Hon Trevor Mallard
Minister for State Owned Enterprises

27 March 2007 Media Statement

Bill paves way for possible merger of two SOEs

A bill has been introduced to parliament that will pave the way for the possible merger of state owned enterprises AgriQuality Limited and Asure New Zealand Limited, State Owned Enterprises Minister Trevor Mallard said today.

"The bill has been introduced today and will amend the SOEs Act to enable a merger to take place, should ministers decide this is viable," Trevor Mallard said.

"The government would prefer to see SOEs collaborate and coordinate their activities rather than compete against each other at a cost to the Crown and taxpayers - and this bill also reflects that desire in that it will prevent AgriQualty from providing export red meat inspection services.

"While a business case for a merger still has to be established, the economic benefits from a merger are expected to come from the establishment of a single integrated provider of primary sector food safety and biosecurity related services.

"AgriQuality and Asure have agreed to work together to explore the possibility of a merger," Trevor Mallard said.

The benefits for the agriculture sector and to taxpayers are likely to include:
- Scale-related efficiencies from having a single national service provider
- improved integration of national biosecurity response capability
- better coordination of skills, experience, technology, and infrastructure across the food and agriculture assurance markets
- improved information flow, innovations and use of resources
- a single integrated service provider would be better placed against national and international competitors
- additional revenue opportunities from offering integrated quality assurance services to the wider food industry

The two SOEs were created in November 1998 out of the corporatisation of MAF Quality Managements business units. AgriQuality's core business is the provision of food safety and biosecurity services, while Asure's is the provision of export red meat inspection services.

Specifically, the bill will:
- authorise shareholding ministers to issue a direction to AgriQuality preventing it from providing export red meat inspection services; and
- amend the State-Owned Enterprises Act 1986 (SOE Act), to remove AgriQuality and/or Asure from the schedule to that Act - provided shareholding ministers agree that a merger makes sense.

ENDS

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