Annual Review Debate — Primary Sector (continued)

It’s an absolute delight to take a call with regard to the annual review on the primary sector, ma’am, and particularly being from the mighty East Coast, as we both are, I’m sure we’ve both got a lot to say on this on this particular matter.

Before I commence my remarks, I want to acknowledge, first and foremost, the many hard-working women and men throughout New Zealand that grind and toil away in a wide range of the primary industries within our regions. Right now, there are so many women, men, and families that are being impacted across a broad range of fronts with regards to insurmountable—it may seem for many folk—biosecurity threats and risk to our core industries. So, I guess, as I was reflecting on the remarks I wanted to make with regard to this annual review, my thoughts went to those that are enduring extensive cattle culls, those that are suffering from Mycoplasma bovis throughout New Zealand right now. So, first, I did want to acknowledge them.

When we look back at the work of the previous Government and we look at the way in which they prioritised the primary industry, for me it wasn’t so much what they did but actually what they didn’t do that I wish to focus my emphasis on—for example, in the dairy industry. We all know that the dairy industry is the largest economic contributor to our export market. It’s absolutely critical to our regions’ growth and survival. However, when it comes to the previous Government having to make critical decisions for our dairy industry, for our largest exporter, those decisions were consistently and repeatedly delayed.

There’s no better example than the Dairy Industry Restructuring Amendment Act (DIRA). As you’ll be well aware, in 2015 the Minister was required to undertake a statutory review. The outcome of that, from the Commerce Commission, was that the DIRA provisions, the competitive provisions within that—[Madam Chair signals for member to return to bill] It all comes back exactly to the annual review, Madam Chair. There was a consequential series of decisions—a failure to bring in critical decisions across key components of our dairy industry. So, for example—I’m straying too far, aren’t I? It’s referenced in there. I’ll pull it up. Look, yeah, for me, it was what the previous Government didn’t do, and it didn’t introduce fundamental legislation to protect our dairy industry. It had it up on the Order Paper for an immeasurable amount of time, but this new Government under the leadership of Minister O’Connor had to tackle, straight off the bat, fundamental legislation because the DIRA provisions were about to expire in May 2018—this year. So we had to introduce, under expediency, the dairy industry—and what was frustrating was listening to the Opposition wax lyrical and, I guess, scaremonger our rural communities, saying that we were trying to introduce things that just absolutely weren’t right, because of their failure to act and bring in fundamental legislation.

I want to turn to—well, that’s actually almost my time, so I’d better not get too much into it. But another failure on that dairy front is the National Animal Identification Tracing scheme.

CHAIRPERSON (Hon Anne Tolley): I’d ask the member to talk about the appropriations if she could—

Yeah, the appropriations and the fact that those things weren’t done.

CHAIRPERSON (Hon Anne Tolley): —just for a little bit.

Yeah, thank you, Madam Chair. The fact that there was insufficient funding provided to measures such as the National Animal Identification and Tracing scheme, has, as we have seen, led to—well, potentially lead to—the flow of Mycoplasma bovis throughout our country right now, which is a critical issue that this Government is having to tackle.

Madam Chair, thank you very much for allowing me to take a call on the appropriations review of the Ministry for Primary Industries (MPI) 2016-17. It’s a great time to reflect on MPI and also the new Minister’s performance, Damien O’Connor—

💬 Hon Chris Hipkins: No, it’s not—no, it’s not.

—over the last six months. Yes, it is. It’s been fascinating to see what has occurred, because, as Minister Hipkins knows, this appropriations review is right up to the present day. And if he bothers to have a read of the report he will see a whole lot of things that I’m going to canvass that are very topical for rural communities right now. In particular, I’ll be talking about Mycoplasma bovis, which is a cattle disease that is certainly impacting on a large amount of rural communities and farmers up and down the country. I’m sure that urban MP would be very keen to hear from this side of the House about the financial strain that it is impacting on those farmers up and down the country.

