Hon ANNETTE KING (Minister for Food Safety) : I move, That the Animal Products Amendment Bill (No 2) and the Animal Products (Ancillary and Transitional Provisions) Amendment Bill (No 2) be now read a third time. This legislation 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, with exports worth more than $508 billion to the New Zealand economy. There are over 14,000 dairy farmer suppliers, with 188 registered dairy factories, 285 registered stores and transporters, and 473 registered dairy premises. There is widespread industry support for this legislation, and there has been unanimous support in this House.

The legislation will provide for a seamless transition between the Dairy Industry Act and the Animal Products Act. It will deem all product safety programmes under the Dairy Industry Act to be risk management programmes under the Animal Products Act from 1 June 2005, which is the start of the next dairy season. On those grounds there will be little change for operators in their day-to-day business functions, which means that there will be minimal compliance costs associated with the legislation. For the majority of the industry, the technical requirements will initially remain the same.

The dairy industry keenly awaits this legislation and is looking forward to receiving the benefits of operating under a new legislative framework that is consistent with the enabling style used in modern, risk-based legislation. I thank the members of the Primary Production Committee for the work they did on reporting the legislation back to the House without amendment. There was little substance in the debate in the Committee of the whole House. Perhaps there was a little bit of point-scoring from Brian Connell as he made a speech against the New Zealand Food Safety Authority, but I suspect that it was more a filler for his 5 minutes than a plan to scrap the authority, should National ever become the Government.

Hon David Carter: Who wrote this?

Hon ANNETTE KING: I say to Mr Carter that I wrote that all by myself. I thought we would have a little bit of passion in the debate, because we did not get much in the Committee stage.

I conclude by saying that this is long-awaited legislation. Dairy farmers will be very happy tonight to know that we have finally passed this legislation, which enables them to start the next dairy season on 1 June 2005 with this legislation in place. I commend this legislation to the House for its third reading.

Hon DAVID CARTER (National) : Can I first of all say in response to the Minister that due to the debate that preceded this very important legislation, I suspect that 14,000 dairy farmers—those extremely hard-working New Zealand dairy farmers—have turned out the lights, because by about 4 o’clock or 5 o’clock tomorrow morning, they will be up before that member starts her day, to make sure that they are out there doing their bit to create wealth for all of New Zealand. I applaud those 14,000 dairy farmers for what they have done for our economy over the last 5 years. It is a credit to them, and it is a shame that the Government has not taken the opportunity to recognise them and credit them for their role.

With the passing of this legislation, it is important for the House to realise that there were two reasons given at the time that the previous National Government passed that excellent legislation, the Animal Products Act of 1999. As we revamped the legislation pertaining to all animal products, we specifically excluded the dairy industry, for two reasons. The first reason given to us at the time by officialdom was the complexity of dairy products. The second reason given was the huge amount of change that was occurring in the dairy industry at that time due to producer board deregulation.

Let me comment on the first reason. It is interesting that while officials and the industry spoke about the depth of complexity around bringing dairy products and the dairy industry into this legislation, once everybody has put their minds to it in the clear light of day, it seems to me that we have overcome the complexities, and I acknowledge the work done by the select committee as it tidied up one or two things through that process.

The second reason, I think, was quite valid. We have to go back to 1997 and 1998 when the Hon John Luxton, an eminent former member and agriculture Minister, staked his political career on the reform of producer boards and, particularly, the reform of the dairy industry. I had the pleasure yesterday, with the member for Piako, Lindsay Tisch, to be in his electorate and to visit Open Country Cheese, which is an operation located 10 kilometres north of Matamata. Many members of this House will know that the former Deputy Prime Minister, the Hon Wyatt Creech—

Darren Hughes: The right honourable!

Hon DAVID CARTER: It is nice to still have a “right honourable” after that member voted the Privy Council away; they are fast becoming an endangered species, those “right honourables”! But I want to congratulate the Rt Hon Wyatt Creech and the Hon John Luxton on what they, and what many other investors, have done there at Open Country Cheese. However, I point out that that has happened only because the legislation passed by this House has allowed the dairy industry to finally deregulate, with the formation of Fonterra, and that has, to date, been a very successful move for the 14,000 dairy farmers.

We then attended a meeting after visiting Open Country Cheese, and one of the dairy farmers there made a comment such as: “Well, I think the only good legislation that the socialists have passed is the Dairy Industry Restructuring Act of 2001.” I certainly took the opportunity to correct that farmer. While the law might finally have been passed under the Labour Government elected at the end of 1999, no credit at all can go to the Labour Government, and particularly not to Jim Sutton as Minister of Agriculture, for shepherding that legislation through the House. It was entirely the superb work of the previous Government, which took the initiative to allow this industry—this all-important industry—to play its role in the New Zealand economy.

