Annual Review Debate — Primary Sector (continued)

Thank you, Mr Chair. I’m pleased to be able to take a call on this Appropriation (2016/17 Confirmation and Validation) Bill with the theme being the primary sector. It’s been an interesting process for me, being a new member of the Primary Production Committee. Having all the different entities come and present to us their annual reports was really quite an interesting exercise. We had various entities present to us. We had the Ministry for Primary Industries, Quotable Value New Zealand Ltd, Animal Control Products Ltd, AsureQuality Ltd, Crown Irrigation Investments Ltd, Land Information New Zealand, and Landcorp Farming, so we were quite a busy committee with all of our annual reports that we had presented to us.

I think it would be fair to say that the committee has worked well during this process. There was definitely some robust questioning of some of these entities. They were certainly put through their paces, shall we say, at times, and I think that taxpayers can be assured that this committee has been thorough in its review of these entities.

In particular, I want to focus on the Ministry for Primary Industries’ annual review, and the reason for that is Mycoplasma bovis is something that came up quite a lot during this review. I feel that because this is something that is quite relevant to the area where I live down in Ashburton, that’s something I wanted to talk about in particular.

Mycoplasma bovis—I think this just about has to be one of the most devastating diseases to hit our primary sector for many, many, many years. We know that it’s a bacteria that can cause serious conditions in cattle—mastitis, pneumonia, arthritis, late-term pregnancy loss—and it doesn’t respond to any treatment. It was July 2017 when Mycoplasma bovis was first found in cattle in Ōāmaru, and we now know that approximately 22,300 animals will be culled as a result of this. This is devastating—absolutely devastating—for farmers all round New Zealand, but in particular Southland and Canterbury. I can’t even begin to fathom as to how it has come to the point where we’ve had to cull over 20,000 animals. Clearly, someone has been asleep at the wheel and has been too slow to limit cattle movement.

I’ve got a family that has contacted me, a young family. They sent me an email, and I just want to read a wee part from their email. It says, “The last three months have propelled us to an all-time low in our farming career. Having struggled through two difficult financial seasons, we’d begun to finally progress with real satisfaction, only to be dealt this unfortunate blow. It is extremely hard to explain how difficult this has been for our family, our business partners, and our staff.” This is a story—and one of many, I’m sure—that many farmers who have experienced this Mycoplasma outbreak can relate to.

I think that the ball has really been dropped here, and I think it’s a lot to do with our National Animal Identification and Tracing system, and certain farmers complying but some not. We can probably look to trace Mycoplasma bovis back to some of the discrepancies there.

But we are lucky, actually, now that we have a Minister that is ready to make those hard decisions, and he has made those hard decisions about culling the animals and still working towards eradication as opposed to just managing it at this point. I just think that we’re very lucky now that we have a new Government that is ready to take action on these extremely dire situations where we have biosecurity incursions, and I really hope that we don’t have to be faced with something like this any time soon. Thank you.

Thank you, Mr Chairman. I’ll just take the opportunity to make a comment or two or three on what is, effectively, the review process of the Ministry for Primary Industries (MPI) and all the agencies. I’d like to acknowledge the Primary Production Committee and all the work they’ve done. I’d like to acknowledge the people who might be watching this out there in rural land. And, actually, it’s not conventional but I want to acknowledge—my little daughter said she might watch Parliament, which is a true commitment for someone of 10 years of age, but anyway. There are people who are out there and they are interested in what is happening to the sectors that drive the vast majority of export income for this country. It is a huge a role for the select committee to oversee the process that takes place through the financial year.

We had the first speech, unfortunately, I have to say, from Mr Bennett, who spoke about the future issues—indeed, things I’ll be happy to talk about next year as we move forward under the new Government. But, actually, looking back, I acknowledge the member of the committee Jo Luxton, who raised what has obviously been one of the biggest challenges facing the incoming Government. Indeed, it was notified in July of last year, under the previous Government, under the period of review, and that was the discovery of Mycoplasma bovis. It has significant financial implications for everyone through the farming sector, including Government at the top, and this Government has already had to commit tens of millions of dollars to the process of trying to round up and eradicate this disease.

