Commerce Amendment Bill

I move, That the question be now put.

Thank you, Madam Chair.

💬 Hon Shane Jones: Wake up!

It’s wonderful to move on to—oh, I was just texting my daughter, Mr Jones. I’m sorry if that’s a terrible thing in your eyes. Some of us care about our children.

On Part 2, “Specified airport services”, this is a part on which, as the bill was introduced and went through the Transport and Infrastructure Committee, we had particular issues.

💬 Hon Shane Jones: I raise a point of order, Madam Chairperson. At a time of heightened sensitivity to family concerns and the damage that bad politics does, I take very strong exception to that member’s suggestion that I, or anyone else, do not have my seven children or my nine mokopunas uppermost in my mind.

CHAIRPERSON (Poto Williams): Mr Hudson—

Thank you, Madam Chair.

CHAIRPERSON (Poto Williams): No, Mr Hudson. I think perhaps—

I withdraw and apologise.

CHAIRPERSON (Poto Williams): Thank you.

The airport services is an area of the part that we had issues with coming into the Transport and Infrastructure Committee, but of which I will acknowledge the officials, who, upon listening to the submissions that were received on this part, have made some significant and constructive changes to. There are still two particular areas of concern that we have around this, but I do want to at least begin by acknowledging that the attention they paid to those submissions and the changes they have made have gone a great way to, from our perspective, making this change far more palatable.

The two areas that are still concerning but which we’re not going to allow to stand in the way of the passage of this legislation are, first, a comment I made when the departmental report was presented to the committee was that the basis behind the argument that a full inquiry into amending the particular regulated services or type of regulation, particularly the type of the regulative method on airports that are currently regulated, was acceptable to be done under a truncated process because Parliament had already considered that those airports should be regulated.

I think that, actually, we have to take Parliament at its full extent of word and knowledge when it passes legislation. Unless we can find very clear statements from Parliament at the time, I don’t believe that the fact that Parliament agreed to a certain amount of tier-two regulatory power at one time inherently means that Parliament would have no issue therefore with that being changed.

My view on this is that when Parliament passed that law at the time, it fully appreciated that what was in place was that those airports would be regulated under an information disclosure regime and that it wouldn’t necessarily be an easy task for that to be changed, and, if it were changed, the process to change it would be as comprehensive as the process that put it in there in the first place, in terms of the inquiry.

So we don’t actually think it was established satisfactorily during the select committee process that there was a prior argument, a prior evidence, that changing the ability for how an inquiry might be undertaken under currently regulated airports and the truncated nature of that—how that was already established to be OK in the eyes of Parliament. The argument was “No, this is actually a matter for Parliament to debate from the very beginning to the end.”

The second point, and I think it’s the more fundamental one, actually, to this, is that in the regulatory impact statement that accompanied the introduction of this bill, officials noted that there is no evidence that the current regime of information disclosure is not working for those regulated airports. It also noted in that same regulatory impact statement that even if there were a problem, the impact of landing fees on consumers—and the Minister of Commerce and Consumer Affairs has been telling us how we should all be thinking about consumers in everything we talk about in this bill—would be minimal and far less than the other competitive pressures on airfares.

So my argument there is I don’t believe it was ever established that there was a fundamental need to take power away from Parliament—because that is what this does—and place it actually in the hand of the Government, the hand of the Ministers, the hand of the Executive Council, to be able to decide to change the regulatory environment for these airports that are currently regulated, instead of sending it back to Parliament to decide whether or not there should be a change, should it come to pass that there is sufficient evidence, or any evidence, quite frankly, that the current regime is not working and, therefore, that it should be looked at to change.

That simply was not ever satisfactorily—well, it wasn’t actually truly canvassed to be honest, but it was never evidenced. There was some talk about the potential that the information disclosure means that airports could play a bit fast and loose; they could choose to try to not disclose information or all of the information, or they could argue a lot to try to delay things. But I come back to the point that the officials made on the introduction of the bill: that they had no evidence that that was happening. There was no evidence that the information disclosure regime was not working as intended.

