Commerce Amendment Bill

Thank you, Madam Deputy Speaker. It’s a pleasure to rise again and continue this contribution. Now, when we last left off, I was talking about the concerns we had about the proposed market studies power, particularly the self-initiation provisions for the Commerce Commission, where their structure, where the effective decision-making, and where normally in a business or other Crown entity we might think of as the decisions of the executive are made, in practice, in the commission by the same group of people who fulfil the governance-type role that we might see in other entities as a board.

So with self-initiation, there simply is not the check and balance that would exist in a business or entity structure that had a separation of the executive and an independent board. We think that’s really quite important in this environment, because the market studies provisions, while they are unquestionably a good idea to help ensure competitiveness in our markets and protection, particularly for our consumers—they are very, very powerful powers that they confer. They have the very real ability to be, quite frankly, very burdensome and expensive and to place a great deal of pressure on businesses across any number of industries. We feel it is appropriate, given the power that is vested in the commission, that there should be some check or balance to the exercise of that market studies power. Now, in the absence of having an independent board, that would best vest with the responsible Minister and Cabinet.

That was in the original provisions that the previous Government had agreed to. They were going to be ministerial initiated inquiries. They could have been made at the request of the commissioners but initiated by the Minister, and, indeed, even if, semantically, there were to be provisions about self-initiation, they should have that check and balance of being approved by the Minister, which means, of course, with Cabinet’s endorsement also. We feel quite strongly about this. We cannot support the bill with the provisions as they are. It’s a very deliberate change by Minister Faafoi. We’ve seen the paper he took to Cabinet. He was aware of the state of the bill under the previous Government, and he made a very deliberate move to change that. We do not support that.

The other element of the bill is around additional regulation-making provisions for the regulation of airports. Ordinarily, one could look at this and suggest that—in the hypothetical that the officials have given, you could build a case for saying, well, if a problem were to arise, this would enable it to be addressed somewhat easier and more rapidly. But I think it’s incorrect to presume, as officials have done, that it wasn’t the intention of Parliament for it to be the way it is, and that is that should it be determined that the information disclosure regime were not sufficient, then it would have to be through a legislative change that additional powers of regulation-making authority were granted to the commission. I don’t think there is any clear evidence to suggest, as some officials have, that it was a drafting error that led it to be the way it was.

But even more importantly is that in the regulatory impact statements, the officials note a couple of very key points. The first point they note is that there is evidence that the current regime of information disclosure is working well. So they’re saying that there is no problem that exists with the current regulation. The second point they make is about the wider stakeholders, which includes customers—you know, purchasers, consumers—and that is that the impact, should there be a problem, would not be significant. They make the point that the competitiveness between airlines has a far greater impact on the pricing consumers pay than landing fees and airport charges. So, quite frankly, the officials have put out there supporting evidence that suggests that their recommendation is not warranted. Our view is that regulation and regulation-making powers should be appropriate and only there to the extent that they’re needed. They should address a very specific and real problem. That problem should be reinforced with evidence and the officials own arguments do not actually support doing that. So we cannot in this instance support the additional regulation-making authority.

A lyricist once said “two out of three ain’t bad”, but one out of three is poor, and we do not support this bill.

Madam Deputy Speaker, I’m very pleased to take a call on the Commerce Amendment Bill—particularly pleased because this bill, of course, is being put forward to the House by the Hon Kris Faafoi. Some people value his presence in this Chamber because of his good looks, his witty repartee, and his sharp wit. All of those things which are—

💬 Matt Doocey: Name one person who said that.

—all of those things which Mr Doocey aspires to achieve one day—but, actually, I don’t think that’s his chief contribution to this Chamber. His chief contribution is that he is a Minister, in his portfolio as the Minister of Commerce and Consumer Affairs, who’s actually really picked up the mantle and is an active Minister who is getting stuck in with a legislative agenda that is about making sure that we have modern, fit for purpose regulation and laws to make sure that Kiwi consumers and Kiwi businesses are treated fairly. That, ultimately, is what the regulatory framework in the Commerce Act is all about. So I want to commend Minister Faafoi for that.

Why is this bill important, and why, in fact, is the whole rubric of legislation that we have in this area important? Well, there are three things I think we can point to. One is about providing appropriate protections for consumers, because we are dealing, in the space that this bill deals with, with large commercial institutions who have a great deal of market power. And the risk, as we know, is that if you don’t have appropriate regulation and you have organisations with a lot of market power, they tend to abuse it. So if you don’t have good regulation in place, the people who cop that are the consumers at the far end of the process. They end up paying higher prices than they should do in a competitive marketplace.

The second reason, and I think this is often overlooked, is that often in these sectors we have companies that want to do the right thing, that actually want to behave in an ethical way, that want to operate in a competitive market, and that want to do the right thing by the consumer, but unless everyone else is playing by the rules they actually get undermined and their business model doesn’t work. So it’s important that we have good regulation to support the good businesses in the sector as well.

The final thing is a whole-of-economy question, and that is the value of having efficient, competitive, workable markets. If we don’t have them, if we have a small number of market players taking advantage of lax regulation, they make supernormal profits. It’s actually inefficient across our economy. We lose productivity. Those businesses aren’t driven to improve their service to consumers and to the broader economy. So this sort of regulation is extremely important.

There are three major areas that this bill addresses, and most of them are actually pretty long-signalled by a series of reviews that began under the previous Government. The first thing that the bill does is introduce a new power to the Commerce Commission to initiate market studies and to produce market reports. This is extremely important and it will be the main topic of my comments later on. I think this is an incredibly important new power, and I’ll get to some of the reasons for that.

The second area that it does address is a bit of an overhaul of the regulatory regime around our airports, which, of course, in their catchments, tend to be natural monopolies. There are always tensions around the way that they operate and the way that they price, so it is appropriate that we have a robust regime there, and there are some improvements that are made through this legislation.