Can I say that it possibly went back so far as 2015, and through this process—I have to just challenge Ms Luxton with one of her assertions. We don’t know the source of the farm, and the farm that it was first discovered on may not be the source of the infection. I have to acknowledge that and to apologise, because I think those farmers have been unfairly blamed for what might be an infection from another source. I think it is unfair, and I’ll acknowledge that publicly: there has been some confusion.

There are two sources, possibly—there were thought to be—and now maybe one. We’re not quite sure. We’re going to round that up and, hopefully, identify that accurately. But in the meantime, we’ve been trying to track animals that have spread out all through New Zealand. We should have been able to actually identify and track all of those movements under NAIT—the National Animal Identification and Tracing system. It was introduced by the previous Government. It was subject to the best advice from around the world, and was supposed to have been the world’s best practice, but it has failed. I have to say that publicly. There’s a review document that should have been out for public disclosure and discussion probably over 12 months ago, but they sat on that report, and that’s been unfortunate.

Our inability to accurately identify all animal movements has meant it’s really, really difficult for us to have given some assurance to the tracking and tracing programme when we’ve been trying to nail down Mycoplasma bovis, and the report—that farmers and people in the agribusiness sector should read—puts out there about 40 recommendations on what we have to do to improve the NAIT system. It is really important we get that feedback so that when we do make the changes, as an incoming Government, they’re the right changes to give effect to the best animal identification and tracing system in the world. We need it if we are going to be the producers of the finest food, the safest food, in the world for consumers and customers who will be all around the world.

So let’s get it right. Let’s acknowledge the mistakes of the past and the fact that, I have to say, the previous Government wasn’t prepared to nail down and prosecute people who didn’t adhere to the system. That lax approach, I guess, has led to an attitude which has taken NAIT for granted and left us in the situation that we’re in now. We’ll move on from that, but it is one of perhaps the most significant things in review that we should acknowledge and then commit to change and improve, and we will do that as an incoming Government.

Back to Mycoplasma bovis—as I say, acknowledging perhaps some misunderstandings around one of the main farms where this was identified, but also acknowledging the challenges of those people who have been affected—about 50 farms at this point are under restricted notices or have had culling. It is a really, really difficult time for those farmers, and we want to acknowledge that and offer them the support, as we have been attempting to do.

In terms of the other areas of significance—others may raise that; I might want to make a few comments, but this is the most important area—[Bell rung] Very briefly, Mr Chairman.

CHAIRPERSON (Adrian Rurawhe): Are you expecting another call?

Yeah.

CHAIRPERSON (Adrian Rurawhe): OK.

Just a very brief call, Mr Chairman, to say that this is the most import area of export growth and income generation. It is important that each and every one of the members on the committee do their bit, and I look forward to hearing from them as to what happened in the previous financial year. Learning from those mistakes, we can make the changes and get on and do better under this incoming Government. Kia ora.

Thank you, Mr Chair. I’d like to start out by saying that while I’m on the Primary Production Committee second time around, I wasn’t there for the review, unfortunately. But I have read the papers, and I am going to focus on Crown Irrigation Investments Ltd—what’s in the review and ongoing matters, as is allowed under the Standing Orders.

I am a little disappointed as to how it’s come out in the last few days, with Crown Irrigation Investments Ltd in the review quite clearly touching on what was within the coalition agreement around winding back irrigation investment. They didn’t at that stage know what was in store, and we now do know that, and they know that, and what’s come out is that, actually, the Minister didn’t contact Crown Irrigations Investments Ltd himself. The Minister is better than that, and I hope he reflects on that, because, while he may not be required to do it, it’s a common courtesy. Why he’s done that or why that didn’t happen, I don’t know, but I hope he reflects on that, because, as I said, he’s better than that.

I want to focus on two of the projects that have been cut as a result of this, and there were some quite erroneous things said today in the House by a member—from New Zealand First, I think it was—who spoke about the Hurunui Water Project. If he went down and cared to actually have a look at it, he would realise how far off the mark he was.

Those projects, like the Hurunui Water Project, for example—it’s not a cheap scheme by any means. It’ll be $1,000 a hectare or $10,000 a hectare—that’s a lot of money—to put in place. What Crown Irrigation Investments Ltd, the purpose of that, and what was reported on in the report, is—it funds overbuild. What that means is that instead of putting in a pipe this big, in the sure knowledge of knowing that it’ll need to be bigger later, they enable the pipe to be put in a little bit bigger. That saves money in the long run.

