Hon DAMIEN O'CONNOR (Associate Minister of Health), on behalf of the Minister for Food Safety: I move, That the Animal Products (Dairy Products and Other Matters) Bill be now read a first time. This bill provides for the regulation of the dairy industry under the Animal Products Act and repeals the Dairy Industry Act. The dairy industry is New Zealand’s largest industry. For the year ended 31 May 2003, dairy and casein exports were worth $5.81 billion to the New Zealand economy. There are over 14,000 dairy farm suppliers, 188 registered dairy factories, 285 registered stores and transporters, and 473 registered dairy premises.

The safety and trade of dairy products currently comes under the Dairy Industry Act. That Act does not provide an adequate legislative framework for ensuring product safety outcomes or an adequate legislative framework to facilitate trade in a risk-based management environment. The prescriptive and inflexible style of the Dairy Industry Act is inconsistent with the enabling style of legislation that has been used in modern risk-based legislation, such as the Animal Products Act.

There are two overarching public policy objectives for the bill: firstly, to manage risks to human and animal health from the consumption and use of dairy products; and, secondly, to facilitate the entry of dairy products to overseas markets.

The proposals in the Animal Products (Dairy Products and Other Matters) Bill were first made available for public consultation in July 1999 with the release of a public discussion paper. It was distributed to a wide range of stakeholders, including dairy producers, exporters, manufacturers, farming groups, consumer groups, Māori, and Government departments. A further discussion paper was released in February 2001, and consultation meetings were held during March 2001. Consultation has been ongoing since then on transitional and implementation matters.

Currently the Animal Products Act exempts material or product that is dairy produce. The bill removes the exemption of dairy produce, along with making a series of amendments that reflect the current risk-based management requirements under the Dairy Industry Act. These include adding definitions of dairy processor, dairy material, and dairy product, and providing that, unless exempted, all dairy processes must operate under a risk-management programme.

The bill will provide for a seamless transition between the Dairy Industry Act and the Animal Products Act. It provides for a new legislative framework that is consistent with the enabling style of legislation used in modern risk-based legislation. It will deem all product safety programmes under the Dairy Industry Act to be risk-management programmes under the Animal Products Act from the date of commencement, which I anticipate will be 1 January 2005, not 1 July 2004 as stated in the bill. This will mean that all dairy processes—from the milking shed, the farm dairy, up until the dairy product is exported or sent to retail—will now operate under a risk-management programme. This will ensure that product safety outcomes in the dairy industry are provided for in the risk-based management environment. On these grounds there will be little change for operators in their day-to-day business functions.

The bill also enables the Governor-General, by Order in Council, to exempt dairy material, dairy product, or dairy processes from all or parts of the Animal Products Act if certain criteria are met. Exemptions would be given only when the risks are managed under other legislation, such as the Food Act or the Agricultural Compounds and Veterinary Medicines Act, or where the known risks are negligible. There would be minimum compliance costs associated with the bill. For the majority of the industry the technical requirements will remain the same, and this will mean very little change in costs. The bill provides for other matters that amend the operation of the Act. These include amendments to export requirements, the conditions that can be applied to risk-management programmes, and the requirements for multibusiness risk-management programmes. It is also my intention to introduce a Supplementary Order Paper that further amends the export requirements, to correct a deficiency that has recently come to light.

I propose that the Animal Products (Dairy Products and Other Matters) Bill be considered by the Primary Production Committee. Although I have not spoken to each provision of this bill in any detail I believe I have indicated that it is a logical step forward in the development of generic legislation rather than industry-specific legislation. The bill repeals outdated legislation and provides a flexible means for managing current and potential risks posed by dairy material and dairy product. I commend this bill to the House.

Dr LYNDA SCOTT (National—Kaikoura) : The Animal Products (Dairy Products and Other Matters) Bill is one of food safety, which is why I am speaking on it today. The National Party will be supporting this bill. As the Minister has just said, wide consultation has been undertaken, and that consultation began under the National Government in 1999. The dairy industry is supportive of the changes that are being made that change the regulation by repealing the Dairy Industry Act, and bringing the regulations of the dairy industry under the Animal Products Act.

