a lot of money. There are transportation costs, company profits—all that sort of thing. And there are also economic returns to farmers—higher farm-gate returns—from having organic produce.

I remind the House that ours is a market-driven economy, and the market signals, for this industry in particular, are unequivocal. Consumers, particularly in our elite markets of Europe, Japan, and the United States, increasingly want high-quality meat products. They want them with little or no chemical residue, and they are also very interested in the traceability of the product. We hear stories about supermarkets in the European Union, for instance, that have television screens above the lamb chops department where they show videos of frolicking white little sheep. The implicit understanding is that those frolicking white little sheep have become their nice little lamb chops on the other side of the world. It is important to them. And, of course, the lambs are tended by a kindly green farmer with a crook, rather than a motorbike and dogs.

At the same time those very same markets that are saying they want high quality, low chemical residue, and traceability are also saying that they do not want genetically engineered product. Whether they are logical or rational is irrelevant. The fact is that consumers utterly reject genetically engineered food products, at least at this time. It certainly seems to be going into the foreseeable future, as well.

There are utterly compelling economic reasons for not embracing genetic engineering. I have been through them on a number of occasions in this House, and it is probably not appropriate for me to revisit them now—to the great relief of my colleague Mr Eckhoff. But I encourage the industry-good function, Single Organisation Ltd, to spend time and money on investigating the question of genetic engineering for livestock farmers. It really is an important area. We are being forced to embrace it by the Government, and Federated Farmers of New Zealand is also supportive. But the grass-roots farmers—by most polls, around 70 percent of farmers—simply do not want it. I believe that one of the major functions of the industry-good body is to do some independent work and establish, hopefully once and for all, whether it is worth New Zealand embracing genetic engineering. The economic analyses that have been put together so far, and this includes the Government’s own one that was released the day before Easter—which shows us how good the news was—show without any doubt at all that embracing genetic engineering will be disastrous, not only for the agriculture industry but for the economy as a whole.

Returning to the bill itself, the Greens are pleased to support its passage to the Primary Production Committee.

I rise to speak in this debate as something of a rather rare species, if not an endangered species. I am probably the only MP in this House who returned to the farm this weekend and got my hands dirty. I shifted a few sheep and turned off the irrigator. I am sure the House would be delighted to learn that the exodus of the million or so lambs out of the east coast of the South Island has stopped, and we can be extremely grateful for the rains that have occurred.

In listening to the previous speakers—and many made very good points, of course—one thing I can say is that the importance of the agricultural industry and the pastoral industry is still grossly underrated in the eyes of many New Zealanders. It is not that long ago that the Tourism Board did a survey. In that survey it asked visitors to New Zealand what the most iconic aspect of New Zealand was. What was it that they most recognised when they were overseas or in New Zealand? What was the thing they most wanted to see? Interestingly enough it was not the kiwi, or Janet Mackey, or whomever else. It was, in fact, the sheep. That is what visitors to this country recognised as being the most important iconic thing—or certainly animal—in this country. It is quite an interesting aside.

I support, of course—as everybody else does in this House—this bill going to the select committee, which is not to say that we in the ACT party do not have some concerns about this bill. I will reflect on the meat industry’s not too distant past. Prior to 1984 we had things like supplementary minimum prices, and we had Government controls, and we even had at one time the Meat Board actually exporting meat. What a disaster that turned out to be. It is also worth thinking about what life for a farmer after subsidy was like. We were getting approximately $10 for a lamb, and for an old ewe we were lucky if we did not get a bill. Many farmers did get a bill for their old ewes, back in those days after subsidies were removed.

The industry was forced to get itself together, and I am delighted to say that many farmers in this country have received up to $120 for a lamb when the exchange rate was down at, shall we say, more favourable levels. Today we are getting between $50 and $60, and between $30 and $40 for old ewes. I say those things as a tribute to the way this industry has picked itself up over the last 20 years and has really started to swim.