Irrigation schemes—having been involved in getting a community irrigation scheme, and, in fact, chairing it, from scratch to up and running—are in fact a real challenge. The challenge is getting over the funding hump—getting enough people on board to actually get the money up and get the scheme to a bankable stage. And people say, “Well, it should stand on its merits.” Well, they do in the end, but the ability to get there is quite fraught. If you look at the costs for consents for a large project compared to the costs for a small project, they are, in fact, about the same. So if you can get a group together and get the scheme up and running, then you will get there because of that—not you, Mr Chair, of course. Then the community will be able to get those schemes up and running, and, actually, it is an infrastructure that pays itself back.

The best example is the Waipara irrigation scheme, not far from the Hurunui Water Project, which was put in at $5.7 million. That’s what it cost to put in. That scheme, within 10 years, was returning that much money per annum in excise tax on the wine produced off that irrigation scheme. So that irrigation scheme would have paid back the cost of the irrigation scheme, the capital cost, year on year, in excise tax alone—not counting income tax, not counting GST, and not counting the return of the investment of those people and their annual returns and the money flowing through the community. We do know from studies that every dollar spent invested inside the gate returns $2 outside the gate—the farm gate.

So these schemes pay for themselves very quickly. These schemes provide a huge community benefit, and, in the case of the Hurunui Water Project, only 10 to 15 percent of the irrigated land would be either dairy or dairy support. So the scheme is well ahead of what would be expected otherwise.

So I’ll leave it at that, and I might come back later, but that’s a brief rundown and I do hope the Minister reflects, as I said. So thank you.

Thank you, Mr Chair. I’m pleased to speak on this annual review debate for the primary sector. As a member of the Primary Production Committee, we definitely know how important our primary sectors are to regional New Zealand but also in terms of the export revenues that they generate for Aotearoa as well.

As we’ve heard in previous contributions, we reviewed a number of entities, from ministries through to statutory boards, through to State-owned enterprises and State-owned companies. So it was the full variety of different Crown entities that came under our purview.

Just touching on certain entities that we reviewed, I do want to focus on the Ministry for Primary Industries (MPI) first up. I want to acknowledge the Minister and also Martyn Dunne and the team at MPI, who gave us a thorough background into the work that has been going on—the extensive work that is going on—to combat the outbreak of Mycoplasma bovis. It was heartening to know that everything that can be thrown at it is being thrown at it. Now, of course, we can stand here in hindsight and say, “What happened? What went wrong? What were the failings in our biosecurity system?”, and I’m sure those questions will be answered in due course. But in terms of the immediate work that was going on right from the onset of that outbreak, I can only just give my commendation to MPI for the work that’s going on and is still going on, albeit now to quite a drastic culling stage. Again, we need to do all that we can to make sure that we eradicate that virus from our primary sector.

That also spans other incursions. We’ve got myrtle rust and we’ve got—I’m thinking of the oysters in Southland with Bonamia ostreae. It is a fact of life that our defences are always under attack and some nasties do get through our systems. I guess, hopefully, we can ensure that our Ministry for Primary Industries, and our whole biosecurity system, learn from these incursions and better bolster our defences to ensure that we can keep as many of them at bay. I know this is dear to Minister O’Connor, and I know that he’ll be—and is—working very hard to ensure that we strengthen those pā defences, as I like to say.

In my remaining time, I also want to cover a couple of other entities that we reviewed. One such one is Landcorp Farming. Now, I guess Landcorp Farming doesn’t really have that sort of sizzle or razzmatazz as other State-owned enterprises have. It has been doing it tough. It is in the primary sector. It has a range of a variety of farms right up and down the length and breadth of the country. It was disappointing that, yet again, whilst there was an operating profit, there were no dividends paid to the Crown. It has been, I think, some six years since a dividend has been paid, but there were other priorities, I guess, for that company on its balance sheet.

