Commerce (Grocery Sector Covenants) Amendment Bill

Thank you, Mr Speaker. I’m glad we clarified that piece of arithmetic. It’s a pleasure to be talking on the third reading of the Commerce (Grocery Sector Covenants) Amendment Bill. This has been an interesting process to be involved in, and I just want to acknowledge, first of all, the Economic Development, Science and Innovation Committee and the Minister during this process.

It’s just worthwhile reflecting a little bit on the process. This legislation was introduced to the House under urgency at Budget time, and, basically, the select committee had just on a week to look at the bill in that current draft, and make changes, which we subsequently did. Unfortunately, I only had the opportunity to listen to five submissions. Some were particularly good, but all of them were useful. But it was a very limited period for people to make submissions, and, unfortunately, we didn’t hear from the grocery retailers themselves, but none the less we have arrived at a point with this bill in that very shortened period which I think gets to a position where most parties are pretty comfortable with its outcome.

I think when the bill was first introduced, we had a number of quite significant issues with it. One is that the first bit was whether, in fact, the bill actually dealt substantively with the issue of restrictive covenants. And we went on to define two types of those, which I’ll talk about shortly. This is part of what the Commerce Commission’s recommendations were. How do you improve access to wholesale trade? And, of course, there was a bit of focus with what supermarkets have been doing with wholesale access and wholesale arrangements, but how do you actually achieve wholesale supply?

The third thing was—and the Commerce Commission recommended that there should be a mandatory code of conduct that is imposed on the industry, particularly with the major retailers—there was a requirement that major grocery should be very clear about their promotional and pricing arrangements and terms and be transparent about what those arrangements were. And the last thing that the Commerce Commission talked about was the need to monitor the conduct of the major grocery retailers.

So that was all in the original document that the Commerce Commission presented, and, of course, the bill leveraged off. But the bill only deals with one of all those issues, and that is namely just about what sort of property arrangements were grocery retailers putting in place and had put in place and the need to make sure that they weren’t restrictive in the way that they were operating.

So the first thing is—and we heard this from a very good submission from Katherine Rich and her team at the Food and Grocery Council—in terms of the covenants, the big issue was, in the lease arrangements, whether, and to what extent, the grocery trade was restricting other competitors unnecessarily. One of the interesting things was that the examples that were provided to the committee that, in many cases, the major grocery retailers, in their lease agreements, would be saying, “Look, you cannot allow a person or company or an entity, whatever, to sell, for instance, jewellery, luggage, electronics gear, as three examples of many, without first of all getting our approval.” That in itself was deemed to be a very, very extensive and probably overburdensome constraint on competition of all sorts. And, of course, the other one, from competitors, most likely, the way that supermarkets perceived it and actioned it, was against cafes and restaurants and people like that.

The second element was what was described as first right of refusal clauses. This is a situation where the grocery retailers, in the lease agreement, required the option to be able to take up any space and have a first right of refusal.

The third one was requiring the grocery retailers in their lease agreements, and also, on some occasions, required landlords, to oppose planning-law changes if, indeed, they may compromise the operation of a supermarket or retailer. And that was an obligation placed on the landlord through the lease agreement.

And the last one was the linking of rent to turnover, which, particularly as some people have a view that that was inducing the landlords to make sure that the grocery trade in the situation where they had an incentive, if the turnover increased, the rent went up accordingly, to make sure they protected the business of the grocery retailer.

So those are the four bits around the covenants that were particularly of interest to the committee. Now, our particular concerns were around the covenants, that we didn’t actually adequately cover the covenants in the initial draft of the legislation. The covenants have been defined in the legislation to two areas. One is the “restrictive covenant”, which is around product, such as the electronic sales or the language, and one is around the “exclusivity covenant”, which is the one around stopping people getting access to land.

Now, the big issue was when you define “covenant”, how is that actioned? Could it be actually just through a lease agreement or could it be through the deed of lease that’s actually reached on the title, or could it be done via a side letter, which is probably the norm if you’re doing a first right of refusal. So our first issue was that we wanted to make sure that we adequately covered all the different covenant arrangements and how they were executed and enforced by the grocery retail.

