Commerce (Criminalisation of Cartels) Amendment Bill

I move, That the Commerce (Criminalisation of Cartels) Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill.

This bill seeks to amend the Commerce Act 1986 to introduce criminal sanctions for serious cartel conduct. Last year, the previous Government removed criminalisation provisions from the bill through a Supplementary Order Paper submitted to the committee of the whole House. This Government believes that was a mistake. We believe the previous Government failed to understand the need for strong deterrents to prevent parties from intentionally engaging in cartel conduct.

Serious cartel conduct harms New Zealand consumers. Cartels are formed when competitors agree to fix prices, restrict output, or allocate markets. This reduces competition in the market. This results in high costs and reduced choice for ordinary New Zealanders. Labour committed to implementing this reform, and it is being delivered by this coalition Government. Criminalising cartel conduct is necessary to protect consumers and honest business. A criminal sanction will send a clear message that our society is not willing to tolerate this type of behaviour. It’ll also provide a clear deterrent to those who deliberately engage in cartel conduct. Increased awareness of criminalisation will reduce unintended cartel conduct, as businesses will more thoroughly consider the competition impacts of their arrangements.

Internationally, most of our trading partners have criminalised cartel conduct—Australia, Canada, the United States, and the UK—and cartels can cross borders, as we have seen in the past. Aligning our laws with these jurisdictions should allow the Commerce Commission to participate more fully in international cartel investigations. This bill implements a criminal regime for cartel conduct that will run alongside the civil regime. A sanction for an individual will be up to seven years’ imprisonment, a half a million dollar fine, or both. And this puts this offence on par with white-collar crime and corruption. In the eyes of most New Zealanders this conduct is worthy of such a sanction.

This bill went through a full select committee process last year. However, given the previous Minister’s disregard for the committee’s recommendation to include criminal sanctions for the worst cartel behaviours, the bill must return to a select committee. I would encourage the business community and all other stakeholders to consider making a submission. It is important that the Government works with the business community to achieve the most robust and efficient business environment for all New Zealanders. In the interests of business certainty we will retain sound provisions of the current legislation, for example, the exception relating to collaborative activities.

The collaborative clearance regime introduced last year allows businesses to seek assurance from the Commerce Commission that their proposed joint ventures meet the requirements of the collaborative activity exception. In short, this will mean that businesses can check if their proposed collaboration is free of competition risk. This is not compulsory, and businesses can continue to self-assess as they mostly do now, but this clearance regime gives them an option for certainty.

Honest businesses should have no concerns, and this bill provides a defence for those who believed a collaborative activity exception applied. For similar reasons, the bill also provides a defence for those who believe their liner shipping block exception applies to any conduct in question. I believe that this block exception is well targeted. It balances the need for the industry to work together to achieve efficiencies but to do so in a way that does not harm competition. I do not propose to revisit this matter during the course of the consideration of this bill. It has already been well considered by this House.

The regime won’t come into force until August next year, after which we can review the block exception in due course if the need arises. This bill provides an appropriate transition period of two years, and during this time I expect business and individuals to take note of the impending introduction of criminal sanctions and to reflect on their conduct, ongoing and proposed.

This Government has an ambitious programme of competition law reform, and I will soon introduce a bill enabling the Commerce Commission to conduct market studies. This will allow the commission to shine a light on markets that aren’t performing as effectively as they could or delivering the best outcomes for consumers. It would also allow Governments to assess whether further action is needed to protect consumers and our robust business environment.

The review of section 36 of the Commerce Act will also continue under this Government. In New Zealand, many of our markets have few dominant players, and this provision of the Commerce Act is vitally important to deter the misuse of market power. The section is clearly in need of reform to deter firms from abusing their market power but also to make it workable in terms of enforcement. We are in a position to assess the changes implemented in Australia but at the same time ensuring any reform is fit for purpose in the New Zealand context.

I look forward to engaging with stakeholders in the most appropriate mechanism as an alternative, and this work underpins the Government’s commitment to build a strong economy, be fiscally responsible, and provide certainty for consumers and business. We will work with business to deliver shared prosperity for all. This bill is one of a number on our work programme that will encourage the economy to flourish. I commend this bill to the House.

I’m delighted the Government filibuster stopped so that I could address this bill before the dinner adjournment. I thank Mr Faafoi for his excellent speech, which, unfortunately, was devoid of any merit whatsoever, which is why we are going to oppose the legislation. We say the legislation is unnecessary and, secondly, it will give rise to additional costs that cannot be warranted.

The fact of the matter is that our competition law is working pretty well in this area. There has always been a jurisdiction on the part of the Commerce Commission to pursue cases involving price fixing, and some of the penalties that have been imposed on various companies have been very large indeed. So, for example, I go to the wood chemicals area. Koppers Arch Wood Protection, for example, was fined $2.85 million for price fixing plus $750,000 for exclusionary conduct jointly and severally. I think the ophthalmologists were done over a couple of years ago. In the air cargo area in 2011, the High Court approved a settlement requiring Air New Zealand to pay a $7.5 million penalty for price fixing in breach of the Commerce Act, and the same applies in the freight forwarding area.

So the civil regime—which Mr Goldsmith, when he was the Minister of Commerce and Consumer Affairs, built on and Jacqui Dean also built on through the legislation that was passed last year—in my opinion, works very effectively. This was a matter that has been the subject of—it could almost be a Homeric epic, because it was discussed at such length within Government from about 2011 to 2017, and it was a good, robust debate on these very important issues.

💬 Hon Kris Faafoi: And you still got it wrong.

You don’t know what a Homeric epic is—Mr Faafoi doesn’t know what a Homeric epic is. It’s a poem. He probably hasn’t got beyond haiku.

The second point I would make is that it adds considerable costs to the Commerce Commission. The Commerce Commission was before the Economic Development, Science and Innovation Committee last week. It is doing very well, and when they go to court, more often they win, and win big. The committee was very impressed by their hard work. But if we impose this criminal jurisdiction on them, they will, of course, have to instruct Crown solicitors. That will add to cost and expense in an area where I don’t think too much more is gained. So I think there are questions of costs that need to be looked at, but, more than that, I think that the current regime, which was updated by the legislation passed in August 2017, is working very well indeed.

The third point I would make is that the assumption that criminalisation of cartel behaviour is the norm is not necessarily correct. Of course, we have the Sherman Antitrust Act, which was passed in 1890 in the United States, and, I think, Canada’s had the ability to impose criminal sanctions since about 1889. But, generally speaking, across the globe, while there have been some countries that have moved towards criminalisation, it’s not necessarily the norm. For these reasons, the National Opposition is going to oppose this legislation.

I find it extraordinary—this legislation is almost a metaphor for the legislative activity of this Government. They’ve got nothing really original to contribute to debate in this House, so what they have to do, and what they’ve clearly been giving instructions to officials to do, is to scurry around and try and find something that can be brought to the House.