Brian Connell: What do Federated Farmers think of this?

Hon DAVID CARTER: Mr Connell interjects to ask me what Federated Farmers think of that move. They are certainly very supportive of the dairy industry and of the deregulation that has occurred. After I corrected that one hapless member within my audience, they collectively congratulated the previous National Government on its superb work in deregulating industry boards. But I have a quiz for that member, Brian Connell: what do five Federated Farmers provincial branches—namely, Auckland, Bay of Plenty, West Coast, Nelson, and Marlborough—all have in common?

Brian Connell: They want the Minister of Agriculture to resign.

Hon DAVID CARTER: The member is absolutely right. Those five provincial branches of Federated Farmers have taken the unprecedented move of calling for the resignation of the Minister of Agriculture.

As I said in a radio interview about 30 minutes ago, even though agriculture went through the turmoil of the 1980s, at no time did the industry feel so aggrieved that it voted a vote of no confidence, as they are doing with the current Minister of Agriculture, the Hon Jim Sutton. What we are seeing is a turning point, and why the Minister Annette King can come into this House and crow about a $5 billion industry, and 14,000 dairy farmers working hard, morning and night, to create that wealth. Those farmers are aggrieved. They are angry. They are as angry as we have ever seen the farming community in this country, and the principal reason they are grumpy is the stupid legislation around the issue of public access.

I say to members opposite that that will be the issue that this Government will have to justify during the election campaign. That is the reason so many farmers are voting no confidence in the Minister of Agriculture, and that is the reason the farmers who should be happy with the current level of dairy payout are not happy at all. They are fed up with this Government attacking agriculture and not appreciating the role that it plays.

I want to now move to a very important aspect of this legislation—that is, the issue of trade facilitation. This legislation will help to facilitate the entry of New Zealand dairy products into our overseas markets, and that is to be applauded. But I say to this House that we can sit here and pass any amount of legislation that facilitates the entry of our dairy products into overseas markets, but it will not help one iota unless the Government will generally focus on the issues of trade development.

I refer, of course, to the way we have allowed the Australians to get a march on us by developing a free-trade agreement with America, whereas we are nowhere on the agenda for a free-trade agreement with the United States of America until Helen Clark is prepared to apologise for some of the comments she made earlier against President Bush and his administration.

Finally, I want to talk briefly about our ability to export dairy products to any country in the world. What then becomes critical about our ability to profitably export is the costs of production in this country. Until the election of a Labour Government in 2002, New Zealand was recognised as the cheapest place in the world to produce dairy products. I was horrified, but not surprised, to learn last week of the report of AgResearch that states that New Zealand is not now the cheapest place in the world to produce dairy products—Argentina and Chile are the cheapest. However, more worrying is that Australia, our biggest competitor in the international market, is now a cheaper place to operate a dairy farm and produce dairy products than New Zealand.

That is principally because this Government has slagged and slogged the dairy industry, and all of agriculture, with somewhere around 30 new taxes since 1999. The industry cannot continue to prosper if a Government is totally unsympathetic to the issue of profitability. The Government must take note of these additional taxes it is imposing on this industry, because they threaten the very buoyancy of the New Zealand economy.

Hon DAVID CUNLIFFE (Minister for Communications) : If there were ever any doubt that that member is a twice-failed spokesperson on agriculture, that pathetic speech would prove it. He rambled off the subject on to everything from nuclear ships to tax policy, but never once mentioned the substance of this bill. I support the bill, and so does the Government whip.

R DOUG WOOLERTON (NZ First) : That speech was from the well-known dairy farmer from west Auckland, David Cunliffe. But he has other attributes, so we will not go on very much about that. These bills about animal products are technical legislation and, as previous speakers have mentioned, the legislation is intended to enhance our entry into foreign markets. It is certainly true that the dairy industry is a $5 billion export industry. It is certainly true that there are 14,000 dairy farmers in this country, who produce, I might add, 25 percent of this country’s exports—exports upon which we rely in order to sustain a reasonably high standard of living.

When the Hon David Carter was talking about that he made much about the dairy industry deregulation, promulgated by the Hon John Luxton and pushed through a special committee of this House while the National Party was in Government. But I would not make a big issue about having pushed through deregulation and, very shortly thereafter, going off to take advantage of that deregulation by building one’s own cheese factory with another ministerial colleague called Wyatt Creech. There is nothing illegal about that and there is nothing particularly wrong about that, but it is just not something I would rave on about if I were the Hon David Carter. The milk is supplied to Open Country Cheese by Fonterra, which is forced by legislation to supply milk to the company—at an agreed price, I must add.

