Appropriation (2026/27 Estimates) Bill

Thank you, Madam Chair. I’m pleased to take this call to open this debate as the chair of the Economic Development, Science and Innovation Committee. This is just to provide a very quick summary of the areas that the select committee members discussed with the Minister of Commerce and Consumer Affairs. I want to acknowledge the Minister, the Hon Cameron Brewer, and his officials for answering questions that the committee members asked. The Commerce and Consumer Affairs appropriations fund has a range of work that is led by the Ministry of Business, Innovation and Employment. The portfolio covers financial markets competition, consumer and commercial matters, corporate governance, intellectual property, and standards and conformance.

The select committee noted that for 2026-2027, the Government is seeking $305.6 million for the Commerce and Consumer Affairs appropriations, which is $8.8 million less than the previous year’s estimated actual expenditure of $314.4 million. The select committee members were interested in discussing banking competition, especially how it’s working for small businesses. We also discussed beneficiaries of open banking, and the Minister suggested that increased competition among lenders has improved conditions for mortgage borrowers, including young people and first-home buyers.

The select committee was interested in financial crime as well, and we compared how it works in Australia versus New Zealand. The Minister told the select committee that he would seek advice on the level of financial loss for consumers as well as the amount of compensation banks are paying. We discussed recent and proposed legislative changes, and in that, we also discussed the surcharge ban bill—the short form of the Retail Payment System (Ban on Merchant Surcharges) Amendment Bill. The Minister told the select committee that he is still considering various options to see how that could be proceeded. We discussed reporting on fuel price data, because the select committee noted that the ministry had stopped its reporting on fuel price monitoring data when the international fuel crisis happened. But we also note that since our hearing, the ministry has resumed publication of its weekly fuel pricing monitoring.

Other than these issues, we also discussed extreme weather events and insurance claims, product standards, and safety. There was quite a lot that we squeezed in the time that was available with the Minister, and I look forward to the debate. Thank you.

Thank you, Madam Chair. I want to start, first, with the issues of the day. The Minister of Commerce and Consumer Affairs is responsible for the $86 million appropriation to the Financial Markets Authority (FMA), so I want to ask him about what was reported today, which will be of concern to him, I know, and the finding of the FMA that consumers are being sold in New Zealand add-on insurances and extended warranties that are effectively of no value to them and that are entirely a waste of money. This will not surprise him. These also match the findings of the Commerce Commission in late 2022, which was when further changes to the Conduct of Financial Institutions (CoFI) regime were made—changes to the CoFI regime which his Government has reversed.

The FMA’s investigation and enforcement funding is what I want to start to ask him about first. It’s a good news story. It goes up from $17.4 million to $24.5 million. I want to ask him first: what enforcement action does he expect the FMA to be taking, particularly around junk insurances? He will also be familiar with what the Australian Federal Government are doing to ensure that junk insurances are not something that Australian consumers are burdened with. In the Australian Treasury’s advice to Government recently, they found in the scope of tens of millions of dollars to be the cost every year to Australian consumers in terms of insurances which are, frankly, a complete waste of time, energy, and money, and a predatory practice.

I want to ask the Minister what his expectations are of the FMA, given that it was his Government that put the enforcement function to that agency—an agency which is beleaguered by some troubles within it, and I would also offer him the opportunity to comment on that. But what I’m interested in here now is that if we have a regulator that has taken its eye off the ball, and a Minister who has too, how can we ensure that those consumers who are being lumped with these products which are of no value to them are going to get some regulatory relief, especially in the context where this Government has removed some of those key protections within the CoFI regime? I’ll start there.

Thank you, Madam Chair, and thank you to the member too for her interest in these matters. Just on the Financial Markets Authority (FMA), yes, it is going through challenging times, but we continue to have full confidence in the FMA, more so than ever before, with the appointment of a new chair and a new board member. As the member indicated, they have, since 1 July, picked up more responsibilities, as the member is well aware, in layman’s terms, by having oversight of consumer credit.

I hear what she’s saying as far as the insurance sector and what she described as junk insurance products. I know that the FMA, with consumer oversight now of credit, as you may have already seen in some of these reports, is going to hit pretty hard those that are basically loan sharking car sales all around the country. The FMA is going to be focused on those. The FMA is also going to have a focus on any attached insurance policies, too, that may add up. But for those that have pretty much only got the option, in their own eyes, to take the terms and conditions that that car salesperson is putting on them, normally at huge compounding interest rates, they need to be aware that the FMA—the tools that we have given them—have ratcheted up their ability to monitor this. They have responsibility now to have consumer credit from the Commerce Commission, and they have a big focus as they unleash across consumer credit, particularly on the car sector.