Section 36 reform is a crunchy issue. Market studies reform, as was set out in the brief to the incoming Minister, is a crunchy issue. There are so many really good issues in competition law, but this is not one of them. It’s a makeweight piece of legislation in an area that is very well traversed, and what I think we need to do for certainty in competition law is leave the law as it is. So, with those brief comments, I indicate that National will oppose this scruffy little bill.

It’s always a delight to follow on from the Hon Chris Finlayson. He is erudite, informed, articulate, and in these respects he singularly stands out on the Opposition benches. But in listening to the Hon Chris Finlayson, it also brings a note of sorrow to my heart, because it reminds us of great National Party MPs who are no longer in the House with us. And in respect of this bill, I am referring to a truly Churchillian figure, one of the great legislating Ministers of our times—I don’t really need to say his name. Everyone knows who I’m thinking about: the man from Tukituki, the Hon Craig Foss.

Sitting suspended from 6 p.m. to 7.30 p.m.

Thank you. Well, somewhat unfortunately, in my opening remarks, I’d just built up to a punchline just as the bells rang, and the punchline was Craig Foss, so let me just backtrack a little bit to give some context to members who have come to the House specifically for this debate and for this speech. Really, it was a kind punchline, because in my comments I was acknowledging the former Minister of Commerce, Craig Foss, who, at the point at which the previous bill, the Commerce (Cartels and Other Matters) Amendment Bill, was introduced in 2012, which contained within it the criminalisation of cartels’ behaviour, was the Minister of Commerce. I think he’s someone who we can actually look back to a little bit fondly, because the passage of that bill, in the latter days of the previous National Government, had all of the speed and the dynamism of an aged sloth with a gangrenous leg. The first reading was in 2012, the second in 2014, and we got to the final reading in 2017. This was a bill that was dealing with the serious matter of cartel behaviour in the New Zealand economy, and it took five years for it to make its progress through the House.

The reason that I raised the fine example of Mr Craig Foss, the former Minister, is that Craig Foss actually got the issue that we are debating in this bill, the Commerce (Criminalisation of Cartels) Amendment Bill. I actually want to refer back to his excellent first reading speech on the Commerce (Cartels and Other Matters) Amendment Bill back in 2012. Here is what Craig Foss, the former National Minister of Commerce, had to say at that point: “I believe that with the introduction of criminal sanctions [in relation to cartels], New Zealand stands to benefit in three ways. First is the increased deterrence of hard-core cartels due to the severe sanctions, associated stigma, and possible restriction of an individual’s freedom. Second is the increased detection of hard-core cartels from improving the effectiveness of the leniency regime by increasing the value to the individual applying for leniency.”—I’ll talk more about this later—“The leniency regime is administered by the Commerce Commission, and encourages cartelists to come forward in return for leniency. Third is an improved ability to cooperate and detect cartel conduct.” That was Mr Craig Foss, the National Minister for Commerce, in the first reading of that bill, recognising the value of the criminalisation of cartel behaviour.

And it didn’t stop there, because we got to the Commerce Committee and there was a unanimous report from that select committee—a National Party - majority select committee—that recommended proceeding with the criminalisation of cartel behaviour, having listened to submissions from across New Zealand society. Mr Craig Foss, in his second reading speech: “Notably, the committee endorsed the introduction of criminal sanctions for hard-core cartel conduct. This change aligns New Zealand with Australia and some of its major [committee] partners.” So there we had a legislative process that recognised the value of criminalising cartel behaviour, right up until the committee stage.

Unfortunately, between that point and the committee stage we had a change in ministerial leadership, and I want to welcome to the stage Mr Paul Goldsmith, who took over—welcome, Mr Goldsmith—and who, somewhat out of the blue, at committee stage tabled a Supplementary Order Paper that gutted that bill and removed the provisions around the criminalisation of cartel behaviour. All we got was, basically, a one-liner—a one-liner from that Minister and from the National Party—and it was one of those lame ones, saying there will be a “chilling effect.” “Chilling effect” is one of those phrases that you use when you just don’t want to do something and you don’t want to have to argue the toss, and that is what happened. I actually looked back on the committee stage debate, the point at which this House considered that significant change to that piece of legislation, and there was a very, very scant response and discussion to that major change by the Minister in the chair, at that stage, who was the Hon Jacqui Dean.

So I just want to refer back to those comments from Mr Craig Foss. He got it right. It is entirely appropriate to criminalise cartel behaviour, and he described the reasons well. Let’s just go back to those: the first he said was “the increased deterrence of hard-core cartels due to the severe sanctions, associated stigma, and possible restriction on an individual’s freedom.” So it’s, basically, that logic that we have in the criminal law that when we want to seriously deter a kind of behaviour, we make sure that there are sanctions to match, and, in this case, the sanctions potentially include imprisonment of up to five years. I think that is entirely appropriate. It is entirely appropriate because it makes it consistent with other white-collar sanctions that we see for fraud, for insider trading, and the like, but, for some reason, cartel behaviour has been excluded up until this point.

The second point that Mr Foss made—he said, “Second is the increased detection of hard-core cartels from improving the effectiveness of the leniency regime by increasing the value to the individual applying for leniency.” This is, effectively, where one party who may have been involved in cartel behaviour can come forward, can fess up because they’re worried that it might go wrong further down the line, and get the information into the hands of the relevant authorities so that it can be dealt with. And, of course, you increase the likelihood of that happening if people are concerned about the consequences. So having some serious consequences by way of criminal culpability on the line means that the leniency regime is more likely to actually be used.

The third, Mr Foss noted, is “an improved ability”—and I’m quoting here—“to cooperate and detect cartel conduct. This is particularly important for global cartels, where information is more likely to be shared with countries that have criminal regimes.” And, of course, this is where the rhetoric around a chilling effect becomes completely unstuck, because virtually all of our major trading partners, all of the major OECD economies that we trade with have criminalisation of cartel behaviour. Has there been a chilling effect on business investment in Australia, in the UK, in the US, in Japan, or in Korea? Of course, the answer, which we all know, is no. Those countries have perfectly functional economies, and the criminalisation of cartel conduct has not had any significant effect on them whatsoever. It was simply a weak excuse from the previous Government, which didn’t want to go down a path that, quite frankly, was opposed by some of the people that they have close relationships with, and I view that as utterly unacceptable.

There are two arguments that I want to add to Mr Foss’s reasons for supporting the criminalisation of cartel behaviour. The first is consistency with other offences. What is cartel behaviour? It is powerful players, often in oligopolistic markets, coming together to abuse the market for their own personal enrichment. That is what it is about. Cartel behaviour is about distorting markets so that those particular players do better, so they can raise the prices and reap more profit. It is about taking money out of the pockets of other businesses and out of consumers.