What we feel, on this side of the House, is that while they have gone cap in hand to industry and got some money, we feel that the compensation is still too slow. It seems to be a bureaucratic nightmare for farmers to have to work their way through this process. I stood up in the Parliament about five or six weeks ago when Minister O’Connor had a ministerial statement and I challenged the Minister and said that compensation should be fair and fast. We aren’t seeing that now. What we are hearing in my office and in other rural electorates throughout the country is that farmers are still waiting, and it’s just not good enough. These are farming families that have made the right decision to support MPI and get on to cull and, hopefully, eradicate M. bovis for ever. But we are still waiting to see whether the Government will fully fund in Budget 2018 enough money to compensate these farmers. Let’s wait and see. We only have a couple of weeks to know the answer to that.

What’s also interesting, and it’s referred to in the report from the Primary Production Committee, is that the Minister when he came in to his new role—he decided, and he campaigned on it, that he wanted to smash apart the Ministry for Primary Industries and create stand alone entities. Well, there was huge pushback from officials. They said, “It’s a nonsense; we will lose our competent authority in international markets to do with food safety and biosecurity.” So what happened there is that the officials wore down the Minister and the Minister got to a point—he was almost on his knees and had to save face, and they came up with this rebranding exercise. So right now we’re seeing four business entities rolled out from MPI, costing $17 million. This money is coming from the Primary Growth Partnership fund.

This is research and development money that’s being raided from the front line of the primary sector—lifting value in our export markets, innovation, and technology—so that there can be a sticker on the door that says “BioSecurity New Zealand” or “Fisheries New Zealand” or “Forestry New Zealand”. [Interruption] I can’t see—and we wait, “Matua Jones”, for your little launch of your forestry thing; you’ll probably get a hat with a pine tree on the top of it, or maybe a mānuka seedling. We’ll wait and see whether you can deliver on your aspirational goals, and I’m unsure whether you will be able to do that or not.

What’s also been really interesting of late is to do with irrigation. This afternoon we saw that, for the second time in just the last couple of weeks, the Minister had to stand up and correct an answer. So he has misled Parliament now, just on this one particular topic, twice. The first one, he stood up in an answer to me in the House and said, “Yes, I have met Crown Irrigation officials.” Then he went back to his office and they scurried through the paperwork, and he realised that he had met Crown Irrigation officials in Opposition—probably when they came to the Primary Production Committee—so he had to come into the House and correct that one. Then I peppered him with some more questions and asked him, “Has Crown Irrigation requested a meeting with you?” He stood up in the House and said no. Well what we heard today was, I think—and I’ve just got to clarify this—on three, if not four, occasions Crown Irrigation had written to the Minister, requesting a meeting. The Minister didn’t have the balls to get those officials in his office and say “I’m sorry; I’m going to raid $100 million from this fund.” when farmers and growers rely on it.

Particularly when we think about climate change, this is all about mitigation and drought protection and food production, security for rural communities, actually supplying water through to some of our cities and towns. I heard on the weekend that Central Plains Water Ltd has kept two Lake Taupōs of water in the ground—isn’t that a fantastic thing? That water then flows into Lake Ellesmere—Te Waihora. These are the benefits of water storage, but we’ve had a raid on the primary sector, on the irrigation fund—$100 million has been siphoned out of it because they can’t make their numbers match up for Budget 2018.

Also, what’s been really interesting is the Primary Sector Council has just been launched. Some great names in there, great people—I know most of them—but, when you look through those names, there is not one dairy industry processing person. You would think for the size of the New Zealand dairy industry that you would have an industry representative—not you, Madam Chair, but you would think the Minister would choose to have a dairy industry representative—in that council. Well, no; he has turned his back on the New Zealand dairy industry, and I’ll tell you why: it’s because there’s a review of the Dairy Industry Restructuring Act. We still don’t know terms of reference. We know it’s going to take about 12 months, and I’ll bet your bottom dollar that’s going to be about dealing to dairy farmers in New Zealand. It’s going to be outside of contestability and competition in the New Zealand dairy industry, which was how the Act was set up.