I thank the Minister of Commerce and Consumer Affairs for those answers, but the question was: what enforcement action does he expect his regulator to take with the increased appropriation which he has given them for enforcement? I look forward to his response to that. His comment earlier that the Financial Markets Authority (FMA) has been given new tools for licensing and monitoring is not right. The licensing and monitoring regime has been transferred from two regulators to one—that’s true—but the compliance spend that FMA has access to has been cut by this Minister. Isn’t that the key to fixing this, Minister? I agree with you that licensing is a key component of that, so why is that not reflected in the appropriation?

A third question for the Minister. The FMA has given targeted feedback to insurers. Those are the insurers that the Minister himself categorises as loan sharking car sales. Those loan sharks have been slapped on the hand with a wet bus ticket by this regulator. Will the Minister name them now if he is not going to pursue regulatory action?

As I said, the Financial Markets Authority (FMA) has oversight now of consumer credit. We had about 35 skilled people move from the Commerce Commission over to the FMA in that realm of consumer credit, and they are determined to get on top of many of the issues that the member has articulated, and that’s in and around the car sector, particularly the used car sector, and loaning and insurance products. If they are seen to be in breach of the law, the FMA has given me every assurance that these people will be in their sights and they will be coming down hard on them.

The problem we have is that the Minister of Commerce and Consumer Affairs knows who these bad actors are and won’t even name them for the committee. Minister, is there any clearer breach of the Conduct of Financial Institutions (CoFI) than a 2 to 3 percent loss ratio insurance product? It’s effectively an insurance product which never pays out. These are insurance products which are not valuable to consumers, that they do not understand, and they are sold under push conditions to the most vulnerable consumers there are, to single mums who have gone into a car yard with a Work and Income New Zealand payment because they need a car to get to work. Why won’t this Minister take action, and why has this Minister spent time reversing some of those changes that CoFI requires insurers to act in good faith and actually put some of the practical implications in place? Is that because the commerce and consumer affairs policy advice appropriation has been cut to $14.564 million this year, and what were the fulltime-equivalent assumptions that sit behind that? How many policy staff did he get rid of, and is that why he doesn’t have useful advice about what impact this is having on the consumers?

Thank you, Madam Chair. Well, I suppose it’s probably about now, when I’m being asked, potentially, for some comments as to operational priorities, that I remind the member that the Financial Markets Authority (FMA), as she well knows, is an autonomous, independent Crown entity, with a new chair and an independent board, that comes up with its own work programme. The FMA has given us every assurance that the Credit Contracts and Consumer Finance Act, which it has now taken over from the Commerce Commission, is going to be a big priority for it. Once upon a time, when the FMA replaced the Securities Commission, it was a capital markets regulator. Its remit is much wider, going across town, and it has plenty of tools to make sure that anyone in the consumer credit space, and any vulnerable New Zealanders that are getting ripped off when buying cars or insuring cars—those perpetrators will be prosecuted.

I just want to clarify—that was a helpful answer from the Minister—will vulnerable consumers who are being ripped off by car loan sharks, as the Minister categorises them, be prosecuted in this coming year? Madam Chair?

CHAIRPERSON (Barbara Kuriger): Arena Williams.

ARENA WILLIAMS: I think that was a no from the Minister, so I’ll move on to the product safety standards and trading standards—

CHAIRPERSON (Barbara Kuriger): The Minister actually clarified that people will be prosecuted. The Minister might like to comment—it’s not the Minister that decides that date, whether it will be this year or not—

No, no. Thank you, Madam Chair. As I articulated, this responsibility for the Credit Contracts and Consumer Finance Act, and those that fall outside the legal bounds of it, now falls to the autonomous independent Crown entity called the Financial Markets Authority, so I’m not going to stand up here and start putting forward dates of prosecutions, who should be prosecuted, and name and shame them—that’s not my role. Otherwise, I may as well push the FMA aside, take it out of the statute, and we can leave the House and go and create our own inspectorate and go and put our own enforcement upon them. We’re not doing that.

CHAIRPERSON (Barbara Kuriger): So now that that’s clear, we’ll have the next question, thank you.