But I do look forward, and this came out of the discussions—Landcorp has been working for the past few years on developing a brand called Pāmu, and I’ve been asking in the past couple of reviews why haven’t they changed the name of Landcorp to Pāmu. If you are going to be going through a transformation and wanting to adopt all of these new brand names, I think they should go the full distance and make sure that that is effected. Again, names like Landcorp hearken back to the Rogernomics era of the 1980s, and certainly, I guess, if the company is intending to move with the times and to go through this transformation of being more focused on value-add, both on-farm and also through to market, the adoption of that name would be appropriate. I understand that discussions will be taking place with the relevant Ministers to give effect to that. So, yes, I do commend this debate thus far.

Thank you, Mr Chair. Look, it’s been an interesting period going through these annual reviews, as a first-time MP, and to sit on these for the first opportunity. It was really interesting to see the work that was being done in the different entities.

I’d just like to start with Crown Irrigation. There’s been a lot happening in this space and a lot of project work in the pipeline. In New Zealand we are particularly fortunate to be very wealthy in terms of our freshwater resource. Now, we utilise only about 3 percent of that resource on an annual basis, so there is massive opportunity for us to continue to capture some of that potential opportunity around enhancing the economic, the social, and the environmental benefits for our rural communities through irrigation projects. That was something that was highlighted to us through the annual review—the value, in particular, around some of the economic gains and the environmental aspects that can be enhanced.

Now, environmentally, there was a significant opportunity to improve the water quality and to maintain minimum flows, and some of those aspects were considered to be major drawcards for continuing with the irrigation projects that were on the cards. Of course, we’ve heard that the new Government is not continuing with these projects and is indeed looking to pull out of some of the projects that had already moved into various stages of discussion. Of course, there is an argument that says, “Hey, there was no legal obligation entered into.”, and that may well be the case, but we also need to consider what is the moral obligation upon us in this House to make and adhere to commitments that have been signalled well within the communities, especially where there has been significant investment already committed in good faith by members of those communities. That was something that was certainly raised with some concern from the Crown Irrigation perspective.

Of course, then there was uncertainty also around the potential to fund some of these projects through the regional development fund, and they classified some of the smaller projects that were currently on their work programme to be considered as localised projects which had been indicated as potentially being up for funding. So really what I’m getting to here is that there was a lot of uncertainty around these projects that were in the pipeline and whether or not they will indeed be continuing, and we’ve been told it is unlikely that they will be.

Moving on to the Ministry for Primary Industries, we had a range of different topics covered in that area and, again, some really interesting initiatives. There’s been a lot of work happening in that space, and primary industries is a passion of mine, so it was really fascinating to hear of some of the great work that has been done over a number of years now. Some of those areas—biosecurity is one that continues to be a constant challenge for New Zealand. We are lucky to be an island nation where we have no other land borders. That presents some challenges and requires a continued ongoing focus on biosecurity. There will always be risks to that, and we’ve seen those over time with the Queensland fruit fly, the brown marmorated stink bug, and, more recently, Mycoplasma bovis and myrtle rust as well.

So those challenges are something we need to fight back against and be prepared to manage when they arise. What was raised with us was there was a little bit of concern around the timing, the assets that are being put towards some of those now, and, most recently, of course, the most topical issue being Mycoplasma bovis. That has been a challenging situation to deal with, and I just want to acknowledge that for anyone involved in that, it must be a particularly difficult situation for them. But really we need a quick response. We need to have the best information we can at hand in managing that appropriately.

Of course, likewise with the stink bug incursions—and we’ve had some of these in the past. They’ve been dealt with and managed efficiently, and this time we had another incursion. There was concern that some of these stink bugs had travelled significant distances within our borders, and so this was really highlighting some of the challenges and the need to continue a focus with the new Government on biosecurity. I would encourage them to do just that.

Of course, we then had a reasonable discussion around dairy, the dairy industry, and where that’s going. Obviously, now we’re looking at a review of the Dairy Industry Restructuring Act as well, which is pretty significant for this industry. It looks to incorporate aspects much wider than just dairy—for example, some of the environmental considerations. Are we going to see a stocking rate cap coming in? Are we going to see limits put in place? Is Fonterra going to be required to continue to pick up all milk from suppliers? That’s one where we see an ongoing focus around the environmental space, so that would be an area I would encourage prompt action on.