So the review is going to go from here, out to here. It’s going to talk about things like land use, a cow cap, stocking rate, emissions, water quality, and compaction. All of these things are well beyond the scope and the way the legislation was set up in this Parliament. That’s why there is no dairy industry processor representative in the Primary Sector Council. That’s why I don’t think they are going to achieve a lot, and I’m disappointed by that, but I do wish them well.

You would have thought that, with nine years in Opposition, the Minister wouldn’t need a council to tell him what to do in his new role as Minister. What would have been really interesting is if the council had been brought in in the early times of the formation of the coalition. What would they have advised on irrigation? They would have said, “Keep it. It’s really important. It’s improving the environment. We should have more of it.” Six regions were declared in drought this summer. You would have thought the Government would want to help regional New Zealand and farmers and growers, but no.

What would the Primary Industries Council have recommended on an emissions trading scheme (ETS) charge and bringing in biological emissions—that’s livestock—into the ETS? The Minister’s already indicated at the East Coast Field Days a couple of weeks ago that farmers are going to be taxed to the tune of $5,000. This is ahead of the Climate Change Commission doing their investigation and their report. So we already know that that’s happening. So once again that’s why there’s no dairy representative. So, in summary, it’s been a pretty pathetic start for the Minister of Agriculture in his role.

Thank you, Madam Chair. I just wanted to follow on on a couple of the topics raised by the previous speaker, the Hon Nathan Guy. One of the things I’m particularly concerned about, I think as a result of where we’ve got to in the last few months, and obviously Crown Irrigation reported to the select committee of which I was the chair at the time, and I think that—

💬 Hon Nathan Guy: A very good chair.

Absolutely. Thank you, Mr Guy. But I think the challenge I find with the irrigation situation is that there’s a gap in any irrigation scheme proposal, and the gap is the community input into that scheme and the benefit that the environment will get as a result of that. I think it’s a pretty far call to expect the commercial operations to fund that up front, and that was the reason for the irrigation fund largely—it funded the piece that the community couldn’t fund to get those schemes off the ground, because the environmental benefits of those schemes are significant. Whilst I accept that the users of those schemes, in due course, should pay the costs—I have no problem with that—it’s getting those schemes off the ground initially that was the challenge, and that’s the real loss I think we’ve suffered as a result of that. So that’s my little bit on irrigation.

I want to talk a little bit about one or two other issues that came up in the course of those discussions, and I wanted to specifically focus on forestry. We currently have around 50 million trees per annum planted as replacements for the trees that are cut down, so that’s around about 50,000 hectares—if we put it in rough figures—of trees milled every year, exported every year, or used in the industry every year. So 50 million trees take that up. We need another 50 million trees to reach the Government’s target, and I guess the challenge I see in that is that if we start to use land that I consider—and I guess I’m talking about class IV land and better. If we started to use that for planting trees, it’d be one of the great tragedies of New Zealand history, because that land has much more value in other areas than trees. So the reason I raise this is if you think about the potential to put whole farm blocks into trees, then you straight away run the risk of capturing a whole lot of very good quality land in that proposal. That would be a tragedy for New Zealand’s future.

I just want to point out one or two of the challenges we’ve had with policies like that in the past where Governments have, I guess, initiated measures that at the time they thought were logical, and I guess if you go back to the time of supplementary minimum prices, they were the thing that created most of the challenge we’ve got with erosion in the hill country now. At the time, the Government of the day thought that was a sound policy, but history has proved it to be significantly flawed. I also think there are some elements of the Dairy Industry Restructuring Act, which is another topic that is very topical at the Primary Production Committee and in the primary sector—some of that is flawed as well, when you think about it. It caused perverse behaviour to occur in the industry because it forced Fonterra, effectively, to pick up milk wherever it was viable to grow it from a farmer perspective—it didn’t always create the right decisions.

So Governments interfering in natural processes have got to be very careful how they do that, and I think that’s quite dangerous for our futures.

💬 Greg O’Connor: Does that include subsidising irrigation, Mr McKelvie?

I’m not talking—you didn’t listen, clearly. You should listen more carefully when you’re sitting in the Chamber, because I talked about exactly the piece of the irrigation scheme that was necessary to be initially subsidised to get it off the ground. It’s got nothing to do with the commercial operation of irrigation.