When other people within our regime of sanctions do that, whether it’s a few people conducting low-level fraud in a bank or a supermarket chain or whatever, those people face criminal sanction, and very often for amounts that will be significantly below what we see from cartel behaviour. In New Zealand, in the airfreight industry, we had a well-known case a few years ago where approximately $200 million of excess profit was made because of proven cartel behaviour. Now, I will warrant you, Madam Deputy Speaker—I will warrant you—that people operating at a far lower level, engaging in fraudulent behaviour, abusing rules, and breaking the law will potentially face jail terms, but the big boys engaging in that behaviour at the moment don’t face criminal sanction, and that is simply an inequity that this Government will not stand for.

And here’s a final one for the sons and daughters of Milton Friedman on the other side of the House that I want to put to those members tonight: cartel behaviour is an abuse of the market place. If you believe in free and equitable and functional markets, you should be taking a stand against cartel behaviour in the strongest possible terms, because it undermines your economic philosophy, it undermines the functioning of free and efficient markets. It is an abuse of those markets and, given the scale of it, why would we not stand up for it in the strongest possible terms by sending a message to those people in the towers of Queen Street that we expect them to play by the rules and that we will not stand for cartel behaviour that distorts our economy and rips money out of the pockets of our businesses and our consumers. I commend this bill to the House and look forward to other contributions. Thank you.

Well, that was a very interesting speech. As if there is anybody in this House who thinks cartel behaviour is a good thing and something that the public is in favour of! Everybody is opposed to cartel behaviour, and that is why in this country there have been very strict and severe civil sanctions against cartel behaviour, running to fines of up to $10 million—huge sums involved. So it has always been treated as a very, very serious offence.

Well, what we’ve seen here today is a very unedifying spectacle of a new Government filibustering away over its own bills, dragging things out because it has no agenda. So what we’ve seen is the Government has sort of sat down and realised, “Oh my goodness, we’ve got all these weeks of sitting time and we have no bills.” And all the new Ministers were sent off on a little errand to find what are, in effect, a bit like members’ bills—to find some bill that is easy to draw up and flicks a little switch that they can introduce into the House so that they can look like they’re a Government that have any idea of what they are doing. So here we have this bill brought into the House, which overturns a decision that was made by this House only last year after long and due consideration.

Yes, intelligent people can argue about whether it is a good thing to criminalise cartel behaviour or not. There are some countries that do and there are some countries that don’t. There are perfectly legitimate arguments on both sides. On balance, as the Minister in the previous Government, I was opposed to the criminalisation for the simple reason that up to now we have seen this as a civil matter with very severe penalties involved. But, ultimately, if the Government does, every year, pass a new way for directors of companies to go to jail, come up with a new way for them to go to jail if their judgments are wrong, then ultimately it does add up and have a chilling effect, as the phrase that has been used, on innovation. We want our directors to be cautious but if you push them to be ultra-cautious, then there is a cost in terms of innovation.

The Government members may make out it’s the simplest thing in the world to detect cartel behaviour or to understand cartel behaviour, but the boundary between pro-competition collaboration and anti-competition collaboration is not as clear-cut as you would think, and what may be pro-competitive one year may turn out to be anti-competitive the next year. So this is an area, in many countries in the world, where there is a detailed and long, drawn-out public process about how best to handle it.

We, on balance, were strongly of the view that the regime that we’ve had in place in New Zealand for many, many years, in a small economy with small businesses, on the average, dominating, was the appropriate one for New Zealand. There’s been no robust evidence put forward by officials or before the committee that makes a strong case for changing what has been in place. If you have the view that regulatory restraint is a good political philosophy to hold, then this is the approach that you should take. So this Government is introducing this one, and we’ll look forward to taking it to select committee and hearing what people have to say, but let’s not forget what this is all about, which is filling up the Order Paper in order to avoid embarrassment on the part of a new Government that doesn’t have a clear programme to put forward.

Thank you, Madam Deputy Speaker. Look, I just wanted to address the comments from the previous speaker, Paul Goldsmith, because one of—

💬 Hon Member: Goldstein.

Ha, ha! One of the more valid arguments he raised was around how the criminalisation process works. So let’s not confuse the point that the legislation itself, and what we’re trying to achieve around holding cartels to account for behaviour, fundamentally didn’t change. It was the criminalisation aspect that you guys, the Opposition now, seemed to have the issue with at the time. The legislation itself fundamentally remains the same.

We got to a point where—I put it to the previous speaker—there are several defence mechanisms for the individual in terms of an honest belief defence and operating in good conscience. We’re not seeking to criminalise these operators; it is those with malicious intent. So they have to clearly break the law, which that side of the House agreed we needed to implement in the first place. I just wanted to address that point made, because it was one of the few fair points.

It’s much more fun to go back to one of the previous speakers, Mr Finlayson, who—

💬 Hon Member: Who?

Mr Finlayson.

💬 Clayton Mitchell: Who’s he?

Maybe I’ve got the name wrong—ha, ha! But I’d like to quote him, because he said this bill was unnecessary. His quote was, “It’s working pretty well.” That’s what the erudite member had to say about the current structure.

But what I wanted to touch on now is that when the Commerce (Cartels and Other Matters) Bill came up in the last term, in its third part—five years after it was first introduced to the House—what I particularly liked in the conversation, on behalf of New Zealand First, was that, actually, here’s a piece of legislation that’s looking to be more permissive in terms of good business working together. We have to be—as the previous member himself, the Hon Paul Goldsmith, the former Minister, said—mindful of cartel operations. It’s bad, and everyone in the House disagrees with it. But what that legislation was seeking to do was to be more permissive in the operations of business so that they could actually seek to put a case forward where their coming together, in terms of two big firms providing services together, was actually beneficial for the end consumer. There are cases where we see that, around the world, and, if it’s managed well, it’s a really good thing. That was what was exciting about that legislation. What was typical was that it was a response to what other jurisdictions around the world were already doing, but, credit to the Government of the time, they saw what was happening around the world and thought, “Yeah, let’s do that in New Zealand.”

The challenge then, and what the rest of the world highlighted in their practice, was, yes, a more permissive regime—let’s allow these guys to work together if we can bring proof that the end consumer would benefit from that coalition, that working together—but the balancing act was really important. New Zealand First said at the time, “Fantastic, you’ve got the balance right.” If there was intent, if there was malicious operation where those individuals sought to use this permissive new regime maliciously, we could now hold those individuals to account through the criminalisation that was introduced and well-spoken to by the previous Ministers—criminalisation. The previous Ministers who first brought this to the House, the National Ministers of the time, spoke eloquently about the need for this criminalisation.