Now, I think it’s actually a fundamental part of the legislative process here, which is why, when legislation comes in that is creating or amending regulation-making powers—that, one, the Regulations Review Committee was established in the first place, but that it goes off to that committee for comment. What is happening is effectively the outsourcing of parliamentary sovereignty, because it’s Parliament that makes the law, not the primary legislation. It’s not the Government; it certainly isn’t the officials; it is Parliament that, through the process of debate here across all stages, makes the determination of whether or not a law will be enacted in the first place or amended. To then put greater latitude into regulation-making powers is to outsource that decision from Parliament as a whole to the executive wing, to the Government, to the Executive Council on advice from officials. It’s a big step because it takes the decision away from 120 members and places it in the hands of—I think it’s roughly about 29 members now—25 members, shall we say, in Cabinet, plus the Governor-General.

So I actually think it is—well, it should be—contingent on the Government, given that it’s their legislation, establishing the need to begin with. So giving the evidence that says what we have today isn’t working and this is why Parliament shouldn’t wait any longer but should hand the power over to the Government on its behalf to make the change when Government feels that it might become a greater need. That is in effect what the amendments in Part 2—prior, particularly, to the amendments the officials recommended in the departmental report. It’s what those amendments do. It removes the authority from Parliament and places it in the hands of the Government, and what is Parliament for if not to scrutinise the work of Government? But by doing these things we take that scrutiny away. After this debate it probably will in fact—because we have given our support to the legislation as a whole—enact that.

So I do acknowledge, again, that the officials did listen to submissions on this part of the bill. They did make changes. I particularly commend the amendments that they did offer up around the need to properly assess the costs versus benefits, particularly if there is a move to seek to add additional airports into the regulated airports scheme, but also if there are new services—not particularly changing those current regulated airport services, but if there are new services to be brought on—the Commerce Commission will have to undertake a cost-benefit study on that, and will have to provide that report that shows that it will be worthwhile, and why it would provide those additional material benefits.

But that doesn’t take away, I argue, from the fundamental point that while it is all good that the bill that has been before the House has proposed amendments to make it better than it was on introduction, there was still not an establishment that the need to change, to add the regulation and to amend the existing regulation—it was not evidenced that there was a current need that would require that Parliament release some of its sovereignty to the Government to make the decision on its behalf. Hopefully, were there to be some future evidence, that might actually give Parliament cause to want to change it. Minister, if that comes about—because there’s no evidence of a problem today—why not bring that back to Parliament then? It’s what we exist for. Let Parliament make that decision when it’s required. Minister, please answer that one.

Thank you, Madam Chair, for the opportunity to speak to Part 2 of the Commerce Amendment Bill. This relates to the regulation of airport services, which, in my view, is a very important but probably understated part of this bill. We’ve talked a lot this afternoon about other parts of the bill, but this is a very, very important part, which I think is worthy of a lot of debate.

I want to draw the committee’s attention to the fact that, in the bill, it specifies three airports, they being Auckland Airport, Wellington International Airport, and Christchurch International Airport. So my first question for the Minister is: at what threshold does an airport become large enough, or provide enough services, to be included in that list? As we know, Auckland, Wellington, and Christchurch are our three largest centres. But if you look around the country at the moment, there are a large number of airports which are increasing services, and they’re increasing the number of airlines that are flying in, which is very good to see. And so the example I’d draw the Minister’s attention to specifically would be Queenstown. Queenstown now, I believe, has more airlines flying into it than Wellington Airport does, which is very good for the South Island and very good for my part of the world. So that’s my first question to the Minister: at what point does an airport become of a scale or of a size to be worthy of being included in this list?

