Commerce Amendment Bill

Thank you, Madam Chair. It’s a pleasure to rise and talk on this Commerce Amendment Bill, particularly Part 1, which is the most contentious part—a part which the National Party had issues with when in Government, and it has continued to espouse those in Opposition. The issue with this particular section is not the ability to undertake market studies, or competition studies, as the Commerce Commission prefers to term them; it’s not any sort of reluctance on our part to inquire into the good workings of industries and markets across New Zealand.

The issue we have long held is around the decision making for when those studies should be undertaken and who should approve them. In particular, it’s an issue of governance and, indeed, actually, of management of the budget that the Government has set out for these studies. The Government has allowed, across each of the next three Budget years, $1.5 million dollars a year for the undertaking of market studies. But then, we would argue, it poses quite a significant challenge if more than one party is able to independently initiate them, and that is because when giving evidence in the select committee stage the Commerce Commission pointed out that a market study would be expected to take, at a minimum, $1 million of resource to undertake, and they were very clear that in their view the budget that had been allowed would permit only one market study to be undertaken per year.

That being the case, if the Government decides it wants to undertake a market study—and they have clearly indicated they want to do at least one—and the Commerce Commission of their own volition determines that they also want to undertake a market study, well, there’s not enough money in the kitty to do both. So, actually, the bill doesn’t have a mechanism for determining who gets priority if both wish to undertake a study in the same financial year and there’s not enough money to go around. But, more to the point, it creates a bit of a mess of the management of that, and I would argue, and we would argue, that the mere fact that that potential mismanagement, that potential confusion, could arise is itself deeply unhelpful for confidence across our business communities. They don’t quite know where they’re going to get hit and who from, or, indeed, if from more than one angle at once across multiple markets.

Our position all along has been—including when we were in Government—that only a Minister should initiate those market studies, and we know this. It’s actually quite troubling in more than one sense, because, in consulting with my colleagues here on the background to this bill, although it’s had amendments at the select committee, this is still largely the bill that officials have tried to push over a long period of time. The officials actually took every opportunity at every change of Minister, including changes of Minister within the same Government, to rehash the same approach. Under Minister Foss there was an approach that was not agreed to. Then under Minister Goldsmith they tried to reintroduce the same provisions, and that wasn’t agreed to. Under Minister Dean they tried again, and under this Minister of Commerce and Consumer Affairs they have tried at least—well, it would appear to be at least—a fourth time.

Despite every other time being knocked back, we had officials try and try and try again until they finally found a Minister who would acquiesce to their desires. But, in doing so, it introduces risk to our businesses and risk to our business confidence, which, as we well know, has been trending very, very poorly under this new Government. So I would encourage the Minister to take that into consideration. We think it would make it more difficult to manage and be potentially messy, while not actually adding any more value. We would by no means get any more novel studies or any more studies than we might otherwise have. They would be no less comprehensive, no less effective, and no less valuable in the outputs and the recommendations they might bring. It would simply be more than one vector of attack, if you will, and that is not necessary if it’s not adding anything.

So, to that end, I have tabled Supplementary Order Paper (SOP) 139. It is quite a simple one. The Supplementary Order Paper merely adds a couple of provisions—a provision that says that when the Commerce Commission is going to self-initiate one of those market studies, or competition studies if they prefer to use the term, that that must be approved by the Minister. This way—one simple provision—means we have the same ability to investigate across markets, undertake the same level of research, undertake the same depth and comprehensive breadth, reach the same conclusions, and make the same recommendations but do it in a way that doesn’t create confusion—[Bell rung] Madam Chair?

CHAIRPERSON (Hon Anne Tolley): I call Brett Hudson.

—and removes the potential confusion that could be present if we’ve got multiple forms of an issue or multiple vectors of initiation. There is actually another reason too—which is why I asked for the second call—to delve into why it is a very good idea that there either be ministerial-initiated studies, or at least ministerial-approved. And that is because officials in the departmental report provided us with information about how our closest neighbours operate in this area of market/competition studies.

The Australian Competition and Consumer Commission (ACCC) do already have the power to undertake market studies—they have the power to self-initiate them too—but here’s the key difference: where the ACCC self-initiates market studies, they do not have the ability to compel businesses to provide them the data they want. It is completely voluntary. They cannot force them to provide certain data, nor in certain formats, nor to certain extents. They make requests; the businesses voluntarily choose to comply and oblige with those responses, or they choose not to.

Not surprisingly, the information from the ACCC, through our officials, shows that in some instances the ACCC believes that that has resulted in them receiving suboptimal levels of information, but it has definitely had a much lower impost for each of those studies on those market participants, on those businesses.

Where the ACCC is able to invoke compulsion for the acquisition of data, ministerial approval is required in every instance. Where they exercise the power to compel businesses to provide them data, that must be accompanied with ministerial approval. So my question to the Minister is: why are we so different? Why should we be different? Why, when we are, in a sense, copying, to one degree or another, the ability to undertake market studies where we harmonise so many other regulations and approaches across the Tasman, why do we persist in operating a model that is different to theirs? Their market isn’t about market studies or not market studies; it’s about whether the commission has the ability to compel businesses to provide the information they want.

In Australia, where they self-initiate market studies, the commission there does not have the ability, the authority, to compel the provision of data. We do in our market studies, and this piece of legislation requires it. We have that compulsion. We don’t disagree with that. We think that’s actually an important factor to make sure that these competition studies—market studies—would actually work well. But we also contend that, like in Australia, where that is the case, that should require Ministerial approval.

That’s why, Minister, if you can’t—well, by all means, tell us why we should be different to Australia in this matter. But that’s why I encourage the Government to support my Supplementary Order Paper. It is a sensible one. It doesn’t add any enormous process, cost, weight, or time. It doesn’t affect the nature of the studies, or the time it will take, or their findings. It simply makes sure that the Minister—or Cabinet, through that Minister—appreciates the level of impost on businesses of a very comprehensive study. Because the Commerce Commission made it clear in their evidence that it will absolutely be a comprehensive study across a broad range of market participants. They will not do market studies by half measures. These things will be large. They will be long. They will be expensive to the Government and, equally, they will be hugely expensive to large, medium, and very small New Zealand businesses.

So I encourage the Minister and encourage the Government to take a deep breath on this one. The action we take here, which we fundamentally support—this idea of market studies—has enormous impacts on New Zealanders and New Zealand businesses, particularly the small ones. It is absolutely appropriate and, we would argue, right that Cabinet, through the responsible Minister, should reflect on each study, including those the Commerce Commission might put forward itself, reflect on the level of impact that the study will have on New Zealanders and New Zealand businesses, and either give it the stamp of approval or reject it. Minister, I call on you to support the SOP.

Thank you, Madam Chair. What a great contribution from our colleague Brett Hudson.