I also want to talk briefly about some other areas that I think are really important to us, and that’s both the funding of biosecurity and the control and operation of our fishing industries. They are really important things to fund, but it’s very important that we also retain the knowledge and expertise of people in those areas, because it is a significant piece of New Zealand’s history and it’s also a significant piece of our income. The fishing industry returns about $2 billion in export earnings a year to New Zealand, and we need to manage—and I think we do manage it very well. But we need to ensure that it continues to be managed in an extremely positive manner and to enable both recreational and commercial fisheries to operate in tandem and to do it very well. I hope that the Government continues to do that.

Finally, the one thing I just wanted to very briefly talk about is the honey industry, because I think that’s a significant concern to New Zealand’s future. The Primary Production Committee, over the years, have had numerous inquiries and views on this, and it’s very important that this industry gets its challenges resolved and that it continues in the future. Thank you, Madam Chairperson.

Thank you, Madam Chairperson. It gives me pleasure to speak on the appropriations for a few minutes, and at the outset I’d like to highlight a couple of changes that it seems this Government has made to the regime that was in place only six months ago. We’re going to have fewer irrigation projects. This is a real concern. The Government has decided to not support irrigation projects, and I have two of them, potentially, in my electorate of the Wairarapa.

This is a real shame, because irrigation projects can do so many good things for so many people in provincial New Zealand. We’re talking about primary production but we’re also talking about social and environmental good. We’re also talking about security of supply of water to the towns—to the urban people in those smaller provincial towns that we have around the country. So it’s very disappointing to hear, though, that we have a Green Party who is concerned about climate change and we have a New Zealand First Party that talks about provincial support, yet we have a Government that has eliminated, wiped out, and is no longer going to support decent-sized irrigation projects that support rural communities.

We’ve also got a fuel tax. Now, that is going to hit rural New Zealand harder than your urban commuter, who is going to jump on a train or walk or use public transport. In provincial New Zealand, there is far less public transport. People use their cars and drive further. That funding, that tax on fuel to support Auckland’s roads, is a blight on provincial New Zealand. Then, we’ve got the dairy sector. That is going to be in the emissions trading scheme (ETS), Mr Parker has said. The animals in the dairy sector will be in the ETS—therefore making New Zealand’s dairy sector less competitive on the global market. That is a real shame. That demonstrates that this Government does not support the primary sector. It does not support regional New Zealand.

The Primary Growth Partnership—other speakers before me have spoken of this. Clearly, that money that was targeted at research and development to support the future of our primary sector is being stripped away and is being grabbed for the benefit of Mr Shane Jones’—what does he call it?—Provincial Growth Fund. He calls it a provincial growth fund. It is not a provincial growth fund. It is a lolly scramble. It is an ability for him to gift money to his favourite projects. It is a slush fund that has little criteria, little oversight, and little accountability. Just so people know, that is where the Provincial Growth Fund money is coming from. It is coming from the Primary Growth Partnership money, and it is coming from the Crown irrigation fund money.

💬 Hon Shane Jones: New money, new money.

That man—that Minister—is going to spray it around to his mates without any accountability, without any thought about investment, and without any thought of whether it’s debt or equity, and I’ve mentioned that to him before.

We’ve also got the issue—I’d just like to come back to the fact that research and development is important in this sector. We had a question in the House earlier talking about tax credits versus Callaghan Innovation, and we can argue about the amount. But, nevertheless, we know that that is the way forward to address some of the climate change issues that we’ve just talked about—emissions from animals—and it also is the way forward to increase productivity on farm.

It’s really important that that fund is continued. Not every project is going to win, and not every project is going to have positive results, but it is that investment—and I focus on the word “investment”—that is so important to develop research and development for those primary sector industries, rather than having it given to a propagation outfit for a few trees or a roundabout or a set of lights or a netball court that might be called a Provincial Growth Fund activity. So the provinces are disappointed in what this Government is doing.

💬 Hon Shane Jones: News of the World.