The third area relates to the enforcement mechanisms that the Commerce Commission has and—quite sensibly I think, arising out of a process of reviews—it looks to repeal the current cease and desist regime and replace that with some more workable and useful mechanisms for enforcement.

Before getting on to those, I want to talk about a study which emerged last year, which I think points to the very good reasons for having an enhanced market studies and market reporting regime to sit with the Commerce Commission. It was a report that was released last year into the operation of our retail petrol market, and I think most members of the House will recall this. It came out in about July of last year. It was overseen by the Hon Judith Collins, at that time the energy and resources Minister. What I want to draw to the attention of the House is the incredibly strong language in the way that these things are done that is actually used in that report to talk about this incredibly important sector.

So let me quote here. This is from a National Business Review (NBR) article which was summarising the findings of the report: “The study’s primary conclusion is that ‘we cannot definitely say that fuel prices in New Zealand are reasonable, and we have reason to believe that they might not be’”. This study was carried out by three independent economic consultancies working with the Ministry for Business, Innovation and Employment (MBIE). It went on to say, “We can indeed identify features of the New Zealand fuel industry possibly giving cause for concern that consumers are not as well served as they should be.” Further, it says, “Furthermore, the market studies powers”—so this is from the Minister herself, Judith Collins. She took note of these concerns and said, “Furthermore, the market studies powers announced recently by the Minister of Commerce and Consumer Affairs will give the government the option to direct the Commerce Commission to undertake a further competition-specific fuel market study”. So she was picking up on these concerns that came out in the report and pointing to the need for the Commerce Commission to have increased powers.

The final comment that I want to draw the House’s attention to—let me just find it here in the NBR report. Here we go. The MBIE report said that there was “some suggestion that the major companies subsidise the cost of fuel in competitive places in the North Island through fatter margins in Wellington and the South Island, but there was a lack of available information to determine that conclusively.” What was the reason that there was a lack of available information? Well, it was because the major players—and let’s name them in the House here: Z Energy, BP, Mobil, Caltex, and Gull—did not provide comparable financial data and some did not provide sufficient information within the timeframes for the study’s authors to report. In other words, under the mechanism that we have in place at the moment, the big boys in this incredibly important industry simply refused to cooperate. They simply refused to front up with the information that this Government-initiated inquiry into their practices required to draw any firm conclusions. That is utterly unacceptable in a sector that is as important as the fuel sector is to the New Zealand consumer and New Zealand economy. So it’s incredibly important, as Minister Judith Collins said there, that we actually give the Commerce Commission the appropriate powers that it needs. So what do we get through the implementation of an ability to implement market studies and market reports? Well, it actually means that we get a regime whereby the Commerce Commission can actually properly look into these areas, and can actually require that evidence is produced.

I want to address one of the concerns that the previous speaker, Mr Hudson, raised. This is one of the changes that the Government has made. The previous Government said that only a Minister should be able to initiate such an inquiry. Minister Faafoi in this bill has been very clear that we should actually, as well as giving Ministers the power to initiate such an inquiry, give the Commerce Commission that ability as well. I simply can’t understand any good arguments for not giving that independent body—which has the oversight, which has the institutional knowledge, which has expertise—the ability to initiate an inquiry off its own bat. Now, this is an active Government that doesn’t stand for big companies ripping off Kiwi consumers, but imagine if, at some stage in the future, we had a laissez-faire Government that was more relaxed about these things. I think that Kiwi consumers would want to know that we had an independent Government agency that had the ability to pick up the cudgels itself and go into bat for them.

Just to deal with Mr Hudson’s suggestion that this would, sort of, be done with no oversight, no controls whatsoever, the bill is very, very clear that if the Commerce Commission does go down this track, they have to provide full justification for it, they’ll be consulting with other Government agencies, they’ll have to produce a draft report, and they’ll then have to allow the market players an ability to comment on that and provide a response before there is a final report, which, of course, can actually only offer recommendations to Cabinet and to Government agencies. So any report that is produced by the Commerce Commission, any market report as a result of a market study, won’t on its own actually be able to require a change of behaviour. There will still have to be a step where, at the political level, that is put into action. So I simply don’t think that those concerns raised by Mr Hudson are adequate to oppose this measure, which is an incredibly important measure to ensure that Kiwi consumers aren’t being ripped off by the big boys at the top end of town. I hope that the Opposition does have a bit of a rethink about that issue.

The other two areas that the bill addresses are a bit of an overhaul of the regulatory framework around our airports—particularly the three major regulated airports, being Auckland, Wellington, and Christchurch. These airports are natural monopolies. Mr Hudson is correct to say that competition between airlines is more likely to have an effect on the ticket price that the consumer pays, but that doesn’t mean that we shouldn’t have an eye on the other issues around whether they are engaging in fair pricing behaviour. All that this legislation does is, effectively, provide a bit of a regulatory backstop if that isn’t happening.

This is a good bill, it’s about making sure that Kiwi consumers and good Kiwi businesses are protected from predatory monopolistic practices, and I commend it to the House. Thank you.

Thank you, Madam Deputy Speaker. It’s a pleasure to be talking on the Commerce Amendment Bill, first reading.

As we’ve heard, this bill has got three parts to it, and I’m principally going to talk about the first two parts. The first one is around competition studies, and I think, first of all, I should preface this with the fact that everyone in this House wants to make sure that we have good, strong competition in New Zealand and that players are acting appropriately and robustly so that we do, as consumers, pay the lowest amount that we should for goods and services. So I don’t think there’s anything to debate about that point. The role of the Commerce Commission itself is really at the stake of what this is about.