I would like to congratulate the Minister in the chair, Kris Faafoi, who is my favourite Minister at the moment. I have no idea why he’s not in Cabinet. He should be there. I think we’d vote for that—except that, of course, he won’t be there long, because we’ll be back. I’d like to congratulate him for taking up the work that our excellent colleague the Hon Jacqui Dean did last year when she worked with me when I was dealing with the fuel price study that was undertaken into the price of petrol and diesel in New Zealand and the margins that were being charged by the fuel companies. The Hon Jacqui Dean undertook some very good work. Cabinet, under the National-led Government last year, agreed to a proposal which is, essentially, this bill plus Brett Hudson’s Supplementary Order Paper 139.

In other words, the concerns were always around—those eloquently expressed by Mr Hudson—the ability of the Commerce Commission to undertake surveys and work, and to get right into the detail of how pricing is being calculated, and also around the profits involved and the supply of goods and services, but, at the same time, remembering that the Commerce Commission is quite a blunt instrument. It is a very powerful organisation, even now, and to give it the powers that the Government wishes to do, without any caveat or any responsibility to come back to a Minister or to a Cabinet about whether or not the Government wants to have that sort of extremely invasive and costly look at a market, I think is a little dangerous.

I say “it’s a little dangerous” because the cost involved to businesses and therefore to workers, and therefore to everyone else who buys from those businesses, tends to be extremely high. So this is not a power that should be undertaken lightly or because of a general gut feel. It should be based on whether or not there appears to be a serious issue that needs to be reviewed and looked at and got to the nub of. That is why I think it’s quite important to bring this decision back to Cabinet, to the Minister, because Ministers in Cabinet are responsible to the people.

The Commerce Commission is not elected. It is not responsible to the people. It’s appointed by the Government of the day and, once they’re in there, they’re there until the end of the term. So what that really means is they’re not going to have to answer all sorts of questions. They’re not subject to questions in question time. They’re not subject to the sorts of interrogation and holding to account that Governments are. So I think it is a very wise thing for the Government to adopt Supplementary Order Paper 139, which gives the Minister and therefore Cabinet a say in whether or not something goes ahead.

The reason why we can do this without worrying about what this does to an individual business is that the Commerce Commission’s market study powers would not apply to a single business but to a whole industry or a whole market, and therefore it’s not about deciding to interrogate down into one particular business but an entire area. Now, the cost of that can be enormous. Time is money in business, so the cost in time is enormous. The threats around this if someone gets things wrong when they’re providing information can be enormous. So this is not a power to be used lightly.

I would suggest to the Minister—who I am backing to have two years in Cabinet; I thought that was quite generous, really—that he considers this, because that would actually take away quite a lot of the concerns and the fears, particularly of people in business who are wondering whether or not this is actually going to become an empire being built by the Commerce Commission without anybody being able to say “Hang on. This is really not OK, and it’s not what this Act is all about.” So I would suggest he takes on that concern.

Can I thank the two members of the Opposition for taking calls to Part 1, which does contain most of the heft of this piece of legislation in and around market, or competition, studies. Can I thank the member Judith Collins, who’s just resumed her seat, for her support. I also offer my support in her further career endeavours, if they may eventuate.

Can I just point out that we’ve had 15 minutes from the Opposition so far in this Part 1 debate and I don’t think I’ve heard the word “consumer” once. So if we strip away what this piece of legislation is—you can talk about self-initiated market studies if you like, but what this piece of legislation really is about, if you took it to people on the street, is it is a piece of legislation to make sure that consumers in New Zealand are getting a fair go. That is going to be done by the Commerce Commission by looking at a market—whichever market it might be—if we think that that market isn’t operating efficiently or effectively. Now, that’s the language we use in this House, but what that means to the average New Zealander is do we think they’re getting a fair deal? Do we think they are paying too much for a particular good or a particular service? The ability for the Commerce Commission to undertake these market studies is an extremely important tool to make sure that we as parliamentarians, when New Zealanders ask us whether or not we think that they’re getting a fair go, are able to investigate that issue itself.

Can I point out to Ms Collins her efforts in a previous Government—I think it was 2017—when the previous Government tried to get to the bottom of petrol prices, as one example. The stumbling block that the previous Government had there was their inability to compel particular players in that market to give them information so that this Parliament and that Government could answer the simple question as to whether or not we thought that those petrol companies were giving consumers a fair go.

I’d like to quote the previous Minister of Energy and Resources, the Hon Judith Collins, who said at the time of her frustration of not being able to get that information that “There were difficulties in comparing the information received from the companies, and some very specific information that was required could not be obtained. As a result, the Study doesn’t definitively answer whether fuel prices are reasonable or not.” It’s a pretty simple question that consumers will ask of us as MPs and of us as a Government as to whether or not a market is operating effectively and efficiently. I will also point out that the previous Government was working towards this piece of legislation but didn’t get to introduce it.

To Mr Hudson’s point: yes, Mr Foss was approached. Yes, the Hon Paul Goldsmith was approached. Yes, the Hon Jacqui Dean was approached by Ministry of Business, Innovation and Employment officials as to whether or not the Commerce Commission should have the power to self-initiate. On each of those occasions, each of those Ministers of Commerce said no. I would put to the committee that on each of those occasions those Ministers were wrong, because we need to make sure that the proper questions are being asked to ensure that consumers are getting a fair go. And if the Government of the day hasn’t initiated a market study into a market that the rest of New Zealand believes isn’t operating effectively—i.e., isn’t giving them a fair go—then any Government worth its salt should have initiated a market study.

I think the Opposition need to have a little bit more faith in the Commerce Commission and their ability to manage these things, and also the faith in any stripe of Government to manage these issues as well. The previous Government allocated $1.5 million to the Commerce Commission in terms of budgeting to make sure that it could follow through with these market studies. I have every faith that they and the Government will be able to manage those market, or competition, studies within that budget to ensure that that is being done to a responsible level and also ask the questions that consumers want answered.

I know that the Opposition doesn’t like the idea of the Commerce Commission self-initiating market studies. Again, I would reiterate that any Government worth its salt, if it thinks New Zealanders are getting ripped off, would make sure that a market study is undertaken but also, if it doesn’t, that the Commerce Commission has the ability to do it itself.

Thank you, Madam Chair. Following on from Minister Faafoi’s comments, of course if New Zealanders are being ripped off by any company or industry, there are very substantial powers that the Commerce Commission has in relation to price fixing or cartel behaviour or any such illegal activity by businesses where very large fines and significant penalties can be raised. So that’s not what we’re talking about here. What we’re talking about is a suspicion that there may be something going on in a particular industry which is not as effective as it could be. So no laws have been broken, necessarily, but there’s a hunch.

As Minister of Commerce and Consumer Affairs, I was always cautious about this and a subsequent Minister of Commerce and Consumer Affairs—and the National Government itself—did advance this bill in order to offer market studies powers to the Commerce Commission. The only hesitancy I had was, of course, that it relies upon a Government of the day being disciplined in its approach to how it operates. The danger, of course, in allowing politicians to have access to market studies powers using the powers of the Commerce Commission is that it will be used for political purposes and drive-by shootings of particular industries when particular Ministers are feeling the heat on other issues.