That is certainly a wee way yet from the pure, free market that the Hon David Carter would have us believe exists in the dairy industry. So I tell members I do not think it is right that the National members rave on about that, because it is neither a completely free market nor is it something to be proud of to have shoved through legislation in this House and then to have gone out into the business world to take advantage of it. I do not think anyone should skite about that.

It is also the case that five branches of Federated Farmers have passed a vote of no confidence in the Minister of Agriculture. I have previously warned Federated Farmers against tying themselves up too closely with political parties. In this case—I do not know whether people are aware of this, but if they are not I will make them—the ACT party, through its very energetic member Gerry Eckhoff, has been making sure that those votes of no confidence in the Minister are passed, by going around the country and by going on about the so-called right-to-roam legislation. That legislation, as I understand it, is not going to happen, but we all know that legislation is planned to give access to rivers and streams. We will talk about that in the fullness of time. New Zealand First will be happy to talk about it, and I am personally happy to give my views on it at the appropriate time.

It is interesting that people are saying that that issue will be an election issue. It will not be—absolutely not—and it will not even register on the Richter scale at the election. I think, quite frankly, that the two parties that are going on and on about it are having Federated Farmers on. When the lady from Federated Farmers comes to see me, I will ask her whether Federated Farmers are now getting into the political business and joining up with parties, or whether they are going to do what my father and his friends and colleagues of those days did—and what they worked their buts off for—which was to represent farmers fairly in this House amongst all the political parties, without fear or favour and no matter who is governing the country at any point in time. If Federated Farmers are not going to do that, they will pass into the annals of irrelevancy. I will give them that warning right now, because that is what I intend to tell their representative.

It is a sad day when Federated Farmers go down that track, and it is a sad day when they are led astray by one party in particular in this House, which has misjudged the situation and thought that legislation would be in Parliament by now. It is not in the House, and it will not be here before the election. A person does not have to be a rocket scientist to work that out, but that party’s members have gone around huffing and puffing to no end use, and they have, to use my colloquialism, tucked up Federated Farmers. I am proud to say that when my father was at the top of that organisation he would not have allowed that to happen, and he will be turning in his grave that such an organisation has gone down that path. New Zealand First will not support all that sort of right-to-roam legislation, but neither will it go down the path of tucking up an industrial grouping with such an honourable history as Federated Farmers and, in fact, the farmers themselves.

We support this animal products legislation. We look forward to its assisting dairy farmers across the country, and most of all look forward to its assisting our access into markets—unfriendly markets, I might add—on the other side of the world.

GERRARD ECKHOFF (ACT) : In case any people listening were not aware who the previous speaker was, let me inform them that it was Doug Woolerton, who was supported by the blowfish—Doug Woolerton and the “Blowfish Party”.

While we are talking about the animal products bills, let me assure that member and everybody else that the demand that has come over my desk for me to get back on the bus, go right throughout New Zealand, and talk about the issues affecting farmers has been immense. In a few short days I will be back talking to the farming community about access, which affects the farming community; about the “fart tax”—I suppose members will claim that that was just a Federated Farmers beat-up on the farmers again—or, getting political, about the 5c a litre fuel tax. Farmers are very keen to know why they are being penalised when they put fuel in vehicles that they use on their own farm tracks. That 5c a litre tax will be used to fix the roads of Auckland, and farmers are not happy about paying it.

But let me say to Mr Woolerton that the job of Federated Farmers is to represent their farming communities in the way they see fit, just as the trade union movement represents its members as it sees fit. The trade union movement is affiliated almost totally to the Labour Government, yet Mr Woolerton says that Federated Farmers cannot align themselves with the centre-right—yeah, right!

I would like to get back to the subject of the dairy industry and the wider land-based industry, and to make this observation: it is because this Government has ignored land-based industry in this country that it has been so successful. Let us think about that for a moment. It is because the Government has fundamentally ignored everything to do with land-based industry that it has been so successful. I suggest that the Government should also ignore education, health, welfare, and all of those issues, because they are outstanding failures. Yet when we look at the dairy industry we see outstanding success. Why? Why does this Government not run the food industry, for example? That surely must be the most important industry in this country. If we do not eat, we die. So why does the Government not take it over? The answer is obvious: we would all end up 100 metres back in the queue on a cold winter’s morning, trying to get some bread. That is why we will not have Governments involved.