Of course, then we heard a bit about forestry and honey as well and the flip-flopping on some of those decisions more recently. So a lot of work happening in this space, Mr Chair.

Thank you very much, Mr Chair. Look, it’s my pleasure to take a call on this. Let me run through a couple of things that the last member has just talked about. But, first of all, let me say it’s an absolute pleasure to have a new Minister of Agriculture who understands how this country actually works. That last member actually highlighted—I don’t know if he did it on purpose, but he actually highlighted what was wrong with the Ministry for Primary Industries (MPI), and it’s why we’ve made the changes we’ve made.

So I look through the review of MPI, OK, and what do I see? I see a whole lot of dairying. I see about two paragraphs on forestry. And where’s the fisheries? There is nothing in there on MPI about fisheries at all, which is why we have said we need to change things. We need to change the way things are done, which is why we split forestry out.

I see in the report it says that it’s business as usual. They’re planting 50 million trees for the 50,000 hectares that have been harvested. Well, it’s not about 50,000 hectares that have been harvested; we need to plant substantially more trees not only to meet our carbon liabilities but also the environment. In Hawke’s Bay alone—and the former Mayor of Hastings District Council will know this—we have identified 250,000 hectares in Hawke’s Bay alone that needs replanting. Ten million tonnes of sediment every year goes into Hawke’s Bay from land that is not suitable for farmland or that was cleared once upon the time. And MPI says it’s 50,000 hectares across the country—business as usual? The problem is there was no business. There was nothing.

I went to two forestry conferences during the election campaign—two forestry conferences—where all the industry leaders were, and at one forestry conference there was no one from MPI. At the second forestry conference there was two. There were more people from the Ministry of Foreign Affairs at the forestry conference than there were from MPI, which is why the Minister, in his wisdom, has said, “Let’s split out forestry, let’s split out fisheries, let’s split out food safety to make sure they get the attention that they deserve.” All credit to Minister Damien O’Connor, because he knows how the rural sector works, and that’s the irony, isn’t it? That’s the irony. They’re supposed to be the party of farmers, and yet they completely did over the primary industries sector.

And when I hear the member say, “Surely, there’s a moral obligation to build these dams”—surely there’s a moral obligation to take $100 million of taxpayer money and build the dams—well, my personal view is we’ve actually got a moral obligation to invest taxpayers’ money in a way that is going to add significant value. How about a hospital here? How about a hospital? How about our schools? How about our houses? How about our police officers? How about the things that are going to keep our communities safe, and health and well-being, instead of a dam?

Hawkes’ Bay’s a classic case. So we talked about building a dam. Crown Irrigation Investments was going to put some money into it, TrustPower walked away because the return was just terrible—they couldn’t make it work. So what we were going to do was ask ratepayers—150,000 ratepayers—to subsidise a capital gain for 150 farmers. Now, I tend to agree with the Minister of Agriculture when he said that if it can work off its own bat, then absolutely—we are not a party that is against water storage, for goodness’ sake! In fact, we’re all for water storage if the farmers can make it work themselves. Why should we provide a whole lot of subsidy? Why should we provide subsidies when our hospitals are mouldy and our schools are falling down and we’re under-resourced in the police sector?

Tim van de Molen: Embarrassing.

That is totally embarrassing—totally embarrassing. You’re dead right, sir. You’re dead right. This is why, when I have a look at this—I read the report on the Overseas Investment Office. Goodness me—18 months ago they created an enforcement team. Why didn’t they do this nine years ago? We knew—we knew—there were foreign investors coming over here, making promises in order to get the consent to buy the land, and they were just not living up to the promises they had made. They were just not meeting the promises they were making. So they created an enforcement team 18 months ago. It’s a bit late. It’s a bit late.

Finally, what we’re going to do with the Overseas Investment Office is, first of all, resource it in a way that means it can make meaningful decisions and then ensure that people who come over here can meet the promises they make. I mean, thank goodness it’s a whole new chapter. Thank goodness this is the last time we’ll be reading about what happened under a National Government. Next time, there will be a whole lot of really good stories. I congratulate the Minister. It’s fantastic.

I move, That the committee report progress.

House resumed.

Progress reported.

Report adopted.