So what we’ve seen so far hasn’t filled me with a great deal of confidence because we’ve had the Prime Minister of this country stand here in this Parliament and appoint herself as judge and jury on this topic and say that New Zealand consumers are being fleeced—full stop. Full stop. Now, she may be right; she may be not—who knows? She certainly has no evidence to base her accusation on, but we are granting the Commerce Commission powers to undertake full studies into a particular industry when the Prime Minister—and then, last week, it was confirmed by the Minister of Transport, who agreed with the Prime Minister, and then by the Attorney-General of this country, for goodness’ sake! The Attorney-General of this country, who was answering on behalf of the Minister of Energy and Resources, confirmed the Prime Minister’s view that New Zealanders were being fleeced.

So the worry is that, unbelievably, this Government has given an answer to a question that it’s going to ask the Commerce Commission to come up with some evidence and a reply on, and that is the thing that concerns us a great deal about this. It requires discipline from a Government, and, instead, what we see is petrol prices going up considerably, largely because of international fuel prices which fluctuate over the years—everybody understands that—but there has also been a very significant addition of fuel taxes and levies. The Prime Minister has been slippery as all heck on that topic, with all sorts of different numbers that have been sort of shuffled out there—6.8 percent, which is complete nonsense. There has been more than 4 percent added through excise tax, plus GST, and plus another 11.5c on the Auckland regional fuel tax that this Government has passed, and that has flowed through to fuel taxes.

So New Zealanders up and down the country are upset about trying to find the extra money within their weekly budgets to pay for the petrol and the diesel that they need to get around. They know that there are international forces behind that, but they see this Government at that very time of vulnerability adding their own taxes and levies. They see all the incontinent spending of this Government and they are rightly annoyed, and for the Government to then just turn around and use this power to say that New Zealanders are being fleeced without evidence is something that gives me real concern.

Now, that is not to say that we shouldn’t ask the question. Of course we should ask the question, and that’s why we absolutely support having the ability to have these powers and to ask that question. But the only point I would make is that that power needs to be accompanied by discipline, and this Government has shown none of it. We had the Minister talking about the fair go, and, absolutely, we want to see all New Zealand consumers getting a fair go—absolutely. We also expect that New Zealand businesses also get a fair go and that they don’t have the Prime Minister acting as a judge and jury, answering a question that she herself has asked.

So we support this bill, and we implore this Government to show some discipline. Thank you very much.

Thank you, Madam Chair. I support Supplementary Order Paper (SOP) 139 of Brett Hudson, who has made an amendment, and I think this is a very good suggestion—very consistent with National’s policy when we were in Government: “In clause 4, new section 50, replace subsection (2) with: (2) Before carrying out a competition study, the Commission—(a) must obtain approval for the study from the Minister; and (b) must, by notice in the Gazette,—(i) prescribe the terms of reference for the study; and (ii) specify the date by which the Commission will make the final competition report for the study publicly available.”

This is a good check on the Commerce Commission. I’m touched by the faith of the current Minister, Kris Faafoi, in the Commerce Commission. They are good people—they are very good people—and it’s lovely that he has such a kind and loving and trusting relationship with them. But, actually, a competition study is going to have a large impact on New Zealand business large and small, particularly on the small. If one thinks about the fact that business in New Zealand, any market in New Zealand, generally, is dominated by small business—after all, 97 percent of all business in New Zealand is undertaken by small business—then the cost and the impost of a market study or competition study is going to fall on small business rather than a larger business which has a whole business unit, which I’m sure is taking place as we speak, to be the body which deals with incoming market studies.

So it is lovely of the Hon Kris Faafoi to have such a warm and trusting relationship with the Commerce Commission, and a commission which I also have a lot of respect for, but who live in the city. They live in Wellington and they live in Auckland; mostly, the people who work for the Commerce Commission are people who live in cities. Well, a lot of the markets—and particularly if we choose just one market study, potentially a fuel market study—they sell fuel at Mount Cook and they sell fuel in Ranfurly and they sell fuel in Tongariro National Park. It is those small-business fuel retailers who are going to feel the imposition of a market study disproportionately to the size of their business and disproportionately to the larger suppliers of fuel who are spread, mainly, because of the numbers, in the cities. So I absolutely support this SOP.

I think the Minister must step up and take some responsibility in the initiation of a market study. I think it is simply not good enough for the Commerce Commission to test the wind from Auckland or Wellington and sense there is an anomaly or an unfairness or some practice that they are not supporting within a market. It does need ministerial responsibility. Isn’t that what a Government is for? Isn’t that why we have Cabinet and Ministers?

Under this Supplementary Order Paper, the Minister of Commerce and Consumer Affairs will be alerted to a market dysfunction or market problem. It may well come from the public—there might be a public outcry. It may well come from the Commerce Commission, but if I were the Minister, I would expect that the Commerce Commission, in that instance, would come to my office and outline their concerns around that market and why they feel that a market study is worthy of consideration by the Minister and by the Cabinet. That’s why we have a Government: to provide a check and a brake on our bureaucracy.

I don’t buy the “I trust the Commerce Commission because they are good people.” argument. Yes, they are good people—of course they are good people—but that is why this country has got a Minister of commerce and a Cabinet, which has got to be the check on any market study, any competition study. It’s not for the big guys, not for the big fuel companies, not for the big supermarkets but for the little guys, the small business owners, who might well be a husband and wife team somewhere in New Zealand, somewhere in the provinces, who will have a disproportionate burden placed upon them in any form of market study.

Thank you very much, Madam Chair. First of all, I want to say that I support Supplementary Order Paper 139 in the name of my colleague beside me, Brett Hudson. I think it’s an excellent Supplementary Order Paper, and I spoke about it the other day, in fact.

First of all, I just want to reiterate—as I think is absolutely implied, but let’s just be clear—that we all support that there should be in New Zealand the promotion of healthy competition, so that consumers, picking up on the term that the Minister Kris Faafoi used, get access to the goods and services they require, at the right price. So that’s an absolute given because this bill is, essentially, a National Party bill, but the bit that we differ from is this bit about whether you give the Commerce Commission unfettered rights of power to undertake a market study.

Of course, I was fascinated hearing that the Minister, when he rose to his feet just before, and I am deeply appreciative that he took the opportunity to do that—the only thing he could talk about was the consumer. Of course we are concerned about the consumer, but I am just a little bit concerned that the only issue the Minister of Commerce and Consumer Affairs could raise about this and why it wasn’t a good thing that we were opposing this aspect was that we didn’t have sufficient regard to the consumer. Now, I know he’s a former broadcaster and retail politics is an important part of it and the consumer is an important part of it, but as I’ve heard from my colleagues earlier, when they were asked this question when they were Ministers, they were very careful about this power. So the officials must have just been waiting for a soft touch, and I think the soft touch has arrived.

💬 Brett Hudson: They found him.

They found him—they found him. They said, “Oh, here we go. We’re going to get it this time.”

Of course, I want to hear the Minister stand up and tell me about the other jurisdictions around the world, about why New Zealand should allow this, and just talk about some of the other jurisdictions. I understand the officials’ document talked about the Australian Competition and Consumer Commission—ACCC, as people talk about it. As has been alluded to before, they can undertake market studies, of course they can, but the difference is that where they exercise the power to require information and all that specific stuff that goes on in these inquiries—and I have been involved in them—that’s when they need an oversight, and in that case they go to the Minister. So they are judicious about those powers—very judicious.

