Commerce Amendment Bill

I move, That the Commerce Amendment Bill be now read a second time.

The Commerce Amendment Bill amends the Commerce Act 1986 and deals with three important issues to enhance the operation of New Zealand’s competition regime. These three issues are market studies, or competition studies as they are referred to in the bill; secondly, the regulation of specified airport services; and, finally, alternative enforcement mechanisms used by the Commerce Commission.

The Commerce Amendment Bill was introduced into this House on 28 March this year and was referred to the Transport and Infrastructure Committee for consideration on 1 May 2018. The committee received 24 submissions from interested groups and individuals and heard oral evidence from 10 submitters. I wish to thank members of the committee for their consideration of this bill and, in particular, the chairperson, Darroch Ball, for ensuring that the bill was reported back in such a timely manner.

The committee members have carefully considered a range of technical issues raised in submissions. It is unfortunate that the committee was not able to reach a consensus on all of these matters raised, but by majority it has recommended some very useful amendments which will improve the operation of the bill. So I thank those members for their work.

I will now briefly turn to some key issues in the bill as reported back. In terms of market studies, the ability for the Commerce Commission to undertake market or competition studies is a key element of this bill. Market studies are in-depth studies into whether competition in a market is working effectively and, if not, why not. Unlike an enforcement investigation, the Commerce Commission may look into the structure and performance of the market itself and, if required, make recommendations on how it could work better. The bill includes a non-exhaustive list of types of recommendation the commission may make. These market studies have the potential to identify opportunities for significantly improving market outcomes for consumers and businesses. Healthy competition in markets improves affordability of goods and services for consumers and promotes innovation and productivity for businesses.

An important feature of this bill as introduced is that it provides that both the responsible Minister and the Commerce Commission can initiate a market study. I see the ability of the Commerce Commission to initiate a market study as being critical to maintaining the integrity of the regime. It enables the politics to be removed from the decision on which markets to study. This is particularly important if a Government is active in the relevant market, either in a regulatory capacity or through its trading activities.

The committee, by majority, has also recommended that the responsible Minister should have to publicly respond to a Commerce Commission final report on a market study, and I welcome this change. The Government should be required to state its views on the commission’s findings and what steps it proposes to take in response to any recommendations. It adds to Government transparency and the integrity of the regime.

A further issue in the bill is measures to strengthen economic regulation of airports. The Commerce Commission currently has a programme of work under way to assess the latest price resets by the three major international airports. This bill does not directly affect that work. Rather, it provides that in the event that the Commerce Commission identifies that the current information disclosure regime is not working effectively, there is a statutory process for determining whether further regulation is desirable—that is, it provides a regulatory backstop.

The committee, by majority, has recommended minor changes to the bill. First, the majority recommends making it clear that if an inquiry is initiated into whether further services provided by the three major airport companies should be regulated, the Commerce Commission must consider the costs and benefits of imposing regulation on that service and market power of those airports. Secondly, the majority recommends clarifying that a new airport company may become subject to regulation under the Commerce Act following a full inquiry by the Commerce Commission.

I support these changes. The amendments in this bill will strengthen the regulatory regime to better protect users of airport services from misuse of market power by airport companies. These changes should impose no direct costs on the airport companies if they’re operating consistently with the purposes of the current regime.

Finally, the bill amends the Commerce Act to also allow the Commerce Commission to accept enforceable undertakings to resolve enforcement cases. This mechanism is a cost-effective and timely means to stop anti-competitive conduct and, if desirable, remedy any harm to competition. The committee has recommended amendments to make clear the matters that may be included in an enforceable undertaking, including when the Commerce Commission is investigating a potentially anti-competitive merger. These are very useful clarifications.

In conclusion, passing this bill will enhance New Zealand’s competition regime and protect the well-being of consumers and businesses. I commend the Commerce Amendment Bill to the House.

Thank you, Madam Assistant Speaker. It’s a pleasure to rise and speak on this bill in the second reading. Although not a permanent member of the Transport and Infrastructure Committee, I was fortunate to be able to substitute on for all of the business on the scrutiny of this bill, so I was able to hear from the submitters and I had the opportunity to ask some questions. The bill has been returned with some amendments, but there are problems that persist with it that we sought in the select committee to rationally set out to Government members of the committee and reach agreement on. Unfortunately, that could not be attained.

I particularly want to start in the area of market studies. The Minister introducing this second reading, Kris Faafoi, did point out that the market studies provisions will permit the responsible Minister to initiate a market study, or competition study, or the Commerce Commission to self-initiate. It was that self-initiation that we presented as an issue. Actually, prior to the last election, the National-led Government had endorsed pretty much this bill, certainly in terms of market studies. We had made a Cabinet process to place the fundamentals of those into legislation. But the point of difference was that that then National-led Government believed that such studies should be ministerial-initiated only, not self-initiated.

The Minister today and previously has justified those provisions on the basis that allowing the Commerce Commission to self-initiate market studies takes the politics out of those competition studies. Well, that’s remarkable, really, because last week, firstly, the Prime Minister on two occasions, and then Mr Hughes—one of his governing partners in a confidence and supply agreement—put the politics right back into them by stating that, first, they are going to put this bill through the House in some haste, and it’s yet to be determined if that also translates into parliamentary urgency, but urgency was the word the Prime Minister used. This bill would pass through its remaining stages in some haste so they could hasten a market study into fuel pricing in New Zealand.

The Prime Minister then went on to say the next day that the next cab off the rank could possibly be a study into supermarkets, and then Mr Hughes reiterated that call. So, I would argue, so much for the line that politics will be taken out of competition studies and competition regulation in the New Zealand marketplace under this bill.

What those comments, and, in fact, the Minister’s own comments as this bill went through select committee, showed is that we’re now looking at some haste for legislation that the Government doesn’t understand what it’s actually legislating for. In particular, the Minister, in the Estimates hearings, as this bill had entered select committee, stated in evidence that a market study would be expected on average to cost approximately $400,000. So he felt—and he said under evidence—that there should be enough in the previous Budget to permit about three, maybe up to four, of these studies a year.

Well, that’s quite remarkable, because in its oral submission the Commerce Commission made it absolutely clear to the select committee that the budget allowance of $1.5 million a year for these competition studies, as the Commerce Commission prefers to term them, would permit one study to be undertaken a year. They made it very clear that there would be no change to be expected out of a million dollars for each study, and they expected that there would be no more than one able to be afforded per year. But we have a responsible Minister that believes that three or even four of them could be done for that same budget.

Now, what that indicates is that the Minister’s brought a bill to the House and into select committee without actually talking to his officials about what the scope and implications of these studies are. They are clearly much larger, more expensive, and have more imposition on the businesses affected than the Minister is aware of, and, in fact, the Prime Minister made it clear in her comments around the fuel price inquiry she wants to set into motion quickly that they’ll be able to report back early in 2019. Again, the Commerce Commission made it very clear that these studies are comprehensive studies. They take a great deal of time. In fact, we can anticipate that each study would take the best part of a year to complete.

The Commerce Commission also made it clear in their submission that in order for a market study or a competition study to be just that, it requires broad participation, broad inquiry. So whereas the Minister responsible, in his evidence, again in Estimates, indicated that, perhaps, you know, you could talk to a couple of participants, the Commerce Commission were very clear under questioning that, actually, a market study requires a very, very broad look at a market, across a range of businesses, not just, for instance, in this fuel price inquiry, a couple or all of the major oil providers, or the likes of Z Energy but, indeed, across the range of fuel service vendors in New Zealand.