Yes. The problem is that the Minister’s regulator has done exactly that—has used a targeted feedback mechanism, which is pretty novel, to tell the insurers who are, as the Minister would categorise it, ripping off vulnerable consumers. They are doing that. We are none the wiser in this committee about who they are, yet the Minister does know who they are, and so whether this is having an impact in the market remains to be seen, because they’re not being publicly required to change the behaviour, nor are they even named.

Minister, product safety standards are important to me; you know this—no surprises there. Congratulations on taking action on the blind cords. But I want to ask you about the appropriation. As it stands, the money allocated to that falls, in real terms, and also doesn’t keep up with cost pressures. I’ll say the worry genuinely: I’m worried that this is something where Ministers have a lot on their plate, and this is the thing that comes second in the portfolio, but it is one of the most critical things. Button batteries and asbestos sand, for instance, is something that is deeply concerning for Kiwi parents, and these are being sold, still, on our shelves by some of the most widespread and well-respected retailers in our market. Why, Minister, have you not increased the appropriation for this? Are we asking the Ministry of Business, Innovation and Employment to get more for less, when this is something that is already deeply underfunded? Ministers haven’t been able to take quicker action for those parents who are very, very concerned about this.

Thank you, Madam Chair. At the Estimates in June, I pretty much foreshadowed, after years of coroners’ reports, and after the loss of too many souls—young souls—that this Government was going to get on top of corded blinds. As you can see, we have begun that process. The regulations have been drafted by the Parliamentary Counsel Office, and I expect that they will be out for public consultation soon, and then the regulations around the corded blinds will come into effect 12 months after that.

Just on the corded blinds issue, because it was one that we discussed at length at the Estimates: we have taken a decision since then. But for those families that are concerned, and corded blinds are in their homes, there are ways to fix those and to make them safer, and that can be found out on the Ministry of Business, Innovation and Employment (MBIE) website—sometimes that can be as easy as going down to the local hardware shop and buying a fastener, or shortening up the cords. There are ways of doing that, as I said, via the MBIE website. So corded blinds are something that I know the previous Government looked at, I know there have been a number of coroners’ reports, and we’re getting on top of it. Public consultation on the regulations are coming out soon.

Following on from the Minister’s answer, what I really want to know is given that there is a cut to this appropriation, how many fewer compliance interventions does he expect the Ministry of Business, Innovation and Employment (MBIE) to be able to take? The question is about button batteries, asbestos sand, and those consumer products which are particularly of concern for parents and children. Also, given that his Government has changed the rules for building products, in an attempt to create more competition in the market for building products—which is a good thing—this has allowed more products that are either lacking in certification because the certifications have been of dubious means, or they do not meet the New Zealand standards, but they can’t check everything. That’s the problem we have here: we have a system that is designed not to check everything but to be from trusted sources.

My question is: the asbestos doors, the warped windows that cause injury, the lead taps—these are all things which MBIE should be taking action on; they are causing real harm but they are also examples of products where information campaigns won’t change the game, because they get installed in a house and then a homeowner changes. The impact of these will be long-term. Is the Minister sufficiently focused, and has he resourced his department to be able to take action now, before these things become real problems in the decades to come?

Thank you, Madam Chair. A fair enough question: is the Ministry of Business, Innovation and Employment sufficiently funded to be able to have a sufficient oversight, particularly around product standards and product safety—and, I would argue, your emphasis there being on child safety? The answer is yes. We had that announcement, made by the Hon David Seymour and me in a Toyworld on Ballance Street a month or so ago.

Tim Costley: A very memorable occasion.

Hon CAMERON BREWER: There was much fanfare and wide acclaim by most people, because we are aligning ourselves with EU, US, and Australian and Canadian standards, from memory. Those standards will be out for consultation in due course, and then there’ll be a six-month transition period.

When it comes to the ongoing issue as to the work we’re doing in relation to, as the member described it, asbestos in sand, that was discovered by testing it at AUT. It’s important to remember that we’ve had 23 recalls and about 47,000 units of product recalled. We are now working through those issues to see where we can effectively tighten up the system, if it’s going to deliver a real result. In the meantime, those retailers need to be sure of themselves, when they’re selling this stuff, that it’s safe, and consumers need to take every precaution they can. The best precaution, of course, is not to buy any coloured children’s sand products; that’s the abundance of caution. MBIE has got—if they wanted to look at it and see if it was safe or not, or if they wanted to get rid of it—a lot of advice on their website. But we continue to work through these matters. A lot of product has been recalled, and we will be arriving at a decision as to what we can do to tighten up the system to make it more foolproof going forward.