Now, I would love to hear the Minister talk about the UK situation, because I’m sure that in coming to this decision, he must have considered that very, very carefully. Of course, we know about the UK Competition and Markets Authority. They too have a right to go and do market studies, but, of course, they too have an oversight. Very, very few jurisdictions allow their Commerce Commission equivalents unfettered rights to undertake these types of powers, and in those cases they have boards: the management proposes; the board decides. They are very, very protective of that relationship, because I know I had this conversation with them about a year ago, and when I was meeting with them—the senior officials from that unit—no one was proposing that they should have unfettered rights. So I think that’s a crucial part of what we’re debating today.

I think this view that we should just let the Commerce Commission loose because it’s in the best interests of consumers has a place to some extent, but you must recognise how invasive these inquiries are. They are absolutely disruptive and, in some cases, destructive to the businesses concerned, and, certainly, because they get publicity around them, there is also this element of being seen to be guilty before proven innocent.

I think it’s particularly injudicious that the Prime Minister has been talking about undertaking an inquiry into fuel companies and using the term “fleecing the New Zealand consumer”. I think those are very injudicious comments, and that’s why we don’t support this. I think it’s even worse when she’s gone out and talked to Ministers and asked Ministers what other inquiries we should be doing, because that is simply irresponsible in these situations. So I do not agree with these.

Thank you, Madam Chair. I am pleased to be taking a call this afternoon on the Commerce Amendment Bill. I want to focus my comments specifically, of course, on Part 1, which relates to competition studies and inserts a new Part 3A into the Commerce Act. But I did just want to start with new section 51, which allows the Minister to require the Commerce Commission to carry out a competition study.

Now, at this point, I have to remind members and those watching at home—I’m sure there are many of those—why we have this bill coming to us at this point. At this point, we’ve had this Government in charge for around 12 months—just over 12 months—so why is it that they feel the need to bring this piece of legislation to Parliament after 12 months? And the answer to that question is petrol prices. Today, in my electorate of Rangitata, petrol prices are $2.46—$2.46—for a litre of 91 octane. That’s 20 percent more than a year ago—20 percent more than a year ago. And we ask ourselves why that is—why that is. What is it that changed 12 months ago? What happened 12 months ago that might have had an impact on petrol prices?

💬 Hon Shane Jones: The dollar.

Well, first, of course, there is the regional fuel levy—the so-called regional fuel levy—of around 12c that the Government opposite brought in, and the problem with that legislation that they brought forward was, of course, price spreading. There was nothing in that piece of legislation that meant that that tax, that was meant to be applied to Auckland, would stay in Auckland. The second reason we have higher fuel prices than we had 12 months ago is a nationwide levy of 4c a litre across the country. So at a time when we have, as the member opposite said, a declining value of the New Zealand dollar, the Government opposite are putting additional taxes on. In real terms, petrol prices now are the highest they’ve been in 35 years.

So this Government has suggested, “Oh no, the problem is not us. The problem is not all these additional taxes that we’re putting on.” The problem is not the 12c a litre they’ve put on Auckland car owners! The problem is not the 4c a litre they’ve put on across the country! The problem is not the 4c a litre that they’re going to put on next year! The problem is not the 4c a litre that they’re going to put on the following year! The problem is somewhere else! The problem is with the fuel companies! And so they’ve brought this piece of legislation forward to require the Minister to allow for competition studies by the Commerce Commission.

I’ve got two questions to the Minister in the chair, Kris Faafoi. He’s been very good at answering our questions so far today, so I’ve got two questions for him. The first one is: if he is genuine about helping consumers—he talked before about consumers—will he agree today to talk to the Minister of Transport to take those additional taxes off until the commission has reported back on the study into fuel prices? Will he do that today? The second question I have: will the Minister commit, if once that review has come back the commission finds that the Government’s additional fuel taxes are having a disproportionate impact on the price of fuel across the country, to having those taxes removed?

I now want to turn to the Supplementary Order Paper in the name of my very hard-working colleague Brett Hudson, and in it he asks for some additional democratic oversight because, as has been talked about this afternoon, we did this. This piece of legislation was drafted by our Government, the National Government, in a sense, and it really allowed for these competition studies to go forward but only at the discretion of the Minister—at the discretion of the Minister. The legislation that’s been brought now by the Minister allows for those studies to be put forward at the suggestion of the Commerce Commission.

Look, that’s fine if he wants to do that; we disagree with that, actually. We don’t think that that should be the case. We think there should be some democratic oversight. But if he is going to go down that route, why not provide for the commission to have to come to the Minister to, essentially, receive sign-off for that decision? The Commerce Commission can decide that they want to hold an investigation or a review into something, but require them to come to the Minister first. And the reason I ask that is because, in the Minister’s own bill—in fact, it’s a new part to the bill; section 51(e)—it already requires the Minister to respond to a commission report, which is fine. Again, I think that’s a valid approach to require the Minister to report back at the end. Why not have him involved at the start?

Madam Chair, can I thank members opposite for the debate so far. I’ve found it very entertaining. What I’m finding slightly troublesome, though, is trying to make logic of some of the National Party arguments. The member for Hunua, Andrew Bayly, mentioned that this was essentially a National Party bill, but then another member, Jacqui Dean, picked the details to shreds about the effect that this will have on small businesses. I just want to know if the National Party wants to clarify its position on this, because I know it’s changed its tune on which way it’s going to vote on this piece of legislation—if it is a National Party bill from the outset, whether or not it actually agrees with the detail of the bill. I heard the former commerce Minister saying she didn’t like, necessarily, how these market studies are going to be done and the impact that it may have on small businesses, but then Mr Bayly says this is essentially a National Party bill. So it would be really good for the people listening at home if the National Party would clarify its position on this piece of legislation. So that would be helpful.

The next piece that I would like to respond to is the point made by the former commerce Minister Jacqui Dean. The fact is that I actually think that small businesses and regional areas will welcome this piece of legislation. When large players in concentrated markets are using their power in those markets, it is shutting some of those players in regional markets out because of their inability to compete with some of the larger markets. So I’m just trying to see, again, if there is actually a constant strain of an argument for or against from the National Party around this piece of legislation.

I can’t go without addressing some of the issues that Mr Bayly raised in terms of me personally. I don’t mind being called a soft touch, but Mr Bayly did raise the issue that sometimes Governments or Ministers could be a soft touch. I am not, because I said to the officials that, actually, we’re going to do this. But the point of the Commerce Commission having the ability to initiate a market study is that sometimes, I fear, maybe some Governments of a particular stripe might be a soft touch in the future and may not initiate a market study. I would think, again—and I’ll reiterate this point—any Government worth its salt, if it thinks a market isn’t operating effectively, which means consumers aren’t getting a fair go, if they were to do that for the benefit of consumers, then the ability of the Commerce Commission to initiate a market study is very important.