I just want to pick up on those points that the last speaker just raised. It’s about the degree of balance and who should have the authority to go and undertake what is the most significant of any of the activities that a commission such as the Commerce Commission in New Zealand would undertake—that is, undertaking a market investigation. I’ve got to say, I think the nuance that people are missing is that New Zealand’s structure is slightly different than many other competition-type organisations around the world. For instance, I went to see the Competition and Markets Authority in London in December last year, and it was interesting looking at their structure, where the executive have a very important role to play in terms of looking at the way competition is undertaken in the market and undertaking market studies. But the difference between New Zealand and the UK, as just one example, is that there is another body sitting in between the executive and the ultimate decision of that Competition and Markets Authority—namely, an independent board. That’s the difference. There’s an independent step before the commission would go off and do what is the most significant of actions that it ever takes. And bear in mind that if the commission gets it wrong, that may, in some cases, be absolutely detrimental to the business concerned.

So the reason why we’re opposed to this bill is the fact that we believe that when it comes to these really, really important decisions around undertaking a market study, those decisions should be taken by a Minister, subject to a Cabinet process, so that they are given a heightened level of scrutiny before they are undertaken. That’s not to say that they should not be undertaken, but what it makes very clear is that there is a high threshold, because, as I said before, if they get it wrong and there are aspersions around a market study that’s undertaken and found in time to be incorrect or unproven, then that can be very detrimental to the business concerned.

I just want to pick up on airports, which is really around Part 4 of the principal Act. As we all know, the Commerce Commission has a very important role in terms of overseeing terminal charges and landing fees, which basically make up the difference or the return that an airport will achieve in New Zealand. Those two are the key drivers, and, of course, the commission has a role in terms of setting an appropriate return on investment or weighted average cost of capital for the three airports—Auckland, Wellington, and Christchurch. This piece of legislation provides, by regulation, an ability for the commission to require more information, and, as a former member of the Regulations Review Committee, I’m sure many will appreciate that it’s much more important that those types of powers should be embedded in the primary legislation and not through the back door—i.e., in the form of regulation-making power—and that is why we have a problem with this piece of legislation.

So the third element, of course, we are supportive of, but I think those two points that I’ve spoken about earlier are vital, significant, and important. I think people need to think very, very clearly about them, but certainly, from my perspective, I wouldn’t be supporting this bill.

Madam Deputy Speaker, it’s with great pleasure I rise on behalf of New Zealand First to speak in support of the amended 1986 Commerce Act. I’d actually also like to join in Michael Wood’s comments around Minister Faafoi, and I note some media comments along the same line. He’s been an excellent Minister in his civil defence and commerce portfolios—so good, in fact, that we think he might actually be good enough to be a New Zealand First Minister if he carries on this trajectory.

Of course, we know there are three parts to this bill. It amends the airports regime, Part 4 of the Commerce Act; it encourages competition with the market studies regime; and it makes changes to the alternative enforcement laws—all very important distinctions. The airports—and, of course, New Zealand First has been in the media a little bit: my colleague Shane Jones standing up for the regions and the air connectivity, and part of that, of course, is making sure that we get a fair go for the regional airports and making sure that they are competitive, providing a good service, and not just the big monopolies in Auckland, Wellington, and Christchurch.

There have been some studies done into this—the Ministry of Business, Innovation and Employment 2014-16 study. This started to show that Auckland Airport, the profits that they were making were probably adding over and above. I think it shows that they were making a 7.6 percent return as opposed to 6.4, which was considered the benchmark, and that was close to a dollar a head per passenger. So that is maybe a small increment, but that was $47 million when it was added up over a five-year period. And, of course, Auckland Airport is looking at getting a second runway, so there is a chance with those monopolistic powers to potentially do a bit of price gouging, and the amendment to this Act allows the Commerce Commission to reach into that particular company and, in this example, have a look to make sure that the pricing that is being charged is fair, it’s benchmarked, and it is fair to the consumer.

Of course, we’ve had some other recent examples outside of the airport industry—the BP situation recently, which I’ll allude to shortly—but the introduction of the market studies amendment is the bit that I would like to concentrate on, because I think New Zealand is of a scale where monopolies, duopolies are almost a necessary evil at times. We haven’t got the population, outside the behemoth that is Auckland. We have quite a large land mass and fairly small population, and for businesses to get economies of scale, you know, there’s not that much competition there to compete for.

So when we see the supermarket duopolies, for example, we can look back maybe 10 years ago, when The Warehouse tried to get into groceries. Now, there wouldn’t be a more well-known retailer with an existing footprint and with an existing clientele. They lasted probably less than a year in groceries because the duopoly was able to squeeze them out. Essentially, that showed just how hard it is to break some of these established duopolies and get other competition coming in. We’ve also had the recent example, as I said, of BP.

Monopolies aren’t necessarily a bad thing. They’re not necessarily evil. New Zealand’s best primary industry, the kiwifruit industry, has a single-desk seller—a total monopoly on selling and exporting kiwifruit. Zespri has been incredibly successful. It has been supported time and again by the growers. When they get to vote, they want to keep that economy of scale, that market presence, and that marketing clout.

So monopolies aren’t necessarily evil, but there’s horses for courses. In New Zealand, as I said, because of our unique circumstances—a rather large land mass and relatively small population outside of Auckland—sometimes they’re just the way it is. We need to make sure that the consumers are protected and that this market studies provision that allows the Minister or the Commerce Commission to reach inside that industry and have a look—it needs to be used judiciously. There is a cost to business. We don’t want this to be something that’s done willy-nilly. There has to be some justification, and that would be the case. There are appropriate safeguards in place within this bill and full justifications have to be made. There’s terms of reference, and we have to set out the scope. So New Zealand First is comfortable that this is appropriate.

The other monopoly, of course, that is an absolute testament to central planning, if you want to go down that, is the New Zealand Rugby Union and the All Blacks—totally centrally planned. We dominate the world—the most successful sporting team in international sports history is centrally planned. So, you know, these things aren’t necessarily evil. There are horses for courses.