Thank you, Minister. I’ve run out of time on that, but I want to ask him now about liquidations. The official assignee appropriation falls, in real terms, by $2.4 million—that’s a big movement for that appropriation Why, when insolvency is up—in figures published today—by 74 percent in the retail sector, are we seeing double-digit insolvencies every day in New Zealand and a $3.7 billion tax cut owed by businesses to the IRD? Why is it that the IRD has more money to recover these funds, but under the Minister’s appropriations, the organisation charged with collecting that debt falls, in real terms? Is he expecting the caseload to fall; is that part of the strategy? Or is it the case that there will be no ability to collect that debt? If he could give us some insight into what his plan there is, when this will be an ongoing Government problem, when the economic hardship and financial hardship that people and businesses find them in will continue to increase.

Thank you, Madam Chair. Just on the broader issue of liquidations: yes, we know the numbers have been coming through, but as the Minister of Finance, I think, and others have pointed out, the number of new company registrations and the number of new businesses are significant as well. For example, there have been 62,000 new company registrations as of 30 June. As WellingtonNZ said to me just the other week—that economic development agency based on Taranaki Street, for the Wellington region—“Cameron, we know you hear a lot about closed restaurants in Wellington, but there have been more restaurants opened in Wellington in the last two years than there have been closed.”

That is wacky stuff from the Minister. Is his answer that they can foreclose with massive tax debt owing, wages owing, and creditors in debt, and the official assignee can get no funding from the Government to recover any of it because they can start a new business?

We are very proud of the Inland Revenue’s more active debt collection approach. We all know what Inland Revenue’s balance sheet looked like when we walked in here at the end of 2023, when everyone who wanted one got an interest-free loan. Those businesses, many of those businesses, are why they may have got a stay of execution through COVID, and Inland Revenue may have been given the instruction to lay off and take the pressure off these businesses. None the less, for a lot of businesses, they got that stay of execution, they took those wage subsidies, they took those interest-free business loans, they survived for a couple of years, and then guess what happened? Inflation took over, interest rates took over, and they got cleaned out. They got cleaned out, and now we’re left with a lot of business debt on the IRD ledger, which the Minister is systematically working through and cleaning up.

CHAIRPERSON (Barbara Kuriger): Arena Williams. I think we’ve got time for about one more question.

Customer and product data-sharing is part of the Minister’s appropriation. What is happening with the contract of the Ministry of Business, Innovation and Employment with Payments NZ—why can’t Revolut get a licence, and why are fintechs and New Zealand’s market bleeding to death while waiting for accreditation and the ability to participate with open banking, which was promised to them?

CHAIRPERSON (Barbara Kuriger): You can have another one, while the Minister’s thinking.

Madam Chair, we don’t have any more time. So I can only think that the Minister does not intend to answer the question. I’ll watch him carefully, if he does wish to.

Oh, look, well, if we’re talking about the payment services regime, she knows that there’s two pieces of work that have been led, and discussion documents, both by the Ministry of Business, Innovation and Employment (MBIE) and, more latterly, by the Reserve Bank. We know that we’ve got a lot of work to do in the area of our payment services. We know that we were once a leader in EFTPOS in the late 1980s, and in many aspects—

Hon Matt Doocey: Oh, a good decade. Bring back the EFTPOS decade.

Hon CAMERON BREWER: Doocey still has his Post Office book. But we know that we were leaders and we’ve got a lot of work to do. Those two retail payments services discussion documents are out by both MBIE and the Reserve Bank, and we are looking forward to assessing that and making positive changes.

CHAIRPERSON (Barbara Kuriger): This debate is interrupted. It is time for me to report progress. Just before I do, I’d like to pass on the House’s thanks to the security team. There was a wee incident up there this afternoon. Thank you very much; please pass that on to your team.

House resumed.

CHAIRPERSON (Barbara Kuriger): Madam Speaker, the committee has further considered the Appropriation (2026/27 Estimates) Bill and reports that it has made progress on the bill. I move, That the report be adopted.

Motion agreed to.

Report adopted.

ASSISTANT SPEAKER (Maureen Pugh): The Appropriation (2026/27 Estimates) Bill is set down for further consideration in committee on the next sitting day. The House adjourns until 2 p.m. on Tuesday, 25 August.

The House adjourned at 5.57 p.m.