The issue around the land banking: the bill was actually silent on the land banking issue, but we came to a view that with the Resource Management Act (RMA) changes, that wasn’t something that needed to be addressed. But the next big issue was: who is going to be monitoring these supermarkets and the ability to make sure that it was getting adequate information? So that’s been dealt with through a Supplementary Order Paper that the Minister referred to, which updates clause 4 to insert new clause 28C, which means that the Commerce Commission will now have the right to go and seek information from retailers. It is an interim step, because as the Minister just said now and has confirmed on previous occasions, the intent is to establish a grocery retailer, and we think it’s absolutely important that the grocery retailer actually has teeth to be able to go and enforce and be able to monitor the situation on a proactive basis, not on a reactive basis, which is the current mode of operation for the Commerce Commission. We’re yet to see the arrangement for the grocery retailer, and we’re looking forward to seeing what that is, but that is why the committee sought the requirement, and I’m glad that the Minister responded in terms of being much clearer about making sure that the Commerce Commission could act proactively, could seek necessary information, and that was an interim step until we got through to the next stage.

So, in the end, we’ve ended up addressing the first right of refusal—that’s been covered in the covenant arrangements, the way it’s been now defined—confirmation of the grocery regulator, and the ability for the Commerce Commission to proactively go and get information. What we set aside was the planning law requirements under the RMA and also the issue of compensation. We were concerned that grocery retailers may take a view that they may unnecessarily seek compensation, but we’ve come to a view that that cannot occur, and it’s under the Fair Trading Act.

So, look, I think it’s a pretty good outcome we’ve ended up with. There are some other minor changes around the fuel exemption that’s only related to environmental outcomes. The most heartening thing is the supermarkets are now moving to removing some of the covenants proactively. There is no longer a requirement that they have to seek the landlord’s permission to remove these restrictive covenants and, indeed, Foodstuffs, in particular, I should highlight, who have been very keen to move proactively and get through this situation.

I want to finish off by thanking the members of the select committee; Jamie Strange, the chair; my colleagues on our side, in particular Melissa Lee; and the officials and the Minister; and all we now wait for is ALDI and Costco, hopefully, to come in time, if they find New Zealand an attractive enough destination.

Thank you, Mr Speaker. I appreciate the opportunity to take a call. I will make a very brief call, for the sake of time. As the chair of the Economic Development, Science and Innovation Committee, I would also like to acknowledge the members who worked very collaboratively on this bill, particularly Andrew Bayly, the member who has just resumed his seat. I really enjoyed working very closely with Andrew, and Andrew’s expertise has certainly strengthened this bill. So I acknowledge that member.

This bill has support right across the House, which is fantastic, and I just want to touch on one quick point here in the brief time I have available, which is the Commerce Commission and the importance of them being proactive, which is what we saw in terms of the Supplementary Order Paper from the Minister. I’d like to highlight that very strongly, and I look forward to the Commerce Commission taking a proactive approach in this area. It’s an excellent piece of legislation. I commend it to the House.

Mr Speaker, thank you. I have a question for members of this Government: when this legislation is passed, what actual effects is it going to have upon the cost of living and the cost of food in New Zealand in the short or medium term? Sadly, the answer is: next to nothing. Jamie Strange, the last speaker in the debate, said he didn’t want to take too much time and that we had to pass it into law—we needed to quickly pass it into law so that virtually nothing will happen. Now, that’s not to say that we’re not supporting it—there are anomalies in the law that make it difficult for competitors to enter the market—but if you go and have a look at actually why food is so expensive in New Zealand at the moment, the supermarkets will be a part of that, but they will only be a part of it. Actually, the role that the Government plays in creating regulation and, therefore, cost as quickly as they can is the larger part of why food is expensive—and too expensive in this country.

I don’t want to take away the importance of this by suggesting it’s unimportant, but for mum and dad at home in a Kiwi household that’s finding it hard to pay the bills and is faced with the extremely tough choice of paying bills or feeding the kids—if they are listening to this debate and they’ve listened to the Minister’s speech at the beginning, I’m sorry for them: there is no relief. There is no help coming as a result of this legislation, and there will be members of Government who say that that’s not true, that they’re a caring Government and that they’re a listening Government. If it is solely the responsibility of the supermarkets for the sharp escalation of the cost of food in New Zealand over the last few years, why is it that the fish and chip shop is more expensive than it was, that the food at the market is more expensive than it was, and that food at the gate of the producer is more expensive today than it was? The supermarkets have nothing at all to do with that degree of production or retail.