There is also the alternative enforcement mechanisms, and, as has been mentioned, the cease and desist provisions have not been utilised for the reason that they’ve been a bit clunky. Only once in the last 15 years has that particular provision been used, so court injunctions have been more efficient. They’ve been seen to get the job done faster. The commission can enforce standards and it does have the same powers as the court in some circumstances, so I think this is an ability to streamline and speed up some of those provisions. So that’s got to be good, and that’ll take cost out.

So, without further ado, New Zealand First does support this through to the next reading. We will, obviously, look to the select committee—as we should—for ways that we can streamline this, as I’m sure businesses will come forward. There are some powerful forces out there against this, potentially, so we have to make sure that even those voices are heard, and that’s what this Parliament is here to do.

So, without further ado, I would like to commend this bill to the select committee. I commend the Minister and this Government, again, for bringing forward sensible, pragmatic legislation that is looking to make life better for average New Zealanders. With that, I commend this bill to the House.

Madam Deputy Speaker, thank you for the opportunity to take a call on the Commerce Amendment Bill. National believes in a competitive market and we believe in ensuring consumers get the best choices and best value for money. This bill would give the Commerce Commission an unconstrained power that we simply cannot agree with. It would allow them to undertake market studies and improve enforcement actions without effective ministerial oversight, which I don’t think the original bill was ever actually intended to do. Only the Minister of Commerce and Consumer Affairs—the person with the direct accountability to the people of this country—should have this power. It is far too damaging to commercial interests to give an unchecked authority such as this to the Commerce Commission—and the Minister laughs.

Checks and balances are, in fact, needed, particularly for a Government that is actually claiming to be the most open and transparent in New Zealand’s history, and to allow this variance in the legislation would open up unneeded bureaucratic authority that was never actually intended by the former National Government when this bill was originally drafted. We believe in proactive legislation for the commerce sector, and for the Minister to carefully determine areas where a wrong may need to be righted; not reactive areas where unelected public servants and officials could, effectively, make an expensive, unnecessary, and potentially harmful determination.

This is actually not a criticism of the Commerce Commission. I think they are a thoroughly professional group of people and they do an amazing job. They are very good at what they do. My colleague Brett Hudson, the spokesperson for commerce, has actually spoken about this particular bill and the reasons why National is opposed to this bill. National’s record with the commerce sector is incredible. Through important steps such as improved financial reporting requirements, tightened financial advice regimes, and better relationships across the Tasman with our mutual regulatory agencies, National worked to deliver more for this sector and Kiwi businesses. Earlier, my colleague Andrew Bayly spoke about the particular section in the bill that actually deals with the changes to the airport regulations. I will not actually go into that because I don’t really understand it, so I won’t actually speak about it.

But when National has worked with the New Zealand Commerce Commission, it was work to provide protection that does not stifle business, but promotes better buying, better investment, and better businesses. I do not believe that this bill actually does that, and because of that, I cannot support it.

It’s an absolute delight to speak on the Commerce Amendment Bill. I came down, toddled down, from my wee office in Bowen House as I was making the trek over, and I was quite excited tonight because I thought I was going to be giving a cheerful speech about this whole House being in support of common-sense amendments for our Commerce Act. When I went through, and I’d prepared this great little summary about how it’s not often that we can all agree on striking a pretty finely nuanced—there’s a nuanced line between, I guess, enabling a competitive market to get the best from our economy, and, as we all know, competition is a core underpinning of our economic model.

But, in turn, the purpose of the Commerce Act, the principal Act—already given my speech and everything—is to promote competition in markets for the long-term benefits of consumers. So I was heartened when I was reading the remarks of the former National Minister Jacqui Dean, particularly with regard to undertaking market studies. This is the bit I couldn’t understand—what is the Opposition saying? That’s why I came down here to give this jubilant kind of commendation to the whole House, because she said, in June 2017, that “These proposals”—speaking in regard to the market studies—“would include empowering the Commerce Commission to undertake market studies and improve its enforcement actions without having to go to court.” It said that it would allow the Government to be proactive rather than reactive.

But it seems that the Opposition has decided to go against what the Hon Jacqui Dean was recommending when she was at the helm for that Opposition party, and they’ve decided to react to common-sense legislation for the betterment of our economy. Now, that doesn’t make any sense to me, because, look, whilst I’m not a member on the commerce committee, I am indeed a consumer. I want to commend the Hon Kris Faafoi, because what he has been required to do in a very short amount of time is strike the balance between enabling competition law and getting the right balance to enable our economy. That isn’t easy, but there is plenty of work that has been undertaken—that was undertaken, indeed, under the last Minister, which is why it’s absolutely bamboozling on this side of the House to understand why that side of the House is not supporting common-sense legislation.

But, look, I’ll turn to the substantive matters in terms of what this amendment bill actually does. It does three parts. I’m not going to spend too much time waxing lyrical in regard to the airport regulation component, but I do want to touch on the market studies, and I do want to touch on the alternative enforcement provisions. Again, it was just this week—I’m going to quote the honourable—where is it? Oh, goodness me, my notes are all over the show. Anyway, I want to quote the Hon Jonathan Young, who this week said in regard to—

💬 Brett Hudson: The “Hon”? He’s got a promotion.

Wasn’t he? I thought he was “Hon”.

💬 Hon Member: Of course he’s honourable.