Remarkably, the Auckland business chamber informed us just recently—last week—that of the 1,500 service stations across New Zealand over 1,200 of them are fundamentally small business, or what we might call mum and pop operations. Now, the Commerce Commission made it absolutely clear that in order to be a competition study it is going to have to look at that breadth across the market. So what they are going to impose, through hastening this legislation, is an inquiry process that will take the best part of a year, that will look at a really broad range of business, and, in doing so, because the market studies have compulsory data acquisition powers, they are going to require small businesses to furnish the same sort of information in the same format to the same extent as they will require of the very largest businesses.

It is evidence that the Government does not understand the scope and the cost impost across small as well as large businesses that their legislation will impose. That is why it’s an absolute travesty that they refuse to listen to rational argument that the best way to manage this would be to limit the use of these powers, particularly the ability to compel businesses to provide data in specific formats and extents to that which has been either initiated at a ministerial level or endorsed by the responsible Minister.

By the way, look, if they really want to get a fuel inquiry under way, we’d be pretty happy to help with this. But, really, if they want do a fuel inquiry and it’s going to take a year, if they really want to be a kind and caring Government as they claim, the best way they can help New Zealanders tomorrow is simply by axing the tax that they’ve just put on—the recent excise and the regional fuel tax. Indicators in the Auckland market are showing that competitive pressures there are driving cost prices down, which, effectively, sees some of that recovered from outside of the Auckland region so that the impost of that regional fuel tax is in effect—not in reality, but in effect—being felt across broader parts of New Zealand.

But we do acknowledge that doing that inquiry is better than doing nothing. It is going to take too long. Every day that that inquiry goes on, New Zealanders are going to feel the pinch in their back pockets because of the taxes that are imposed on them as well as other global supply and exchange pressures. But at least it will be doing something along the way to help, so we are of a mind to want to offer our support to get that under way.

Before I finish, I would like to just touch on a couple of the other areas of the bill. The airport regulation—actually, before I just move on to the airport regulation, I intend to put a Supplementary Order Paper (SOP) in during the committee stage, which I call on the Government to support. It’s going to be a very simple SOP. It is simply going to require that where the Commerce Commission self-initiates a competition study, it will require ministerial approval. I call on the Government to support that, because it would bring us in line with the Australian Competition and Consumer Commission (ACCC). In Australia, market studies don’t have the ability to compel businesses to provide data; it is a voluntary data provision only. Where the ACCC is able to exercise powers of compulsion in the acquisition of data, they require ministerial approval, even when they’re self-initiated by the ACCC. So there’s a good reason there for the Government to keep us in sync, in harmony, with the regulatory practice in Australia. So I call on the Minister of Commerce and Consumer Affairs to support that SOP in the next stage.

But on the airport regulation, I’ll acknowledge that officials made some changes which made those provisions much more palatable, but they still didn’t meet the threshold of proving why the change was actually needed in the first place. We would like to see this inquiry get under way. We want to ease back pockets for Kiwis. We will support this bill and at second reading.

I am very happy today to stand in support of the Commerce Amendment Bill, and I’d like to start by just acknowledging and congratulating our Minister of Commerce and Consumer Affairs, the Hon Kris Faafoi, for taking decisive action on this issue. I’m pleased to support this bill, because this coalition Government is on the side of Kiwi consumers, on the side of honest businesses, and on the side of functional markets. We are not going to make excuses for failures in those areas as the last speaker, Brett Hudson, and as the last Government did.

A good starting point, if we want to think about this bill, is a report—a very good piece of work—that was in fact done by the Hon Judith Collins in her stint as the Minister of Energy and Resources in the previous Government. What did that report tell us, which was published in 2017? It told us at that point, after she commissioned that report into activities in the consumer fuel market, that at that time, Kiwis suffered the highest pre-tax fuel prices in the OECD. That was back in 2017. That same report told us that there was not sufficient evidence to tell us that there was not a degree of collusion and inappropriate activity across our fuel markets.

When that previous Minister commissioned that report into retail fuel prices, two of the major players in the market refused to cooperate with the Commerce Commission, and that is why this Government and this Minister have taken decisive action. When Kiwis are being ripped off at the pump and potentially being ripped off in other markets, we’re not going to sit back and just let those major players rip-off those consumers and refuse to cooperate with the Commerce Commission. That’s what they did. When that previous Minister, who was one of the tougher Ministers in that previous Government—when they asked for information, those companies refused to cooperate with a study instigated by the Commerce Commission. We’re not going to allow that situation to carry on, and that is what this piece of legislation turns around.

It will ensure that when we undertake market studies into areas where we have a concern that consumers may not be treated fairly—we believe that market powers may be being abused—it will ensure that those companies have to cooperate and have to provide the same information. It will also ensure that the Commerce Commission has the ability to act and to self-initiate those studies. I have to say that the previous speaker, Brett Hudson, and the Opposition in their minority view in opposing this bill make a great play of believing that the process should be depoliticised and are having a go at the Government when they claim that we’re not acting in accordance with that idea, but then they’re opposing the idea that the Commerce Commission has the ability to self-initiate—so which one actually is it?

This bill gives the Commerce Commission the ability to self-initiate so that it can use its expertise and its judgment to carefully initiate studies where they might be required. I might say that in the future unfortunate event where we have another weak National Party Minister holding that portfolio, New Zealand consumers will be very pleased that the commission has the ability to act if a future Government does not.

In the House today, we have seen the Opposition turn from lions to lambs. In question time we heard no end of concern about fuel prices, and I think some of that noise might have been to make up for noise that they don’t want heard in other places. But now they are lambs on that issue, when it comes to this piece of legislation. This is a piece of legislation that actually gives us the capacity, if we look at places like the fuel market, to delve into why it is that Kiwi consumers have amongst the highest pre-tax prices in the OECD. And let’s remember, that was something that we came to understand back in 2017 when that Government first started looking into this issue. The difference is that this Government is actually prepared to do something about it.

One of the most important things to remember, as well, is that what we have when market studies are conducted is an ability for the Commerce Commission to make recommendations back to the Minister to actually take some action. Once again, over nine years under that previous Government—we had a study at the end, but we had no action on these issues.

💬 Hon Dr Nick Smith: Fuel prices only went up by 1 percent per year.

What we know, Mr Smith, as per that report, is that we had the highest pre-tax prices in the OECD at the end of that previous Government’s term.

One of the bits of scaremongering that happened in amongst the Opposition’s arguments against this bill was the suggestion that it was inappropriate for the Commerce Commission to have the ability to self-initiate. What is important to understand about this bill is that it gives the Commerce Commission, when it produces a market report, the ability to make recommendations which do go back to the Minister and do go back to the political process in order to make changes, if changes are justified. So that’s an important safeguard that I think is important for the House to be aware of.

The Transport and Infrastructure Committee considered this bill very carefully, considered the submissions carefully, and has made, I think, some very sensible changes, including, for example, the requirement for the Minister, within a certain amount of time, to give a response to any market study that is produced.

I’m absolutely convinced that Kiwi consumers are going to welcome this bill. As I said at the beginning of my comments, this is a Government which is on the side of Kiwi consumers, on the side of fair competition, on the side of good and ethical businesses, and this bill will support those outcomes. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker. It’s a pleasure to speak in support of this bill. I think it’s quite interesting—we’ve had a few comments from the member who’s just resumed his seat, Michael Wood, about what was done last year in relation to fuel prices. Certainly, last year, for about ten months, I was privileged to be the Minister of Energy and Resources, and I really enjoyed getting stuck into an area, particularly around fuel supply—

💬 Chris Bishop: Very good Minister.

—and security of supply, but also around—thank you very much, Chris Bishop. I almost said the Hon Chris Bishop, but that’s because I’m thinking ahead.

