Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill

Members, the committee is considering the Dairy Industry Restructuring (Export Licences Allocation) Amendment Bill. Members, we come first to Part 1. Part 1 is the debate on clauses 4 to 9, “Amendments relating to international trade with designated markets”, and the Schedule. The question is that Part 1 stand part.

Thanks, Madam Chair. This is a fascinating piece of legislation for someone who’s not deeply embedded in the area of dairy trade, but I am interested in competition. From what I understand from this bill—and I ask the committee’s indulgence if I don’t have the depth of understanding of other members in the Chamber—it’s a shift from historical exports as a basis for allocating quota, as opposed to dairy production. In a nutshell, that seems to be the centrepiece of this bill. I guess, from a competition standpoint, I’m always concerned with any rule that looks backwards in giving an advantage, because these quotas are clearly highly advantageous. If you’re given them, you have preferential access to an overseas market. In terms of the business that’s going on in New Zealand, we want the most effective and efficient, nimble businesses that we can.

So my question, essentially, for the Minister for Agriculture is this: is there a risk here that a new business without history of export into markets will be disadvantaged and they will, in fact, suffer greater barriers to entry, because, in dairy, exports are the biggest game in town? Will they suffer a disadvantage because they don’t have an export history?

So if they’re a start-up who’s got a better milking practice and better nutrition and all of those important things and they’re actually doing it better, but because they don’t get preferential low-tariff entry, or no-tariff entry in some cases, will that, in fact, mean that they’re more likely to fail and they can’t compete on an equal footing? Because that’s what a kind of historic, looking-back to say, “What’s your history of export?”, seems to say.

Now, it may well be that, within the organisation, there’s room for allocation of quota to address this kind of competition issue. But, along with, I’m sure, everyone else in this House, we want to see a dairy industry which rewards innovation and new entrants and best practice and doesn’t reward legacy dairying simply on the basis that it’s done it for a long time in a good way. So it’s just a very brief question to kick us off. But I am quite interested in that because competition is critical not only for domestic cost of living issues but also to make sure that internationally we’re highly competitive.

Thank you, Mr Chair, and thank you for the question. The answer is no. There won’t be disadvantage, and I’ll come to the exact reason why in a moment. But, in fact, this will allow greater competition, not take competition away.

If it is based upon the amount of milk that is collected, and then a quota is divided up based upon that, you actually don’t have to be an exporter to get a quota, or you may never use it, although you would have to apply for it. In its essence, what it means is that people who are exporting have a greater ability to get quota. Now, the majority of our dairy exports go to countries where there isn’t a quota. Australia is an example. China is an example. Therefore, based upon your percentage in a tariff line of a dairy product of your exports anywhere in the world, if you reach 3 percent, you are eligible for 3 percent of the quota into a market where we have a quota.

In the case, though, that somebody is a new entrant—they have started collecting milk in New Zealand, or let’s just say they actually are buying milk from somewhere, not collecting it and they’re making cheese—you are right that it would be challenging for them without a three-year history of export anywhere in the world to get quota. But we are creating regulation-setting powers to create a pool that would allow us to recognise that under circumstances, to allow a new entrant to build up that profile by exporting into a market.

The final thing here, though, is exporting is not easy. In fact, as many colleagues will know, exporting dairy products around the world is very challenging. It’s extremely competitive and it is hard to get into markets. In fact, dairy is one of the most heavily protected commodities produced in the world, traded, and certainly one of the most heavily subsidised in the world. We have none of that here in New Zealand.

So the point I guess I’m making is that if somebody wants to create a product and say, “I’m going to export and I only want access to these preferential quotas with lower tariff rates and not elsewhere.”, you’d actually suggest that they are using that to be more competitive than they are because they haven’t reached other markets. Therefore, my view is this is a fair balance.

But the point around “Will it hold a new entrant back having to wait three years?”, we have the ability to create a pool to reserve some of this quota to share where necessary, particularly for smaller players that may never get to a large enough percentage for it to be meaningful in a quota market.