So here we are today, fixing what was clearly a mistake at the time. I’m not sure if we could call it cold feet, but cold feet from what? One of the great arguments that most traders in the House—parliamentarians who respect trade and working with our international neighbours—always speak about is the alignment of regulation and policy. Now, our biggest trading partner is Australia, and here we were, following along the lines of our Australian neighbour so that in our closer economic relations we could be in alignment and work together to hold international companies to account. It just made a lot of sense. And Australia wasn’t the only jurisdiction that did that. We’ve spoken about Canada. I think we mentioned Korea and Japan. There are examples, and more and more are coming online all the time, so that is the challenge for New Zealand. We are a small country that must deal with the rest of the world, and the best way we can do that is through the rule of law and good and agreed rules of engagement. This bill will remedy the mistake made by that previous administration.

The bill itself would have cartel behaviour prohibited—it goes without saying now. We know it currently has only civil sanctions—that’s what the bill’s seeking to remedy tonight—and it was absurd of the former Minister to remove those criminal sanctions. You know, in the whole debate leading up to that period where it had gone through select committee—and I’m happy to be corrected, but if memory serves—all of the submissions said that criminalisation was appropriate and the correct thing to do, and the Minister of the time absolutely agreed—absolutely agreed. And yet in the next step in the legislative process, the bill was—“gutted”, I think, was the word used by a previous member. It just made no sense, and it makes no sense, and this is why we are here this evening to fix a mistake made by the party opposite.

I think, really and truly, I’ve touched on the most important parts. It is something that we need to do to align our legislation with our international neighbours. It’s important that we get that right. We are moving—it is a permissive regime and there must be a balance to that so that we can hold individuals to account who maliciously seek to benefit off defrauding New Zealand consumers through cartel behaviour. So it is with pleasure this evening that I do recommend this bill to the House. Madam Deputy Speaker, thank you.

Thank you, Madam Deputy Speaker. It’s a pleasure to be talking on the Commerce (Criminalisation of Cartels) Amendment Bill. The previous speaker, Fletcher Tabuteau, just said that the Government were trying to address the issues of the last Government. Madam Deputy Speaker, I put it to you that this is a Government that is meddling—meddling on the edges. I am very disappointed that the new Minister of Commerce and Consumer Affairs has chosen this bill to be his opening gambit in terms of trying to improve the environment for businesses and people of New Zealand. This is a vexed issue, of course, and all New Zealanders hate the concept of cartels operating in New Zealand and causing all the disadvantages of that. Everyone agrees with that; that’s an absolute given, but let’s just go and remind ourselves about what powers are already in the existing Act.

First is that under the civil sanctions provision of the Commerce Act, individuals can be fined up to a maximum of $500,000, and corporations can have financial penalties the greater of $10 million—three times the value of the ill-gotten gains, however they are assessed—or 10 percent of the company’s turnover. Madam Deputy Speaker, I would say to you that those are significant penalties. The second provision under the existing Commerce Act is that companies are prohibited from indemnifying their directors and management, and that is a common practice. Under the existing Act they are prohibited from providing that financial assistance—in effect, cover for their directors and management. The third thing is that directors and management can be banned—if they are found to be operating cartels—for a maximum of five years. I put it to you, Madam Deputy Speaker, these are substantial penalties.

So what is this new bill—this new bill that seeks to be the wonderful lead-off on the commerce section of the Government’s new agenda. Well, under clause 4 it inserts new section 82B, which inserts a provision around criminal cartels. In order to commit an offence a person must give effect to a cartel provision and intend, at the time of giving effect to the cartel provision, to engage in price fixing, restricting output, or market allocation, which, of course, are provisions already under the current legislation in terms of those specific elements. But by introducing a criminal content, what it does is it introduces a whole new test that the courts now have to assess. One is about establishing intent, and it has to be in relation to the detriment of the public. So, already, we’ve added a complication.

But even if you accept that argument, the penalties that are proposed under this new bill are basically the same. The only difference is that in respect of an individual not only can they have a maximum fine of up to $500,000, but they may be imprisoned up to a period of seven years. And there are already watered-down provisions in the new bill, which, rightly so, excludes things like shipping companies and other collaborative arrangements. So there are already existing exemptions.

I think there’s a very legitimate conversation to be talking about how a Government should promote healthy competition, but I ask you, Madam Deputy Speaker, where is the evidence? Where is the evidence for the need for this change? There is no evidence. There is absolutely no evidence for the need to introduce a criminalisation issue.

I think that what this bill does is it introduces this additional test that really cuts to the core of those people who manage New Zealand businesses legitimately but introduces a whole new area of risk. These are the very same people that the bill seeks to target. They may inadvertently give rise to a situation that may border on the issue of cartels, but this issue about this criminalisation clause is that it is a very grey area. If you think about issues where people are doing joint bids, where they are working collaboratively within the market place—we’ve got a very vibrant creative sector working together to develop new products and services—or even where companies are vertically integrated, all those are grey areas under this criminalisation, and I think what’s going to end up is an absolute field day for lawyers.

So I think this just purely a philosophical change by this Government who is anti-business—anti-business—and I don’t believe that this is actually going to achieve anything. Already the courts have handed out a vast number of convictions over the last few years; they are effective. We’ve got a whole stack of parties against this, including Treasury and the Productivity Commission. I think this is a feel-good bill for everyone on the other side there to be able to say, “Yes, we’re doing something, but in reality we’re not doing anything at all.”

Kia ora, Madam Deputy Speaker. Ngā mihi nui ki a koutou. Kia ora. We took the kids to the circus recently. I don’t think they saw in the circus events more acrobatics and backflips than we saw from the National Party tonight. Every single allegation against this legislation can be rebutted with the simple question: “Why did you put it to the House in the beginning?”

What we heard from the last member, Andrew Bayly, is it was a philosophical chase, it was anti-business, it won’t achieve anything. Why didn’t the member ask Minister Goldsmith when it was originally put to the House? We also heard that member say, “Where’s the evidence?” Well, I would point to the OECD. I would point to the market studies that we’ve seen conducted by the US Department of Justice, the studies conducted in the UK, the studies conducted in Japan. Where’s the evidence? It’s all over the world, Mr Bayly, and you should look at it.

Now I also heard from that member this was all about meddling. This Parliament is acting on behalf of consumers, making sure they get a fair go; making sure businesses operating in a competitive, fair environment get a fair go and can compete. What we are talking about tonight isn’t about meddling; it’s about making sure we’ve got a fair market so consumers and market participants can have confidence in the system. That’s exactly why the Government put it originally. Now, remember the National Party was for it, then they were against it, and we don’t know where they are today. I urge them to support it, because what we’re talking about is—the evidence is very clear—that criminalisation of cartels is effective. That’s what the OECD has found.