One of the most successful companies, still farmer owned, is the Alliance Freezing Company in the scenic south—when it picked up Waitaki, I think at politicians’ behest, many years ago. I believe that Alliance is now our leading meat-processing company. We have moved on so far to the extent that we now have robots processing carcasses. That is a huge advance for this industry, just in the period of 20 years.

Other speakers have alluded to possibly the most important aspect of this bill, which is to manage the hugely important quota system that allows exporters access to the high-priced markets. For far too long New Zealand was pouring product into low-priced markets in the Middle East, and others. We now recognise that the most important markets to us are in Europe and the USA. We are, unfortunately, still under the quota system. I would love to see a total free-trade system where we can export and import to our heart’s desire. But, in fact, we do have this quota management system in place, and the board’s duty under this bill is to continue to administer this quota.

Can I just offer a moment or two of thought about this quota system? The Primary Production Committee has just gone through over a year’s inquiry into the scampi quota. That was all about who got what under a quota system. The potential—I emphasise the word “potential”—is possibly there for something similar to occur in the meat industry if we are not very, very careful. As I understand it, a case is going to the Privy Council, very shortly, alleging unfairness in the distribution of this very valuable meat quota. We certainly do not want to get into a system where some sort of old boys’ club is developed where the existing exporters receive an appropriation of any new quota, and the new players that we all welcome into this industry receive little or nothing. The allocation system that the board has developed, and will probably refine over a period, must be transparent, so that farmers and other companies can see that it is being totally fair and totally up front, that everybody is getting their fair share, and not having a system where the allegations—as I alluded to earlier—of unfairness and even corruption were levied at many players within the fishing industry during this scampi inquiry.

One of the other concerns I have is that the new board that now incorporates part of the wool industry must not get top-heavy. It has real potential now, with its developing size, to get bigger and bigger, and therefore more costly. The board must continue to look at ways of downsizing itself. I think it was Mr Ian Ewen-Street who said there were some very real concerns about the restructuring of this industry. I do recall members of the board expressing some concerns about the vote—whether we continued with a meat board. So the board moved to continue with the quota system, and rightly so. But there was a very strong body of opinion that said to the board that it did not want to see this industry get top-heavy and bureaucratic, and that we want to be able to retain our control. There is now an industry board where exporters and farmer representatives work together, hopefully for the good of this industry. That is as it should be, but we must always make sure that the balance is right.

One thing that does concern me is the need—as the Government puts it—for some form of oversight by the Labour Government. I ask the simple question—why? This industry right now manages itself. It does not need oversight or political influence. That is what I do not like about this bill. Many farmers have a concern that there will be a continuance of political interference and oversight of this industry—something the industry does not want or need. I am concerned about the very wide powers given to this Minister under clause 11, “International obligations”. Speaking as a member of the Primary Production Committee, I am sure we will be looking at that issue in very close detail to ensure that the level of influence of the Government is kept to an absolute minimum, if at all.

I must say we are suffering a little bit under the high dollar at this time, but I might add that the high dollar also provides a driving impetus for the industry to decommodify. So I look forward to a very exciting time in the meat industry in the future.

I rise on behalf of United Future to support the first reading of the Meat Board Restructuring Bill. I believe that this bill is a sensible and proper response to the request by the Meat Board for reform of its institutional structure. The overarching objective of this restructuring is based on the realities of international competition and best practice. Reconstituting the organisational structures and processes of the meat industry will help to ensure not only that its ongoing success within an increasingly tight global marketplace will be enhanced but also that the chance of it being sustained will be greatly increased.

New Zealand’s distance from international markets, together with a highly competitive playing field, demand both a level of prudence and initiative. These two traits have been clearly exercised by the Meat Board and farmers alike, by way of recognising the need for institutional change to better their ability to compete and manage their collective cause. For this I congratulate both parties on their instructive in the finished product as detailed in this bill before us today.