Thank you, Mr Chair. I just want to ask a question that follows on from my colleague the Hon Duncan Webb with regard to the quota. The Minister of Agriculture just talked about those who haven’t been part of the system—making this a bit fairer for them to be able to enter the quota system. I note, though, Minister, that the volume is based on the three previous seasons, for those existing. So my question to the Minister is: why did you land on the three previous seasons as opposed to perhaps the one season beforehand, and not make your decisions based on those?

Thank you, Mr Chair. In essence, it’s to smooth out differences from year to year—so view it as an average, as opposed to one year to the other.

Coming back to the earlier point, because it’s linked: if it’s merely upon milk production, those who export more than perhaps they might collect milk in New Zealand would be disadvantaged. So this is based upon what you export, not the amount of milk you produce.

If you come to a tariff line—in this case, perhaps it could be a very special type of cheese that has special access to a market around the world and we have a quota for it—actually, you could be a very large part of that export but a very small part of milk collected or production of milk within New Zealand. Therefore, the large companies that bring in a lot of milk would have a greater share of that.

So it’s coming to us desiring that we want to fill these quotas, to sell them, to allow many others to share in them, particularly as they go up the value chain, with higher-value goods. Ultimately, we believe this will give all exporters a greater chance to benefit, as opposed to those who collect the most milk in New Zealand.

Thank you, Mr Chair. Thank you for that answer, Minister. It’s really helpful that you are happy to answer after each question thus far.

💬 Hon Todd McClay: It’ll stop soon, but let’s have another go!

Ha, ha! Minister, I want to talk about the bill creating a regulation-making power that enables 10 percent of export licences for a designated market listed in Schedule 5A of the Dairy Industry Restructuring Act to be reserved for exporters who would otherwise be ineligible and exporters only eligible for fewer than 200 tonnes of product. So clause 7, which inserts new section 26AA, in the bill states, “The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations that reserve 10 percent of export licences per quota year for any 1 or more designated markets listed in Schedule 5A if the available export licences equate to a volume of 10,000 tonnes or more of product in that designated market.” I’m interested to know why only 10 percent of licences are set aside—why not more; why not less? How did you come to that figure, please?

Thank you, Mr Chair, and thank you to the Minister of Agriculture for being so engaging on this particular issue. I have a question for the Minister regarding clause 4, particularly subclause (2), and I’m looking at questions between the “eligible participant” and “eligible reserve participant”. I’m just checking in terms of what we’ve heard previously—the fact that when we have our free-trade agreements or closer economic partnership agreements (CEPAs), etc., that there is a degree of flux in terms of the volume that we’re able to work. I think we heard previously that, for example, if we do have an NZ-India CEPA, what does that actually mean?

Can I just check, in terms of the “eligible participant”, whether locking us into something that equates to a volume of 20 tonnes, for example, is an appropriate mechanism, considering that—is it to do with the amount that we’re able to export, or is it to do with the amount we’re able to produce, as the baseline for that determination? So that’s one of the questions I have: whether it’s better to do it as a percentage for the quota year, or as an actual volume for that percent a year. I just want to get some ideas behind that.

I also just in general really appreciate the fact that both the Minister and also the Primary Production Committee took on board the option two and option six of the regulatory impact statement on this, particularly allowing small to medium sized entities, in this case, under option six, to have that possibility of being an eligible reserve participant.

But I have a question from that in terms of the idea that it has to do with export volume history under a tariff heading. I genuinely would like to know from the Minister—because I don’t know this at all, and this is something that the Foreign Affairs, Defence and Trade Committee has been very interested in, in terms of non-tariff barriers—when we’re looking at export volume history, whether the idea of the eligible participant, or eligible reserve participant in this case, will only fall under a tariff heading. Are there any sort of non-tariff, dairy kinds of export, etc., or are they all simply tariffed? In which case, if there are non-tariffed exports, how do they fit in this picture, if there are any?