I was on the committee, before this legislation was introduced, when the Government instructed the Commerce Commission to do an investigation into the supermarkets and the structure of retail for wholesale food in New Zealand. The Commerce Commission came before the committee, and I had the opportunity to question them about all the things that they were looking at to come up with a clear overview—information that the consumer could rely upon—as to why food was escalating in price in New Zealand. Sadly, they said that they only had the ability to look into the supermarkets and nothing else: not the effect of a fast increase in the rate of the minimum wage year on year on year, and whether that’s had an impact or not; whether or not more regulation from the Government that imposes standards around, say, health and safety that actually don’t drive any greater outcomes in safety, and whether or not that’s a cost that is borne by a producer that gets passed on; or whether or not at the time—and we have a small respite at the moment—extra increases in the cost of fuel or in road-user charges for diesel have had an impact, and are they being passed on.

The Commerce Commission said that they didn’t have the ability to look into any of these sorts of things because the Government and Cabinet, in instructing them to do an investigation, asked them to solely look at the structure of those supermarkets. Sadly, what that means is that only a part of the job is done. Now, the Commerce Commission came out with a number of reforms or suggestions in its finding. Let’s say the Government took on board all of them and did them in urgency. Let’s say we were doing every single thing that they’d said today in this House and were passing them into law—well, that would be a positive thing.

There could well be more competition, but a lack of competition in itself isn’t the only reason that costs have gone up; largely, it’s the role that this Government has played. If there is no consequence at all to fast increases in the minimum wage and all that it does is provide people with more so that they are better off, then that’s no consequence—put it up to $50 per hour. But we know that’s not the case. There is a consequence, because every time the Government imposes a cost upon business, it has to be passed on or absorbed, and, in the case of most producers in New Zealand, they can no longer absorb that cost increase imposed by the Government and so they are having to pass it on.

So the Government, in applauding or congratulating themselves here today, have made a very, very small step in the direction of focusing on why food has become so prohibitively expensive to so many households in New Zealand. What they haven’t done is looked at the role that they play themselves, and I dare say, unfortunately, as we debate other things in this House, that, actually, as more and more rules come, more regulations come, and more changes come—as well-meaning as they may seem—they will impose burden and cost upon businesses that gets passed on in everything that we do, and, in this case, in food.

Think about the producer of fresh fruit and vegetables in New Zealand that are sold in supermarkets. The price has gone up hugely, and why is that? Actually, because of the costs that are imposed upon the grower through everything that they do, from regulation to the cost of freight, and so on. When those fresh fruit and veges are picked and put on a truck, the cost goes up because of extra tax and the increase in the minimum wage, which is passed on or is inherited by even those who earn more than the minimum wage, because, actually, you see cost go up throughout that pay scale until the produce arrives at the supermarket and is unpacked, and then those costs actually are upon the supermarket business, and they have inherited or had to assume the costs previously.

That’s the reason that things have become so very expensive in this country. I’ve got to say that whilst this is an important move in as far as at least it may level the playing field for those that might want to enter the market and that have found that they couldn’t find the land that they wanted to build a supermarket or create a new outlet somewhere where consumers could take advantage of that, when we do have a new entrant to the market and they build their supermarket and they move into that supermarket, already the cost imposed upon them to build, to get the consents, and to meet all of the standards the Government has put in place means that on their very first day of more competition for supermarkets in New Zealand, their goods will be more expensive than they should be if the Government hadn’t believed that every single issue they find can be solved by new regulation that imposes cost.

The final thing here is that in the end, it’s not the supermarket, the owner of the building, or the employer that is worse off as a result; it is the consumer—the very people that this Government says that they want to help through their kindness. Ultimately, the Government bears more responsibility for the sharp increases in ongoing costs to the consumer in almost everything that we see than the supermarket does, albeit this is a small step in the right direction.

I will echo the words of the last speaker, who is the chair of the select committee that has done a very good job in as far as what he’s allowed to do: let’s be in a rush to pass this legislation so that tomorrow, not a single thing happens for the consumer in New Zealand, except the costs will continue to go up. If it was merely about competition, it would be an easy issue to solve. The Government could wash its hands of the responsibility, but in everything this Government has done, it has imposed cost upon businesses and households, and it is the consumer that bears the brunt of that. Thank you, Mr Speaker.

Thank you, Mr Speaker. We took Mr McClay’s contribution just at that—that obviously this is not enough. But, look, wait; there’s more. This bill is just the beginning of everything that we as a progressive Government are doing to help New Zealanders through, right now, all of the pressures that we’re facing, not only from overseas but within as well.

