4. R DOUG WOOLERTON (NZ First) Link to this
to the Minister of Finance
Is he satisfied that the Overseas Investment Act 2005 is working in the best interests of New Zealand in the wake of Russian company Nutritek being allowed to create New Zealand’s first totally foreign-owned dairy producer; if so, why?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I thank the member for his question. I am still awaiting a National Party question on the Budget! The answer is yes; because the acquisition of the additional New Zealand Dairies Ltd shares by Nutritek is likely to result in the creation of new job opportunities, the introduction into New Zealand of new technology or business skills, increased export receipts for New Zealand exporters, and added market competition and greater efficiency in New Zealand—all of which are criteria under the Act.
Does the Minister of Finance agree that the reputation of our dairy industry and the associated “Made in New Zealand” brand is of vital economic importance to our country; if so, why does he not consider those reputations to be important enough for Ministers to take them into account when judging overseas investment decisions?
Hon Dr MICHAEL CULLEN Link to this
I think it is fair to say that a long time was taken by Ministers over this decision, and a whole range of such factors were taken into account. In particular, a number of accusations that had been made were carefully investigated by officials.
Sue BradfordDoes the Minister agree that this decision will mean that New Zealand taxpayers give Russian-owned Nutritek some $12 million over the next 5 years to cover the Kyoto Protocol cost of its greenhouse emissions; and would it not be better to keep our dairy industry in New Zealand hands, and to have the industry pay its own way instead of receiving taxpayers’ subsidies?
Hon Dr MICHAEL CULLEN Link to this
The owners of this business will be subject to exactly the same laws as any other owner of any primary sector business within New Zealand.
Is the Minister aware that Nutritek will not introduce any technical skill or expertise to New Zealand Dairies Ltd that cannot be found in New Zealand; and can he confirm that the takeover application contains no guarantee that value-added projects will be undertaken by Nutritek in New Zealand?
Hon Dr MICHAEL CULLEN Link to this
I can confirm that Nutritek is a specialist in a range of activities, including dairy products for babies, and other matters; that it has a significant research capacity offshore; and that the takeover has been welcomed by the head of the dairy section of Federated Farmers.
What consideration, if any, was given by his office and the Overseas Investment Office to the extensive and detailed submission opposing Nutritek’s application that came from three of the founders of, and largest shareholders in, New Zealand Dairies Ltd, whose submission was also supported by three-quarters of the farmers supplying milk to New Zealand Dairies Ltd?
Hon Dr MICHAEL CULLEN Link to this
I can assure the member that very careful consideration was given to all of those submissions, and, indeed, Ministers received quite full reports on a number of the accusations and submissions that were made.
Rt Hon Winston Peters Link to this
Can the Minister confirm that New Zealand First wrote to Ministers to urge them not to allow Nutritek to take over the company, arguing that the decision would set a precedent that would allow the dairy industry to be taken from the hands of those who had invested in it, and from the country that has nurtured it through regulation and international agreements over many years?
Hon Dr MICHAEL CULLEN Link to this
I can confirm that that letter was received. I think Ministers determined that the basis on which that letter had been written was not factually correct in that, indeed, New Zealand Dairies Ltd is not a farmer cooperative like Fonterra; it is a processing plant and processing company. Of course, the restructuring of the dairy industry by the Dairy Industry Restructuring Act did envisage that there would be new entrants into the business, and that some of those entrants would be from offshore. The one that was most commonly talked about at the time, of course, subsequently collapsed, or went into considerable decline, initially.
Rt Hon Winston Peters Link to this
Is the Minister not concerned that this takeover sets a precedent, enabling the start of a big foreign campaign to buy out the New Zealand dairy industry, and to trade off our priceless image overseas; and is he aware that, unlike the case of the railways, both our dairy industry and our image will be irretrievable after the Government has sold it off?
Hon Dr MICHAEL CULLEN Link to this
I see no precedent in this sale, or any suggestion at all, that, for example, Fonterra is going to pass to overseas interests, or Tātua is going to pass to overseas interests; they are completely different companies in structure from the one that Nutritek has bought. Nutritek will be a relatively small player. It should be noted, for example, that although there have been some concerns about the possible mixing of products coming out of Nutritek here with offshore products, that is equally possible at the moment with powdered milk supplies from New Zealand.
Hon Jim AndertonDoes the Minister have any information about the assets that Fonterra, as a representative of the New Zealand dairy industry, is purchasing in other countries, and what would our reaction be if Fonterra were stopped from purchasing those assets?
Hon Dr MICHAEL CULLEN Link to this
Fonterra has acquired assets in China, in Chile, in other South American countries, I believe, and in Australia. Indeed, it is engaged in a major expansion of its international organisation. It is very hard for us to say to foreign-owned companies that they cannot buy any part of the New Zealand dairy industry, when the largest single player and trader in dairy products in the world is busy trying to buy up milk supply in other countries.