Some may question whether the Government should play a part in the residual statutory board. When it comes to the question of the country’s specific tariff quota, the necessity for Government involvement is both proper and justified. The significance of such quotas is not bound to any one industry. Their importance transcends micro-benefits and affects the economy at a macro level. They are important to the economic well-being of the country as a whole, and, as such, should be seen to serve the national interest above and beyond the interests of a particular industry.

A Government role in the board will ensure that the issues regarding the administration of the country’s specific tariff quotas will be addressed, with due consideration given to the best interest of the country as a whole. A board consisting of only industry-elected officials may result in a greater potential to view any development, opportunity, or issue within the prism of their respective industry. This bill ensures that the chances of this happening are greatly reduced by the retention of Government involvement, and United Future supports this.

This bill will help to bolster our competitive advantage internationally by improving conditions for growth and innovation. In order to remain in the lead pack, we must ensure through legislation that the structures put in place perpetuate conditions that allow innovation and growth to flourish without undue restraint. This bill will foster such conditions by improving efficiency. Any concerns of wavering efficiency over a prolonged period should be allayed by the bill’s provision for compliance audits of the board’s quota management systems. I am happy that these new 3-yearly audits will ensure a benchmark of efficacy of enforcement systems. By measuring standards of efficiency against our country’s international treaty obligations, efficiency performance will not be a factor in the demise of international competitiveness. Moreover, these audits will impose upon the board a heightened level of accountability to the Crown to ensure appropriate standards are maintained.

There is, however, one issue relating to the new audit regime of which we must be watchful. This issue concerns the provision that allows the Minister to seek an unscheduled audit at any time. Although I understand the conceptual rationale behind these audits, I wonder whether a clear reason-to-act provocation guideline should be drawn up—such guidelines that enable the board to set parameters in their duties to ensure that certain lines are not crossed. I put it to the House that it would be only fair for the auditing authority to communicate clear and applicable terms of reference as a guiding doctrine of best practice. Surely this would be in the best interests of all parties concerned, and would go a long way to ensure that efficiency and operational success are sustained.

United Future supports the ongoing management of industry reserve funds by the residual board. Notwithstanding the large amount under management, and mindful that these assets ultimately belong to livestock farmers, it is comforting to see that the bill provides for constraints on the management of these reserves. This check and balance will ensure that the board can mobilise funds only for certain reasons framed within certain broad-based, best-for-industry activity. This is a judicious and responsible control of funds that honours the primacy of the farmer in the industry. It will create both a hedge for times of crisis and allow the industry to weather periods of distress that may impact on the vigour of the industry.

It is vital that the Meat Board, in its deliberations, not only takes an inclusiveness approach but also is seen to act in such a manner. Perception matters nearly as much as reality. Not only will goodwill and ongoing support be offered by farmers if consulted, but it will also convey to the board an awareness of the practical effects of their decisions on the farm. The gains from having a single entity are plentiful. The new organisation will be better able to position itself as an authoritative body on pastoral issues. It will be better able to provide the impetus for healthier farm profit. A single organisation will be better able to influence relevant trade policy and dealings with key markets. A new revitalised Meat Board will have a raised public and institutional profile, giving more leverage to champion agricultural causes.

The flow-on effects of this raised profile are clear and beneficial to both the industry and the wider economy. The quality of recruitment across the board will improve, and an environment that promotes innovation will be crafted. The organisation’s contribution to the economy will be more recognised, compliance costs will be kept at a more manageable level, and the new organisation will be better positioned to leverage more Government funding as needed. Let us not forget that the backbone of our economy still lies in the hands of those who work the land, and they are facing a mountain of issues that must be climbed in order for our country to move forward. To name but a few issues: sheep and beef farm profit is down 17 percent, the rising exchange rate is eating away at profit, there is a need to secure footholds in new beef markets in Asia, and there is the spectre of a host of biosecurity threats that could devastate the industry at any time.