I think one of the issues, really, that struck me, was that the industry itself is quite challenged in some ways. And a lot of what’s around fuel prices is around the fact that we have three major suppliers that control and own the Marsden Point refinery, and that competition is primarily served or given to New Zealand from Gull, which imports its fuel already refined from Australia, and that even some of the smaller players like Waitomo Group and Allied Petroleum, some of the very small players who are often significantly cheaper than the big suppliers of fuel domestically, actually buy their domestic fuel from the big suppliers—and I always find it stunning that they can do that and still be able to sell it cheaper. So it was an area that I took very seriously.

I discussed the matter with my parliamentary colleague, now the Hon Stuart Nash, and he told me what his concerns were. He was a spokesman for the Labour Party at the time. We looked at the issue, I took it to the caucus and to Cabinet, and we agreed that we would have a survey done by the Ministry of Business, Innovation and Employment (MBIE) around the price margins and what was happening in the fuel supply, but also the cost to consumers. As soon as that survey was announced, the price of fuel came down. It was quite stunning. I don’t know whether or not it was as a consequence, but it was certainly noticeable. On the other hand, this year, when the Hon Megan Woods called the fuel companies in to give them a dressing down, the price went up, but I think that could be something to do with what happened in that room—who knows. Anyway, the main thing, I think, is that we took this issue very seriously.

We were also concerned around the ability of MBIE to get all of the advice and information that it needed from the fuel companies. So, to put it on the record: Mobil would not provide us with all of the information required by the people who were undertaking the work. Even though I went to see Mobil in Houston actually, at their head office, for various reasons, and discussed this with them, they would not provide that. Gull would not provide it either, and that was, they said, because they were in a sale from a private family to Caltex Australia. The companies that did provide full information as requested were Z Energy and BP. I think it’s good to put on record who provided the information.

We got a result back from MBIE and it said that basically it looked like there was cause for concern around those prices. I took this issue, along with my colleague the Hon Jacqui Dean, who was at that stage the Minister of Commerce and Consumer Affairs, the role that the Hon Kris Faafoi has now—and why that man has not been put in Cabinet I do not know, other than that he’s not a woman. What we did was we took that to Cabinet, and Cabinet agreed that we would give the Commerce Commission extra powers to undertake the market research and surveys that the Commerce Commission had been asking for, but we would limit it to areas where there was a ministerial or Cabinet direction to the Commerce Commission to undertake those, sort of, market study powers. The reason for that is that the market study power provision is extraordinarily costly to an industry and extraordinarily pervasive. If you bear in mind that the Commerce Commission also agreed to the sale of Caltex to Z at one stage, and therefore people would say that it was involved in actually making the market less competitive, you’d have to wonder sometimes at some of those decisions.

Anyway, the main thing is that this power is something that we think should be reserved for Cabinet to ask the Commerce Commission, or the Minister to ask the Commerce Commission, to look at these areas, because we should not underestimate how debilitating the cost and the time involved in complying with requests from the Commerce Commission can be. We’ve certainly seen that in Australia, and we took note of some of the issues that Australians had found with the Australian Competition and Consumer Commission, the ACCC, as they call it there, which can be extraordinarily difficult for anybody to comply with but also can go on for a very long period of time. What sometimes, I think, regulators and those in politics who’ve never been in business tend to forget is that every time there’s a cost imposed on an industry, the consumer ultimately ends up paying. It’s all very well to think, “Well, business can pay for it.” Well, business actually is there to make a profit too and they will pass that on in some way, in some form, at some time, to the consumer. So you’ve got to be very careful with this, that it’s not overdone.

We are ultimately only a country of—what—4.8 million people, the best little country in the world obviously. We are bigger than the whole of the United Kingdom in surface area. We are the sixth-largest economic zone in the world, but our population is smaller than Melbourne’s. I think that when we think about that, we should be very careful about the costs that we impose on businesses and therefore on consumers.

We know that this work was done by and approved by Cabinet last year—I think, from memory, it was about July last year, and then we had this issue called an election come in, and it stopped all that work done. That work has already been done, and the Minister has been praised roundly by her colleague Michael Wood—who would be much better at the role, frankly, in my opinion, than she is—for getting on with this. Actually, she sat on it for a whole year, more than a year. She’s really done nothing with it and all she’s done is she’s come back and given in to the demands of those who want to regulate everything without understanding the cost of it.

So we have decided in the National Party that we need to support this bill because we do need to get these issues dealt with. We have seen rising petrol costs and diesel costs this year. We know that a large part of that is from the extra taxes that the Labour - New Zealand First - Greens Government have agreed to, particularly in the Auckland region with the 10c a litre plus GST—so 11.5c a litre regional fuel tax added on to everything else that Aucklanders are expected to pay. For those who are not in Auckland: don’t worry, this tax is coming to you too.

So we are very aware that the Government has only now decided to slam around the big fuel companies because it’s easier to do so rather than to address the fact that so much of our transport taxes, paid for solely by petrol buyers and diesel buyers through the road user charges, are currently paying for public transport, paying for roads, paying for, apparently, a trolley bus or a tram going up Dominion Road, paying for cycleways, paying for walkways—paying for everything. The people in my electorate of Papakura and many other electorates are not asking about the Commerce Commission’s powers to do surveys and to look at things. What they are saying to me is “Why does the Government think we’re going to be fobbed off with this when they could actually stop the regional fuel tax and axe the tax?” People are wanting to axe the tax, and I think that even though there are some good things that could come out of this legislation, ultimately it is not going to deal with the major issue that it’s being used to try and be a salve for, or even a band-aid for, which is the extra petrol taxes and diesel taxes put on by this Government.

I stand to take a short call, and I’m eminently qualified to speak on this matter as a consequence of my forays into the world of supermarket predatory pricing.

💬 Hon Dr Nick Smith: Went nowhere.

We’ve heard from Mr Nick Smith, who took $240,000 from the taxpayer to defend himself against egregious and incorrect claims pertaining to the timber industry. He needs the protection of the Commerce Commission. The Commerce Commission, through the Minister, with these expanded powers can seek to resolve some of the issues that Mr Nick Smith, who on two occasions was funded out of the taxpayer for ultimately false claims—

💬 Hon Dr Nick Smith: Because leaky homes was a real problem.

—so the less we hear from him, the better, which is why as a consequence of today’s ructions he will soon be shown the back door. But let me come back to what I learnt through the episode of Countdown. The actual Commerce Commission was unwilling, incapable of delving into the behaviour of Countdown. So I congratulate Minister Faafoi for expanding the powers, shepherding this legislation. I’m willing to acknowledge quite a bit of what Judith Collins has said: that both parties have had concerns for quite some time as to how we give the Commerce Commission enough powers to intervene in these large monolithic—or sectors of the economy where enormous power is concentrated in a limited number of players.

Now, I accept that for the last 30-odd years we’ve got a laissez-faire approach and we’ve left things really to the Darwinist tendencies of the market. But I think that the recent episode that the Prime Minister is highlighting in relation to fuel companies shows that somewhere within the State we need to endow an institution with enough power of scariness to actually cause information to be brought forward. If we leave it to individual MPs, they fall disgraced. As I’ve said, the member from Nelson suffered and required a taxpayer bailout for fear of permanent penury.

💬 Hon Dr Nick Smith: Rubbish!

That is a fact—that is a fact.

💬 Hon Dr Nick Smith: No, it’s not.

Just google it, Madam Assistant Speaker, and you will see. The member doth protest too much.

On the question of which areas this institution is likely to focus on, well, it’s pretty simple: the cost of power—that has an inordinate impact on ordinary households; the cost of fuel—yes, most certainly, and especially within the context of the transition economy; the cost of insurance—it’s a pity that the member for Nelson didn’t have insurance when he put his hand in the taxpayer’s pocket, up to $300,000, several years ago.