I say again that I am absolutely proud of the industry that I stand in this House and represent—the farming industry. It has achieved outstanding success. Despite high-handed, top-down regulation being imposed on the industry by this Government, it has managed somehow to circumvent that. We had a little bit of good fortune, I guess, with exchange rates at one stage down to 39c, but now they are up to 75c and the industry is still holding its own, because of its expertise and the high demand for the quality products of this industry and of the wider land-based industry in this country.

As an ACT party MP I am not at all keen on regulation and rules, but I do accept that in the dairy industry and the food industry there has to be regulation surrounding the quality of food. But one of the great ironies about this whole thing is that the regulations surrounding the use of antibiotics and so on for animals are far more stringent than the regulations for their use by human beings. Why? Why do we virtually control the use of something like Amoxil for animals but do not restrict its use by human beings? We can swallow the stuff by the gallon if we wish to. It seems totally perverse that we have these high-handed restrictions on the farming industry, yet human beings can absorb everything that is thrown at them.

I also want to pay tribute to Mr Owen Jennings, who of course would be well known to everybody in this House. We have heard about deregulation. Well, it was Owen Jennings and the ACT party who back in 1996 drove this issue when every other party in this House said: “Oh no, don’t touch it. Let the farming community decide.” I think we owe a huge debt of gratitude to men like Owen Jennings who had the courage to stand against the popular tide of conservatism and regulation at that time. His name shines in lights, quite frankly, when we talk about the success of the dairy industry and the success of deregulation, of which New Zealand is rightly so very proud today. I think we owe a real debt of gratitude to Owen Jennings and like-minded people who, way back—almost 10 years ago now—demanded the freedom for this industry to expand and excel, which it most surely has done.

There is a way to go yet, especially for the dairy industry. I am delighted to see that a private dairy company, Open Country Cheese, has started up. It opened for public subscription. Shares were floated and they were taken within a matter of minutes, I think. That shows that the public in this country has huge confidence in my old flatmate Wyatt Creech and the others who have started up this company. They saw the opportunity, and, despite what Mr Woolerton says, I am told that they will have secured private, or non-Fonterra, suppliers before very much longer. I cannot guarantee it, but it is something that I think will happen. Open Country Cheese recognises that there is a need for outside capital to come into this industry, rather than farmers constantly being asked to accept a smaller payout for their product. They can expand their own industry without having to tie up all their capital within the dairy industry—without their having all their eggs in that one particular basket, so to speak.

So we have a lot to be very, very proud of in the dairy industry. This animal products legislation goes along the way of ensuring that our products are widely known and respected, and command premium prices throughout the world. Alongside my colleagues, I stand delighted to support this bill. I make this final point: it seems extraordinary that virtually every bill that goes through the Primary Production Committee is non-controversial and gets cross-party support. That is because, by and large, it is common sense that the legislation is needed, and there is little or no Government involvement. That is the secret to success in this country—get the Government out of business.

JUDY TURNER (Deputy Leader—United Future) : I stand on behalf of United Future to speak to the third reading of this legislation. As a dairy farmer’s daughter, I think my dear dad would not be turning in his grave, but would be rather chuffed that this industry is getting the makeover that it so richly deserves.

The objectives are quite clearly defined. The legislation sets in place a system that is less coercive and more outcome focused. The move to manage the risks to humans and to animal health from the consumption and use of dairy products, and to further facilitate the entry of New Zealand dairy products into the overseas markets through improved quality assurances, cannot in all reality be rationally opposed. It is very pleasing to hear the support in the House this evening for the third readings. These objectives will serve the industry and the country well, both now and into the future.

It was also pleasing to note that there were efforts to consult the industry members about the underlying issues that the legislation 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 legislation and adds value to its intentions.

Consultation on this proposal has included discussion papers and stakeholder submissions, and it has been broad and extremely useful. The regulatory model used for the legislation will afford the industry more responsibility for producing safe food, and the necessary flexibility to achieve desired outcomes. The functionality of the model is commendable and will add value to industry practice and procedure, and will help to ensure future-proofing of the industry, allowing for its ongoing development for the benefit of all New Zealanders. Once again, United Future supports the third readings of the bills.

BRIAN CONNELL (National—Rakaia) : I want to take a relatively short call on this legislation because I have just two or three points to make. The first is that although the National Party is supporting this legislation, and I know that the dairy industry is supporting this, we are doing it somewhat through gritted teeth. The reason, we have been told, that this is the sort of legislation that the dairy industry wants is that it will facilitate trade into European markets. As someone who has been involved in the industry over a number of years, I have to say that I do not necessarily buy that. We should understand, and members of the dairy industry do understand, that the customers in the European markets appreciate cheap, quality goods just like everyone else. Members of the industry are concerned that we will create a bureaucracy that is bloated with red tape, which will affect that competitiveness somewhat. I am sick and tired of a Government that dances to the tune of European markets, day in and day out, without giving due recognition to the dairy industry and the sterling work that that industry has done over the last 20 years.