Well, anyway, that fine gentleman from New Plymouth—and he’s honourable in character, because I absolutely agreed with his remarks from this week. He said, in regard to this bill that’s going through this House with the great gusto and support of the former Government—he said, in regard to what happened with BP this week—now, we all saw that there was a whole range of what looks to be anti-competitive behaviour. That was shown through a series of correspondence which we’ve had a little insight into over the course of the last week. But what that honourable member from the Opposition said was that that’s why the Commerce Commission—he spoke in favour of these amendments. “That was why giving the Commerce Commission more power to study petrol market pricing was so important, he said. The Commerce Amendment Bill”—the one that this Government is currently passing—“introduced to Parliament”—this is a quote, apparently—“on March 28 will give the Commerce Commission the power to study the structure and behaviour of markets, and compel organisations and businesses to provide information to them.”

Now, that was the position just this week of the Opposition in regard to these issues, so I don’t understand—and, you know, look, many of us sit and we work pragmatically together, but I just don’t understand why you’re flip-flopping on such fundamental issues that benefit all New Zealand, striking the balance between ensuring that consumers get the best in the long run and maintaining healthy competition. You know that, we know that, but some of us—that side of the House—decide to play politics with an issue that just should not be a ball to kick around, right?

Anyway, with regard to the market studies, let’s just take, for example, if this week or prior to now there had been the ability, when there was some suspicion that there might have been some fiddling going around and some strong-arming in some industries or some markets—for example, petrol and its price fixing—if the Commerce Commission had on reasonable grounds determined that in the public interest it was important to conduct its own inquiry and its own market study, it could have requested information. It could have requested reports or financials to make sure that every single consumer in New Zealand is benefiting, as it was intended to do under the original Commerce Act, to make sure that all consumers were in the long run getting the best from our industry. So I absolutely want to commend—I came down here ready to commend the National Party and our side, but anyway, I can’t do that any more. I want to commend the work of the Hon Kris Faafoi.

This is a nuanced, this is a technical, this is a complicated area of law. Some people know that, and some people spend a lot of their time on it. I took the opportunity earlier this afternoon to go through a broad range of submissions that were made on the original inquiry, and I think there was a gentleman that I must turn my mind to and make commendation of some of his remarks. I’ll start with his conclusion on the report that he gave. He was an ex—oh, God, my notes are all over the show. There we go—there we go. His name was Donal Curtin, and he was a former member of the Commerce Commission earlier on in the early 2000s, straight after the introduction. [Interruption] He’s probably one of your best mates. But one of the things that I found interesting from his perspective is he said, look, “I start from a reasonably pro-business standpoint. I am sympathetic to arguments that businesses with market power must be allowed (even required) to compete vigorously, and that the law and jurisprudence must be clear enough (as much as it can be in this difficult context) to avoid dynamic or other ‘chilling’ inefficiencies.” So, effectively, he’s going to what the Opposition has been saying. But he said, “But even from where I stand,”—even from where I stand on the pro-business side of things—“I think it’s reasonably clear that the status quo has failed.”

Again, I cannot understand why the Opposition is playing politics with such a significant area of law to benefit all of our communities. Both sides of the House know this. I have no idea what you fullas are up to, but anyway, “even from where I stand, I think it is reasonably clear that the status quo has failed. The test for anti-competitive behaviour is too weak: its design allows anti-competitive behaviour to slip through. It … risks misidentifying potentially pro-consumer behaviour.”, and so on and so forth.

💬 Hon Member: Whose speech is this you’re reading?

This submission is a great speech, and he’s probably from your quarters. His name’s Donal Curtin. He submits on pretty much everything—a former member of the Commerce Commission—and I think that your side of the House might benefit from sitting with somebody—

💬 DEPUTY SPEAKER: Order! Would the member please stop bringing me into the debate.

My sincere apologies, Madam Deputy Speaker. Now, look, we can’t wax lyrical. I’m still bamboozled as to what the Opposition’s up to. But what we do know is that this side of the House is taking pragmatic and prudent measures to ensure the long-term viability and security of consumers. That was the original intention of the Commerce Act, and that is what this Minister of Commerce and Consumer Affairs has done—effectively, agreed with what your former Minister of Commerce and Consumer Affairs said, agreed with what our good friend Jonathan Young has said just this week—to ensure that issues like BP and everything that we’ve seen in that correspondence don’t have a long-term detrimental effect on consumers. Thank you, Madam Deputy Speaker.

Thank you, Madam Deputy Speaker. It was an interesting speech from the last speaker, Kiritapu Allan, who took the Green call, but I’d just like to acknowledge Kris Faafoi, the Minister of Commerce and Consumer Affairs, who’s a very good Minister, but in this case has been led astray by his officials and by the Labour Party. In this case, we do not need to give the Commerce Commission any more power than they already have. If there’s one body in New Zealand that does not need any more power, it’s the Commerce Commission. It’s had a history of making mistakes over 30 or 40 years in regard to mergers and acquisitions. It should not have any more power than it does at the moment, and to even curtail its powers would be a good move—not to give it more power, as this Government is intending to do.

If ever you want an example of how bad the Commerce Commission can be in its decision making, look at the dairy industry, for example. The dairy reforms, supplemented by the Commerce Commission’s role in undertaking that role—they have no idea what they’re talking about when they do a dairy reform. They have people there that do not understand the industry. They make judgments around the industry that are completely incomprehensible to those in the industry, and yet we want to give them more power, and yet we want to give them the ability to make their own decisions about what they want to investigate and do market reports on.

If anything, we should be limiting their ability to make reports and to investigate. They do not know what they’re doing, often, and they have stopped so many mergers and acquisitions in this country’s history that would have actually been good for our economy. To give them more powers at this time is something that would be difficult to see that it should be taken on board.

There was good legislation in this area that was going to be promoted by the previous Government. The current Government has taken it much wider and given a lot more power to the Commerce Commission, an organisation that should really look at itself, go back and reflect on its poor judgment over many years, and actually look at having better judgment going forward; not give them more powers and not give them the ability to make more and more market reports, which I’m sure will not be in the best interests of New Zealand. Thank you, Madam Deputy Speaker.