This bill will go a long way in managing the risks faced, ensuring operational efficiency, improving the administration of the quota system, and promoting the best interests of both the industry and the country. Once again, I am pleased to confirm to the House United Future’s support for the first reading of the Meat Board Restructuring Bill.

JANET MACKEY (Labour—East Coast): I am pleased to stand today and support the Meat Board Restructuring Bill, which will enable the meat industry to join with the wool industry to bring industry-good functions into one entity funded under the Commodity Levies Act. As a member of the Primary Production Committee, I look forward to receiving this bill in the committee so that we can apply our usual excellent and close scrutiny of it.

National supports the passage of this legislation through to the select committee, but I say that with some reservations, and I ask the select committee to be cognisant of that. I have noticed that people are taking a pretty liberal approach, or broad definition, in this debate, and I want to recap what this bill will do. I will read through some notes, as I want to get this right. The bill provides for the restructuring of the New Zealand Meat Board to retain in legislation the board’s meat export quota management functions, the management of the board’s reserve funds, and the removal of the board’s industry-good functions, along with some other minor changes.

As colleagues in this House have already indicated, livestock farmers have overwhelmingly voted in favour of establishing a new entity called SheepCo to manage the industry-good aspects of their enterprises as they will fall out of this restructuring. Anyone with any sense would find it hard not to support this initiative given the overwhelming farmer support for it, though we must not take anything for granted. It is this Government, as I recall, that ignored popular opinion when it came to the “fart tax” and when it came to the Norm Withers referendum on tougher sentencing in law and order. The Government was able to thumb its nose at common sense then, and I believe it could have done so now. So I am relieved to see that the Minister got on his feet and, in a very constructive way, said he wanted to ease the passage of this legislation through the House.

Conceptually, having an organisation dedicated to the management of quota access, which is another way of saying market access, makes sense. But I am struggling to see, along with some other speakers in this House, why we need to have Government oversight of this process. Of course, I am referring to the board’s composition and the Government’s determination to have two of its own directors appointed to that board. I note that Meat New Zealand management agrees with my view. This is another example of Labour saying to industry: “We know best”, and yet another example of the National Party saying: “We listen to business.” Is it any wonder that we are the 45 percent party and the Government is the 38 percent party and going west very quickly?

On what basis would the Government claim to have a role? [Interruption] That got Mr Cosgrove awake! When that question was put to the Minister of Agriculture he pontificated with this justification: “Quotas belong to a nation rather than the industry. Their administration was an internationally sensitive area with potential spillover effects extending beyond the meat trade. The specialist understanding of this in a clear national perspective cannot be guaranteed on a 100-percent industry elected board.” What arrogance this Minister has, and, I have to say, what ignorance, as well! Farmers today are hugely experienced. [Interruption] They operate, I say to Mr Cosgrove, in a highly scientific, highly technology driven environment, and it is because of their success, their expertise, and their energy that we have these quotas in the first place.

💬 Clayton Cosgrove: A real farmer like Shane Ardern!

I raise a point of order, Mr Speaker. I thought it was a tradition in this House that if members interject they have to do so from their own seats.

The ASSISTANT SPEAKER (H V Ross Robertson): That is the case. However, it is only such if a member deliberately moves to interject. Mr Cosgrove has been sitting there for some time.

I did not mention Mr Cosgrove, by the way. New Zealand farmers are the best in the world. I would like to think that they would get acknowledged rather than have the Government put some sort of watchdog body on them. This Government has the perception that all farmers are just a bunch of cow-cockies knee deep in cowpats. That is insulting. Their use of science and technology in best practice is world-renowned. This board comprises eight to nine farmer representatives, and meat processing and exporting sector representation. If they are skilled enough to be selected to the board, then the last thing they need to feel is the constraining hand of this bungling Government and its bureaucrats. What is the point of having a dog and barking at the same time? The role of the board is clear. Its instructions are mandated, for goodness’ sake!

