AsureQuality grilled on procedures

Government-owned food inspection company AsureQuality was grilled today about why it did not get a review done into how it operates.

Farmers needed assurance that fees for meat inspection were fair and a review of would have helped, Labour MP Damien O'Connor said when AsureQuality representatives appeared before Parliament's primary production select committee this morning.

"How can you assure farmers that indeed they are... getting a good deal through your services?" he asked.

AsureQuality chief executive Tony Egan said the company charged competitive meat inspection rates and had only a 5 percent margin.

He said a suggested $300,000 Commerce Commission review was decided against because of the cost and the Meat Industry Association (MIA) was satisfied with a more transparent process around fee setting.

The company had reduced its own costs.

"We've assisted the industry to be more competitive by lowering our cost structure."

Mr O'Connor said a thorough review would have given farmers more confidence.

"I guess there was probably hope that there would be an independent assessment of the real costs, and the fact that that comprehensive assessment was foregone because you came up with a deal with the companies means that there's still this uncertainty about what are the real costs, because, as you said in your report, even through an economic recession you've done quite well."

Mr Egan said the company had an independent review done by Ernst and Young which found overhead allocations were fair and reasonable. Charges were reviewed with meat companies monthly and the MIA biannually.

"We have a fully transparent model and I don't think spending several hundred thousand dollars on (the review) would have changed any of those costs."

Mr O'Connor said that was good for meat companies but still left farmers out.

"For $300,000 it may still be a very good process to go through to give assurance to farmers who are the ultimate payers through this whole process."

Chairman John Spencer questioned who would pay for the review. He said the issue was really around what was involved in meat inspection and work was being done on that.

"Do we need to do all the testing we are doing?"

Mr O'Connor said the review could have looked at those issues too.

Mr Spencer said it was up to the MIA to request a Commerce Commission review but they were happy with the transparent process coupled with Ministry of Economic Development oversight.

- NZPA