💬 Hon Dr Nick Smith: Rubbish! Untrue!

ASSISTANT SPEAKER (Poto Williams): Order! Let’s come back perhaps more to the substance of the bill. I think we’re starting to skate towards the edge a little bit here.

I was only referring to insurance as a possible mitigating effect that Ministers or former Ministers could rely upon rather than raiding the taxpayer’s pūtea. But I will follow your admonition. Banks—obviously, the cost of fees, and I’ll have more to say about the predatory behaviour and the egregious rorts that, in my view, we’ve seen in Australia and must inevitably be found in some manner or form in our own New Zealand banking system.

But, given that they don’t like me talking about them, I’ll choose a time, which is somewhat biblical, like the Ecclesiastes. It is a season for all things. Then there is the general need for the State to remain vigilant on behalf of aggrieved parties or on behalf of politicians who have received accounts where things are not showing that a market is working as we, as parliamentarians, imagine a market should work. Why shouldn’t a backbench MP, if possessed of such information, have the ability to rock up to the Commerce Commission and invite them to use their expanded powers? Or a vigilant Minister, like Minister Faafoi, using these expanded powers so that those who are reluctant participants are forced to cough—whether it’s the fuel companies or Countdown or indeed the real estate companies, given the gouging that I suspect has been happening there.

So I’m a thorough supporter of this bill whilst also being a supporter of a market economy. But without rules and regulations, markets have a Darwinist effect and a very negative effect on consumers. Thank you very much.

I rise to speak on this, the Commerce Amendment Bill. I do state that obviously there is widespread support across Parliament for strong and robust and effective competition laws, because, obviously, our living standards and the health of our economy depend on vigorous competition within industries so that New Zealanders have access to the best price in whatever they are consuming. Whether it’s power, whether it’s an ice cream or a bag of lollies or a TV or whatever, it all relies on there being effective—

💬 Hon Shane Jones: Peanuts. Peanuts.

—and robust competition. Peanuts are just as important.

If you look at what we’re trying to achieve in politics here in the National Party, we’re looking at trying to have a strong and robust economy that delivers high living standards for all New Zealanders. But as well as just generating high incomes—people only get ahead if their incomes are growing faster than the cost of living, and so you do need to also put a great deal of attention on costs. That’s why there has been so much concern around Auckland, particularly recently, with the extra costs that motorists have had to endure over the last little while. People can understand the global fluctuation of fuel prices, but they also are very much concerned about the Government costs that have been added to it, and so the net effect is quite considerable. Focusing on reducing the cost of living for New Zealanders is a fundamental focus of all politicians, and particularly of the National caucus, so it’s important, as part of that, that we have good, robust competition laws.

Now, we’ve heard a lot of what I would describe as flummery from the Prime Minister and various Ministers over the past few days in relation to fuel prices and the fleecing, apparently, that has been going on by fuel companies. I suppose the first point I would make is that we already have—and we have had for decades—strong laws in place to deal with any price fixing or collusion between companies, or cartel behaviours in any industry. So if there is any suggestion that there is some sort of anti-competitive behaviour going on within that industry or any other industry, the Commerce Commission right now—right here, today, and for the last 30 years or longer—has the strong, robust powers to go in and hold those companies to account and, if they find them guilty, put very, very substantial fines in their laps and, potentially, send them to jail. So that is the nature of competition law.

That’s not what we’re talking about here today. What we’re talking about here is the addition of the ability of the Commerce Commission to undertake market studies in a particular area. So if somebody has a look at a particular industry—say, the banking sector, or fuel—and says, “Well, there’s nothing in particular that creates a prima facie case for the Commerce Commission to go in and prosecute somebody. That threshold hasn’t been met, but we think there’s something not quite right here.”, then we’ll go and have a market study. Now, there are some countries around the world that do this, and there are some that don’t. We haven’t traditionally. This piece of legislation is introducing that market studies power, and, on balance, National will be supporting that addition to the armoury that our competition regulator has available to it.

The point that I want to make in the last half of my speech is that it does rely on a responsible Government and a responsible regulator, because it is a significant, wide-ranging power that we’re putting in their hands. There is a real risk, particularly in a small economy like ours, that particular industries right across the economy will be subject to drive-by shootings by unscrupulous politicians, in particular. That’s the risk. I wasn’t so worried about that risk when the National Party was in Government; I am more worried about that risk right now. The previous speaker, of course, Mr Jones, has a long and rather famous record—

💬 Hon Shane Jones: Proud, proud history.

He would say it was proud; I would say it was something otherwise. But he has made a career of attacking particular industries and groups, as we said—the supermarkets, the airlines, Fonterra, the banks. In fact, there’s not too much in the way of big business in New Zealand that he doesn’t think is reprehensible in some way or another at a particular time. He’s made an art form out of just attacking them and getting headlines, and has had the gall, I suppose, right here in this House, in this debate, to say that when it comes to the banks, “I’ll choose the timing of when I mount my attack on them.” So arming that sort of Minister with this sort of weapon is a dangerous situation, and so that is why it is so important that any Government with this tool available to it is disciplined.

Of course, we all have come to accept that that is the way that Mr Jones operates, coming from a smaller party, but when we see the Prime Minister of the nation operating in that way, that’s when many New Zealand businesses and New Zealanders have been deeply concerned. We have the Prime Minister talking about introducing market studies but also acting as the judge and the jury, saying that the oil industry is fleecing New Zealanders. I don’t know why she needs to have a study, because she already knows the outcome. In the process of doing that, she has been very funny with her numbers, saying that there has been a big increase in the cost of petrol since Labour came into power, and that only 6.8c of it comes from the Government—which is complete nonsense. The figure is well over 10c a litre in most of New Zealand, and well over 20c a litre in Auckland when you include the regional fuel tax, and that is a very significant part of the increase in the price of petrol. Of course, it’s not all of it, but it is part of it. So the “Fleecer in Chief” certainly has been the Government itself in this area, but that’s the point.

So the only point I’m making is that, yes, this could be a useful part of our competition armoury in a well-regulated and disciplined Government, and so, on balance, we think this is a tool that we should have, but it does rely on the Government of the day and the bureaucracy, in the form of the Commerce Commission, being disciplined in the way that it goes about it, and not using this purely for political purposes when a particular Minister feels like they haven’t had as much media coverage as they would’ve liked in the last couple of weeks and that it’s time to ramp things up by attacking a particular industry.

Why is this a concern for the average New Zealander? I mean, lot of New Zealanders like to see our business leaders in trouble, but, ultimately, we as consumers pay for everything that flows through the system in terms of costs that are added. Just as when it comes to the fuel pump, the Prime Minister can rail about all sorts of things, but the Government is adding everyday costs to undertaking normal business activity in New Zealand, such as a 27 percent increase over the next three years in the minimum wage, and if you don’t think that that flows through to higher petrol prices, you’re dreaming. Of course it does, and if you add all sorts of other costs, as well as taxes and levies, these things flow through to the costs that New Zealanders pay. An undisciplined approach to market studies in a particular industry can lead to millions and millions and millions of dollars being spent by lawyers over an extended period of time to undertake these studies. Don’t for a moment think that these can be done for $25.50 down at Kmart or something like that; they are very, very expensive things. That cost will be passed on to consumers.

Again, my simple message is, yes, this is a potentially useful part of the competition armoury in New Zealand, as it is in many countries around the world, but it must—must—be accompanied by a disciplined Government. From what we’ve seen so far from this Labour - Greens - New Zealand First alliance, I am a little bit worried. Thank you, Madam Assistant Speaker.

