Hon Jim Sutton
Speech Notes
30 June 2004

Meat Board Restructuring Bill Second Reading, Parliament

Mr Speaker, I move that the Meat Board Restructuring Bill now be read a second time.

Mr Speaker, the Meat Board Restructuring Bill was introduced into the House on 2 December 2003. It had its first reading on 17 February 2004, after which it was referred to the Primary Production Committee for consideration. The Committee received and considered eight written submissions on the Bill.

The Bill provides for the Meat Board to focus in future on its meat export quota management role, which is of critical importance to the industry. The Bill removes the current Board's levying powers so that industry-good activities in the meat industry can be undertaken by a non-statutory industry organisation funded under the Commodity Levies Act 1990. The meat and wool industries have formed a new joint organisation for this purpose.

The key issues raised in the submissions on the Bill related to:
- safeguards for the preservation and application of the Meat Board's reserves;
- governance of the Board;
- ownership of rights to secure economic benefits from meat export quota markets;
- fees in relation to quota management systems;
- provisions for new entrants to quota markets; and
- consultation with the Board about compliance audits of the Board's quota management systems.

The Bill has new provisions governing the management of the Meat Board's reserve funds. The Board currently holds around $100 million in farmer reserves. The Bill provides for the new Board to manage the Board's reserves and other assets in the interests of livestock farmers, including managing the reserves for action in relation to a major industry crisis, preserving the integrity of quota management systems, and funding specific industry-good activities.

While some submissions to the Committee supported the proposal to maintain reserves to preserve the integrity of quota management systems, other submissions opposed it on the grounds that the reserves could become a potential litigation target, and that quota holders as the direct beneficiaries of quota should meet such costs.

I support the Committee's recommendation to insert a clear definition of reserves in the Bill, and its recommendations for clarification of the Board's powers to recover the costs of quota management and to replenish any reserves used to meet quota management costs.

The Bill provides for two of the ten or eleven directors of the Meat Board to be appointed by the Minister. Some submissions to the Committee considered a board of ten to eleven directors to be excessive, and some opposed having two Ministerial appointees on the Board.

The Committee has not recommended any change to this requirement, as it agreed with the original intent that having two Ministerial appointees on the Board will help to ensure that the Board has around its board table, directors with in-depth expertise in the international meat trade, quota management, and international trade relations. As the remaining directors will come from the new meat and wool industry-good organisation as directors of that organisation, I consider that the two Ministerial appointees on the Meat Board are necessary to ensure that proper attention is given to its key function of quota management.

The size of the board reflects the industry's desire for most or all of the industry-good organisation directors to also be directors of the Meat Board.

The Bill retains the Meat Board's meat export quota management functions. It provides that the Crown owns the rights to secure the economic benefits deriving from quota markets, and that the meat industry is the recipient of the economic benefits deriving from quota markets. I support the Committee's recommendation that it be made clearer in the Bill that the economic benefits derived from quota markets are assigned for the benefit of the meat industry.

The Meat Board's quota management functions, including any costs associated with litigation arising out of events postdating the commencement of this Act, will be funded on a cost-recovery basis by export quota holders, and applicants for quota. I agree with the Committee's recommendation to clarify that this provision does not authorise the Board to collect fees relating to costs arising from events that took place prior to commencement of this Act, except for costs that could have been recovered under the Meat Board Act 1997.

The Bill continues to require a part of meat export quotas to be available for allocation to new entrants, as provided for in the Meat Board Act 1997. The new entrant provisions make it easier for new entrants to get access to quota, and are intended to encourage innovation in the industry. I accept the Committee's recommendation that all applicants for a quota allocation under the new entrant provision, even if unsuccessful, should be able to be charged application fees. Every application would impose some processing costs on the Board.

The Bill has new provisions designed to update the existing quota management provisions in the Meat Board Act 1997. The Bill specifically provides for the Crown to audit aspects of the Board's quota management systems. These audits will assess the nature of the Board's compliance enforcement systems to provide a higher level of assurance that such systems comply with New Zealand's international obligations relating to meat export quota management.

The Committee has recommended amendments to these quota compliance audit provisions in the Bill, in order to distinguish more clearly between scheduled and unscheduled audits. I support the Committee's recommendations.

Mr Speaker, this Bill represents an important step in the ongoing evolution of the New Zealand meat industry. It ensures a clear statutory focus on the management of meat export quotas, while enabling the meat and wool industries to join forces in a new organisation to manage their industry-good activities.

I would like to thank the members of the Primary Production Committee for their consideration of the Bill, and for their report tabled on 27 May 2004.

I commend this Bill to the House.

ENDS

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