💬 Phil Heatley: I raise a point of order, Mr Speaker. Mr Peck over there should not be allowed to stand up all the time to interject in that way.

The ASSISTANT SPEAKER (H V Ross Robertson): I did not notice Mr Peck standing.

💬 Phil Heatley: I thought he was standing.

The ASSISTANT SPEAKER (H V Ross Robertson): The member is trifling with the Chair. I warn the member that that behaviour is not acceptable in this Chamber. Points of order are serious issues.

I raised the matter of interjections with you a few minutes ago, and Mr Peck continued to interject, and he is not in his seat. He has interjected constantly, and you are now allowing that to continue.

The ASSISTANT SPEAKER (H V Ross Robertson): The situation with regard to members sitting in another seat is covered in Speakers’ Rulings. It is an indication that members must not move to facilitate interjection. The honourable member has been sitting in that seat all during this debate.

💬 Phil Heatley: I raise a point of order, Mr Speaker. We appreciate that Mr Peck shifted there some time ago, but he has interjected consistently while he has been there. That is the point we are making.

The ASSISTANT SPEAKER (H V Ross Robertson): If I notice that that is happening I will remedy the situation.

The point I was making is that the role of the board is clear. Its instructions are mandated. It is therefore highly insulting to put on the board two members who are simply there as the Government’s guard dogs. The message is very clear: “We, the Government, do not trust you.” That is something the National Party takes very strong exception to. Why should farmers trust this Government to make appointments when its track record does not stack up? After all, the Government can claims guys like John Davy and Ross Armstrong. That will certainly fill the farming community with huge confidence! And it is rather rich coming from a Government that has devastated relationships—I repeat, devastated relationships—with Australia and America to such an extent that America and Australia have done a trade deal and we have been left out in the cold. We will pay dearly for that as a country. To those poor misguided souls opposite who argue that Australia did not get much anyway—and that is code for their self-justification for their appalling handling of this process—I say that Australia is pragmatic. Australia knows that to do a deal with the sole superpower at least puts it in the game. Australia’s deal is a starting point, not a finishing point.

When we compare that with what we have—thanks to Mr Sutton and his cohorts—we see that we do not have a course of dialogue with two of our major trading partners. It will cost this country billions of dollars. The great irony of it is that we are speaking about quota access, yet, because of this Government’s bungling, Australia has just had its beef quota increased with America while we languish out in the cold. I have more faith in our sector’s experts than I do in this Government’s gofers, and, accordingly, I ask the select committee to be very cognisant of this. It is bad enough that this Government ignored the agricultural sector for so long without adding insult to injury.

The other issue that concerns me is the spectre of compliance audits. This smacks of Government interference: “We know best. Do it our way, or else.” This is not an oversight role; this is just straight-out interference. I say to members in this House that they should simply set the board some performance criteria and ask it to report against those, as any other board would. I think this is something the select committee has to have a very hard look at to make sure that those criteria are carefully set.

One other issue I want to raise before I conclude is clause 55, which provides for the board to charge fees for recovery of costs in relation to its registration function. For the sake of the officials I point out that there is an error on page 5 of the explanatory note of the bill. It is fine to charge fees, but implicit in this relationship is an obligation for the board to perform against farmers’ expectations. After all, it is their money. The select committee needs to make this very clear when it addresses this in its final draft of this legislation.

I am surprised at that member’s rather revealing and Freudian comments about attitudes towards the farming community. I suspect that his comments reflect, perhaps, something that he might think but not necessarily say out loud, and it most certainly is an attitude that is not shared by this Government.

This bill has a high level of industry support. That was demonstrated by the very strong support that came through in the referendum held in the farming sector in August last year, with a very strong result in favour. The bill will enable greater safeguarding of the benefits that will flow from access to quota markets, greater accountability to levy payers, and the capture of those synergies and cost efficiencies that are achievable in joint delivery of meat and wool industry-good functions. This is a good bill, and I believe it is in the interests of the sector to get it passed as quickly as possible.