Kia ora, Madam Assistant Speaker. Nga mihi nui ki a koutou, kia ora. Fakalofa lahi atu. It’s that sort of speech—and, actually, the result of nine years of that former Government that has seen this trickle-down, hands-under-the-bum, not acting result, which sees Kiwis pay some of the highest—

💬 Hon Tim Macindoe: What is a “hands-under-the-bum, not acting” result?

You know, it’s sitting on their hands, free market, trickle-down, Ronald Reagan - style politics that sees Kiwis pay some of the highest costs of living, work some of the longest hours, and receive some of the lowest wages in the entire developed world—because that Government wanted to take a hands-off approach to the economy. They were quite happy for the oil companies to fleece ordinary consumers, but the reality is that they were talking about where the costs are going to lie. The member who just resumed his seat, the Hon Paul Goldsmith, was talking about the costs to businesses, not the benefits to consumers.

Now, if the member only bothered to read the background documents behind this, what he would find is, sure, there is a cost to business, but that is minuscule compared to the opportunities, the benefits, for consumers. In fact, the data shows there’s a $62 million net benefit for the country as a result of making sure we’ve got competitive markets. Now, the member, the Hon Shane Jones, gave a quote about markets, and I agree. I think they’re a great way in certain circumstances to deal with scarce resources—markets do play a role. But I also agree with the quote from Bob Menendez in the US, a former senator, who said, “Free markets are good, but what you don’t want is a free-for-all market.” Now, what we want to avoid is the fact where we have markets that only operate for the few.

This legislation deals with airports’ regulations with the Commerce Commission, and gives the Commerce Commission new part 3A, in the principal Act, to deal with market studies—the power through the Minister of Commerce and Consumer Affairs, or the Commerce Commission to do a market study into an area. This is critically important, because what we don’t want is markets that only work for a few. Now, we’ve seen the argument in the petrol market when it comes to the fuel storage in the South Island in the port of Lyttelton. A valid criticism can also be levelled at the supermarket duopoly. Here you have two major players—Foodstuffs and Progressive Enterprises—exerting massive market power and influence and control for producers, but also for consumers.

So this legislation simply gives the Commerce Commission the power to conduct those market studies. It’s not to regulate. It’s not to set the prices or do anything like that. It’s simply to do a market study to look into how competitive it is. I’d point out that this power already exists in the Telecommunications Act 2001—and here is a classic case, and I wonder: is the previous speaker, Paul Goldsmith, actually moving away from the philosophy which has rapidly driven down telecommunication prices for Kiwis? The only other area where we have the ability to do a market study is in the Telecommunications Act 2001, and it was these powers that actually led to unbundling, the split-up of Telecom, the entry of 2degrees into the market—a third player which has massively dropped telecommunication prices for Kiwi consumers: a clear net benefit. But if we listen to Paul Goldsmith, the poor cost to Telecom would be enough to rule out this legislation. So simply having this new market studies power in the public interest, dictated by the Commerce Commission or the Minister, is an important point.

The previous member also did a world survey and said, “Well, you know, it only happens in a few countries.”—absolutely wrong. When the OECD looked into this, what they found is that of the 62 countries surveyed, only New Zealand and Chile—the only two countries out of 62 developing-world and other countries surveyed—didn’t have these types of powers. So I think there was a bit of a falsehood or an exaggeration. It’s very clear that the overwhelming majority of developing countries do use these powers because they bring benefits to their consumers.

So it’s good for consumers, but I would also put it that it’s good for business. Now, I have read the submission of Business New Zealand who are pointing out the cost. I’ve already talked about the benefit-cost ratio which is clearly beneficial for the country and the public interest. Those small business costs are vastly outweighed by the benefits to the economy. I would also urge Business New Zealand members that, actually, it’s good for all businesses in New Zealand when we have competitive markets that are working effectively, with competition.

When you look at the sectors where there are risks of adverse market powers—fuel, energy, transport, food, telecommunications—these are critical areas for all New Zealand businesses to operate. Surely it’s in all New Zealand businesses’ interests to make sure we have a competitive market.

The last word I’d say on the new market powers provision in this legislation is from a former Commerce Commissioner, Donal Curtin, who said, “Most countries have come to the conclusion that if you have a competition authority, it’s kind of sensible that it should be able to find out whether the competition is working in places,” Now, this is the message to the industry: if there’s nothing to hide, there’s nothing to fear. This is an important step forward to make sure we have competitive markets and a fair go for consumers.

When it comes to airport regulation, what this bill is doing is not jumping first to regulating airports—who currently are subject to information disclosure under Part 4 of the Commerce Act. It’s simply providing a credible opportunity for that going forward. What’s the point of asking airports, which are regulated monopolies—just for example: Auckland, Wellington, and Christchurch. Two billion dollars was the profit paid by Auckland Airport over the last 10 years. These three international airports, monopolies in their regions, have huge powers to influence our tourism industry, which is—what?—$14.5 billion. Ninety-nine percent of tourists fly in through these airports. There’s a huge power imbalance between these monopolies, who have all the power, and the airlines and the airline passengers who have no power to negotiate.

So this legislation isn’t jumping to a regulation approach setting the prices. It’s simply saying that if there is excessive price gouging or problems in these markets, the Commerce Commission and the Government should have the power to regulate. I think it’s important to have that credible threat if—and I’m not saying there is—in the future there are issues with those markets and if they’re abusing their monopoly powers.

I guess there has previously been a case—when you look at Wellington Airport’s pricing, the Commerce Commission found that its profits were excessive and unjustified. I believe that was in 2013—between $38 and $69 million. In 2012 to 2017, Christchurch Airport was found to be seeking excessive profits in the range of $21 to $35 million. So it is a live issue, and it’s important that the Government and the commission have those powers simply in reserve if it ever needs them.

So the Green Party is happy to support this legislation which is making sure that there’s a fair go for Kiwi consumers and that markets are operating fairly, but it’s not just a free-for-all, and we’re not going to see monopolistic or duopolistic price gouging at the expense of the New Zealand economy. Kia ora koutou.

Thank you, Madam Assistant Speaker. National does support this Commerce Amendment Bill at its second reading. We do have some concerns about this bill on the way through. First of all, to just very briefly mention the various parts of the bill, there are, effectively, three parts in this bill. One relates to airports regulation. There are three airports that are currently required to be within that regime in New Zealand, and, interestingly, the changes in the bill around airports regulation does anticipate that in the future there might be other airports that are brought into a firmer regulatory regime.

There’s a relatively small part of the bill which relates to alternative enforcement provisions that the Commerce Commission can impose as part of their work. So, they could impose an enforceable undertaking regime in relation to settlements and with penalties if that regime isn’t adhered to. They also repeal the existing provision in the Act which is the cease and desist regime. It was more or less redundant, and is rightly a piece of work that’s been tidied up. But the most contentious part of this bill is around competition studies and the market studies power, which is now well on its way to be given to the Commerce Commission. If I think back to about 18 months ago or maybe 2 years ago now when the then Minister of Energy, Judith Collins, initiated an Ministry of Business, Innovation and Employment - led market study into the electricity sector as a result—was it electricity or was it petroleum?

💬 Matt King: Electricity.

Yeah, I think it was electricity—two years has gone by—and it was hindered by the non-compliance with the various industry players—

💬 Hon Shane Jones: Nine years of idleness.

—with that—

💬 Hon Shane Jones: Nine wasted years.

Gosh, there’s an awfully loud noise in this Chamber. Leaving nothing, I find it disgraceful behaviour from a Minister of the Crown, just sort of barking away over the other side of the House. When I can identify where the noise comes from, well, maybe it might make some more sense, but I suspect not. Because actually, the Minister who is barking incoherently over—

💬 Hon Shane Jones: Jacqui for leader!

—the other side of the House is the very person who—

ASSISTANT SPEAKER (Poto Williams): Order, Mr Jones!