What a farce. I can’t believe the speech that I just heard from the member David Bennett. Probably the most damning thing I could do is table the Hansard in this Parliament in response to that speech. Here’s a member who said that the one institute in this country we should not give more power to is the Commerce Commission. The member said he couldn’t point to a single thing it had done in 30 to 40 years that was beneficial. The member said this was a place we should not give extra power to. I can’t believe that that member is siding with the duopolies, the monopolies, the price-gougers—all the scourges we’ve seen of consumers in New Zealand, and there have been many, many abuses over those 30 to 40 years. The National Party, despite the genesis for this exact legislation being in the National Government, is railing against it. The only word I could think about was “farce”.

I’m happy tonight to be saying in this House that consumers will be better off as a result, but it’s disappointing that the National Party is not being part of this, because, really, this should be an entirely non-partisan, common-sense, reasonable issue. Supporting New Zealand consumers to get a fair go surely is something every member in this House could agree with, but apparently not, and apparently not with David Bennett.

This is good, simple, common-sense legislation. What we’re simply talking about is giving the Minister of Commerce and Consumer Affairs and the Commerce Commission the ability to do a market study into an industry. Just this very week we’ve seen on the front pages of our newspapers, in the headlines on the news, what happens when markets aren’t working, when information isn’t being provided transparently to the public, where we see apparent unfair pricing, ripping consumers off. The very week this is hitting our news. National was saying we shouldn’t be giving the power to look into these markets. I acknowledge the work of the former Minister, Judith Collins, for doing the energy market review that the current Government is following up on. But it’s simply staggering that National members, in their speeches, aren’t supporting this.

This is something that not just the Government and many players in the New Zealand economy are calling for; it’s what the Productivity Commission is calling for. It’s what the OECD is calling for. It’s what various dozens of other countries in the developed world have: the ability to conduct market studies. Ultimately, what this is about is protecting New Zealand consumers. We’ve seen throughout our history—being a small country, an isolated island nation—where some market players have had outsized influence, and who’s been the worst off as a result? It’s been Kiwi consumers, be it in the telecommunications market, in the past, or energy. Just look at the state of our housing and building industry and the inflated costs we pay versus other countries.

The second area that this legislation addresses is it makes it easier for the Commerce Commission to recommend to apply further regulations to airports. We see quite a strong debate in this country between the airlines and the airports, because the airports are regulated under the Commerce Act and have a guaranteed price income, based on their regulated asset base. Quite rightfully, we have that tension because, essentially, if you have a monopoly that’s regulated, such as this, you do have a licence to print money. There is the incentive to overinvest in infrastructure and their assets, to increase their revenue base going forward.

While the documents—I note, prepared under reviews by the former National Government—pointed out it’s working relatively well, it was important to have this secondary, reverse protection lying in reserve in case it was needed. Ultimately, what we’re seeing tonight is the Government standing on the side of consumers, making sure they’re not paying inflated costs, be it at airports, be it in various markets such as energy, the petrol industry, or the supermarket duopoly. Yet we see National standing on the side of those who would not give greater information to consumers; the National Party standing on the side of those market manipulators who would charge consumers more; the National Party actually going against their original work when they were in Government; the National Party going against common-sense reasonableness; the National Party going against the advice of the Productivity Commission and the OECD—it’s simply staggering what we’re seeing tonight. But I’m proud to say that this side of the House is standing up for Kiwi consumers, to make sure they get a fair go. Kia ora.

The next call is a split call—a five-minute call.

Thank you, Madam Deputy Speaker. I’m taking a short call to oppose the Commerce Amendment Bill. It was really interesting to hear the speakers who contributed before, from the Government side. One thing that came out from the previous speech was that the member Gareth Hughes was really surprised to see that we are not supporting this bill. We also heard that it should be common sense to support this bill, and that is only because the member was unable to differentiate between what is common sense and what is not making sense in this bill. So let me get into that.

As we heard before, this bill is to amend the Commerce Act 1986. There are three main components in this bill. To bring that common sense in terms of why we are opposing this bill, I would like to touch on two components of this bill. The first component is that this bill will enable not only the Minister in charge—that is, the Minister of Commerce and Consumer Affairs—but also the Commerce Commission to carry out competition studies. This is purely to prepare competition reports, to get insight into the market, and this is not to see any breaches of the Act. We fully understand the competition studies, and we support healthy competition. We want to see competitive markets in New Zealand. We want to see that consumers are getting value for their dollar.

But what we don’t want is that power to be extended to the Commerce Commission. When National was in Government, we did work on this review. We reviewed the Act, and at that time we recommended that this power should be given only to the Minister. Ministerial oversight is important in carrying out competition studies. But, yes, Labour has picked up the work that was done by the previous National Government, which is great. But what they have done is they have extended that ability to the Commerce Commission as well, which we do not support.

The second point I want to touch on very quickly is that the bill will actually strengthen the regulatory regime under Part 4 of the Act, and that is about the airports. This Part 4 regulates three international airports—Auckland, Wellington, and Christchurch. So, yes—three airports. These three international airports are subject to Part 4 of the Commerce Act 1986. What we have seen is that the current information disclosure regulation is working fine. So the main interest is to see that the consumers are looked after, that their interests are taken care of. Even the review by the Ministry of Business, Innovation and Employment says that the current information disclosure regulation is working fine in taking care of long-term customer interests.

So why do we need to bring another layer of regulation here? We don’t see any evidence that the current information disclosure regulation is not working, so we feel that this is totally unnecessary. For these reasons, we do not support this bill. Thank you.

Thank you, Madam Assistant Speaker. It’s a pleasure to be taking a call on this bill. I think my colleague Michael Wood was trying to explain to us that the Minister of Commerce and Consumer Affairs, the Hon Kris Faafoi, is probably the most handsome Minister in the House—I think that’s what you were trying to say—and the only MP who doesn’t want or need to go on Dancing with the Stars. So I’m certainly supportive and privileged to be talking this evening.