It is with some pleasure that I rise to speak in favour of this bill being put to the Primary Production Committee, and it is for a number of reasons. One is that, unlike the Government, the National Party understands the importance of these industries, and we understand the importance of farmers to New Zealand. Unlike the Government, we understand how much the meat industry is worth to this country. The combined efforts of these industries produce $6 billion worth of exports annually.

It is with some joy, I guess, that I know I now have in this House some farmer support from my colleague from Rakaia, who, like a limpet from 100 yards away, latched on to what this Government is about—that is, once again getting its sticky fingers into an industry in which it has no place, of which it has no knowledge, and where it should not ever bother to go—and I will talk to my colleague later about what that means.

Farmer support for this measure was overwhelming. I heard the member for Invercargill say that it was overwhelming, but he did not know how overwhelming—or it might have been the member for Whanganui; it was one or the other. However, I inform the member over there that 76 percent voted in favour of a stock number weighting. There will be a variance in figures, if we use the farmer numbers, but this was on a stock number - weighted vote. The farmers were in favour of it. They looked at all the pros and cons and said that this was the way to go. They wanted this to go through a robust process, to a select committee, and into being as soon as possible. We in the National Party will do our best to make sure that happens.

Quota are negotiated, Government to Government. That is how it is done—Minister to Minister, Government to Government. Quota are hugely important, and that is why this bill is important. It would be absolutely devastating to this industry and to New Zealand if these quota were damaged in any shape or form through the process of changing from the two separate entities we currently have to the one proposed. For that reason, huge effort needs to go in to make sure that no damage is done to the quota and that the process cannot be used as an excuse by foreign nations that do not want us to have quota access, to opt out of their negotiated position in some way or another. I know that the select committee will consider this deeply and will put in a huge amount of effort on it.

However, that does not mean to say that the quota belong to the Government. Quota are negotiated between Governments. They do not belong to them; they belong to the industry. Here is the philosophical difference. Without the industry producing the goods with which we can negotiate quota access, we do not have any industry. It is as simple as that. Labour socialists do not understand, but somehow consider that the industry magically produces high-quality product for export and develops the markets but do not have the nous, the wherewithal, or the business acumen to manage the process. So they get their sticky fingers into it. They say: “Look, you can’t have a board of farmers running this important industry.” They have only built it from nothing, to a $6 billion industry! What would they know about it! The same thing applied in the dairy industry when we had that debate: “These farmers are incompetent. We cannot have them managing this. The Government has to manage it. It has to get involved and start managing it.”

The reality is that the Government does not have to get involved; it does not have to start managing it. The Government has to set the standards and the rules, and get involved in the negotiation when it comes to State-to-State quota access, but it does not have to get involved in the management of the export industry. Therefore, I tell the farmers out there who may be listening to take particular notice of who the experts are that the Minister decides need to be appointed to this board. It is good to see that eight or nine farmer directors will be on the board, when it is put together.

I have just come from the Dairy Farmers of New Zealand conference in New Plymouth a few hours ago. It was refreshing to listen to a bunch of farmers talking about Government policy. They do not muck about in the way we hear bureaucratic and socialist types muck about—like this Government has. That is why, as we can tell from reading the polls, this Government is on the slippery slope. Its numbers are up. Government members might start getting out around the traps and finding out what they did wrong. Here is a classic example of where they have decided to get their sticky fingers involved. I accept that when it comes to negotiating market access and generating markets, an expertise is required. If we look within all the primary production industries, we will find a huge depth of expertise that will not be found in any other industry anywhere else in New Zealand. If that is not so, why have other industries not passed them out? Why is it that year after year our primary production industries have had growth that exceeds that of any other industry? Despite the fact that we had Labour Governments that said it is a sunset industry and we can kiss it all goodbye, and the sooner all the land between Auckland and Wellington is turned back into a nature park reserve, the better—despite the fact that that was the forecast of Labour Prime Ministers—this industry has grown, year on year, faster than any other industry, and it is still the backbone of the country.