I suppose it is interesting to look back at the history of food safety when it relates to dairy industry products. If we turn our minds back to the past and to the fact that cattle and dairy products can pass on TB, we recall that it was back in those days that we began the pasteurisation of milk. TB in animals is a major cause of disability and death for people in many parts of the world, and those parts of the world that do not have pasteurisation, which was one of the first steps in improving food safety, still have the spread of TB via that role. So we must not forget how important it is to have good risk-management processes and the types of processes that will ensure our dairy products can reach international markets.

There was a scare last year over retroviruses. It is very damaging to New Zealand’s reputation when such misinformation occurs. Retroviruses can be found in cattle, but they do not infect humans. They are killed by pasteurisation and processing. So to maintain our $5.8 billion export market we do need to have appropriate risk-management programmes. Milk is a highly nutritious food, but it is also an excellent growth medium for bacteria. Raw milk has the potential to transfer zoonotic diseases, and milk handling procedures must minimise the associated health risks, and we must not forget that. Milk will contain residues of veterinary medicines if the milk from treated animals is not appropriately withheld, and quality assurance programmes must address the quality issues and the risks presented by pathogens and residues.

Safety and quality assurance programmes for milk and dairy products must cover the whole dairy chain from the farm to the table, and this new legislation will be looking at that. Processing and proper subsequent handling are the most critical steps to ensure safety of products. The processing of milk into a range of dairy products, which usually involves heat treatment, improves both shelf life and safety, while acidification retards growth of most bacteria. Some pathogens can survive in fermented milks made from raw milk, and can present a risk to human health. Fresh cheeses made from raw milk present similar risks, but hard cheeses made from raw milk and stored for periods in excess of 1 month are normally free of pathogens. New Zealand does have a markedly growing cheese manufacturing industry, and I have to say that I am sure all of us in this House have enjoyed some of the wonderful new cheeses that are available from all parts of New Zealand.

Post-processing handling and packaging procedures must avoid post-pasteurisation contamination. So from the dairy shed through to our export markets, it is essential that we maintain our world standing and the billions that we do make in export. It is important that hormones, antibiotics, and pesticides that can contaminate our milk products are handled appropriately and do not pose a safety risk. This bill will be supported by the National Party.

EDWIN PERRY (NZ First) : I am speaking on behalf of my colleague Mr Doug Woolerton, who is a very effective member on the Primary Production Committee, and has a lot of expertise within this area.

New Zealand First is supporting the referral of this bill, namely the Animal Products (Dairy Products and Other Matters) Bill, to the select committee. Bills Digest No. 1116 gives a clear overview of this bill. This bill needs to be passed without any constraints so the industry can get on with its business. The dairy industry, I must say, in the Wairarapa plays a major role in keeping the rural sector going, and the urban sector, obviously, by producing income and employment in those rural areas. We have just heard from the Minister that the national income of the dairy industry is $5.8 billion, which is—

Dr Paul Hutchison: That’s just for cheese.

EDWIN PERRY: I thank my colleague from the National Party for that comment—an abbreviation of the income. Now let us look at some of the key points of this bill. Bills Digest No. 1116 states: “Purpose: The main aims of the Bill are to provide for the: regulation of the dairy industry under the Animal Products Act 1999 (Animal Products Act or Act) and to repeal the Dairy Industry Act 1952 (Dairy Industry Act); management of the risks to human and animal health from the consumption and use of dairy products; and facilitation of entry of dairy products to overseas markets by providing the controls and mechanisms needed for market access and the giving of official assurances.” I would like to look at what is stated under heading “Background”. This states: “ ‘The Animal Products Act applies to all animals, animal material, and animal product unless they are excluded. Dairy produce is currently excluded from the Animal Products Act. This Bill will remove that exclusion’. All dairy processors will be required to operate under a risk management programme unless they are excluded or exempt from all or part of the Animal Products Act. ‘The Bill also provides for amendments to be made to the Animal Products Act which amend the operation of the Act. These amendments will include amendments to the export requirements, the conditions which can be applied to risk management programmes and the risk management requirements for multi-business risk management programmes. A range of other, essentially technical, amendments will also be made.’ ”

Under the main heading “Main Provisions” in the Bills Digest is the paragraph headed “Commencement”, and I will cover just one point here. That paragraph states: “The Bill will come into force on 01 July 2004 except for the amendments made to the Food Hygiene Regulations 1974, which come into effect on 01 July 2005 (Clause 2; Part 2, Clause 32(1)(e), Schedule 3, in relation to the Food Hygiene Regulations 1974).” Then, stated under the heading “Definitions”: “The Bill inserts new definitions to incorporate the dairy industry in the Act. These definitions include ‘dairy material’ (‘animal material’ that is milk extracted from a ‘milking animal’ and any material derived from that material), ‘milk’ (the ‘mammary secretions of milking animals’), ‘dairy processing’ (all processing activities in relation to dairy material),”.