I was asked a couple of questions by Andrew Falloon in and around the Government’s decision around excise tax. Mr Falloon, I remember in our own time in Opposition an “Axe the Tax” campaign as well. We tried to stop the previous Government from increasing GST from 12.5 percent to 15 percent.

💬 Andrew Falloon: It was tax-neutral, and you know it.

Well, that was a tax that the previous Government never mentioned in the lead up to the last election, and I would like to reiterate the point to the member who is using this as an opportunity to make the point: which transport infrastructure projects would that member take away, potentially even from his region, if we weren’t to bring in that excise to those issues in those regions in and around New Zealand? And also he wanted us to pre-empt a decision that, potentially, the Commerce Commission would make. I think Mr Falloon would see the folly in doing that. We’ve got to make sure that if we give the Commerce Commission the ability to do those studies, we let them do their work and make decisions after they’ve done the detailed work that they have the ability now to do as part of a market study.

Thank you, Madam Chair. I’d like to ask the Minister a couple of questions in due course, but much of this bill, as has been stated, is a good thing, particularly my point around the most positive aspect as far as I can see: this compulsion to provide information to the Commerce Commission when requested. There’s no point having an inquiry if you can’t get the information to find results. So that’s a very good step forward, the compulsory data collection from those businesses.

The problem that I’d like to pick up with the Minister is around when he said the Commerce Commission will initiate some investigations where the Commerce Commission might see the politicians not picking up an inquiry, or perhaps the politicians don’t see any issues out there but the Commerce Commission does. So my first question is who gets priority? Is it the list of inquiries that the Commerce Commission wants to take on or is it the list of inquiries that the politicians want to take on? I think, and on this side we think, that the politician must have the veto, or decide. The reasons I say this is because—well, first of all, answer that question of who gets priority.

I agree with Mr Jones when he talked about democracy, democracy, democracy. There’s accountability if you make sure that the Minister is responsible for the inquiry and the decision making that the Commerce Commission is directed to do. For example, I know Mr Jones would love to see an inquiry into the real estate sector. Now, you know, good luck to him putting that forward to the Commerce Commission, and good luck to him for the public, because, you see, the public can see straight through the idea that investigating the real estate sector would just be a total waste of taxpayers’ money. We know it’s an extremely competitive environment in which those businesses operate. So there’s accountability, because if Minister Jones did get that through and did say that real estate agents are going to be investigated—imagine the cost associated with that across all the agents that we have across the country, and for no benefit. The accountability—which is my point—is such that Minister Jones will get voted out. I totally agree with Minister Jones. Minister Jones’ point is that it’s democracy, democracy, democracy.

The other problem is we’ve got a Commerce Commission who has no accountability. They might decide to investigate something that—no idea—no one really cares about. So, therefore, if no one really cares about it, it’s not in the public interest to investigate it. So if the politicians haven’t raised it, why would the Commerce Commission even think that they could possibly justify an inquiry into something that, for example, Mr Jones hasn’t thought of, or Minister Faafoi? We here are much more interested in the public interest than the officials. The officials will struggle to demonstrate that they have the public interest at heart if a Minister can’t do that, because a Minister will have—and must have and needs to have—the public interest at heart, because if he or she does not, the polls will kick them out, and that’s the way it should be.

So my issue here is around governance. At the end of the day, the voter, who’s the taxpayer, is paying, and the taxpayer is able to demonstrate whether they believe the Government of the day is doing the right thing, is putting the right things before the Commerce Commission, putting the right inquiries before the Commerce Commission, by their vote. Whether it’s a real estate inquiry or a supermarket inquiry that the Minister might want to investigate, I would suggest that would be a very silly thing to do, because the public will rebel against that, and that’s a good thing.

So that’s the check and balance that is missing in this bill as it stands today, which is why, obviously, Mr Hudson’s Supplementary Order Paper 139 is an excellent one, because it gives the power to the Minister to veto any silly inquiries suggested by the Commerce Commission. Remember, they just want to stay in their job, so they’ll be putting as many inquiries—that’s the incentive that’s—[Time expired]

Madam Chair, thank you very much. It’s time for some common sense to be injected into this debate. We’ve just had a raft of exhibits that represent special pleading for corporate New Zealand. They serve up this notion that, somehow, Ministers—without looking at their own track record—are going to show less interest, or perhaps a dangerous level of interest. My response is: Countdown. In 2013-14, we took a host of concerns to the former Minister, Craig Foss—widely recognised, sadly not spoken about today. Did he move forward and support an inquiry into the egregious conduct of Countdown, ripping off producers, not well serving ordinary families but gouging the heartland of New Zealand’s productive sector? No. In fact, he went to John Key. John Key was totally uninterested. So, with my characteristic modesty, it fell to the first citizen of the provinces to stand up and take on Countdown.

What did we do? We went to the Commerce Commission, only to find, eventually, that they had inadequate power. Today, we have the National Party MPs saying they’re going to vote for this bill, largely because they’ve recognised that in their nine years they did jack. Now they’ve dreamt up a way of saying, “Ah, but you can strengthen the bill if the Commerce Commission is required to come and get the permission of the equivalent of Craig Foss.” Well, we know that that will not actually come to pass—I’m not talking about my Polynesian cousin in the chair there, Kris Faafoi; I’m talking about the fact that we just look backwards to see the future. When we look back, we have absolutely no confidence that if characters of that nature are back, God forbid, on this side of the House again, they will take the lance to destroy that pernicious behaviour which passes for the ordinary course of events in banking, in insurance, in the oil industry, in the supermarkets. They all require the laser-like attention of the Commerce Commission because they enjoy extraordinarily large privileges in New Zealand society, the banks in particular.

I would say this: don’t ever forget the fact that it was the Aussies who actually underwrote their banking system, and after the Aussies had done that, that then spilled over into New Zealand and Dr Cullen had to give quite a hefty guarantee to the banks. So why should the banks not be required to submit their information, like the oil industry, to an enhanced and empowered Commerce Commission? There’s not a single Kiwi—individual, business, whānau—who does not suffer the full impact of banking decisions and banking policies. Without a word of a doubt, which is why I’m very, very happy to announce that at our party conference we actually passed a levy, which may or may not see the light of day—sorry, a remit, which would require a levy, but that’s more for a political discussion, and I’m here in a constitutional role today, ensuring that the nonsense being talked about on the other side of the Chamber is called out for what it is.

They had a chance to tame corporate behaviour over the last nine years. They won’t do that, because they are the political extension of corporate New Zealand; on this side of the House, we’re not. We stand up for the provinces. We stand up for small to medium sized enterprises. We stand up for ordinary, garden-variety households that are struggling to deal with the pernicious effects of monopolistic behaviour in oil companies, in supermarkets—look, the list could go on, and for fear of exhausting the English language I won’t say too much more on that list, but rich it is—an array of targets, and it’s absolutely legitimate for the Commerce Commission to be given that power. Now, if they use the power egregiously, the High Court and the inherent jurisdiction of the High Court stands there willing to receive complaints, and the High Court will move against the Commerce Commission. The notion that somehow we’ve weakened the Commerce Commission is an absolute load of codswallop.

