Cabinet to decide on milk inquiry

The Government is "very interested" in getting to the bottom of milk prices and may back a parliamentary inquiry into the issue, Prime Minister John Key says.

Labour and the Greens have called for a select committee investigation into the milk market after the Commerce Commission this week said it would take no further action over complaints of soaring consumer prices for the staple food.

Act MP Hilary Calvert who holds the balance of power on Parliament's commerce select committee which would conduct an inquiry has told the Herald she would support a fresh investigation if issues around dairy giant Fonterra's ability to set factory and farm gate prices were examined.

Yesterday, Mr Key said his Cabinet would decide whether to back a new inquiry when it met on Monday.

"We're not ruling out that we'd support a select committee inquiry, we may well do that."

However the Government would not want to cut across the existing inquiries including an inter-departmental investigation into Fonterra's secret methodology for setting underlying farmgate and factory gate prices. Officials are due to report their findings later this year.

Like his Agriculture Minister David Carter this week, Mr Key was unable to assure New Zealanders they were not paying too much for milk.

"What we're trying to do is make sure we're absolutely satisfied that is the case and that's partly why we've got different agencies working on different issues like raw milk pricing."

Mr Key said a select committee inquiry may be of value because it would give various stakeholders a chance to have their say in a public forum.

That view was shared by Labour MP and commerce committee chairwoman Lianne Dalziel, who also said any fresh investigation should not cut across ongoing probes. She favoured an inquiry that examined whether the Commerce Act, which was the framework for the Commerce Commission's investigation, was up to the task of ensuring the retail and wholesale milk markets were functioning well

Act's parliamentary leader John Boscawen said his party would discuss whether they would support a select committee inquiry at their caucus meeting next week.