I shall deal quickly with the paragraph headed “Power to exempt dairy material from Act”, in the Bills Digest, and I think this is important. It is stated there that the bill enables the Governor-General by Order in Council to exempt dairy material, dairy product, or dairy processors from all or parts of the Animal Products Act if certain criteria are met.

It is further stated that: “A transition period of 12 months will apply to all dairy processors operating at the time of commencement and who are not operating under product safety programmes. Those that operate under the Dairy Industry Regulations will be able to continue operations under those regulations for the period of the transition. By the time that year has expired they will be required to operate under a risk management programme or a food safety programme.”, which, I think, is the key part of this bill. There is a lot of common sense in this bill, and New Zealand First recommends it and supports its referral to the select committee.

Dr PAUL HUTCHISON (National—Port Waikato) : I am very happy to support this Animal Products (Dairy Products and Other Matters) Bill on behalf of the National Party. We hear that this bill is going to the Primary Production Committee, but I am supporting it in the context of its huge importance to the food industry, and in the context of the huge importance of the dairy industry to New Zealand’s primary products.

Undoubtedly, according to the explanatory note: “The policy objectives of the bill are: management of the risks to human and animal health from the consumption and use of dairy products; and the facilitation of entry of dairy products to overseas markets by providing the controls and mechanisms needed for market access and the giving of official assurances.” There is no doubt that dairy products are of immense importance to New Zealand, and the safety and quality of those products are absolutely vital to our export industry.

I remember my old microbiology professor in Dunedin pointing out that he regarded milk as “bacterial soup”. Clearly, it has the propensity to deteriorate if not kept in ideal conditions. That is the whole reason this bill imposes a series of risk-management processes that have flexibility—from the cow’s teat right to the export market. I note the agricultural department’s emphasis on the reasons behind the vital need for product quality and safety. It points out just how highly nutritious milk is as a food, but how it is also an excellent growth medium for bacteria. Raw milk, indeed, has the potential to transfer a whole variety of diseases: bacterial, viral, and zoonotic. As the primary producers of the Waikato are always keen to point out to me, it is hugely important that milk is collected in ideal conditions, and transported within 24 hours before it deteriorates.

That chain of action, through to large dairy factories and then on to exporters, shows that at every stage it is vital to have in place safety and quality assurance programmes that are consistent with international best practice. The emphasis on quality assurance and risk management has shifted from end-product testing to certification of processes in approaches such as the hazard analysis critical control point system, and appropriate guidelines and training programmes have been developed by the Food and Agriculture Organization of the United Nations and other agencies to address product standards and specifications for milk and milk products, emerging issues like sanitary and phytosanitary standards, and the technical barriers to trade in the area of international trade. It is vital that New Zealand is at the forefront of that area.

I note that in the development of this bill its genesis actually goes back to July 1999 when the previous National Government released a discussion paper. It was distributed to a wide number of stakeholders, including dairy producers, exporters, manufacturers, farming groups, consumer groups, Māori, and Government departments. Time was given for consultation and six submissions came back—all in favour of a risk-based management approach. I have spoken to both Federated Farmers and Fonterra, and they are supportive of that approach. Further discussion papers were produced in 2000, but we note that the commencement clause in the bill suggests enactment on 1 July 2004. The genesis of this very important bill dates back to 1999, so one wonders why this lumbering Labour Government—or maybe slumbering Labour Government—has taken so many years to finally bring it to the House. It does make one concerned as to where the Government’s priorities are. Nevertheless, the bill is finally here and that is a good thing.