So those are my two quick questions. Number one, this is clause 4(2)(b), around the volume, the “20 tonnes”—whether that is the amount to be exported or the amount that we in Aotearoa are physically able to produce, and whether a percentage would be better. Also, are there are any other non-tariff options, and, if there are, how do they work; if there aren’t, how would the export volume history work?

I’ll take these in a bit of order. Otherwise the list will be long and I might miss some of them.

To the first one around the 10 percent quota. The 10 percent is just what is deemed to be fair, meaningful enough for those who may not have access to be able to participate, should it be demonstrated that there’s a need—and I’ll come to that in a moment—but not so significant that it hampers those or holds back those that are already exporting. We don’t want to say to the larger companies that are doing very well for New Zealand exporting into these areas, filling their quotas, that, actually, they should get less but, at the same time, just because they’re large doesn’t mean we don’t want innovation and others to take part in the market through access to quota.

For the reserve to be set up, a number of things would have to happen before any recommendations are made. “The Minister must be satisfied that—(a) there is demand for [the] reserve export licences from eligible reserve participants; and (b) there is evidence that those persons will be able to use the reserve export licences; and (c) the proposal [for the] reserve licences is consistent with any import licensing and other requirements in the designated market [they’re going into];” and that there is full consultation where things need to be demonstrated. So it is a situation where somebody may want to access, they can prove these things, and full proper public consultation takes place first.

Around the suggestion of India and a potential comprehensive economic partnership agreement: has no impact at all, except if, in a future negotiation, we reached agreement with India or any other country where a quota for dairy exports is agreed in a trade agreement, and therefore this would need to be modified with the implementing legislation for the free-trade agreement. The same rules we’re setting up here would apply. In the case of India or any other market where we’re able to trade into with a trade agreement or without a trade agreement, that amount of trade is the overall amount that New Zealand exports and therefore forms the basis of how an exporter is able to work out what their access to a quota might be.

The member asked about whether it was a tonnage as opposed to percentage. It actually is the same thing. If you take the total tonnage exported and your tonnage that you export and divide it, turn it into a percentage, that’s a percentage of the quota you would be eligible to.

No, it doesn’t have any impact or effect upon non-tariff barriers. The quota is giving a lower tariff rate, from zero to something below what somebody normally would. So if we take the UK as an example, where—well, actually, China is a better example, where we had tariff rates in place and they fell over time and now they’ve fallen to zero. With a quota going in there, people could apply for the quota at a lower tariff rate so they pay less duty on the way in. Others could still sell into that market with a higher tariff rate outside of the free-trade agreement until the point now with China, where it’s gone to zero, and so it wouldn’t be necessary any more. Ultimately, what that does is it means that people are getting preferential access to a lower tariff rate, paying less duty on the way in to a country via this tariff, but if they want to sell more than that, they’re able to; they just pay a higher tariff rate.

Thank you, Mr Chair. I’d also like to acknowledge the Minister of Agriculture’s fulsome answers. It’s really helpful to have the Minister so engaged. Certainly, as the MP for Taieri, which is a mixed rural-urban area, I know that farmers in my rohe will really appreciate the cross-party collaboration on this, a consensus of the House, and also a nuanced approach to quotas.

I want to pick up on a point made by both of my colleagues—the Hon Dr Duncan Webb and the Hon Jo Luxton—and also the Minister’s own point about innovation, looking at the criteria that have been applied in making this determination about wanting to, I guess, assess risk. When I look at the regulatory impact statement, it talks about the options that were considered being retaining the status quo; allocating quota on the basis of export history, or production history—it could be on a “first come, first served” basis, or based on an assessment of an expression of interest, or reserving a proportion of quota for participants that are otherwise ineligible.