What they’ve also found is that New Zealand is particularly susceptible, as a small economy with limited market participants in various fields. When you look around the world, there’s $16 trillion of activity estimated by participants associated with cartel behaviour. Where New Zealand is particularly susceptible, and we’ve seen various cases in our history, from the ophthalmologists through to the air transport case—look, it’s important that we make sure that we listen to the evidence and actually have the deterrents. Now, what we know from the data is that having a criminal charge on our statute book does act as a deterrent. The OECD has also found that it’s more effective at actually finding it.

It’s important because the negative impacts on an economy are so widespread. It’s in terms of market concentration—the ability to screw the scrum. Now, as a country that saw one of the most closed economies outside of the Soviet bloc in the 1970s through to the 1980s, where you saw companies get rich simply because they were able to get an import licence under Muldoon’s Government, we’ve got to be wary of concentrating too much power and screwing that market scrum. For a country that’s languishing in the bottom half of the OECD, or the developed world, when it comes to investing in R & D, and when the officials are advising us that cartel behaviour limits innovation in an economy, we should be acting, and the evidence says that criminalisation means detection is easier and it’s also a more effective remedy to stop it in the first place.

So, look, we’re absolutely right behind this legislation. We even note that similar countries such as Australia, the UK, the US, Canada, and Japan all have these. The officials have advised the Parliament that international cooperation will be furthered if cartel behaviour does have a criminal charge on the statute book. Look, it’s been through a select committee at the moment, and that’s why we’re supporting the process. We’ve got to speed up. I mean, this was originally—we saw the first report back in 2010. The legislation was originally put to the House back in 2011. We’ve got the opportunity to protect consumers and protect our economy at the moment. I would note that the Minister has pointed out the very pragmatic and reasonable exceptions, such as collaborative activity to encourage business certainty, and the block exemption—for example, in the shipping industries and noted the transition period of two years to give businesses certainty and the ability to get up to speed with this new statute. Look, it’s all about protecting consumers.

What I’ve heard from the National members is, for some reason, for want of activity, this is the only legislation the Government has put to the House. Well, we heard from the Minister that all the work on his work programme is to protect consumers and to protect the economy, such as the Commerce Commission market studies and the section 36 review to stop the abuse of market power. This Government is acting to protect consumers and to make sure that all participants in the market get a fair go and that no one is screwing the scrum, because, ultimately, what this is about is giving New Zealand consumers the ability to purchase products and services at a fair price. When you look at our supermarket sector and at food prices and petrol prices, important questions have been raised as to whether Kiwis are, in fact, getting a fair go. In a small economy and a small country like ours, it’s particularly important.

I’m disappointed that National originally had the right idea based on evidence, flip-flopped, and back-flipped, and here we are tonight. I hope they can flip back the right way, look at the evidence, and make sure they’re voting along the right side to protect the Kiwi consumers. Thank you.

Thank you, Madam Deputy Speaker. It’s interesting, over this side of the House tonight, when we’ve got the Government—a mix of Government—trying to solve a problem when they haven’t really described where the evidence of a problem is. We’re looking for the evidence of a problem, and we heard Gareth Hughes, the last speaker, talking about the OECD. We heard him talking about Japan, and we heard him talking about the EU. That followed on from a speech before by Fletcher Tabuteau, who talked about the challenge for New Zealand.

In all of this, there is a challenge for New Zealand, because we don’t have the population of many of those countries. In fact, we don’t have the problem of most of those countries. That is a challenge, and Fletcher Tabuteau alluded to it before: we are small and we need to collaborate. So we in this country, under this piece of legislation, are going to have businesses walking an absolute tightrope. I can see that the legal fraternity is going to be making a fortune out of this, because where do we draw the balance between companies wanting to collaborate? We’re a trading nation and we know that. We don’t sit around selling stuff to each other. There’s going to be a lot of collaboration that needs to go on for us to be on the world stage. We’ve been doing trade agreements—we’ve even got this current Government pulling together and doing trade agreements—and we actually need to be very careful that we’re not sending the wrong signals here.

So there is a lack of evidence of a problem, and the suggestions from the arguments that came forward before were that the current penalties are currently effective. “They consider that criminalisation would offer little benefit,” but what it would do is it would impose “substantial costs on businesses”. So there we go again. We’re starting to put in extra substantial costs, so everyone that wants to collaborate to make a difference in this country is going to have to have compliance books and red tape to the limits—which is just typical of what we hear from the other side of the House—to solve a problem about which no one’s given us any evidence that it exists. It’s going to be a real deterrent for people actually getting up, getting in, and working together and helping us have the opportunity to take on the world.

Another concern that the submitters raised was that there will be “mid-level managers and senior managers [who] may already”—and I’m reading this from the regulatory impact statement—“be reluctant to engage in pro-competitive, efficiency enhancing conduct with competitors because of the risk” of what might be in the breach.

Tonight I’ve heard people talking about existing exceptions. So how do you get a fairness around that? Mr Tabuteau talked before about good and agreed rules. So how do you get good and agreed rules that, actually, it’s OK to have some existing exceptions so that it’s OK for some people to collaborate, and the activity is OK as long as the Government says so because the Government seems to need to control everything around here? It will be a field day for lawyers.

There are already things in place to deal with criminal activity, and there have been a number of people who have gone through the court system and have been convicted of behaviour that is clearly anti-competitive, but the fine line is going to be really, really difficult to draw on establishing intent. I would like some real good explanations from people on the other side of the House as to how clear they see that line, because, for me, that line is not black and white. There are always people, I will admit, that, whatever the law is, will try and find a way around it.

So even if this happens, there will be some criminal intent, but I want someone from over the other side of the House to explain to us here that line—tell me what’s on one side and tell me what’s on the other side. We’ve heard about collaboration and then we’ve heard about the evil nastiness of cartels that get together. Now, we all know what’s criminal, but I think that this is going to put a great onus on lots of businesses in this country. It’s going to constrain—and I could see Gareth Hughes over there talking about facilitating all these ideas about technology and working together, and all this big buzz in his head about all these things that could be created if we put this law in place. I’d like to contend that it’s going to have the opposite effect. Thank you.

The next call is a split call—five minutes each.

Well, I hope five minutes is enough to explain to the member what’s wrong with cartels and why they are, in fact, criminal behaviour. I’ll tell you what: let’s just think for a minute what’s going on here. What’s going on is price stripping—taking wealth from consumers and moving it to corporates.

So let’s talk about price fixing. A competitive market, the so-called market that that lot over there on the other side of the House says it promotes, would see a price equilibrium—a fair price that gives fair profits to the producers and a fair price to the consumers. What a cartel does, if we price fix, is it bumps the price up. It’s a cartel agreement to ensure that the consumer pays too much, so that the money goes illegitimately—illegitimately—from the consumer to the corporate.