I do note, according to Rural News on 17 September 2002, that: “Bringing the dairy industry under the Animal Products Act is a top priority says the New Zealand Food Safety Authority, in its post-election ministerial briefing.” Even in the worst or the best-case scenario, the Labour Government has delayed this very important bill for 2 to 3 years. The Government was expecting it to be law at least a year ago. What has happened? All this is consistent with the way this Labour Government has put priorities into social engineering and not into the highly important area of our primary produce—our exports—to ensure that the standards surrounding them are in the best interests of our country.

So here we have an important bill, fundamental to one of our key industries—the dairy industry—yet the Government has been sitting on it for several years. The bill is about putting in place international best-practice, risk management programmes, from the teat of the cow to the export market. National supports it going to the select committee.

JUDY TURNER (United Future) : I stand on behalf of United Future to support the first reading of the Animal Products (Dairy Products and Other Matters) Bill. This bill is about rescinding the Dairy Industry Act so that the dairy industry can be included under the existing Animal Products Act, and it is about amending the Animal Products (Ancillary and Transitional Provisions) Act. Its policy objectives are clearly defined and extremely prudent. They are: to manage the risks to human and animal health from the consumption and use of dairy products, and to facilitate the entry of New Zealand dairy products to overseas markets through improved quality assurances. Those objectives are outcome-based and less coercive than previous legislative-led intentions.

The bill applies to all aspects of the dairying process, from the cowshed to the retailer, and is focused on identifying and managing health and hygiene risks throughout the process. All dairy processes will be required to operate under a risk management programme, unless they are deemed to be better regulated under another Act.

The need to repeal the Dairy Industry Act is apparent. It is a 51-year-old Act that fuses a mixture of laws, some dating back to 1892. The Dairy Industry Act is rigid and prescriptive, and it is time indeed for a revamp.

This animal products legislation reflects current industry and legislative practices, by using a risk-based management approach to control hazards. It also uses the regulatory model for verification in the use of recognised agencies. As someone who was raised on a dairy farm, it is fascinating for me to see how much a primary industry can evolve over time. The range of value-added products now marketed worldwide, compared with the humble cream can sitting on the stand by the gate waiting for collection, is a credit and testimony to those who manage, direct, and participate in this vital industry.

The bill sets out to manage the fact that multiple business interests have handled many products by the time they reach consumers, so that confidence needs to be consistent at each stage. The risk to business of the poor performance by one contributor to the process is immense, and internationally recognised risk management is vital. It is pleasing to note that there were efforts to consult industry members about the underlying issue the bill seeks to address. As with any proposed legislation that affects the livelihood of stakeholders, both large and small, participation in the process—and, hopefully, buy-in—brings integrity to the bill and adds value to its intention.

Consultation on that proposal has included discussion papers and the invitation to stakeholders to make submissions. Support was forthcoming, which included support from a dairy reference group established for the purpose of representing the interests of the dairy industry. Several options were considered when looking at the proposal, and the decision was to opt for an approach that was as future-proof as possible in allowing for the ongoing development of this industry.

The guiding principles of this bill deserve recognition. Change is minimised where possible, to allow for as little disruption to the practice as possible. Harmonisation is specifically sought to further allow for the ease of transition. There will be no technical change without the consultation of affected parties, and documents, language, and processes will be clear and concise. Those principles, inherent in the bill, help to ensure best practice and best results.

The regulatory model used for this bill is judiciously risk-based and outcome-focused. It will afford industry more responsibility for producing safe food, and give the necessary flexibility to achieve desired outcomes. The functionality of the model is commendable. It will add value to industry practice and procedure, and help to ensure ongoing success and best practice. We are very pleased to support this first reading.

GERRARD ECKHOFF (ACT) : Before starting on the bill I would like to make a slight observation, as I made yesterday in this House when speaking on the Meat Board Restructuring Bill. It is that it is a real pleasure to stand in the House and speak on a bill that we are in total unanimity on. I ask members to reflect on why that is. Here we have a farming industry that has no Government handouts or subsidy, and only a very little light-handed regulation if and when required. Does that not produce a great result in the House? That is what the people, whether they are up in the gallery or listening on the radio, want to see in this place—the Government and the Opposition working together for the betterment of this country, rather than indulging in party politics. That is rather nice to see, and I am delighted to take a call on this bill and support it going to the Primary Production Committee, as every other party is doing.