What will actually happen is that the message will go out to the executives and the decision-makers in corporate New Zealand—sneaky, egregious, manipulative behaviour will now be shown the full light of disinfectant sunrise as a consequence of this side of the House agreeing to pass the bill.

Thank you, Madam Chair. National supports the bill, and I’d like to acknowledge the officials who came to the Transport and Infrastructure Committee and were mighty impressive with their contributions and their help with drafting this bill. It amends the Commerce Act 1986 to introduce a market studies regime. I’ve had the pleasure of hearing from the Minister Kris Faafoi, and I have a question for you: why is he not in Cabinet? He’s the best they’ve got.

💬 Kiritapu Allan: Relevance.

He’s the best they’ve got. So, very relevant—very relevant. So I support your application to Cabinet.

This bill says that either the Commerce Commission or the Minister can initiate a market study if it’s in the public interest, what’s best for the consumers. On the select committee, we heard a reference to having an enforceable undertakings regime, which gives it teeth, because I understand that the cease and desist regime previously was rarely ever used—didn’t have any teeth. So we support this bill because it’s, essentially, our work—it’s, essentially, our work—but I think the Government needs to axe the fuel taxes.

Now, Minister Faafoi asked the question before—

💬 Kiritapu Allan: Relevance.

—well, he asked a question, so I have to answer it—what we would axe out of roading projects when we axe the tax. The trams—the billion-dollar trams, multi-billion-dollar trams. Axe those trams, that’s what I’d say. We’ve got record high fuel prices, so it’s a real burden on our economy. It’s really hurting families, it’s really hurting small businesses, and it’s hurting rural New Zealand. It’s really affecting the cost of living. Everything that’s transported on the road has gone up in price—the cost has gone up.

I’ve got a constituent in my patch who has a trucking company, and when I went to see him during the campaign 18 months ago, things were going all right for him—he was trucking along. His fuel bill has nearly doubled—it has nearly doubled—since 18 months ago, and he passes that price on to his consumers. The Gull service station—we’ve got the Gull service station down the road—had diesel at under a dollar, and now it’s $1.60, and he passes that on. His fuel bill, on average, was around $10,000 a month, and now it’s close to $18,000. That’s a massive increase in cost.

The Government seized on the Commerce Act. It’s come along at the right time for them to say we’re going to have a market study. But I can save them the cost, because most of the increase is taxes. I remember Jacinda Ardern during the campaign saying, “No new taxes.”—no new taxes. She said that during the election campaign—

💬 Hon Jacqui Dean: “In our first term.”

“In our first term.”—no new taxes. Man, are they hitting us with taxes. Clearly, they’re spooked by the community anger about this.

So a market study—it’s a lengthy process. It’s going to take at least 12 months, so there’s no immediate relief to motorists. It’s going to take at least 12 months, and it’s going to be a huge burden on businesses—it can be a huge burden on businesses—so it shouldn’t be taken lightly. We support the idea of market studies—we do. We just think there should be some ministerial oversight. They should have a veto right. Commerce Minister Kris Faafoi estimated the cost to be around $400,000, but the officials have said that figure’s more likely a million dollars or more. So he’s way out on his estimates, but I ask you this question—this really important question: why is he not in Cabinet? Thanks very much.

Madam Chair, thank you. I’d like to thank Matt King for being able to have the rehearsal of his general debate speech this week. Alastair Scott raised some issues for which I have concern as the Minister of Commerce and Consumer Affairs, and, again, it goes to show, I think, some of the confused messaging that the National Party has had during this Part 1 debate. Earlier in the debate, former Minister of Commerce and Consumer Affairs Jacqui Dean was talking about the Commerce Commission people—they’re nice people—but then what concerns me is that we have a member of the Opposition calling into question the integrity of the Commerce Commission, saying that they wanted to stay in their jobs as a ruse to making sure that they could initiate market studies. Now, I’m hoping that that is a careless remark from the member, but I think that the Commerce Commission has a lot more integrity than that. To the suggestion that Mr Scott made that they may, willy-nilly, initiate market studies as a ruse, as I say, to keep their jobs is both simplistic and, I think, stupid and dumb on the member’s part.

I’m a big fan of independence of certain entities within the Government framework, the Commerce Commission being one of them, but for the member to suggest that the Commerce Commission would be silly and initiate market studies because they wanted to stay in their jobs I think crosses the line, to a degree, and doesn’t show due respect to an entity that is very important in terms of the enforcement of the Commerce Act. The debate can be robust in this House, but the member might want to rethink his remarks. I’ve only been the Minister of Commerce and Consumer Affairs for one year—for 12 months—and all my dealings with the Commerce Commission have been ones with integrity. I know that there are points of difference of opinion in and around this legislation, and if the Opposition thinks that the members of the Commerce Commission are good people, that’s fine—that’s an opinion—but to suggest that they might use the market power initiation to “keep their jobs” or stay in their jobs I think might need a little bit more thinking from the member involved.

Thank you, Madam Chair. I’d like to respond to some of the earlier comments of the Minister in the chair, Kris Faafoi. Before I do that, I just want to respond to Mr Jones’ contribution where he was talking about Countdown supermarkets, his concerns, and how the Government—apparently, nothing happened. Well, Mr Jones must have a very short attention span, because in February 2014 the Commerce Commission announced it was going to undertake a study around those allegations, and on 20 November 2014 they reported back.

Just to make it clear, their chief executive said “the allegations … against Progressive … were serious and the Commission had undertaken an extensive and thorough investigation into those allegations.” They also remarked, “The Commission [did] not believe that Progressive has breached any of the laws it enforces and it will not be taking any action against Progressive.” So for Mr Jones to suggest that the laws were somehow inadequate or the Government somehow didn’t do anything is patently incorrect and in no way supports this bill or its provisions, because what the Commerce Commission did there is it used existing powers to investigate a single market participant. Market studies are not about single market participants; they are about entire markets, and the Commerce Commission have been absolutely clear on that. In order to undertake a market study, they will have to study the breadth of the market across all participants—large, medium, and small.

So when Mr Faafoi made the remark that he thought small businesses would welcome this change—small businesses are the ones who are disproportionally going to be impacted by the imposition of these studies. The commission have acknowledged that they’ll have to include them in the study in order for it to be a market study, and those businesses have fewer resources to deal with them. But all businesses, whether they’re small, medium, or large, can only respond to the impost of a market study by seeking to recover those costs against their consumer base. So it won’t help bring prices down. Unless it finds some egregious findings and recommends changes in law, it’s not going to bring prices down, and, actually, the undertaking of the studies themselves is going to put upward pressure on prices.

Look, I don’t think Mr Faafoi also understands the impact that small business can have on a market. I think that for the consumers it’s actually very positive. For instance, if he had spoken to people in the fuel services industry—petrol companies—he might realise that, for instance, in the Auckland market, one of the fundamental drivers as to why that’s such a competitive price market is not actually Gull—it’s not actually Gull. It turns out that over 1,200 of the 1,500 service stations around New Zealand are mum and pop - type operations, and in Auckland it is those small independents that drive price movements in petrol and diesel across the city. It is people who buy their petrol from a supplier and make their own decisions on how to price it that drives the price down. Then they have the big players reacting to them.