Can I just commend the Minister for taking this bill to the House and all the series of announcements he’s made since. On June 21, he announced more powers to the Commerce Commission—to ComCom—to investigate the conduct of all of our supermarkets.

We’ve also committed to a mandatory code of conduct on top of the banning of land covenants, a unit pricing scheme, and also an industry watchdog. It isn’t just about supermarkets; it’s also about our dairy shops, it’s also about our mum and pop shops across the road in the corner. This bill not only gets us started in terms of making a fairer playing field for everyone but also it will make sure that all our consumers will benefit from it. So this is a good bill and I commend it to the House.

Tēnā koe, Mr Speaker—pleased to take a short call on the Commerce (Grocery Sector Covenants) Amendment Bill. Everyone needs access to nutritious and affordable food. The Green Party is certainly supporting the moves that the Government is making to reduce the duopoly that we have with the dominance of Foodstuffs and Woolworths in Aotearoa, because the current situation is deeply, deeply unbalanced and leads to really poor outcomes for everyone, particularly those who aren’t able to afford healthy food and for growers and suppliers, who are increasingly having to pay for fees like putting their goods on the shelves and issues with the prices that they are getting. In the meantime, if you’ve got the ownership of a supermarket, you’re probably likely to be on the wealthy list in Aotearoa.

So prohibiting these covenants—which I think the Commerce Commission found more than 90 of these restrictive land covenants where supermarkets were using them to prevent their rivals opening stores on that land, and some 60 of these had a term of more than 20 years. Most of them, obviously, were in the main metros—Auckland, Wellington, and Christchurch—and there are also these exclusivity covenants which are able to prevent related businesses, butcheries, bakeries, even hairdressers in some instances, opening in those premises; so all designed to reduce competition. So this bill is a significant step because it will have effect from the day it becomes law in ensuring that these covenants can no longer operate. It has been encouraging to see the voluntary efforts of Foodstuffs and Woolworths in recognising that the law is going to make them and are actually moving to disengage from some of these covenants.

Giving the Commerce Commission more powers, particularly to request and get information from the supermarkets, will assist in monitoring and enforcement. And that’s been a really useful addition that the select committee has made to the bill. The Resource Management Act (RMA) has sought to prevent trade competition being used as an argument by supermarkets against their rivals seeking a land use consent to establish a new store. There’ve been changes to the Act to try and strengthen these provisions because of the frustration at how rival operators would attempt to tie up the establishment of a new supermarket by objecting to the resource consent, but they haven’t been totally effective in ensuring that the other member of the duopoly couldn’t make submissions because the courts did look at the indirect effects in terms of the retail distribution effects. So the RMA hasn’t been the answer, and that’s why we have needed this bill.

It is only part of the way there. We need much more comprehensive work to raise incomes, to make changes to the tax system, to increase benefit payments. We need to make it easier for local grocery shops to establish in residential areas so that households can walk and buy bakery, butchery, and greengrocer products as we used to do when I was growing up. When you had those services in the neighbourhood, you weren’t forced to drive a car to a big car park and a big supermarket. But this bill, in the changes that it makes to ensure that these covenants are regarded as anti-competitive measures and can immediately be acted against under the Fair Trading Act, is a very useful step.

I commend the Minister for the other initiatives that are being taken, but we do need to make those much-wider changes to increase people’s incomes in recognition that grocery prices here in Aotearoa are the fifth most expensive in the OECD and we spend per capita quite a lot on groceries compared to other countries in the OECD.

So it’s certainly a step, it is a useful step, it is one that the Green Party supports, but we need those much-wider changes around incomes to ensure that everyone has access to affordable food. Kia ora.

Thank you very much, Mr Speaker. The duopoly, as it’s called, has had its rewards from the Government’s COVID-19 response, because you couldn’t go anywhere else, and—[Hon Eugenie Sage trips]—the super-profits that are proposed—

Stuart Smith: The Greens are slipping!

DAMIEN SMITH: Sorry?

Stuart Smith: The Greens are slipping—fell out of the poll!

DAMIEN SMITH: Yeah, the Greens are slipping in the poll, or on the floor, sorry.

The super-profit that Mr Clark talks about is 20c per person, per head of population, and that has been the main rationale for driving this change. Now, in the ACT Party, we believe in freeing up covenants that are believed to have been reducing competitive behaviour, but this has been a long-held practice. People do their demographics.