I do so for a very sound reason: it is New Zealand’s reputation as a country—New Zealand Inc, if you like—that is at stake if or when we ever, and I trust it will not happen, send food products overseas that are not safe. This bill is designed to ensure that the standards we apply to our consumable goods, whether meat or milk, or whatever, are the highest possible that technology can allow us to determine. So, as I said earlier, it is an issue that is met with a high degree of unanimity. We must therefore accept that we need a light-handed Government standard to give what could be described as a stamp of approval, because “Made in New Zealand” does mean an awful lot overseas. I am sure we are all very well aware of that.

There are one or two issues that we need to flag, especially within the dairy industry—and indeed the wider agricultural industry—and that is the use of antibiotics, which, of course, testing will pick up. I saw a programme recently on television about the use of antibiotics overseas and the abuse of this miracle product. Although we use antibiotics in the dairy industry, and indeed in the orchard industry—I am not sure that many people realise that we spray orchard trees with amoxyl to kill certain bugs—they must be used in a very sensible and restrained way to ensure that resistance does not occur.

I thought that programme was something we should all take a great deal of note of. I am sure that the people within our dairy and meat industries understand the need for very judicious use of antibiotics whenever necessary. Certainly, farmers understand the need for antibiotics at very limited times, and we now have the technology to pick up the overuse of antibiotics in our milk products. So that all goes to show that we are getting it right.

From time to time an odd shipment of cheese causes concern—one went just recently that contained, I think, leptospirosis—and that has a profound effect on the confidence overseas countries have in our product. Thankfully, it was recalled and to a large degree the damage was, if not eliminated, certainly curtailed to some degree. It illustrates that we need to keep a very close watch on ensuring that the high standards that New Zealand is famous for are met at all times.

That is not to say that we cannot, except in smaller or cottage industries, allow for cheese to be made in its natural and normal state—even without pasteurisation. I am told that in France, for example, the “real” cheeses are made that way. They have a certain taste, although I personally cannot recall ever eating any of those sorts of cheeses. I think it would be a shame if we closed our minds totally to ensuring that those who, in a small way, wish to produce these sorts of foods for consumption in New Zealand, which would not compromise our export industries, could do so.

Global trade is an absolute reality, and as a trading nation where over 90 percent of our dairy products leave our shores, we have to be eternally grateful for that. As I said earlier, that imposes the realisation that we need to ensure that standards are met. It places real constraints on the dairy industry to get everything right, so this Animal Products (Dairy Products and Other Matters) Bill is probably a little bit overdue—as one of the National Party people alluded to—but at least we are getting there. I look forward to this bill coming before the Primary Production Committee, which is recognised in the House as probably the most sensible—

Edwin Perry: Common sense.

GERRARD ECKHOFF: It has common sense, as Edwin Perry says. It is the select committee that looks at an issue, rather than at the politics of an issue. That is the way it should be, so we are quite delighted that that should happen.

This bill really is about risk management and making sure that the standards are met, and none of us would oppose that. As a member of the ACT party, I am not in favour of unnecessary rules, regulations, and legislation, but from time to time we have to accept that to get our products into countries overseas it is necessary for the Government to step in and ensure the safety of the products, impose standards, and let the industry get on with the job of meeting those standards. That is what the industry has done. It is an industry, as I said yesterday in debate on the Meat Board Restructuring Bill, that I as a farmer am enormously proud of.

We will meet the requirements of New Zealand into the future—there is no question about that. All we need to do is open the trade up. Only 10 percent of our meat products are chilled at this time. Once we have 100 percent, or get close to that figure, the opportunities for our agricultural country will be enormous. That is something we can look forward to with some considerable relish.

That is about all I wish to say at this time, other than to reiterate that I am delighted to see that the House has supported this bill in its entirety to the select committee, where, no doubt, it will get the committee’s proper consideration.

SUE KEDGLEY (Green) : I seem to be the last speaker in this debate, but I am very pleased to join the total consensus in the House to support the Animal Products (Dairy Products and Other Matters) Bill. As the Minister who introduced it said, I think it is a fairly straightforward bill that basically is about applying risk management to the dairy industry. As others have pointed out, that is absolutely essential for the health and well-being of New Zealanders, and for the protection of our exports.