And you know what: look at this little word in the bill, that it “intends”, that the person “intends” that to occur. That’s what makes it criminal: that someone intends to get money they’re not entitled to. For that, the penalty could be up to seven years inside, because you know what: it’s just like theft. It’s getting money you’re not entitled to. It’s not rocket science. It’s pretty straight forward. If you take money, if you strip money from a class of people that you’re not entitled to, whether it be through price fixing—

💬 DEPUTY SPEAKER: I’m not doing any of that. I’m not doing any of that.

Sorry, Madam Deputy Speaker. If the corporates do that, then they should be—it’s all very nice to say “We don’t want to chill too much activity on the part of these directors, these company directors.” Look, it’s “intends”. The law protects people. There’s such a thing as burden of proof and beyond reasonable doubt, and that’s the protection. The prosecution will have to prove beyond reasonable doubt that the person engaged in this conduct intended to do so, and if they did, then that is deeply wrong. It’s taking, and that’s why they should go to jail.

You’ve asked for evidence. Well, I’ll tell you what: you don’t have to go far. The last Government got that evidence. The Ministry of Economic Development way back in 2010 did a report on this, and do you know what they said? The civil penalties regime is not good enough. It’s not a deterrent. So what we have here is something that will be a deterrent.

It turns out, if you look at the record, that only in 2016 the Commerce Commission said they were having more cartels. They were increasing their work around cartels; it was on the rise. So what we have is a regime that’s not working. We are needing greater deterrents, and that’s what we’ve got here. It’s not enough to say “Look, you really oughtn’t have done that. We’re going to take some of those profits away from you.”, whether it be three times the profit earned or whether it be your $10 million. Whatever it might be, it turns out when you’re playing with the numbers that some of these industries are playing with, it’s good business to take a risk. You might get caught, but let’s take the gamble. Well, let’s set it apart for what it is: it’s deeply wrong, it’s taking, it’s illegitimate. Let’s criminalise it, and let’s make sure that people who go down that road knowing what they’re doing pay the appropriate price. And that’s what we need.

So look, you know, when we think about it we’ve got defences in there for legitimate conduct, because cooperation in industries is sometimes necessary, it’s sometimes appropriate. If that’s existing in the current legislation, unlike the last go at it, which didn’t have that, that is a legitimate defence. So what we have here is an appropriate response, not one that we’re going to put into the water, then get lobbied terribly about and have Chapman Tripp say that it’s a bad idea, and have the Institute of Directors say that it’s a bad idea, and do a u-turn on. No, it’s one that this Government is committed to because it is an entirely appropriate step. What beggars belief is that you’ve got a step here that is looking to make sure that the market is preserved, that it operates effectively. We’ve got an Opposition that’s saying “No. We don’t want that. We want to go back to Paul Goldsmith’s world where we want to give a free pass to company directors so that if they get into a bit of strife, even though they intended to embark upon this course of action, they’re not criminalised for it.” It is wrong. It is taking.

Price fixing is utterly illegitimate, as is any other arrangement such as organising regional procurement or sales regimes. Those kinds of things might be complex. They might take a lot of resources of the Commerce Commission, but we’ve got to stamp on them because they take large amounts of wealth from the New Zealand public, and that’s got to stop. Thank you, Madam Deputy Speaker.

I want to thank the member who’s just resumed his seat, Dr Duncan Webb, for a spirited contribution. But my question, having listened to him, is: is the current law already adequate for the very behaviour we talked about? And I want to—

💬 Hon Member: No.

Well, somebody interjected, “No.”, but I want to give an example whereby I suspect the caucus hasn’t been fully informed by the Labour Cabinet. When the previous Government introduced the National Animal Identification and Tracing (NAIT) Act it required the stock and station industry to be deeply involved in the implementation. I think almost inadvertently, some of those companies got together as they sorted out appropriate charges that they’d make at particular sale yards for the completion of the NAIT obligations. As I say, almost inadvertently, I think, those companies fell foul of commerce legislation at the time because they were accused by the Commerce Commission of price fixing, exactly the sort of behaviour that Dr Duncan Webb said we should not tolerate in New Zealand. I happen to know that some of those companies recognised that they’d broken the current law and were fined many hundreds of thousands of dollars. One major stock and station company decided to fight the Commerce Commission and lost, and I think I’d be right in saying their total costs would’ve exceeded a million dollars. So in the spirited contribution you’ve just heard, I ask the question whether the very situation that Dr Webb has raised is not already covered by commerce legislation in this country.

Which leads me to the relevant question that should be asked: is this legislation necessary tonight? I listened to the Hon Paul Goldsmith’s contribution and I think he’s got it in one: Cabinet has sat there and panicked about the amount of legislation that they have to present on an Order Paper. I think we’re getting very, very close to the situation where the Government’s going to have to consider changing the sitting programme that’s been set by the Parliament at the start of the parliamentary term simply because they haven’t got a legislative agenda. That’s what’s going on here. I can imagine the panicked call around to Cabinet saying, “Get your officials to find anything that we can bring before the House, claim it’s urgent, claim it’s important.”, and here we are within five months of the election discussing the Commerce (Criminalisation of Cartels) Amendment Bill. I say to the Government, “Is this all you’ve got to talk about having won an election and with an agenda?” I cannot believe we’re in the House tonight finding this important enough to do.

What’s clear to me after the contribution from Duncan Webb is that he truly doesn’t understand the current legislation. He doesn’t understand the necessity for this legislation. He can’t ask for it. And if you wanted a further example for the fact that the Government doesn’t know what it’s doing, listen to the very lacklustre performance from the Hon Kris Faafoi when he introduced this legislation. This legislation will impose cost on the business community. We’ve got a regulatory impact statement prepared by the Government—well, not prepared by the Government for this particular legislation because it hasn’t had time to do it, but I go back and look at a previous regulatory impact statement, and that then said that they’re not sure about the cost that will be imposed on business by this legislation.

I say to this Government, it’s been around now for five months, you should’ve had an agenda when you won the election, and it’s time to come forward and debate your agenda. The best that the Government can do is come up with the Commerce (Criminalisation of Cartels) Amendment Bill. If that’s the best they can do after nine long years in Opposition, it’s time they really considered whether they’re worthy of being the Government of this country.

Well, that was a very emotional speech just then from the previous contributor, the Rt Hon David Carter—not much to do with the Commerce (Criminalisation of Cartels) Amendment Bill, but it was a contribution none the less. I want to bring this debate back on track and stop talking about could haves, should haves, and would haves—“If we were in Government, we would have done this and we would have done that.”

So let’s just tackle some of the key points around this particular bill. First of all, I want to address one of the previous speaker’s comments about Labour being anti-business. Well, we’re not anti-business. As a business person myself—a successful business person myself in provincial New Zealand—I can stand here proudly and say that we actually stand up for businesses all across New Zealand every single day. As we go forward over the next few years—and maybe quite a few terms after that, on the performance of the last speaker—we may actually get that opportunity to speak to the business community about our aspirations, and things are looking good, can I say.