He talks about supporting the provinces, but we know—well, the analogy for me is three sheep chasing their tails in a yard.

Thank you, Madam Chair. I just want to reflect on a few areas that popped up during the review of the Primary Production Committee on a number of occasions. The recent policy announcements from the Ardern-Peters coalition Government are going to have a severe and negative impact on rural communities like Clutha-Southland. It’s official: rural New Zealand is under attack. Whether it’s the extra tax farmers in Gore or Mossburn will be paying at the pump for Auckland’s trams, the $3 billion alcohol allowance paid to students to go and drink their first year of studies away, last week’s announcement to end offshore oil and gas exploration—an industry which will be destroyed, which employs over 8,000 in high-paying jobs and contributes over $2.5 billion to our economy—or just a couple of weeks ago, when the Rural Health Alliance was declined a mere $600,000, or $1 to every rural person in New Zealand. They provide a great service to our rural communities, especially in areas like mental health. And last week’s announcement of an interim climate change commission is worrying to the extreme. It seems likely that agriculture will be forced into the emissions trading scheme. The list goes on and on.

I was disappointed to hear funding for vital irrigation projects that support not only dairy but horticultural industries will be axed. This was announced around the same time hard-working and honest farmers in Otago and Southland were going through the worst drought in decades. I want to acknowledge the Otago and Southland farmers, who have put up with so much hardship over the past several months. It’s been a very challenging time on many fronts. First, there was the drought. Speaking with so many farmers who have been in the district for many, many decades, they often told me this summer was the worst, the driest, and the hottest they have ever experienced. As I drove round the electorate looking at the land, usually green and lush at this time of year, it was brown and dry, looking more like a desert in the middle of Africa. Many farmers had struggled over summer to grow crops for winter. Once winter hits, in a couple of months, some will really start to feel the pinch.

CHAIRPERSON (Hon Anne Tolley): Could the member sort of come to the appropriations debate?

Sorry, Madam Chair. This was all related in the Ministry for Primary Industries (MPI) review.

CHAIRPERSON (Hon Anne Tolley): Well, you need to relate it in your speech.

That’s right. In December last time, around the same time the drought was kicking in, along came Mycoplasma bovis, which has been widespread in Southland. M. bovis is a cattle disease, a bacterial infection that can cause a range of conditions in cattle. This disease affects animal welfare and production, and, for the record, humans cannot catch this. The biggest risk is animal movement. If M. bovis spreads throughout New Zealand, we’ll see a small decline in output. It won’t bring the industry to its knees, but as a country we will feel it. I want to acknowledge that rural support trusts across the country have been working incredibly hard assisting rural people, from owners to managers, staff, and contractors, in these tough times.

I want to take this opportunity to thank the hard-working MPI staff on the ground, who have worked long days and nights in the effort to eradicate this terrible disease. Speaking to some of the field staff, it’s clear how committed they are. However, some admitted to me the fear that they have for their jobs due to the restructure currently under way, commissioned by the Minister of Agriculture. It simply isn’t fair to put these hard-working staff under more pressure. I don’t agree with the Minister’s decision to waste $17 million to rebrand MPI just to put a few new stickers on the doors. During the MPI review, I did ask the head of MPI how staff are feeling and how they would respond to another disease outbreak after they’d been broken up into four departments. He couldn’t answer.

I want to just give one bit of credit to the Minister of Agriculture. He’s got a knack of doing this: whenever he declares a drought, within 48 hours, the rain starts to appear. So I do commend the Minister on that one thing.

I raise a point of order, Madam Chairperson. I didn’t want to interrupt the last member, Hamish Walker, during his fantastic contribution, but I did just want to get some clarification as to whether or not the committee is still enabling newer members to read directly, verbatim, their speeches. We have had some direction in respect—

That’s enough—that’s OK. That’s fine. Newer members I do give a bit of licence to, but the member makes a good point. We are in debate—we’re in committee—and it should be off the cuff. Are there no more speakers on the primary sector? OK.

Reports relevant to the Primary Sector noted.

Social Development and Housing Sector