I worked, as an example, for a time in the multiplex industry. You do your numbers, and you look at where people will drive to your cinema chain, and then you take the commercial risk of investing in that site, going through the planning process. Then you open it and you hope they will come. What we found in that industry was that if you had one multiplex in an area, you had a certain amount of business. If you put two in that area, the business grew three times. The supermarkets know that it’s a highly competitive market place that they operate in, and they have themselves, at a margin level, been totally shocked by the rise of inflation in this country. Inflation in this country is what’s driving this behavioural change.

ACT would repeal the Resource Management Act to fast track any supermarket chain that wants to come here. We believe that this bill should have had a clause in it that said the Overseas Investment Office would make national grocery retailing a strategic and significant area of national interest. That would allow people to fast track coming here, and it would have given them the certainty that they need. I’m not sure by the time the next election comes that there will be many more supermarkets built. It’s a question that no one has answered. It’s a question that the journalists haven’t asked the Ministers. Tonight, we sit here and we have a building block here, but we don’t have the full solution.

Getting access to the wholesale market here is absolutely essential for a new entrant coming here. They can’t bring all their products on ships. They have to operate within the environment here. They may have points of differences in terms of what they sell, but, effectively, it’s not a “me too” situation. If you’re trying to build a point of difference as an ALDI or as a Costco or a Warehouse, as an example, versus the incumbents, you need to have some point of difference. Is that price? Is that value? Is that competition on the types of products that you supply? What is happening is down the line at the farm gate and at the grower gate and at the wine gate. That leads me on to the fact that if you come here to make a supermarket successful, you need to have a grocery strategy that includes alcoholic beverages as well.

I do commend the bill, and the ACT Party will be supporting the bill. But this should have been captured in something that was more holistic, and, with the legal ramifications of unwinding some of these covenants, the lawyers will have a field day. Then the lawyers will have a field day when a new entrant comes in, so it’s good money for them.

If you look at the provisions that the Commerce Commission have under new section 28C in clause 4, the understanding of these is not clear. The reference to the Fair Trading Act is not clear in how this all meshes together.

We will be supporting the bill tonight, but looking closely at the ramifications of how this actually works in the market place. We still reinforce the fact that the most important thing for the supermarkets and the people in New Zealand in a pandemic or in a normal situation, as we know, is to have the right products on the right shelves at the right time so people aren’t living in fear. They’re living in fear for two reasons: inflation and, not the fact that the supermarket isn’t there, just that when they go there, they know there’s no alternative choices, or not the same choices that used to be.

We would actually recommend to the Government that this isn’t a quick fix. There needs to be another bill very quickly to level the playing field in terms of those other areas. This alone will not solve the problem, but it goes a short step towards doing that.

We would like people to finally understand that if supermarkets do set up in Pukekohe or in Wellington here, they do take commercial risk. It’s not an insignificant investment. The shareholders of those businesses do act in the best interest of the customers. It’s not super-profits, like the Government has said, for the sake of it. I believe—doing my numbers—that that has been driven by the COVID lockdown, and that was the only place you could go. So let’s take a sensible and pragmatic approach to planning this out, let’s invite new entrants in, and let’s get the Overseas Investment Office activated to actually allow this facilitation. Thank you.

Kia ora, Mr Speaker. The Commerce Commission stated that competition is not working for everyday New Zealanders. As the Labour Party, we committed at the last election, and we continue to be committed, to addressing the rising cost of groceries. We want to make sure that shoppers are paying a fair price at the checkout, and this is not the silver bullet—we know that—but this is a part of a suite of activities that are going on. To Dr David Clark, our Minister of Commerce and Consumer Affairs, thank you for bringing this to the House, and I know you are doing a lot of work behind the scenes in terms of what is to come.

Groceries are an essential purchase for every day and everybody within Aotearoa. As I’ve gone around the electorate of New Plymouth, and as I’ve spoken with dairy owners and with superette owners, I know that they gave me the thumbs up because they know that, currently, it is not working. Currently, supermarkets have the duopoly, and I commend this bill to the House.

I call Simon Watts for five minutes.

Thank you very much, Mr Speaker. It’s a pleasure to rise on the Commerce (Grocery Sector Covenants) Amendment Bill in its third reading. National will be supporting this bill, but I want to echo some comments made before by the Hon Todd McClay, because I absolutely agree that this bill, in substance, is only—if we’re at all lucky—going to have a minor and miniscule impact in terms of the key issues that this country faces.