It seems to me in that list, if you like, there is a bit of bias towards track record rather than innovation. That would seem to be fair enough, but when we consider what has also been raised in the second reading speech by my colleague the Hon Damien O’Connor, we’re looking at new products such as goat and sheep milk. The question I have is: why have we got, in clause 4, amending section 5(1)(b), the average export volumes as being the only determinant, because it seems to me—particularly when we also look at inclusion of all markets—that if somebody was wanting to apply a traditional product and then also go into an innovative area where perhaps there is more risk, there doesn’t seem to be a nuance around facilitating the innovation of that. They’re going to be assessed on their track record, and there could be a disincentive to be more innovative around these new innovative products.

I just wondered, in terms of both the regulatory impact statement with those criteria, were other criteria considered to give a stronger weighting towards innovation? Was there a consideration given to exporters who might have a very traditional and safe and tested track-record - type product, who would perhaps be most likely to be going into new markets with a more innovative product, because they can afford to do so? I would never expect new suppliers or producers to be able to do that. And what nuanced considerations were given to that clause? I did hear the Minister talk about the fact that there is a mitigation but I would like to understand specifically in that example how the totality of the three years track record can be weighted towards a less risk-averse regime, so that those who are genuinely wanting to expand into new markets with new products are not counted against. We definitely don’t want to see a chilling of innovation through something that has been heralded across the House as a pretty good bill, thus far.

Thank you, Mr Chairman. I think, as has been said, there’s widespread support for the bill.

There are a couple of questions I have for the Minister of Agriculture, through the select committee process and when it came before him—some have been asked—around the threshold of the 20 tonnes, or whatever it is. I just want to know about the innovative players, and if you can take a product like lactoferrin, which is worth about $1 million per tonne, compared to, say, milk powder, or whole/skim milk powder, which would probably be, I don’t know, it could be $3,000 to $3,500 a tonne. There is a difference in terms of the way that is considered, and I want to know whether—officials: if there is someone exporting lactoferrin and they don’t necessarily have an export history, will the value of the product be considered, even though it’s a very small volume compared to what might normally have been traded?

The question for the Minister is: are they going to set up a regime through regulations that protect the small-volume, high-value players—and perhaps the Minister may have a view on that now.

Thank you, Mr Chair. I’ll take a couple here because it might help with further questions. In as far as innovation is concerned, well, look, we’re all in favour of that; I think everybody in the Chamber is. However, if you innovate a new product, it doesn’t give you an ability to sell into a market under a quota, because a quota is based upon a product and a tariff line. So the example that the Hon Damien O’Connor gave around interferon versus milk powder—you can’t substitute a quota for milk powder for something else. It’s a tariff line. In essence, if you look at our trade agreements, if we have a quota into the United Kingdom for milk powder, it must be filled. If it’s not filled, we don’t sell in there at a lower tariff rate. We can’t say, “Well, actually, we’ve decided to sell you some cheese instead of milk powder at a lower tariff rate.” You can’t substitute. So innovation is still possible, but it actually won’t always be affected by this.

To give you another example, and the example of other products coming in from sheep or non-bovine milk product, ultimately they’re a very small part of the market. The majority of what we sell is from bovine milk and, therefore, in part, the reason—so, for the first time, they are eligible for quota. In essence, if they got 5 percent of the quota overall for a product, the likelihood of being able to fill it is very, very slim, given that it is more of a niche product and they’re not producing the same amount as the wider dairy industry is. We also don’t want them not be able to be in that market. So, for the first time, they could get quota where it’s allowed through definition. In part, that’s the reason also to have the reserve.

A final point on this, I suppose, is think about cheddar cheese. Cheddar cheese, under international rules, is defined as coming from buffalo or from cows, from bovine cows. So you might make a cheddar cheese from sheep, but you wouldn’t be able to get access to the quota under a lower tariff rate, because it doesn’t meet the definition that’s agreed between those countries.

On the 20 tonnes, it’s because it is one refrigerated container and there was a view that anything below one refrigerated container wouldn’t be commercially viable or meaningful. But, having said that, there are opportunities, not less than that but with that reserve quota, should regulations be set in the future, to ensure that those who want to innovate and can have access, particularly up the value chain, will have the ability to do so.