So what’s Mr Faafoi’s answer? “Oh, I’m going to penalise those small players—I’ll undertake a market study.”—huge cost impositions on them, having to provide the same data that BP and Z Energy and Mobil have to provide. So, Mr Faafoi, your proposition here is not going to protect those businesses; it’s going to put cost impositions on them, which is all the more reason why it should be Cabinet, through the responsible Minister, that has the final say as to whether or not a market study is undertaken, because Cabinet will, as its elected members—it’s their job, it’s their fundamental reason for being, to understand what any decision will mean for constituents, for people in our communities, for businesses, for business owners, and of course for consumers.

The other point Mr Faafoi raised: he said, in the first 15 minutes of this Part 1 debate, that National Party members had not mentioned the consumer once. Well, that’s troubling because for some reason Mr Faafoi doesn’t understand that a well-functioning market is good for the consumer. That’s what people on this side of the Chamber were saying. So when he claims they weren’t mentioning the interests of the consumer, the whole comments from this side are in the interests of the consumer.

Mr Faafoi might want to read his principal Act again, because the objectives of the Commerce Act make it clear that it is about protecting the interests of consumers not just through prices—no—but through innovations from business. Mr Faafoi, businesses that are being smacked with extra regulation and extra cost not only don’t have that spare profit to innovate with but, quite frankly, it will erode business confidence even further and the likely outcome from that is that business will be less likely to innovate. It will be the consumer that suffers. Support the SOP, Minister.

Thank you, Madam Chair. A lot of the debate this afternoon has, quite rightly, centred around the initiation of a competition study or a market study. The position that the National members have expressed in various ways is that by supporting Brett Hudson’s Supplementary Order Paper (SOP) 139, which puts, effectively, ministerial and Cabinet oversight over a market study, it actually protects business in New Zealand. It protects business—both large and small business—in New Zealand from a Commerce Commission - initiated study, which, in the view of the current Government of the day, may or may not be required.

I think we need to reflect a little bit on the meaning of leadership and our representative parliamentary democracy which we have in New Zealand, where the current Minister of Commerce and Consumer Affairs, the Hon Kris Faafoi, represents his electorate, he comes to Parliament and is given the honour and responsibility of being a Minister of commerce, and yet, very quickly after having been in receipt of that honour, he just puts it across to one side and gives responsibility back to the bureaucrats. So the very reason why, when National were in Government, Cabinet approved a ministerial and Cabinet sign-off of a market study was to protect New Zealand businesses and to protect New Zealand consumers. But this Government has cast that aside. It is not the Commerce Commission’s role to protect small businesses, but it is that Minister’s, and that Minister has quite happily and quite trustingly—touchingly trustingly—cast that responsibility off to one side.

I do regret that this Government has taken a policy position which seems to, effectively, be the easy way out—the path of least resistance. “I know there’s a market study on, but it wasn’t my decision. We’ve got to allow the bureaucrats to take charge of decisions such as a market study which is going to impact on your business. I’m terribly sorry that it is costing you a lot of money, but it’s not my fault because I must let the bureaucrats lead this.”—I mean, isn’t that a ridiculous policy position?

That is why I support the SOP of Brett Hudson, which reinstates the very sensible approach of having Cabinet doing what Cabinet should do—that is, take responsibility for a measure which is going to be intrusive and expensive, and probably worth doing. But the reason National advanced the Commerce Act amendment work was because, in certain circumstances, very carefully thought-out market studies are an absolutely necessary tool for the Commerce Commission. They’re a tool for the Commerce Commission, but they should not be something that the Commerce Commission can initiate.

However, we now have a situation where the Prime Minister of the day has been judge and jury, talking up market studies, noting that customers are being fleeced at the pumps, and then inviting other Ministers—as if it were some kind of lolly scramble—to come up with ideas of their own for market studies. How enticing and how exciting is that for a Minister who can’t think of anything else better to do with their time—“Yes, let’s have more market studies.” Well, that’s all very well, but doesn’t that completely ignore the fact that it’s not the Ministers who are initiating market studies? Aren’t they just arguing against themselves?

All of this points to a woeful lack of good policy development within this Government. What this points to is a Government which has put yet more taxes on the public of New Zealand. The absolutely inevitable thing has happened. They’ve put a regional fuel tax on Auckland which we are feeling in North Otago—diesel, by the way, is $1.86 at the pump. No wonder small business—

💬 Hon Shane Jones: Shop around.

Ah, and there we are. There we have the “Clown Prince of the Regions” saying “Shop around.” How do you shop around in a small town—[Time expired]

Before the debate on this part closes, I want to make sure I make some points, because I do feel it coming to a natural end. Can I just respond to some comments made by the Hon Jacqui Dean, where she said that it’s not the job of the Commerce Commission to protect small business. Well, I’ve got some news for her: it actually is. To make sure that businesses flourish in New Zealand and that competition is fair—that’s one of the key outcomes of what we asked the Commerce Commission to do. So I’m quite troubled that we have a former commerce Minister in the Opposition who fundamentally believes that it’s not the job of the Commerce Commission to protect small business, which should also be troubling for the Opposition.

I also want to point to an argument that has been made by a number of members opposite in and around their disdain for the fact that the Commerce Commission would go and ask businesses of all shapes and sizes within a market to get information. Well, my simple question to the members opposite—as they have been saying during this debate this is a piece of National Party legislation, allegedly—is how would it have been different under you? Where in the bill would it have been fundamentally any different in the collection of that information?

Judith Collins, a former Minister herself, has said that in the fuel market study, the previous Government didn’t have the ability to go and collect information and data, and Alastair Scott himself—in amongst a couple of shocking things—made this point that we need to make sure that we’ve got the information and the data. The Commerce Commission will only do that with businesses, both big and small, if it finds it necessary and desirable to get the information that it needs to make the recommendations and the findings to the Government as to whether a market is operating effectively.

So can I just reiterate the point to the members opposite: you might have to start bringing your arguments together to be clearer. I’m not sure whether you actually support or don’t support this piece of legislation. I know you’ve changed your minds as to whether or not you’re going to be voting for or against it, but I suggest you don’t poke holes in your own arguments by saying this is a National Party bill and taking credit for it, but then end up making arguments against the details of it. It doesn’t look good, especially when you change your tune in the voting.

💬 Andrew Falloon: Madam Chair?

💬 Brett Hudson: Madam Chair?

CHAIRPERSON (Hon Anne Tolley): I call Andrew Falloon.

Thank you, Madam Chair, and I apologise to my senior colleague Brett Hudson. Look, I just want to respond to Minister Faafoi for a moment, because I think we’ve been reasonably clear—in fact, very clear—this afternoon about what our position is. Our position is that we support the overall intent of the legislation. We support the legislation as it was drafted by the previous National Government. What we don’t support are the changes that have been made to the legislation since the new Government’s come in.

We all support the bill because we do think that it is, overall, a worthy piece of legislation, but we don’t support some of the aspects around it that don’t provide for democratic oversight of decisions made by the Commerce Commission, and that leads me to my point that I want to make to begin with.