We heard a rather miserable speech. There’s been quite a lot of misery. I came here to the House quite excited, but I hear misery. The member from Hamilton East, David Bennett, who’s now departed—I mean, Waikato is a happy part of New Zealand; I can’t believe things are so miserable up there—talked about stopping this and stopping that and not wanting to give more power here, and there, and I thought, “Poor David, this must be a miserable life in Hamilton—

ASSISTANT SPEAKER (Poto Williams): Order! Please refer to members by their full names. Thank you.

Absolutely—sorry, Madam Assistant Speaker. But look, what we’ve heard tonight is that this is a common-sense bill, and there should be a bipartisan approach, because, after all, what we want to start doing, and what we are doing, is protecting New Zealand consumers. I’m really happy to see and happy to support the Minister’s commitment to supporting a more competitive, confident, and productive business environment that will really deliver a lot more positive outcomes for New Zealanders.

When you look at the bill itself—something that’s been missing from lots of speeches; we’ve talked about lots of hoo-ha, but not really the bill itself—there are three parts there.

💬 Andrew Bayly: That’s right. Let’s hear it from you.

There are—well, someone has to bring common sense, and let’s just carefully consider things here. There are three parts. One is to make amendments to the airports regulatory regime in Part 4 of the Commerce Act. I am the member for the electorate where we have Wellington Airport. I actually have two airports—not many other electorates could boast that: a small international airport on the Chatham Islands, as the honourable—

💬 Hon Christopher Finlayson: Which needs to be properly funded.

That needs to be properly funded—thank you, the Hon Christopher Finlayson.

💬 Hon Christopher Finlayson: I got them the wharf; you get them the airport.

We’ll get you the airport—the “Finlayson Memorial Airport”, maybe. Secondly, introduce a—

💬 Hon Christopher Finlayson: I like you, Paul.

Ha, ha!—competition studies, market studies regime; and, number three, make changes to the alternative enforcement mechanisms available to the Commerce Commission, that great institution—as the member for Hamilton East would attest to.

So in this package, there’ll be a range of amendments introduced that signal the Government is committed to a competition system and that the commission itself, the Commerce Commission, has the tools it needs to, as I said, get good tools to protect New Zealand consumers.

If I look at the airports regulation in the time that I have left, a short time—look, these were carried out by a review by the Ministry of Business, Innovation, and Employment officials some three years ago now, if not four years ago, between 2014 and 2016. It looked at the effectiveness of the information disclosure regime. And, look, it was largely working. The officials came back and said there was no compelling case to move the airports to something that was more heavily regulated, so no need—sorry, there wasn’t a compelling case for a more heavy-handed negotiate, arbitrate regime. However, one thing the report did say is that the officials were concerned that there was no credible threat of further regulation in the Act. If the current regime is no longer effective it could strain the market power of the regulated airports.

I commend this bill, to the House and I hope—

💬 Andrew Bayly: What about the detail?

They say the devil is in the detail, but the devil actually sits opposite me instead. So I commend the bill to the House. Thank you.

Thank you, Madam Assistant Speaker. It’s a pleasure to take a brief call tonight on the first reading of the Commerce Amendment Bill. I want to congratulate Minister Faafoi on bringing to the House what is a very good piece of work that was brought over from the previous National Government, but, of course, we will be opposing the bill for the very good reasons that my colleague Brett Hudson has already pointed out.

The key aspect of the bill is allowing for the Commerce Commission to undertake market studies. That is a laudable goal, and I think if the bill stuck to that, that is something we could all agree with. Where we differ, though, is that our belief is that those market studies should be initiated by Government, not by the Commerce Commission alone. That would allow for democratic oversight of those decisions rather than having them with the Commerce Commission and giving them an unfettered right to undertake those studies.

There are two other aspects to the bill which I want to briefly touch on, and I enjoyed Mr Eagle’s comment just now about how he’s got two airports in his electorate. I’ve actually been to the Chatham Islands and it’s a wonderful place, Paul, but I’ve actually got three airports in my electorate. I’ve got the wonderful Timaru Airport; Ashburton Airport, which is also very well-used; and the wonderful Rangitata Island Aerodrome. None of those airports are large enough, unfortunately, to be included in this bill, but there are three airports that are large enough to be included in the scope of this legislation, and they, of course, are Auckland, Wellington, and Christchurch.

The bill’s explanatory note states that it makes a change “to enable negotiate/arbitrate regulation, default/customised price-quality regulation, or individual price-quality regulation to be imposed on specific airport services by Order in Council.” Now, if members opposite understood that, they’re probably doing better than I can, but what I can say, or what I have to ask, is why? There’s actually been a study into Part 4 of the Commerce Act by the Ministry of Business, Innovation and Employment, and that review found that the legislation now is working and is effective. In fact, it was shown to be working so well that two airports of the three have actually lowered their fees as a result.

Finally, there’s the third aspect of the bill, and that is around alternative enforcement. That’s also an aspect that we support. It’s a sensible addition to the Commerce Commission’s, I guess, basket of goods that they can use. We do support it. I do look forward to the bill, if it does pass, going to the Economic Development, Science and Innovation Committee. It’s a very hard-working committee, led admirably by my friend and colleague Jonathan Young. If the bill does come to our select committee, I look forward to working on that bill and making it better, and perhaps putting it into a position where we can vote for the bill beyond first reading. Thank you.

Thank you, Madam Assistant Speaker. The intention of any commerce bill is to improve competition. That’s really about ensuring that any goods and services are provided to the public at the lowest-possible price whilst ensuring that industry makes reasonable and fair profit margins, and that’s exactly what this does. This is about this Government picking up some work which, admittedly, was done by the former Government but also improving it to make sure that we’re constantly vigilant.