Opposition Member: Fourteen thousand hard-working dairy farmers.

BRIAN CONNELL: The 14,000 hard-working dairy farmers in this country should get more support and recognition than they do from this Government. The other point I want to make—and this really raises the hackles on the back of my neck—relates to the Food Safety Authority. Here is an organisation that has a reputation for being full of zealots. It is hard to deal with—it is pretty much “Do it our way, or no way.”—and I say that that is not an acceptable way to conduct business across this country. Industry after industry has felt the torch of this authority, and they find it very difficult and unreasonable to deal with. What it is promoting is that this industry must be self-regulating. It must have risk management programmes in place, we have been told. Well, hello! Wake up and smell the roses, is what I say to the Food Safety Authority, because here is an industry that has been regulating itself for a long time, and has been doing it to exacting standards. It should get some credit for that.

My final advice to the Government is this: if it is not broke, then do not try to fix it. What the dairy industry is most alarmed about—when I talk to individual members, and to the industry as a whole—is that this will end up in a bureaucratic nightmare, as this Government, its consultants, and its food safety henchmen drive around the country and put in place bloated regulation after regulation, which is simply not necessary.

LINDSAY TISCH (National—Piako) : It is always interesting to hear Government members talk about how great the dairy industry is and how great agriculture is, but it was not so many years ago that David Lange said that agriculture was a sunset industry.

Lianne Dalziel: 1985.

LINDSAY TISCH: In 1985 David Lange said that agriculture was a sunset industry. It is actually agriculture that has led the charge in the growth of New Zealand. The prosperity of New Zealand has been very much dependent on what is happening in the agricultural sector. With deregulation we have seen—as my colleague the Hon David Carter said—the creation of enterprises like Open Country Cheese, which David Carter and myself visited yesterday. We have seen the kind of entrepreneurial spirit that has gone into that initiative. It is a $25 million investment, which was oversubscribed—that is how well the investors thought of this operation—and which is now, within a short time, moving into whey production. To manage the risk of that operation, the company is moving into whey and the markets associated with it.

I want to share a couple of comments with the House about Open Country Cheese. For the benefit of the member from New Zealand First Doug Woolerton, who does come from the agricultural sector—as he has mentioned, his father was very much involved in the dairy industry—I say that although Fonterra has to supply so many litres of milk to that company under the Dairy Industry Restructuring Act, individual farmers have taken it upon themselves to move straight out of supplying Fonterra—

Hon David Carter: They are queuing up.

LINDSAY TISCH: They are queuing up, as my colleague says. We had yesterday the situation where a Tātua Cooperative Dairy Co. supplier—and everyone knows what a success Tātua is—has taken his supply away from Tātua, to supply exclusively Open Country Cheese. Now, as my colleague says, there are farmers lining up to supply this company next year. The member says the company is taking money from Fonterra, because of the Dairy Industry Restructuring Act, but I tell him that it is not dependent on that, because it is making it out there in the marketplace. It has established a reputation.

Lianne Dalziel: What’s the name of the company?

LINDSAY TISCH: It is called the Open Country Cheese Co.

Opposition Member: That member should know about that.

LINDSAY TISCH: The member should know about it. Here we have a company with entrepreneurial spirit and get-up-and-go. These people—the dairy farmers of the country—are making it worthwhile. They are the wealth creators.

Brian Connell: They do not get handouts.

LINDSAY TISCH: No, they did not need any handouts from Mr Anderton. They are the wealth creators of New Zealand. National supports their initiatives. We support their entrepreneurial spirit—not only the dairy farmers but also those companies that are making a go of it at the coalface, such as Open Country Cheese. And there will be other companies that do that. National is happy to support that. As we move to adding value, the point needs to be made—it has been made before, but I reiterate it—that New Zealand is no longer the country producing the cheapest dairy products. We have been overtaken now by the Argentine and Chile. Those countries’ costs of production are lower than ours. We have to be footing it in the marketplace, we have to be adding value to our products, and that is what this sort of company is doing.

It is no credit to Labour, I can tell members; it is no credit to what this Government has been doing. It happened during National’s time, when people with foresight, such as John Luxton and Wyatt Creech, were prepared to stand up and be counted, and Wyatt Creech has led the charge with this new cheese company.

National is supporting this legislation, and we are supporting the dairy farmers and the dairy industry of New Zealand.

• Bills read a third time.