The bill, obviously, is a result of a market study undertaken around competition and is looking to implement one single recommendation that was identified, and that will be an amendment to the Commerce Act 1986. I think that what’s interesting is the politics that are at play here, in behind, by this Government. They need to blame something or someone for the state in which our economy and our country is in, with a soaring cost of living crisis and soaring inflation.

Basically, as we’ve seen, there’s a good amount of blame in terms of who is responsible, except for the Government at the moment, whether it’s Ukraine or, in this case, the grocery sector—in particular, the duopoly of supermarkets are to blame for the fact that food prices have increased 7.6 percent in the last year and fruit and vegetables have increased 18 percent. Well, that’s absolutely ridiculous—that is absolutely ridiculous. They are, basically, trying to identify one group or one organisation to put blame on to deflect the fact that it’s through their actions and their decisions that we are where we are today, in part, and that is the reality of what’s going on there. I think Kiwis are pretty sensible and can see through that.

That’s the reason why the Minister has decided to spread this over a period of time—probably, I would guess, over the period over which inflation is going to be significantly high across this country—just so there’s an insight. It’s like the old saying that if you walk around with a clipboard or a notebook under your arm, you look like you’re busy. Well, what the Minister’s doing here is just spreading out this bill to make it look like this Government is actually doing something, and the reality is they’re doing absolutely damn not much at all. That is a great shame.

But I think, as I said, Kiwis can see through that—they’re not silly. They’re going to say, “Look, these guys are just looking for someone to blame, and this is the tool with which they’re going to do it.”

Shanan Halbert: National do nothing.

SIMON WATTS: I think the point made before in regards—and I can hear the colleagues over there. They probably know it—they know it deep down: “Oh, how did he work out our strategy?” Yeah, but they know.

The fact that the COVID-19 period—and it was raised by a member from ACT before in regards to the fact that through Government decision-making, they made the rules and regulations that a number of our food providers, fruit and vege shops—remember the butchers that couldn’t open during lockdown? Remember all of our small businesses in our community? Who made that decision? Well, the Government made that decision, didn’t they? Then—surprise, surprise—we’ve come out of that lockdown period, and then they’ve recognised and said, “Well, those supermarkets that we drove all of that demand into have made super-profits.” Do you think we were born yesterday? No. Kiwis can see right through what you are doing, and you are trying to use the grocery sector as the big bad business that is to blame for the cost of living crisis and inflation. I’m sorry, but that doesn’t wash and that doesn’t stick.

So what we’re going to see is an incremental process of regulation and reform. All of that adds costs to businesses and other layers of bureaucracy. We’ve talked about the minimum wage, we’ve talked about another public holiday—that all correlates through into increase of prices, and that will continue on under this Government. These types of regulatory aspects will deal with the rats and mice in regards to some of the underlying contractual aspects. It will make absolutely—

Shanan Halbert: You’ve got so grumpy since you moved from Northcote.

SIMON WATTS: —very limited significant impact, and I can hear the member from Northcote calling out from the other side. You know, he’s got Countdown in his electorate, but he’s also got a number of fruit and vege small businesses and butcheries, and I don’t think he spent much time during Auckland’s lockdown going into those businesses on the North Shore and explaining to them why his Government—

Shanan Halbert: Compare what you did and compare what I did, buddy. You know it—you know the answer.

SIMON WATTS: —has said they cannot open up and trade. He continues to go on—you can hear him in the background—but the reality is Kiwis can see it. They all know it. But at the end of the day, while National will be supporting this bill, I think I’ve articulated that this is not going to make any material impact in regards to the problems we face as this country.

I call Helen White—five minutes.

Thank you, Mr Speaker, for letting me take this call, because this is something that I’m really passionate about. When I was an employment lawyer, I had a few cases which involved supermarkets, and, a very long time ago, there was an issue with the amount of profit that these supermarkets were making and some of the sharp practices they were engaged in.

I was very, very pleased to see this bill come in. I was extremely pleased to see the addition of the Supplementary Order Paper with regard to the proactive role that our Commerce Commission will play and, actually, the transparency that will be required, because, under the hood of private contracts, we often have these kinds of practices that hurt people—and these have hurt people for a long time. I am absolutely proud to be part of a Government that has put an end to this behaviour, and I hope to see more to come.