I think that we in New Zealand are fortunate in that we have very high standards of safety in the dairy industry. I think we are fortunate too that our cows roam in paddocks and are not kept in concrete feedlots, as they are in some countries overseas. We are fortunate that we do not do things like inject our cows with a genetically engineered growth hormone, as is done in America.

If I may digress for 1 minute, I was delighted to hear that Gerry Eckhoff watched that very interesting programme on antibiotics the other night. He talked about how important it is that we use antibiotics in a sensible and restrained way because of the concern about resistance that that programme documented. I am sure Gerry Eckhoff is aware that antibiotics are used reasonably judiciously in the dairy industry to treat mastitis, but I am afraid to tell him that in other industries—as I am sure he is aware—they are used most injudiciously. I am referring in particular to the poultry industry, where antibiotics are fed continuously to chickens in their feed and water.

When Gerry Eckhoff talked about the need for judicious and restrained use of antibiotics, I became very hopeful that he will take up in the Primary Production Committee—the committee he has praised so heartily—the most injudicious, indiscriminate way that antibiotics are fed in New Zealand to literally 80 million or more chickens on a continuous basis, raising the spectre of huge resistance. I am sure that members are aware of surveys showing that 50 percent of the chicken flock is contaminated with vancomycin-resistant bacteria.

The Minister of Consumer Affairs is looking perplexed, as if she does not believe me, but I would be very happy to supply her with all the studies that show this very regrettable aspect of our chicken industry. Fortunately, we do not have this problem in the dairy industry. Antibiotics are not used indiscriminately, and the industry has a very good and well-deserved reputation. I think this very straightforward bill, and this risk-management approach will hopefully enhance and strengthen that reputation.

Gerry Eckhoff talked about how New Zealand’s reputation as a country is at stake if we do not properly manage the risks to our dairy industry, etc. He is absolutely right. I think there are some concerns that the dairy industry needs to address to make sure they do not become more serious ones that could damage our reputation, as Gerry Eckhoff mentioned. The first one is DDE residues being found in dairy products. We have already had examples of testing in England, which found DDE residues in butter from New Zealand. I think that is a very real issue that the dairy industry needs to look at. I think the dairy industry needs to look at the whole controversy around A2 milk. I think there is a feeling that the whole issue has been seen as a threat, and there has been a lot of controversy. I think we should look at it with a very open mind, and do as much research as possible into claims that the various proteins in milk could affect our health. I think the industry needs to look very seriously at that.

Although for the most part we have very good animal welfare practices in the dairy industry because our cows roam free, nevertheless there are some practices that I think we need to mention. They could be the sorts of things that could raise concerns, and animal welfare is becoming a concern internationally. We give cows various hormones and drugs to induce their calves to be born up to 3 months earlier, simply for the convenience of them all being milked at the same time. The inducing of calves in very substantial amounts is a practice that is causing concern internationally. There are concerns around whether that is acceptable, and around the treatment of male calves that cannot be used for dairying. I think the treatment of calves in general is something the Dairy Board needs to look at. Finally, there is the whole issue of effluent from the industry that is contaminating our rivers, streams, and lakes and causing a very serious environmental issue.

None of the issues I have raised are dealt with in this bill—at least, not that I can see. That is a concern, because I think the Dairy Board needs to address all of those issues if it is to retain its excellent reputation, both internationally and here in New Zealand. However, it seems that the major policy objective of this bill is really to facilitate the entry of our dairy products into international markets. In most areas of food safety, we find that the focus is actually on our exports, rather than on protecting New Zealand consumers, and it would appear that this bill has the same focus. I notice that when the Minister talked about whom he had consulted, most of them were in the industry. He did mention that some sort of consumer had been consulted, but generally I think there is too much focus on protecting our international reputation and industry. I have no problem with that, but not at the expense of protecting the New Zealand consumer. I think we see that reflected in this bill, as well.

Nevertheless, like all the other parties in the House, the Greens will support this bill, and we are very happy to do so. It will go to the Primary Production Committee, and I am sure that some of the concerns I have raised will be raised by the Green Party when it considers the bill in that committee. We will therefore be happy to join the consensus in this House in supporting this bill.

• Bill read a first time, and referred to thePrimary Production Committee.