Thank you, Mr Chair, and, again, thank you, Minister McClay, for the very comprehensive answer. I just want to pick up something the Minister of Agriculture said before in terms of having no substitutes. Can I check? I understand what the Minister is saying in terms of having no substitutes when it comes to milk powder versus—you know, you can’t substitute part of that with cheese, etc. But I just wanted to know in terms of clause 5—and I know that the Minister mentioned non-bovine dairy. But can I just check for clarity: if someone has non-bovine dairy, would they be able to match—for example, when we’re looking at the eligible participant, we’re looking at two separate issues. But when we’re looking at non-bovine dairy producers, or if someone’s got a mix, are they able to supplement, let’s say, that 20-tonne eligibility participant requirement with, let’s say, 19 tonnes of bovine dairy and 1 tonne of non-bovine dairy? Are they able to mix, in that case, if they have a mix—oh, I’m seeing nods from the officials. Yep, great—that’s really clear. Thank you.

The other question I have is just following up from what, previously, the Hon Jo Luxton was asking regarding this new section 26AA, inserted by clause 7, around reserve export licences. I know that the Minister gave quite a nice and wholesome answer around what the Minister would need to consider in order to reserve that 10 percent of export licences, but can I just check: does the Minister have any idea in terms of how often he anticipates that that is something that might actually happen? Do you anticipate this happening with additional markets that have been opened to us? So, yeah, just mainly a question around the frequency of that particular Order in Council being made.

That’s a perfect segue from my colleague there with regard to section 26AA, where the Minister of Agriculture talked before about making a recommendation with regard to export licence, and he listed off all the criteria that the Minister must be satisfied are in place before undertaking that. My question to him, and it’s just a quick question, is: how is the Minister going to ensure that all of these things are in place before making the recommendations? What will the processes and assurances be in order to make sure that everything is in place before making the recommendation?

Look, thank you very much, Mr Chairman. I appreciate the Minister of Agriculture’s explanation before. I guess lactoferrin will come under a protein tariff line, understanding that the tariff lines are quite technically difficult. The point I was trying to make is that we are still using a rather crude 20 tonne—so it’s a volumetric measure of what might be able to have access to quota, even if it is under the appropriate tariff line. I’ll raise that point, and the Minister might be able to refer to it.

The second point I’d like to make is that if Fonterra proceeds with its sale of consumer brands and those products are made from New Zealand milk, does the right of access to quota automatically go to the purchaser of that Fonterra sale, or will there be a need for some legislative change, given they will have no history of export, or it might not, depending on who the company is? Just to ensure that we do everything we can to protect the value for New Zealanders rather than selling off something that, again, it’s been negotiated through trade agreements, it’s legislatively protected, legally protected by Parliament, but could be flicked off depending on what the Fonterra farmers decide.

I’ll take the final question first and then come to the other. So any dairy exporter who sells a part of their business—the new owner of that business would be the same as a brand-new start-up, and they would need to work through the three-year history before they have access to any quota, although recognising if there was a reserve set up, perhaps they would have eligibility to that, depending upon what the criteria had been set at, should there be a regulation in place. So I guess that means that the best way to explain it is that any eligibility for quota is non-transferable; it remains with you.

It comes back to the other reason for that three-year rolling average. What we’re trying to do is make sure that quotas are filled and the product gets to the market, and that the New Zealand dairy farmer or the New Zealand economy benefits fully from this. There are occasions when that hasn’t been the case in the past, and therefore if, for any reason over the three years, you have exported less than your quota—in some cases, it could be significantly less—you therefore no longer have eligibility for the same amount in the future, because someone else has not been able to fill that as you’ve held it, and therefore we want the quota to be filled fully.

As far as criteria around setting up reserve licences and issuing them, it’s very similar to what I said earlier. The only additional piece of information I might offer members is it has to be full consultation around that, and the consultation undertaken with the current holders of export licences, and ascertain historical utilisation of their export licences, and ascertain the potential impact that a reserve export licence will have on their businesses, and ascertain their view on the creation of a reserve portion.