In my previous contribution, I spoke largely around petrol tax and, I guess, the reason that the Government’s brought this legislation to the committee this afternoon. But just at the end of my last contribution I was making a point in support of Brett Hudson’s Supplementary Order Paper 139 around why we should require the Commerce Commission to come to the Minister and seek his approval before they go off and do their market study. I pointed to new section 51E, inserted by clause 4, which says that a Minister must respond to a competition report. So the bill as it stands already acknowledges that the Minister plays a fundamental role in this process, that the Commerce Commission has to come back with their report, hand it to the Minister, and the Minister has to respond. All we’re asking is that that process is, I guess, frontloaded, where the Commerce Commission has to come to the Minister to begin with to seek his approval to go off and do a market study.

That leads me to a couple of questions I have for the Minister. Again, he’s been very good at answering our questions this afternoon. The first one is, particularly where the Commerce Commission have gone off and decided that they want to hold these market studies themselves, will the Minister, or will the Commerce Commission, put a limit on time? As we’ve heard from the Prime Minister recently in relation to petrol tax, this is an urgent issue apparently—this is an urgent issue. Well, our concern on this side of the Chamber is that all they are doing is kicking it down the road. These market studies could take a year, two years, three years, or more, and all the Government will have to do during that time is say, “Oh yes, we’re holding a review. We’ve got this market study; the Commerce Commission is looking into it.”, and it won’t actually report back until, potentially, the next term of Government.

The second question I have for the Minister is in relation to scope, and again I’ll use petrol as an example. If the Government pushes ahead with their plan for a market study on petrol, which I think is not a silly idea—if they do do that—will they put a limit on the scope of that inquiry to certain players in the industry? What we’re worried about is some of those smaller businesses, particularly petrol stations—and, let’s be fair, individual petrol stations don’t really have a lot of say over what the price of petrol is. Will the Commerce Commission start knocking on the door of the Allenton gas station in Ashburton and say, “You need to turn over all of your records. You need to turn over your books. Tell us what your business is. Tell us what your margin is.”, because that would be quite a frightening experience for a lot of small business owners.

Exactly the same goes for the dairy industry. I know Minister Jones across there has had a lot of words to say about Fonterra, which is fair enough—he’s entitled to those views. But our concern is that if he wants to go off and make those statements about the dairy industry, that might force the Commerce Commission into undertaking a study into the dairy industry, and if there was going to be one of those studies, what would be the parameters of that? Would it be a focus on Fonterra? Would it be a focus on farmers? Would you have the Commerce Commission turning up to dairy farms and saying, “Turn over your records.”? Would it be the Commerce Commission turning up to your corner dairy and saying, “Turn over your records. We want to know what your margin is on a litre of blue top milk.”?

I also have another very brief question to ask the Minister, which is just in relation to new section 51C, which relates to consultation on a draft competition report. In new section 51C(2), it says that “In preparing its final report, the Commission must have regard to any comments received on the [final] draft”. My question to him is: when it says “must have regard to”, what does that mean in terms of if there are factual inaccuracies in the report? “Must have regard” can mean, “Oh yes, we’ll listen to you, but we don’t really care what you have to say.”

My final point in this five-minute address is just, I guess, the overall signal that this legislation sends. Shane Jones, again, has made lots of comments about Fonterra, he’s made lots of comments about supermarkets—just this afternoon he’s been making all sorts of comments about banks. Is this going to be a vehicle for Shane Jones and the Minister to go off—[Time expired]

I move, That the question be now put.

Oh, I think we’ve got room for one more.

Thank you, Madam Chair. I want to talk principally about the reporting elements of this and the Minister having the ability to have regard to or to follow those, or not. But, before I do, I just want to make a point to Minister Faafoi, who stood to say that the Commerce Commission in a market study may choose to talk to a broad range of participants, or may choose to talk to small or medium sized businesses or may not. Well, in actual fact, in the oral submission for the Commerce Commission at the Transport and Infrastructure Committee for this bill, in response to a specific question about would a market study require the commission to talk to participants, small and large, across the breadth of an industry, their response was yes; in order for it to be a market study, they would have to talk to a broad range of participants. That, by definition, means they will have to talk to smaller and medium sized businesses—not all of them, but at least some of them—in order for it to be a market study.

So the Minister might want to reflect: did he mislead the committee when he said that they have the choice of whether or not they might talk to small or medium sized businesses? In order for it to be a market study, they will have to, or otherwise what they undertake will be something of a sort of market study. So is the Minister actually suggesting that a market study may not be a study of an entire market but it may be just whatever the Minister or the Commerce Commission might want it to be on any given day of the week? In their submission they were clear it should be very comprehensive, very long, very resource-consuming, and with a broad range of participants.

The reason I stood to take this call—my final call on this part, because I know I am limited to four—to talk about the reporting is that it was offered as a protective mechanism. It’s this idea that, well, the Minister doesn’t have to or Cabinet doesn’t have to accept the recommendations that the Commerce Commission may make as the outcome of a market study is somehow, in itself, providing a protection for industry. And that is true; I mean, the Minister won’t have to necessarily adopt any or all of the recommendations that might flow from the study, but the problem with that is that the study’s already been undertaken. The impost, the cost on the taxpayer, and the cost and impost on all of those businesses will already have been felt because, of course, by definition, the report of findings can only happen after all of the investigative work has been undertaken.

That is the ambulance at the bottom of the cliff, to use an analogy. My Supplementary Order Paper 139 is the fence at the top, because it provides a level of governance to ensure that the potential benefit that can be foreseen from the study warrants the total cost—not just the cost on the budget of the Commerce Commission but the total cost of the impost on all of the New Zealand businesses across that market; large, medium, and small—and that it is worthwhile placing that impost on them because the benefits which might come from the study and its recommendations warrant that. To wait and see until the end if, actually, the study that was undertaken was worthwhile because it actually uncovered some things that should be changed is leaving it all a little bit too late, because if the commission doesn’t find anything of great substance that somehow warrants a fundamental change to that market, then there will have been a huge amount of cost imposed on, particularly—my concern, obviously, is for small and medium sized New Zealand businesses, because they are less in a position to deal with that.

But, actually, even for the larger businesses, you know, they, by the nature of their businesses and their shareholding, will look to offset the cost of these studies against their customers somehow through prices. It may be deferred discounting. It may be that a price that would have gone down this year won’t go down because of that additional cost elsewhere to their business. But, fundamentally, if you go through an entire exercise and there’s nothing of great substance required to change at the end of it, that can have an incredibly high impost, not only of taxpayer spending because of the consumption of that Commerce Commission budget and Commerce Commission resource—because they told us they won’t be hiring additional full-time people and dedicating them to market studies. These are coming out of existing resource. So for that period of time, there’ll be other things they won’t have been doing because they’ll be doing the studies, and if at the end of all that we get to the point where there’s nothing that really needs changing, then there’s a huge impost on New Zealand and on the taxpayer for no real benefit.

So I’d implore the Minister one last time: place the fence at the top. Place a level of governance over the top and have ministerial approval for self-initiated market studies.

I move, That the question be now put.