We, in our party manifesto, which is a collection of all of our great ideas—when we put our heads together, we come up with some good stuff. We’ve included in there a commitment to criminalise cartels. Now, this is very simple. So, when the previous contribution says that this is out of the blue, it’s not. It’s actually very firmly in our manifesto, and it’s something that we’ve wanted to address for a long time.

Price fixing and other cartel conduct harms New Zealand businesses and New Zealand customers, as well. If you want to point to a few recent examples, well, we can talk about the price fixing in relation to the introduction of the National Animal Identification and Tracing Act 2012, where the total penalties exceeded $3 million. There was also another recent example, of attempted anti-competitive conduct for the collection of waste oil in the Upper South Island, with a penalty of $425,000. These examples are recent examples, and they’re out there and they’re happening. So what we want to do is strengthen the law around this.

Most developed countries have a criminal offence for some form of cartel conduct. I say “some” because there are some that don’t, and those examples are Sweden, Finland, and Switzerland. So that’s something interesting for us to take on board. But many of the other developed countries around the world have got some kind of criminal offence in store around cartel conduct.

We want to take a really strong stance against business people that collude against the interests of their customers, and, as you’ve heard from quite a few of the earlier contributions, even the National Party members of Parliament agree with that. If you’ve just tuned in to this debate, then here is the rub. This is the main difference in where they see things and where we see things. You see, the difference is that we think the risk of imprisonment acts as a strong deterrent and reflects the seriousness of the harm that can be caused to the economy by cartel conduct. The current Commerce Act regime and the bill have features that enhance business certainty, such as the collaborative clearance regime and the various exceptions from the Act, and there are other measures in there too. So a lot of the scaremongering from the other side about the changes that we’re putting in here, into this bill—well, they’ve already been thought about and measures have been put in place, and, hopefully, I’ll get to that very soon.

Of real importance with this particular piece of legislation is that we’re going to be talking about the criminalisation of cartels, which will also enable the Commerce Commission to investigate international cartels, as overseas competition agencies in jurisdictions with criminal sanctions will be able to offer more cooperation to the commission underneath those laws. So what is proposed with the new criminal offence? Well, basically, the new criminal regime in this bill is closely based on the regime in the previous Government’s cartel bill, so that’s a good thing—that’s something that they’ll be happy about. The criminal regime will run parallel to the current civil regime—again, it sounds very reasonable.

Now, for it to become an offence, the defendant must have intended to fix prices, restrict output, or allocate markets. The intention element of the offence is not present in the current civil regime, and therein lies the difference. One of the Opposition members talked about how we wouldn’t be able to determine whether or not something was intentional. To that I say, well, that’s why we pay them the big dollars—so that they can actually argue that one out. I don’t think that it’s impossible to find out if there was intention, and, well, as I say, I think that’s something that is valid but also mitigated, as well.

The penalty for the individual would be up to seven years of imprisonment or a fine of up to $500,000, or even both. The penalty for bodies corporate would be up to $10 million, or more in some of those cases.

Now, there’s been a lot of fear about the chilling effect that it’s going to have on businesses—that was contributed earlier by my fellow colleague over here, Michael Wood. We talked about new defences. The new defence, which is included in new section 82C in clause 4, applies if the defendant believes that their conduct was “reasonably necessary” for the purposes of a legitimate joint venture, such as a collaborative activity. Well, that’s there. We’ve identified that, and we’ve mitigated that too. We’ve also put in there, as well, that a two-year transitional period is proposed before the criminal offence comes into force. Now, this would allow for businesses to learn from experience with the existing civil regime for cartel conduct, which came into effect just in August of last year.

Existing exemptions and exemptions from the civil prohibition for cartel conduct would also apply to the new criminal offence. These include the exception relating to collaborative activities such as the joint ventures, and the exception for specified international shipping activities such as vessel-sharing agreements. Businesses will also be able to voluntarily apply to the Commerce Commission for clearance of their proposed collaborative activities, and, if granted, a clearance would confer immunity from the civil prohibition and the criminal offence on the basis that the Commerce Commission would be satisfied that the activity is likely to be consistent with the Act.

So we’ve done our homework on this, and we’ve come to the realisation that this is necessary. This is something that the people want—we heard it in submissions—and we think that it’s a good thing to do.

So, just to reiterate, Labour is not anti-business in the slightest. We are very pro-customer—that’s what we are—and that’s why we are pushing this. I reiterate that it’s in our manifesto, so we’re not just plucking this out of the air. This is actually something that’s very serious to people around New Zealand—enough for us to be able to put it in the manifesto. As I’ve already identified, we’ve got recent examples of where cartel conduct has harmed New Zealanders and New Zealand businesses, and so what we want to do is introduce this—with the addition of imprisonment as a final resort—and put this through the House because it’s the right thing to do. With that, I commend this bill to the House.

The criminalisation of cartel behaviour so early on in this new Government’s past 90-day period is really an indictment on the lack of thought, vision, and pre-prepared legislation. Nine years, it’s taken. Nine years the Government had to sort out what it was going to do when it got in power, and tonight we’re discussing a minute piece of information. The current regime offers $10 million worth of fines if it’s a civil matter, and, actually, it’s working, and I’m not aware of any significant movement in the media to actually toughen down on cartels. I think what’s happening with this Government is actually having a chilling impact on business, and that’s because the combination of a whole lot of things is forcing businesses to lose confidence. The loss of the 90-day trial period, changes in and toughening of immigration, other changes in the employment relations field—they actually all impact on business confidence.

💬 Hon Member: Cartels.

So this bill—on the cartels—actually, in my view, has no robust case or problem to solve behind it.

I go to the regulatory impact report that was given last time. It says, “One [of the concerns raised by submitters] was that even within large, seemingly well-resourced businesses, sales people, mid-level managers and senior managers may already be reluctant to engage in pro-competitive, [behaviour]”. In the world I’m in, and in some of my previous roles, actually working together is a really good thing. We are a small country. We are a small country, and, sometimes, the big model of competition actually works against consumers, and I think this is one of those cases.

We have a problem—an alleged problem—that can’t be quantified and is not supported by Treasury or the Productivity Commission, yet here we are, probably about 120 days in now, on our 20th National Party bill since the House began, because this Government does not have enough of its own stuff. What this is about is slow, incremental, but damaging change to our businesses. It’s all very well to be ideological about sending people to jail for cartel-like behaviour, but, actually, for most people this will end up having a chilling impact, just like health and safety did and just like changes to employment relations, and that is why business confidence is slipping. You guys don’t seem to get it, but out in the real world that’s what people are telling me.