So, ultimately, there will be a number of instances, perhaps, where this would make sense. It would be beneficial. It will help those who are not able to export to do so—in turn, there is a greater return for the New Zealand dairy farmer. This is set out so we can take account of that, but no decision has been made, at this stage, about whether it might or might not be used.

Look, carrying on in Part 1—and I thank the Minister of Agriculture for his explanation—another area of some concern is the quota compliance programmes. Reading through here, and maybe the Minister can explain, it says that if someone has not complied or not obtained a compliance licence, then they can just, as I understand it, through a statutory declaration, explain why they haven’t got one. I guess the question is: given the importance of the dairy industry to our country and of these quotas to our country, then for anyone who is non-compliant in any way or attempts to bypass this piece of legislation and the flexibility that we’re putting in place here, is it good enough that a statutory declaration from them explaining themselves is of sufficient legal credibility, or, indeed, do we need to have a stronger compliance regime in that area? I’ll leave that with the Minister.

I move, That debate on this question now close.

Thank you, Mr Chair. Having just joined the debate and going through the regulatory impact statement, which is dated 25 August 2023, it was obviously conducted under the previous Government—as many members have alluded to—under the Hon Damien O’Connor.

As I’m going through the regulatory impact statement and it does apply to Part 1, it’s around section 3 of the regulatory impact statement, “Delivering an option”, and “How will the new arrangements be implemented?” It talks about the Ministry for Primary Industries (MPI) systems and processes that would need to be worked with: “MPI anticipates that there will be an increase in the number of participants applying to the dairy export quota.” That was based off results of their formal public consultation and the feedback that they received during that targeted engagement from currently ineligible exporters which expressed an interest in access to the dairy export quota.

The regulatory impact statement continues to say, “Some minor changes to the allocation process will be required as a result of the changes.” Then it continues that “The cost of administering the quota allocation system is recovered from participants.” However, they also have a particular paragraph around the impact on Customs, and in it, if I quote the regulatory impact statement, “Customs has advised that additional administrative costs associated with data sharing will be low and can be managed within current resources.”

So it’s quite a simple question to the Minister of Agriculture: that advice that was received by officials dated 25 August 2023, does that still apply, given the Government has gone through cuts trying to find savings within different Government departments? Has he received advice around the impact on Customs in relation to the roll-out of the options which are covered within Part 1; if so, what has that advice said, and will Customs be seeking additional funding in order for them to, basically, manage the new implementation of this policy?

Mr Chair, thank you. In as far as the example that the Hon Damien O’Connor has given, even though a statutory declaration is given, a licence would automatically be declined, although the Minister would have a discretion to decide otherwise, should there be reasons to. So, no, it doesn’t mean that it happens, and, of course, where somebody gives a statutory declaration and it’s wrong and they know that it’s wrong, we actually have rules elsewhere and statutes to deal with that.

In as far as the question about the advice given from Customs , actually, there have not been cuts to the front line. In fact, we’ve ensured that the front line, from Customs to those who work very hard in the front line in the Ministry for Primary Industries, actually continue to do their job, and they’re hard-working New Zealanders that do an even better job as a result of many of the changes and support that we’ve given them. So, actually, the point that I’ve made is that they don’t need additional resource and they can manage the slight changes in the exchange of data. As a result of this, it remains the case, because there have not been cuts to the front line, but, equally, they are already providing data as a result of an older quota regime. This is updating it and it’s modernising it. There are a few more countries that they engage with, as they do with everything. So the advice that I have received is that they’re able to do that within their current budget lines.

Thank you, Mr Chair. I want to first pick up on the response that the Minister of Agriculture gave before in the questions around clause 8 of the bill around the quota compliance programme. Can I just check if my understanding is correct? What the Minister is saying is that the quota are not transferrable, which means that if they are selling a company, let’s say to someone else, that quota doesn’t naturally go through to the new company because it’s not transferable, which means that that then would presumably go back into the pool of quotas that then other people could bid on or potentially the new company could bid on. So I just want to get clarification around the transferability of quota, because, again, this might be something that’s quite a hot topic right now, particularly pertaining to Anchor.