Thank you, Mr Speaker. Hon Todd McClay and Damien O’Connor: what sad sacks. I honestly thought that you were going to be speaking against this bill, but it transpired that, actually, all parties support it.

Hon Todd McClay: I raise a point of order, Mr Speaker. I just want to help the member, I don’t think she meant to say that Damien O’Connor’s a sad sack.

INGRID LEARY: Sorry; you’re absolutely right.

Hon Todd McClay: Although we agree with it!

ASSISTANT SPEAKER (Ian McKelvie): Order!

INGRID LEARY: The Hon Todd McClay referred to mum and dad scenarios of affordability, which is exactly why we’re passing this legislation.

And without wanting to give a lesson, this is about competition law. We have a duopoly, we have a lack of competition, and we have market failure, so of course there are going to be higher prices. There is going to be the ability for private covenants, which the Commerce Commission has reported on: 190 agreements, including covenants and exclusively clauses—150 of those restricting sales and sites for more than 20 years. Now, that is not something to do with the current inflation, which is around international pressure, as we know; this has been decades in the making, and this Government is doing something about it.

So let’s not blame the Government; let’s remember that the supermarkets are making an excess profit of $1 million per day. I’m really proud of this bill. Let’s remember that all parties in this House are supporting it.

The member who’s resumed her seat—Ms Leary—has said inflation’s caused by international problems—I think that’s right. So I give you a couple of numbers: 2.9 percent.

Hon Member: What’s that?

Hon JUDITH COLLINS: That’s the current inflation rate of Switzerland. Apparently that’s not an international country! I give you 1.9 percent; that’s Japan. So there are a few countries that do not have rampant and raging inflation and those countries are ones that were very careful during the COVID lockdowns and were very careful with the money that they were borrowing. As we all know, or we should know, there was profligate wastage and excess from this Government.

What has happened is, of course, that now inflation is at a level that we have not seen since the last time that the National Party had to take over from Labour. In fact, I remember in 2008, when we took over, actually, the mortgage rates were 11 percent and I suggest that it is probably going to get that way by the time we have to take over in 2023.

This bill does have some good points in it. I think it is important to note that we have, essentially, a duopoly around groceries, and that is never a good thing. It is not good to see in shopping centres just one supermarket, or one supermarket and no one else being allowed to sell anything that is also sold in those supermarkets. That is a very bad thing. It is anti-competitive and if the Commerce Commission had been awake to this, they could have actually looked at it a very long time ago.

It is also important to note, as some of my colleagues on this side of the House have noted, that, actually, during the first lockdown our local butchers, our bakers, actually, the fruit and vege sellers—everybody who competed or competes with one of these big supermarkets got to close down, except for dairies. Dairies were allowed, for some particular reason. Now, on that decision alone, many of us, as MPs, took up these issues with the Ministry of Business, Innovation and Employment, the ministry that was in charge of giving exemptions or not, and we were told, “No; you can’t have an exemption.” We saw people—and I think of my own butcher who lost around $40,000 worth of stock; people who, knowing that there was going to be some form of lockdown, were preparing for it to have the meat there.

Dr Duncan Webb: Talk about the bill at any time!

Hon JUDITH COLLINS: So the member on the other side doesn’t want to talk about the people who lost their businesses, does he? No. But these are the very people that we’re told that this bill is going to help, that it’s going to suddenly have some sense in the marketplace. But we know, and we’ve known for a long time, that supermarkets have been in a very privileged position, but they’ve been more so since the first of the lockdowns. That’s because they were given special privileges that other providers of food couldn’t have, or, actually, just didn’t have. They could have had it, but they didn’t have it because this big Government is more comfortable dealing with big business rather than small businesses, owner occupied, people who had to pay their rent, whether they had money or not. What help they got was very little and they could have done with being able to open their doors rather than having their stock in landfill, which is what actually happened.

So when we look at this bill, yes, we will support this bill, because it’s better than nothing. But let’s not kid ourselves that inflation is all being caused by international events, otherwise, Putin. It’s not just that, is it? It’s also the spending that went on. It’s not just because the Government has been borrowing and borrowing and wasting money. It’s not just that the Government has put enormous costs on to businesses, and particularly small businesses, and made it really hard for people to even employ staff, because staff aren’t allowed into the country or haven’t been able to, for some time. It’s nothing of that, according to the Labour Party. It’s all to do with Putin or international events. Well, no, it’s not. It’s actually a lot to do with their behaviour and their absolute paranoia around business.