—in the past—Shane Jones—has really been a reason why we need to be very careful about having a regime of market studies given to the Commerce Commission because he is a serial threatener of New Zealand business, for no better reason than maybe it might make him sound good in the media and get himself a few more votes, which seems to be driving a lot of his party’s policy development in this House. So Shane Jones is barking over that side of the House, whereas members of this side make a contribution to this debate. It’s unseemly, but it also speaks to what drives him as a Minister and why I am fearful about some aspects of this bill, as introduced by the Labour-led coalition Government.

Now, the difference between what was promoted by the previous National Government is that while we had promoted a market studies regime which was to be initiated by the Minister of Commerce and Consumer Affairs and signed off by the Cabinet of the day, the Labour-led coalition Government have amended the bill and introduced it to have a provision where the Commerce Commission itself can initiate a market study. Now, that is a substantial difference, and it is a difference which we should all be aware of, and my colleague the Hon Paul Goldsmith has a very well-known aversion to market studies power, and that aversion has been only made greater by the fact that under the bill, currently, there is no ministerial direction—

💬 Hon Shane Jones: Democracy. Democracy.

See, there we are, barking—barking, barking, barking—probably trying to get a headline but making no better contribution than that. And so now we have a rate at—

💬 Hon Shane Jones: Not today. The barking mad is somewhere else.

I raise a point of order, Mr Speaker. The barking across the other side of the House has got so loud that I can barely hear myself think.

ASSISTANT SPEAKER (Adrian Rurawhe): Thank you. No, the level is rising but, in my opinion, was within the boundaries of which is OK.

Thank you. Thank you so much for that ruling. We do appreciate that spirit of fairness coming from the Chair.

So what we have here is a market studies regime where the Government of the day—and the Prime Minister has already frightened the business community with her comments around a potential fuel market study and how people are being fleeced at the pump, conveniently ignoring the impact of the Auckland regional fuel tax GST to her calculations of how much the fuel companies are taking in the cost of petrol.

Now, the signal that the Prime Minister and other Ministers are giving to the business community is “Be afraid. Be very afraid, because the Labour-led coalition Government is out to get you.” And not only has the Prime Minister sent that chilling message to the whole business community, the electricity industry, and the fuel industry but also Shane Jones, who is making such a worthy contribution to my speech, has indicated that he would very much like to see that same sort of unfettered power be awarded against Air New Zealand, for example.

So what is next? The Prime Minister has invited other Ministers to put up bids about what other industries the Commerce Commission might have a crack at. What kind of signal is that to send to the New Zealand business community? What kind of impact will that have on confidence in our economy? Now, the view of this side of the House was that a market studies power is an important tool but it’s also a very powerful tool, and, being a party of largely constituency MPs, who are close to their communities and who go into small petrol retailers—in fact, a large percentage of petrol retailers in New Zealand are, essentially, husband and wife couples, and they might have a mechanic working for them. But in small town New Zealand, in the provinces—where I ply my trade, as do many of our colleagues—it is those people who also will be impacted by a fuel market study.

It sounds great when the Prime Minister is standing on the platform saying that we are being fleeced at the pumps. Well, I’d tell the Prime Minister, a lot of that fleecing has happened because of her Government’s new tax regime that is driving up the cost of petrol for New Zealanders.

So let’s not forget that a market studies power is a worthy tool, but under our proposal it would have been absolutely controlled by the need for the Minister of Commerce and Consumer Affairs to make the case to Cabinet to initiate a market studies power. All restraint is gone—all restraint is gone—because now we have a Prime Minister and coalition partners who are openly threatening various sectors that they will initiate and direct the Commerce Commission to undertake a market study, and, in my view, that is totally irresponsible behaviour, and the New Zealand economy and the players within that economy, both large and small, have every reason to be afraid.

Thank you, Mr Assistant Speaker. It’s rather odd to sit here and listen to the members for the other side, who are going to support this bill—as they should, because, fundamentally, it did come from their Government—and yet the very thing they object to, on the one hand, is that the Commerce Commission has the ability to instigate these market studies, and yet, on the other hand, they’re objecting to the very thoughtful steps taken by our coalition partners and others to scrutinise what’s going on in the market place. We absolutely need to have markets which are well disciplined, and you can’t know if a market is well disciplined unless and until you know what’s going on in the market. So of course we need these market studies.

There is a real concern—a real and genuine concern—in many markets in New Zealand that there are aberrations: that there are monopolies or duopolies, that there may be cartel-like behaviour, that there may be some kind of market collusion or price fixing, that there could be some kind of abuse of market power, or that, simply, there’s no clear and fair information about the nature of the products and their pricing. But do you know what? We don’t know that, because it’s complex. The markets—the way they work is complex. Even if we do look at the fuel market—we look at the 30c increase that has occurred which has nothing to do with the very useful levies which are being used to fix our infrastructure deficit. It’s just come from somewhere, and we’re not quite sure where. Is it fleecing? Well, it damn well looks like it, and we need to find out. But we’re not going to just make it up; we want to do a study.

Now, if you’re going to do a study, you can’t do that unless you have the ability to ask for and, ultimately, demand that information, and when you need that information, you need it now and you need it in full. So we can’t just send someone into the market to ask nicely; we need the Commerce Commission to have these powers. And, yes, they will be expensive. The Commerce Commission has extra funding to conduct these, and we must accept that there will be a burden on industries who are asked to respond to these questions. But if there’s nothing going wrong, they have nothing to fear.

💬 Andrew Bayly: That is naive.

What will ultimately happen is that abhorrent markets will be fixed. And who will be the winner? I’ll tell you who will be the winner, Mr Bayly. The winners will be (1) the consumer, and (2) every honest business in New Zealand, because a good, honest, and competitive business will thrive, whilst we can pay attention to those who are breaking the rules, who are acting inefficiently or who are abusing their power, or where the market is simply broken and needs intervention. So that is why we need these powers. That’s why the Commerce Commission needs these powers. We need to understand a market before we take any steps in respect of it.

The other thing is this: it’s highly likely that once we know what’s going on in these markets—once this power has been exercised—no further steps will be needed, because what is going on will see the light of day. Consumers will know if they are being taken advantage of. Other businesses will know where other players are not playing by the rules, are cheating, or are simply making monopoly profits. So it’s absolutely imperative that not only Ministers have the ability to look and say the public needs to know, but also the Commerce Commission, because quite rightly there will be instances where we have to depoliticise this question, where in fact it may be something which the Government has a hand in. Air New Zealand, owned largely by the Government—well, maybe we need to look at airlines. That may well be the case. It may be a hard decision for the Government to make; the Commerce Commission can make it one step removed without any suggestion of political interference, and that is absolutely to be endorsed. The test is a public interest test: what is in the interests of the public of New Zealand, businesses, and consumers? And a fair, free, and properly regulated market is absolutely what is in the interests of the New Zealand public. This won’t be a fishing expedition. Businesses need not be alarmed that there’s going to be a whole lot of investigations that are unnecessary and expensive. No, this is going to be a tool which will be carefully exercised, modestly exercised, and absolutely exercised in the interests of New Zealand and our markets will be better for it. Thank you, Mr Assistant Speaker.

I call Alastair Scott—five minutes.

Thank you, Mr Assistant Speaker. I think it seems we can at least agree that competition is a good thing. Competition enables resources to be allocated. And businesses—we’re talking about particularly—to be run efficiently and motivated to survive and earn a profit, must compete with each other. Costs are reduced; the consumer benefits. So, generally, competition is a good thing.

But as we’ve discussed, there is, from time to time, a need for the Commerce Commission—we’re talking about here—to investigate particular industries.