It is for that reason that farmers will line up behind the National Party and vote this lot out. They have had enough of the Government’s sticky fingers getting involved in things such as negotiating quota and appointing people to boards. The formation of SheepCo, and the process that the industries went through in getting to that point, has been an evolution. Some would argue that some of this should have happened more quickly, and I know that our colleagues from the ACT party would say that it should have happened years ago, and, probably, that it has not gone far enough. Some on the left would say it has gone too far, and it should not have happened as quickly. At the end of the day, pragmatic business people, whether they be farmers, industry leaders, or people out there running a normal small business in Wellington City, ultimately will come up with the right decision. Their track record demonstrates that is so. If there is any evidence that that is not so, on a wholesale basis, then people who oppose this kind of approach should bring it to Parliament and demonstrate it to us. I have never seen it. On the other hand, what we have seen when we allow Governments and Wellington-based bureaucrats to make decisions on behalf of the wider community, and to make decisions on behalf of industry, is some major damage being done. When that has been allowed to happen over the years, some major damage has been done.

This bill is necessary and is important. The farming industry wants it to happen. The National Party will be vigilant, I am sure, on the select committee. When the bill goes through to select committee they will be making sure that all the things that are taken care of in this bill, like industry-good functions, are brought together in a way the industry is happy with, so that it can go forward and be prosperous and so that New Zealand can be prosperous as a result.

I thank the member for his contribution and for acknowledging that there is a very strong level of support amongst farming communities for this bill—a matter that was ignored by the National speaker previous to him, who seemed to be unaware of that. I also say to the member that it is a real pity he is not the Opposition spokesperson on agriculture. I had the privilege of sitting on the Primary Production Committee in the last Parliament. That member contributed very, very well indeed to the workings of that select committee. At the very least, he should be the associate spokesperson. One would think they would have a good north/south split, but to put Katherine Rich, a list member from Dunedin, on the list as associate spokesperson, I think, is an insult.

💬 Clayton Cosgrove: He should be on the committee.

Indeed, he should be on the committee, because he did contribute, and contributed quite well.

I do not want to take up a heck of a lot more time, except to congratulate those who have been involved in putting the bill together. I mention just in passing the work of Jeff Grant. He is someone who is well known to this House. The Minister remembers him well. He was a junior whip for the National Party some years ago, and has worked very, very closely with the Government as this particular legislation has been put together.

It might come as an enormous shock to many on the opposite side of the fence that I spend a lot of my own time on farms, and spent time on Taranaki farms in my younger days. Shane knows about my Manaia days, and I tell him that I am still a member of the Manaia Golf Club, by the way.

The ASSISTANT SPEAKER (H V Ross Robertson): The member must use the member’s full name.

Yes, indeed—Mr Ardern. Can I also say that, having two brothers-in-law who farm in Southland, I spend quite an enormous amount of time in and around the Southland farming community, even to the point of going to a drought meeting in Lumsden, which the member for Clutha-Southland did not even bother to turn up to. We know there are some issues for those farms as a result of the drought and so on, so this particular bill is all part of assisting farmers in their marketing efforts, as they look at how they are going to move away from the pure commodity thing to the value-added, etc.

This is a very good bill, and I am sure that if Shane Ardern were on the Primary Production Committee the National Party would scrutinise it with great relish.

Bill read a first time.

on behalf of the Minister of Agriculture: I move, That the Meat Board Restructuring Bill be referred to the Primary Production Committee for consideration, that the committee report the bill by 27 May 2004, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, and during any evening on a day on which there has been a sitting of the House, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area on a day the House is sitting, despite Standing Orders 191, 193(a), and 194(1)(b) and (c).