When I look at some of the supermarkets, we’re very aware that some supermarkets are said to use quite sharp dealing around some of their suppliers, particularly Kiwi suppliers. Of course, businesses make those decisions as to whether or not they’ll supply to them, because they want to be able to get the volume coming through. What we should also remember is that people in business and those who use them need choice. I see that Costco is starting up pretty soon, and I’m told, from my friends who go to Costco in Hawaii and other places, that they will be travelling to—I think your electorate, isn’t it, Mr Penk?—your electorate. I’m possibly not going to be doing that. I’ll go, wherever possible, and support the smaller businesses, because I know what it’s like to be in business and I know how hard it is to have people saying, “I’m just going to go to the cheapest.” Sometimes it’s best to go to people who really care about the produce that they’re presenting to you and they do their very best. I think about the people who have fish shops, those people—people who had their own boats for fish shops and they couldn’t open. I mean, these are the sorts of decisions that actually are going to have years and years of implications for families.

So do we support this bill? Yes. Is it the be all and end all? No. But I saw just the other day that somebody in Southland had used Amazon to get groceries from Australia. Is that right? I think I remember that. If that is so, and I’m sure it is right, it just shows us all the cost of actually going to the supermarket. I do the grocery shopping at home and I find that the grocery shopping is a good way of remembering the price of everything. So I do try and use the smaller places like the butchers and the fish shop and the fruit and vege shop. But I also have to go to the supermarket for certain things and I have noticed the extreme increase in price in just the last six months.

What they tell me, the people who own them and run them, is that a lot of it has to do with the extra costs put on by the Government, yes, and the fuel costs—the fuel costs in particular—because transport costs have gone through the roof. People are finding it very difficult to be able to keep their costs down if they’re having to truck produce across town in Auckland, they’re stuck in traffic—it all adds to the cost. There is no such thing as a free lunch when it comes to groceries. Someone is paying and that someone is always the consumer.

So when the Government is happily giving away days here or adding costs here or giving somebody else an increase—

Dr Duncan Webb: Point of order, Mr Speaker. The member’s just ranged far and wide. Speakers’ rulings—

ASSISTANT SPEAKER (Ian McKelvie): No; with due respect, if you read the bill, the member is referring to quite a number of items in the bill quite frequently.

Hon JUDITH COLLINS: Thank you, Mr Speaker. Of course, when we look at the grocery sector that this is all about regulating, and the Commerce Act, I say to the member who’s resumed his seat: if he doesn’t want to listen, then leave, because I am very happy to give him rendition for the next 10 minutes if the Speaker would only give me permission, which I will not actually ask for, because it’s not all about me, unlike the member who was so objectionable.

I think it is really important when we look at the Commerce Act to realise we’ve had it since 1986. I think the last time I spoke on the Commerce Act, I pointed out that I did one of my dissertations on the Commerce Act, and the Minister in charge of the bill said, “Well, that was 1986.” And I said, yes, it was, and I did. So it’s been around for a while. I think the ComCom, as it’s called now—the Commerce Commission—has often been seen as not having enough teeth or enough funding or enough something or rather or a will to live. I think it is important that we look at it and think—you know, in the anti-trust legislation that we see in some parts of the United States and others, sometimes some of us look at it and think, well, that might be useful. I mean, this was the New Zealand answer to it, the 1986 Act. But the problem is it doesn’t solve the problems that a Government can visit upon people and it doesn’t solve the fact that fuel costs are higher. It doesn’t solve any of that.

Yes, this will go some way, but it is only a little way. It is the right thing to do, but it is certainly not the whole thing that could be done. For a start, the Government could start being upfront about where’s the inflation coming from and what part they’ve had in it, because I think Switzerland and Japan are still part of our world. Thank you.

In the last speaker’s wide-ranging tour of her grocery shopping habits, amongst other matters, she mentioned a couple of times that it’s no surprise that we have a duopoly and that that is driving prices high.

She also mentioned in her closing moments that she wondered whether the Commerce Commission lacks bite. Well, I guess what it takes to give the Commerce Commission bite is a Minister with bite, a Government with determination to do it; we’ve done it—very proud to support this bill.

Motion agreed to.

Bill read a third time.