Every time you change a law in this House, you have to say what the value of that change is—and there may be some laudable goals—and what the cost is of that change in terms of time and money and whether it’s worth it. And, in this case, I simply don’t think it’s worth it, other than to fill up the business agenda of this House. Every time we do something like this, it’s a balance, and the balance, in my view, is the balance between collaboration and competition. Competition, actually, by its very nature, is something that this side of the House strongly supports—

💬 Kieran McAnulty: Not when you’re talking about the Dairy Industry Restructuring Bill, though, Yule. You’re not fussed on competition then, are you?

—but when you don’t have scale, when you don’t have unique qualities that you can share in a competitive way, then it’s actually better to collaborate. Mr McAnulty, you’ll know that from your previous role.

So while previous members on the other side have been focused on the cost to customers, actually, there can often be a cost to people if you don’t collaborate. So I think the focus of this bill is wrong. It’s simply to fill up the agenda when, actually, there isn’t a major problem. Thank you, Madam Deputy Speaker.

New Zealand is a small place. We all know each other—in fact, somewhat worryingly, we might even all be related to each other—and it has its problems. But one of the things that the smallness of our community entails is that it’s easy to connect. It’s easy to cooperate. It’s easy to collude, and that’s when you get a cartel.

On this side of the House, we support that connection, we support the cooperation, but we draw a line at collusion, and it’s a firm line. That is behaviour that we think must be illegal, and it’s behaviour that in some circumstances warrants being criminalised. That is why we have brought this bill to the House—to stop collusion. What we’re talking about here is cartels—about groups of businesses colluding to price fix, to restrict output, and to allocate the market in particular ways, all in order to get a greater profit for themselves. It’s business misbehaviour.

As members on the opposite side of the House have pointed out, business misbehaviour is usually just a civil matter—something that’s dealt with by a fine, a penalty, maybe a period of time when you’re barred from trading. That is what a civil penalty is for; it’s because it’s not criminal activity. But there is something a little bit more when it comes to collusion, and that’s because collusion is not just a civil matter; it is a moral matter, and it is a moral matter because it is theft. That is why collusion needs to be criminalised.

It’s interesting how this collusion can come about. I was very, very interested to listen to what Mr Carter had to say about the National Animal Identification and Tracing Act 2012, where it seemed that, almost inadvertently, stock companies had talked to each other, they’d arranged a few things, and in that way they had come to cooperate in such a way that it became collusion. In fact, the word that Mr Carter used was “inadvertent”, and that does happen. It’s a known phenomenon, a known psychological phenomenon, something that’s studied in depth in game theory—the ongoing tit for tat, where people develop a strategy of cooperating with each other until, in fact, they are colluding. It is done inadvertently, and that’s where you would have a civil penalty. We’ve got civil penalties for that kind of inadvertent behaviour. We’ve already said—and, in fact, it’s in the legislation already—that in terms of the civil penalty, it’s a fine of up to $500,000 for a person who’s involved in cartel activity and $10 million for a company.

But we need a stiffer penalty, and it’s a much more serious penalty where intent is involved; where people set out to defraud, to steal, to price fix, to market allocate, to take money from their fellow citizens and enrich themselves, to undermine the market—the market in which members on the other side of the House so often profess to believe. Only when it suits them, it turns out. One of the things about this collusion is that it’s very hard to see. The people from whom money is stolen are dispersed. It’s often individual consumers who perhaps pay only a small amount each, but the effect is large. Again, that is why this needs to be criminal behaviour.

But imprisonment—imprisonment is a harsh penalty. Normally, we think that it would be a good idea to keep people out of prisons. Normally, we don’t like to incarcerate people. Taking away someone’s freedom is the most serious punishment we can have in this country. So why on earth would we do this? Why would a civil penalty not be sufficient?

Interestingly, members on the other side of the House gave us this answer themselves. They were the ones who made the point, and I think it was Mr Bayly who said that there were hundreds of cases under the law as it stands. Surely that proves, if there are hundreds of cases, that the law is not working, that the law doesn’t have a sufficient penalty? It seems that existing businesses regard those fines and penalties just as a cost of doing business. They can stand a fine of a few hundred thousand dollars if it gives them a much better market position. So we need to find a way to signal clearly to businesses that they must not engage in this behaviour. We need a serious penalty, and that is the criminal legislation—the penalty that we are putting in place.

The theme was echoed by Mr Yule, who said that there was no robust case for this legislation. But if there is no robust case for this legislation, why is Mr Bayly telling us that there are, in fact, hundreds of cases? It would be pleasant if the members on the other side of the House actually cooperated at least a little to sort their arguments out.

Mr Bayly also said that we were introducing a very, very grey area into the law; that we were just incentivising lawyers—we’d give them a great new moneymaking field. Mrs Kuriger said that we were walking a tightrope, that we were making things very difficult for businesses. You know what? It is difficult. It is hard. Being in business is a difficult game, but just because it’s difficult doesn’t mean you’re allowed to be criminal in your behaviour. So we actually need to make sure we penalise the behaviour.

Mrs Kuriger also raised another issue that I thought was very interesting. She talked about the compliance costs that businesses would bear because of this change in the law. But may I point out that businesses already bear these compliance costs? There are already civil penalties in the law. Businesses are already required to assess whether or not their behaviour is acceptable under the law. The difference is they seem to have ignored it; that’s why we need to have the criminal penalty. And let’s be quite clear. This legislation has measures within it designed to reduce those compliance costs. A business may go and seek clearance to ensure that their behaviour does not fall within the bounds of this law. They can get clearance in advance for their connected, collaborative activity. They just may not collude—that’s the difference.

There is something else that I really want to draw out in respect of this legislation. On this side of the House we have talked about the cost to consumers of collusion between big businesses. We’ve talked about how each of us as individual consumers ends up paying a higher price because of collusion, because of cartel behaviour. But it is not just us as consumers who pay this higher price. The businesses who collude, who engage in cartel activity, don’t just steal from consumers; they also steal from honest businesses. They steal from businesses who want to play by the rules. They steal from businesses who are doing the best they can and are playing within the law. You see, those businesses make reduced profits or less profits because some people cheat.

Let’s be quite clear: this legislation is about stopping the cheats, and the bill ought to be supported by the alleged party of business on the other side of the House. I put it to you that the true party of business is the party on this side of the House—the Labour Party—which seeks to ensure that honest businesses do well and that dishonest businesses are stopped in their behaviour. This is what this bill is about and it is why we should support it.

You know, we are hardly alone in doing this. Our major trading partners—countries that we normally like to compare ourselves with: Australia, the US, Canada, the UK, France, and Japan—have all got a criminal offence of collusion. There is no reason why we can’t do it too, and, indeed, it is something that supports ordinary people, and it supports ordinary honest business, so it’s hard to see that it’s an unusual provision that we’re putting in there. For these reasons—because we are supporting the honest businesses, because we are supporting the little people—I urge this House to support this bill.