So the other questions I have in terms of this is they are more kind of getting a few examples from the Minister in terms of what would be some of the options. For example, in clause 8, inserting new section 27, we’re looking at new subsection (3)(c)(ii), where it says, “for any other reason … the Minister is satisfied”. I was wondering if the Minister could provide an example of what some other reasons are where the Minister could be satisfied explaining the participant’s failure to obtain a quota compliance programme.

Along the same vein, for subsection (4), it says that “The Minister must provide written notice to the participant of their decision”, which is understandable, but it says, “within a reasonable time frame”, as opposed to giving a specific time frame. In which case, I would also be interested to know from the Minister on what is considered reasonable and whether they are tied to how the allocation is made in the Gazette under clause 6 of Schedule 5B. So those are my two questions around clause 8, around the quota compliance programme.

But since we’re talking about the Schedule, which is clause 9 of Part 1 of the bill. For Schedule 5B, I am looking at clause 2(4) of Schedule 5B around allocations. I guess the first question I have, which is really interesting in terms of the example, is that if an eligible participant is eligible for 30 tonnes, but then they have excess produce, and then there is additional in terms of the reserve portion, they can add it up into an additional 170 tonnes and equate up to 200, which, I think, if my understanding’s correct, that’s actually a really cool thing to do. But I wanted to check how then would the reserve amount of 200 tonnes or the making up of that 200 tonnes under the eligible reserve participant be distributed across; as in, are they done as a proportion of their eligible participant amount, or they are done as in with any other kind of formula? So I would really like to know: how would people make up that additional amount if it is based off the reserve amount? So those are my three questions.

I move, That debate on this question now close.

Thank you, Mr Chair. I want to also ask a question with regard to the quota compliance programme. The Hon Damien O’Connor asked questions with regard to statutory declarations, and other members have pointed out the things that Minister must take into consideration and be satisfied that the participant has, for whatever reason, failed to obtain a quota compliance.

My question to the Minister of Agriculture is: Minister, you mentioned before about allocation being declined, but if someone knowingly and falsely makes a declaration, will there be any penalties for that person? For example, will they be banned from making applications for allocations in the future or will they just be banned full stop and not ever have the option? Will there be a stand-down period for people that do that?

Also, following on from that, I note that when we heard submissions from Open Country Dairy, they raised concerns around changes to allocation of export licences outside the reserved quota portion, that it created avenue for gaming the allocation system. The advice that we received was that quota markets are a small part of overall New Zealand dairy exports, and exporting products at a loss to obtain a share of what are relatively small markets for New Zealand seems unlikely—but “seems unlikely” is not “definitive”. So is there still going to be the ability for this to be gamed in any way? I’m interested to hear the Minister’s answers to those questions, please.

Tēnā koe, Mr Chair, otirā, tēnā koe e te Minita. We’ve heard kōrero about quotas, etc., and I’ve mentioned the Māori economy and the appeal that the Māori economy is having internationally, but, by virtue of size, sometimes even Māori co-ops can be considered small and emerging. So my question to the Minister is: will there be an allowance or quota set aside for Māori business?

I move, That debate on this question now close.

I’m looking for new material.

Thank you, Mr Chair. I just have a really simple question because I’m still waiting for a response to my previous three questions from the Minister of Agriculture. My question is to do with section 4(4) of replacement Schedule 5B, inserted by the Schedule. I also want to get clarity. It says, “Export licences may only be used for products for which the dairy components are derived only from New Zealand origin milk.” But, as we know, there are processing centres of milk and milk powders in other countries that we have, such as Malaysia, for example. But what happens if they use a mixture of New Zealand origin milk and milk from [Interruption]—that doesn’t happen? OK. In which case, that answers my question.

I move, That debate on this question now close.