I think one thing we’ve got to remember when we’re looking at competition law matters is that the market will always move. Regulation must change to keep up with the fact that industries move very rapidly indeed. Whilst one of the focal points here is airport pricing, a lot of what’s going on in this bill—competition studies and enforceable undertakings—will apply across the board, and one of the real challenges that this bill addresses is highly complex industries. They are industries like internet connectivity broadband services, where there are a number of providers providing extremely complex, technical services, which, to be fair, ordinary folk like us on this side of the House would perhaps struggle to comprehend, and we leave it to people more gifted in the department to explain.

But, nevertheless, what we absolutely need is to ensure that we have that expertise on hand so that we can embark upon a study which will tell us whether those industries are pricing fairly, so that the consumers at home, whether it be at the petrol pump, whether it be on the internet, or whether it be landing at the airport, are paying a fair and reasonable price, and that really is what the competition studies aspect of this legislation does. What we have there is an information failure, and anyone who knows a little bit about economics would know that information failure is one of those situations where the so-called invisible hand withers away, because if people don’t know the value and cost of what they’re buying and selling, then they can’t make an informed decision about what a reasonable price is. We know that a seller of a product has no incentive whatsoever to explain exactly what the input costs of that product are and what their profit margin might be—quite the opposite. What they want to let you think—as has been happening in the petrol industry recently—is that they’re making miserly profits and that, in fact, they’re doing their very best and all of the costs are being thrust on them from elsewhere. Well, that may well not be the case.

So what we have here is not just an ability to embark upon a market study, but rather an ability to embark upon a market study and—critically—to insist that information be provided and that there is compulsory disclosure of information. That information—it’s not evil to want to hold on to it, but it is a natural human trait to not want to disclose things when it’s not to one’s advantage, and that’s what competition studies and market studies are about. It is very clear in New Zealand today that there are a number of industries where market studies will be very useful, and the power to insist on that information will be very well used as well.

Equally, airport pricing—again, at the moment, we have a disclosure regime. The problem with airport pricing, again, is a problem of competition. But it’s not an information failure; it’s a monopoly problem. Like bridges and like ports and airports, it’s a natural monopoly—if someone wants to land in Auckland, there’s only one way to do it. So the problem we have is that a company like Auckland Airport—or any other airport, to be fair—can be a price maker, not a price taker. Now whilst it’s clear under the Commerce Act that a business cannot take advantage of market power, the fact of the matter is that we don’t know whether that’s happening or not unless we have full disclosure. So, once again, we have a disclosure regime, but it’s a disclosure regime which has been shown to not be working. What we need with airport pricing is something more—something lying behind that. So we need, essentially, a shadow of regulation.

It’s really important to point out that in this legislation, there’s no actual regulation of airport pricing, but if we don’t make it clear that, if needed, regulation will be imposed, then airports can run amok. So we need to regulate and, in particular, regulate those major hub airports where they are the only feasible way to travel to and from that destination. What we have is an excellent innovation—the fact that regulations can be made quickly, not through the somewhat more ponderous process of this House, but through an executive process whereby if there is misbehaviour there, that intervention will occur—and that will simply bring discipline. I hope and predict that regulation will never occur, because the mere suggestion that it might—as indeed has happened, with landing charges falling recently—will impose market discipline.

Of course, the third and very important aspect of this bill lies around the enforcement. We’ve got these rather arcane and archaic cease and desist orders under legislation at the moment. They have been used once, I understand. They were used, I think, in respect of Northport, which is the Marsden Point refinery port. They are used, actually, by consent, but are not really a workable, nimble kind of piece of regulation. So, rather than continue with that—and the costs, including having standing commissioners—we’re going to replace that with enforceable undertakings. It is a framework in which the commission—usually by negotiation, to be fair—will discuss the breach or the difficulties with the party and will frame an appropriate behavioural undertaking, and that will become part of the record. Importantly, with enforceable undertakings, they’re not just a bare promise.

The enforceable part is important. If, indeed, there is a breach of that undertaking, it acts as if it was a court order. So, in doing that it, it actually will be able to be taken on the basis that this was a court order, it has been breached, and punitive sanctions will flow.

So enforceable undertakings, again, give teeth. And let’s be fair when we’re in this kind of sphere, when we’re dealing with businesses of this size—airlines, airports, petrol companies, and so on—we absolutely need to have a very strong enforcement framework because they simply will price the risk. So we’ve got to have a framework where the risk of breach is far outweighed by any benefits that might otherwise be obtained.

So, looking at this, this is an excellent piece of legislation. I’m very surprised at the objections from the other side of the House because, in fact, this is a piece of legislation which seeks to give market discipline, and I would have thought that’s what the other side of the House was about. This side of the House supports it very much, not only for that but also because it looks to ensure that products, goods, and services are delivered to the consumer at the lowest reasonable and feasible price and that the economy proceeds on the basis not of profiteering but of fair pricing.

I think that’s something we need to think about a bit more, because we seem to have lost that. We seem to think that profiteering and super-profits are OK. Well, they’re not. Whilst any entrepreneur is allowed to take a profit for their risk, what we need to make sure is that there’s free information, full information, and fair information, and also that where the market power does exist, there are disciplines around that. That is exactly what this piece of legislation does.

So, back to the purpose of this bill. It’s about protecting consumers. It’s about ensuring that market failures are addressed and ensuring that prices are appropriate where and when they’re paid and about giving the Commerce Commission the powers that are necessary to achieve that not only in respect of airports and not only in respect of petrol pumps but across the board, whether that be by market studies, by enforceable undertakings, or elsewhere by regulation. I’m hopeful that regulation won’t be necessary in respect of airports. I don’t think, after will it will because I think we’ve got the tools here.

Minister Faafoi has done an excellent job in improving this bill and bringing it to the House. I commend it to the House.