💬 Hon Shane Jones: Eggs in the Wairarapa.

But as noted by previous speakers, the concern that we have on this side is that the Commerce Commission or the Minister starts barking at the parked cars, starts barking at—I think Mr Jones wants to talk about investigating supermarkets, but he doesn’t know or understand that there’s a hell of a lot of competition already in that sector. For example, think of the fruit and vege market down at the wharves here in Wellington or on the local green in the provincial towns—lots of competition that consumers are able to access. So if we have a Minister like Mr Jones who decides that for some reason he wants to pick on an industry like supermarkets, then we’re wasting money. We’re wasting taxpayers’ money on fixing something that doesn’t need to be fixed.

So that is the concern that business has—that there is an additional cost, an unnecessary burden put on them and we’ve already talked about mum and dad businesses in the fuel industry, the service station industry, which is unaffordable, which is just another layer. Some of the members—not all the members—on the other side don’t seem to concern themselves with small and medium business operators and the costs that these types of regulations impose on them. The other risk of course—and Mr Jones mentioned real estate companies as a possible target. He doesn’t like real estate companies either. I tell you what: if you bought or sold a house recently, you will know you can shop around and you can get that fee down aggressively. These guys are competing with each other all the time. So, again, why are we going to be chasing a parked car and particularly the real estate industry when we know here that it is an extremely aggressive and competitive industry?

Perhaps, rather than focus on that, why not look at—no one’s talked about the cost of building a house and some of the roadblocks and some of the bottlenecks that are existing—

💬 Kieran McAnulty: Like the last Government.

Well, that’s the Government in charge but we haven’t heard anything about the cost of building a house from that side. So how about looking at something like that? How about looking at something about the allocation or the cost of water? Imagine looking at that and running that effectively and efficiently rather than a parked car like the real estate companies and the supermarkets.

The Hon Paul Goldsmith mentioned it wouldn’t be so bad if you could rely on having a responsible Government or rely on having a reasonable and responsible Commerce Commission to do the job that this legislation allows them to do. But our concern on this side is that it has room to go nowhere—for an inquiry to be a waste of time and space, to put a layer of costs on a small business unnecessarily. As I say, the Labour Government—coalition Government is what it’s called nowadays, I think—do not appreciate the costs already imposed by regulators.

And I tell you the reason why more regulations are a bad thing. Mr Faafoi’s got another idea to regulate loan sharks. He wants to put a cap—I digress slightly Mr Assistant Speaker, if I may—on loan sharks. But all that does is it puts the business under the table. It puts that whole industry under the table, because people will still want to borrow money, and if the loan sharks don’t give it to them above the table, you know what, Mr Faafoi? They’ll do it under the table where you can’t see, where the people will still be suffering, and that is the problem with more and more regulations from that side.

This is a split call—five minutes. I call Willow-Jean Prime.

Tēnā koe. Kia ora, Mr Assistant Speaker. I just want to bring a little bit of local and personal context to the debate that we’re having, and I won’t take too long to speak to this bill, given that I’m almost the last speaker. But I was recently contacted by a year 13 Bay of Islands College student who sent me a Facebook message and asked who deals with fuel prices, and a mother who tagged me in a Facebook post who is considering moving to Australia. She’s concerned not only about the cost of fuel but also about the cost of food and asked why our food is more expensive than Australia’s, and, in fact, those living in Australia said, “Why is it that we can get New Zealand food cheaper over here in Australia?”

So these are real concerns in my local communities, questions that I’m being asked on the street, and I support the second reading of this bill which provides us the ability to do market studies. It is simply one tool that will be available to us to make sure that the market is fair and that New Zealanders are paying fair prices, and that’s all that my communities want to be assured of. I support that this means that this can be initiated not only by Ministers but also by the Commerce Commission itself, and, as a previous speaker had noted, they have to prove that there is a public interest in initiating such a market study.

I want to thank the select committee that worked on this bill and all those that made submissions, and highlight one of the recommendations that is coming back from the Transport and Infrastructure Committee, which was to recommend the insertion of a new section 51E. That is to require the Minister to respond to the commission’s final report on the completion of the study within a reasonable time frame. I think that that’s an important addition to this bill, and I’m pleased that it was supported by the Minister in his opening remarks—that that change is welcomed and that the Government should be required to state its views on the commission’s findings and what steps it proposes to take in response to any recommendations. I think that that adds to the transparency and the integrity of the regime.

So with that, I’m not going to take up any further time, other than to put the local and personal context to this issue that we’re debating this afternoon, and say that there are situations where it is in the public interest, with the Commerce Commission having the ability under this proposal to be able to initiate market studies which will ensure that our people are paying fair prices.

Well, thank you, Mr Assistant Speaker. I rise on behalf of the ACT Party in opposition to the Commerce Amendment Bill. I have to say to the speaker who just resumed her seat, Willow-Jean Prime, that the intentions, as so often is the case with the Labour Party, are very noble. Of course people would like more affordable stuff. Of course we’d like a more competitive and efficient economy. Of course people would like more affordable living. There’s no question about that. But that’s not what’s being debated.

What’s being debated here today is whether the Commerce Commission, who have more powers to inquire and subpoena information than the police, should have the ability to sui generis off their own initiative or with the instruction of a Minister—who is a politician—and be able to decide to go into an industry, demand information, and make recommendations that could lead to the restructuring of private businesses. Is that what should be allowed? On the one hand, you’ve got a situation where there are enormous problems in New Zealand with excessive bureaucracy, with too much Government holding New Zealanders back from being more productive, and this Government’s way to make the economy more productive seems to be to add yet another layer of bureaucracy, yet another layer of Government power, on the assumption that somehow the Commerce Commission—after they’ve used their powers to demand information from private businesses, under threat of criminal conviction—will somehow be able to recommend that the industry be broken up, have new competitors enter the market. Who knows?

The fundamental problem is that the Commerce Commission doesn’t know how many competitors should be in a particular industry. The Commerce Commission doesn’t know exactly what a particular industry, such as the retail fuel industry, should charge. You just have to ask yourself this question: if you knew what the correct time for a new competitor to enter a market such as supermarkets was, if you knew what the competitive margin for fuel retailers to charge was, would you be (a) working for the Commerce Commission, or (b) making a huge amount of money while delivering cheaper prices for New Zealanders? Well, of course, people who know what the structure of a market should be are not working for the Commerce Commission. If they knew that, they would be making a lot of money out-competing the current market and bringing down prices.

But it’s worse than that, because not only will this new market study provision allow the Commerce Commission to impose bureaucratic costs on businesses, not only will this new market study provision fail to make anything cheaper, because they don’t know what the right prices should be and they don’t know how many competitors should be in a market; it’s actually an invitation to corruption.

Imagine, if you will, a Minister going to a wine and cheese industry event at an evening where everybody in that industry knows that the Minister has the ability—at a whim, with no justification of his own—under this legislation to unleash a market or a competition study by the Commerce Commission that has more powers than a police inquiry. That is not the kind of position that New Zealanders would like to think a politician should be in. But that is the position that a Minister of Commerce and Consumer Affairs will be in under this legislation. That is why this bill not only will be ineffective, not only is a distraction from the real task of raising the standards of competition and productivity in New Zealand, but is actually dangerous because it erodes an inheritance that all of us have—a political body and a Civil Service that is supposed to be above suspicion and above corruption.

The way that this legislation is being rushed through, so that a market study into retail fuel can be done, when the Prime Minister has already announced the result—i.e., those industries are fleecing consumers—is yet another reason to oppose this bill and why it’s corrupt. I wish I could say that only the Labour Party think that this is the answer to high prices, but, of course, this is a bill that National agreed to in Government too. I’m proud to be standing for ACT—

Order! The member’s time has expired.

