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Dira sunset provisions bill passes first reading

Fuseworks Media
Fuseworks Media

By Maggie Tait of NZPA

Wellington, Oct 14 NZPA - A bill to extend requirements for Fonterra to provide cheap milk to other producers, including competitors, passed its first reading tonight.

The Greens were the only party to vote against The Dairy Industry Restructuring (New Sunset Provisions) Amendment Bill which passed the first reading on 112 to nine votes. The party said the legislation was an unfair imposition on the dairy cooperative and some in Labour thought it was unnecessary after the Government yesterday announced a review of raw milk regulations next year.

The bill extended the period that Fonterra had to provide up to 600 million litres of milk cheaply to other processors, which could order up to 50 million litres each at 10c a litre above the market price for raw milk.

National MP Maurice Williamson told Parliament the bill was needed to ensure competition. It set new market share thresholds -- at least 20 percent of milksolids to be collected by independent processors in a season for most areas.

As soon as thresholds were reached a review would kick in and the pro-competition clauses would lapse.

The bill also required diary processors to keep information so the government would have the information it needed for the review.

Labour's Damien O'Connor was concerned that the Government appeared to want Fonterra to reduce its market share from 95 percent.

"The alarming thing about the bill in the house at the moment, which is effectively redundant given the announcement yesterday...they have effectively said that Fonterra should be at maximum 80 percent of the market in this country."

National's Shane Ardern said the raw milk debate was only part of the equation.

He said a balance needed to be struck between protecting Fonterra's export capability and looking after smaller players within the country.

Green co-leader Russel Norman said the bill aimed to take money off New Zealand farmers and give it to overseas owners of Fonterra's competitors in New Zealand.

"In fact paradoxically one of the effects of this bill will be that New Zealand dairy farmers will actually be subsidising the Chinese communist party."

Synlait was bought by Bright Dairy which is owned by local and central government in China.

He said it was unreasonable to keep moving the goalposts on Fonterra and the original Act said once there was enough competition in the system the subsidies could be dropped.

"Now we are saying now there is this level of competition in the sector we are going to move the goalposts and you have to subsidise them more and more and more until they are big enough."

He said New Zealand producers could be protected without massive subsidies for foreign owners.

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