Thank you, Mr Assistant Speaker. It’s a pleasure to be talking on the second reading of the Commerce Amendment Bill. I thought I’d just start out by just talking about what the Commerce Commission does, because I haven’t actually heard anyone say what it does. First of all, it regulates telecommunications, electricity, dairy, and the airports, and it also administers parts of the Commerce Act in terms of approving—or otherwise—mergers and acquisitions, particularly on the stock exchange. It also has a responsibility for the Fair Trading Act and the Credit Contracts and Consumer Finance Act.

In general, I think the Commerce Commission does a reasonable job in terms of fulfilling its remit. Of course, what we’re talking about today is actually a National Party bill, essentially. We are all about making sure that we have a healthy, competitive environment in which businesses can compete and go out and get consumers and supply the goods and services that they need at the price they require, and give them the choice that they require, as well. We also recognise the limitations of the Commerce Commission framework as it currently stands. Although, I’ve got to say, it does have extensive powers, particularly under section 98 of the Commerce Act.

The thing about this bill, whilst I think we were trying to deal with it—and when I say “we” I mean the National Party, when we introduced this bill—was it was trying to improve the framework. The thing that worries me most about this is how it’s suddenly become a very political bill. I think it’s actually an absolute smokescreen for the issue that is now besetting the Government—the Labour - New Zealand First Government—with the issue around fuel taxes.

I just want to talk about that for just a couple of minutes, because there are three reasons why fuel taxes have gone up. First of all, the price of fuel—ex Singapore or overseas markets—has gone up. When we were having this discussion back in April, if anyone from the Government had sat down and done a Google search, they would have already known that the fuel prices were going up, but they were mindless to that opportunity and what was going to happen and charged on with imposing the fuel tax rise.

The second thing is, no doubt, the increase in fuel taxes. I did a calculation in my own electorate of Hunua, where we don’t have access to public transport. We have large areas of rural communities who do not have any choice other than to use their cars. My calculation is it’s about $20 a week, if you’re travelling 100 kilometres a day, and that is very normal for most of my people living in my electorate. So that issue is increasingly coming to bite the Government.

The third one is the drop in the value of the New Zealand dollar. We’ve seen it plummet under this Government. The day that they came in it was at roughly US73c; now it is US65c. I’m sure there might be one or two on the other side that follow foreign exchange and probably think, “Oh well, a lot of that’s because US interest rates have risen.” Well, to some extent that’s true. But the issue is the New Zealand dollar’s fallen against virtually every currency—virtually every currency. You have to ask, why did it plummet from US73c to US65c today, in 12 months? The reason is that the international community 12 months ago had a different view on this economy. What they’ve witnessed over the last 12 months is a systemic and systematic attempt to disband and deal and create increased risk around this economy.

So we’ve seen things like the labour reforms that are coming through—I see we’re going to debate one soon. We’ve seen that. So businesses are looking at the environment, saying their cost structures are going up. We’ve seen the likely imposition of the fuel taxes. We’ve seen that this Government’s going to pile on an extra $16 billion of debt—$16 billion of debt—and they think no one notices. Well, I’ll tell you why: we’ve already seen our GDP drop from being one of the highest in the world to now middling, to the bottom end of the OECD. That’s why international communities look at New Zealand and go, “That’s a more risky place than 12 months ago.” That is why our dollar has dropped from US73c to US65c—through mismanagement of this economy by that Government, that Labour - New Zealand First Government.

I just want to move on now. We agree with most of the elements in this bill. But the key difference I just want to highlight is that this Government has made a change. They have made a change to the bill. That is, they have allowed the Commerce Commission to self-initiate market studies, giving the Commerce Commission unfettered powers with no oversight. I disagree with this premise.

It’s interesting, because if you look around the world and you look at the ACCC, or, in other terms, the Australian Competition and Consumer Commission, what is their jurisdiction? Their jurisdiction is that they can self-initiate competition or market studies, but they do not have the right under that circumstance to request or require the information to be supplied. They can only get it—they can only have those extraordinary powers—by actually going to the Minister and seeking them. With the ministerial oversight of that request, that’s when they have the power to require information, and, of course, that is a very significant power.

If you think about the UK Competition and Markets Authority—and I visited them 12 months ago to have this very discussion with them in London—they have the right to undertake market powers, but they, again, have been established with a system that has a check on it. The check is that the management of the UK’s Competition and Markets Authority can initiate an inquiry, but it must first get the approval of the board. That’s what we were talking about when we introduced this bill. It was to have ministerial oversight.

So in both those jurisdictions, which in my view—and I’ve studied this area closely over the years—are two very good examples, both of them have the ability for some independent oversight before you give any of those competition authorities in whatever jurisdiction—Australia, America, the UK, or whatever—the ability for someone to, say, check and pause and say, “Is that a relevant power?” But what this Government’s proposing is that we will allow the Commerce Commission to undertake these significant studies with all the rights and powers to require information.

I think it’s absolutely naive of the member for Christchurch Central, who spoke about the fact that if you’re in a business and you haven’t done anything wrong, then you’ve got nothing to fear. Well, commercially, that is absolutely naive, and I would have thought from a lawyer that we might’ve seen something a little bit more practical, because these market studies are incredibly invasive—incredibly invasive. When the Commerce Commission decides to do it—and I have been involved in these studies in assisting the Commerce Commission—they are extensive in terms of the requirement on the people that are involved in those businesses, not only in terms of their time but the nature of the information, the cost of compiling that, and the cost of having proper advisers, lawyers, accountants, and whoever you need to get to assemble that information to make sure it’s correct, because you cannot afford not to make sure that it’s correct.

The second thing is they are incredibly disruptive to businesses. They are incredibly disruptive because these studies take a lot of time. I’ve heard the Minister of Commerce and Consumer Affairs talk about it before and I heard his estimate of $400,000 for these studies. I’ve never heard of a study with a $400,000 cost. They are significant in terms of time. The cost involved for the Commerce Commission, as opposed to the people they are investigating, is absolutely significant. They are invasive, and, until you are proven innocent, there is an issue that everyone knows you are subject to a Commerce Commission inquiry. That is against the counterview of making sure that everyone is presumed innocent until proven guilty.

That is the reason why I think this bill is fundamentally wrong in terms of allowing the Commerce Commission to be able to do these studies in an unfettered manner. That’s why I will personally be supporting—and our party is supporting—the Supplementary Order Paper that Brett Hudson is proposing to put forward to say that these powers should be subject to ministerial oversight. That is world-best practice, and this Government doesn’t know that.

Thank you, Mr Assistant Speaker. Following that National member who has just resumed his seat, I got the strong impression that Mr Andrew Bayly might have got the wrong bill, because there was no reason for him to shout and there was no reason for him to be so emotional. Having said that, I do want to acknowledge the National Party for supporting this bill allowing the Commerce Commission to investigate petrol companies, despite that they voted against the bill’s first reading.

It’s a no-brainer for us to understand and acknowledge that consumers should be at the very heart of competition and consumer policy, and this bill intends to achieve just that. This bill will empower the Commerce Commission to undertake competition studies by carrying out research into the structure and behaviour of markets and to report its findings. Many consumers, for example, will want to know what’s behind the petrol price and how on earth New Zealand’s pre-tax costs would be so high. Surprisingly, as noted by speakers who took a call before this, in terms of a market study regime, among 62 countries surveyed, only Chile and New Zealand do not have such a kind of market study regime.

Market studies will allow in-depth investigation to be conducted by an independent competition authority, the Commerce Commission. So the real winner will be the consumers and businesses. I commend this bill to the House.

Amendments recommended by the Transport and Infrastructure Committee by majority agreed to.

Bill read a second time.