The second question I have is just in relation to a point that Brett Hudson made, which is in relation to oversight by Parliament. The piece of legislation before us talks about strengthening the regulatory regime. Of course, strengthening the regulatory regime usually means imposing more regulation. It also goes on to say: “the commission and the Minister to consider when deciding whether to impose a stronger type of regulation on airports in the future”. And that, I guess, on this side of the House, is of concern to us: that a Minister could go off and willy-nilly decide to put additional regulations on without adequate parliamentary oversight. Of course, Ministers always have the opportunity to put on regulations, but our question, I guess, is: what oversight does Parliament have of that process?

The third point I want to make is just coming back to other airports, because my electorate—I’m very fortunate—has three airports: Timaru Airport, Ashburton Airport, and Rangitata Island Aerodrome, which, if you haven’t been there, I thoroughly recommend. It’s a great part of the world. And I have this hope, I guess, that Timaru Airport will one day provide services to the east coast of Australia and perhaps as far as the Pacific. So I have concerns that if this piece of legislation, as it’s currently drafted, specifies three airports, how far will the Government want to go with that? Because what they are talking about is increasing regulation on those three existing airports, but what plans does the Government have to increase regulation on other airports other than those three specified airports?

The last question I have is just coming back to how those airports are determined. The bill as it’s currently drafted talks about—and I’ll read one of the three examples, because it’s Auckland, Wellington, and Christchurch airports, but it says in here “the company (as defined in section 2 of the Wellington Airport Act 1990) that operates Wellington International Airport or any subsidiary of, or successor to, that company …”. And so the question I have for the Minister is: who determines what the successor or subsidiary is? Because, as we know, companies can structure themselves in many, many ways. Look at Air New Zealand, for example: they operate multiple companies under the banner of Air New Zealand. They also have Air Nelson, they have Mount Cook Airline, and until a couple of years ago they also had Eagle Airways. Airlines and airports and companies in general construct themselves in such a way that they can have multiple subsidiaries, and so who determines, under this Act, what companies are or what subsidiaries are, as defined by this bill?

That also relates, I guess, to the successor aspect. So, again, unfortunately, companies do go under from time to time, and they do restructure themselves, and it can be very difficult sometimes for regulators to determine what a successor company is. So my last question to the Minister is: under this Act, who will determine who the successor company is if Wellington International Airport, for example, went into liquidation, and a new company came in to take over Wellington International Airport—that would obviously be the successor, but if they were to structure themselves in such a way that that was to become unclear, who would determine who the successor airport and company was?

Thank you, Madam Chair. I’m really looking forward to hearing from the Minister about what the problem is that we’re wanting to solve, because from my experience of travelling around the country and doing a lot of flights, our airports generally seem to be operating very well, and I’m just not quite sure what the problem is. So I think one of the issues that we always need to keep in mind when we are wanting to regulate even more than what we currently do is that we need to understand that almost all regulation brings with it cost.

I’ve heard the Minister before—I thought quite unjustifiably, actually—commenting that this side of the Chamber wasn’t talking enough about consumers. So, as a consumer, let me say, actually, this matters. It matters because cost is added, and that cost is passed on to consumers for the use of those airports, whether it’s through airline tickets or, in the odd case, where it’s some other form of levy on customers who are travelling. So I’m not sure what the problem is. Our airports seem to work very well. The only one thing I’d say for Auckland Airport: please sort out the roading that you also control, and then I’ll be even happier. And, by the way, quite a lot of the issues there are issues around security that tends to take quite a long time if you’re there at the wrong time of the day. So what’s the problem? Why do we need to have this? We understand absolutely the fuel issues. What we don’t understand is what it is that we’re talking about here and what is the problem. What I see are airports that are operating very well around the country.

The odd other issue that I’ve seen is where civil aviation has not been able—say, was it in Napier?—to guarantee that there would be air traffic controllers. Those are the sorts of issues that are probably well outside of the realm of this proposed legislation, and yet I would have thought were probably quite important. So I don’t think that’s the role of the airport companies; I think that is the role of the Civil Aviation Authority (CAA), and these are the things, I think, that we would want to see more. I’m not quite sure what is going wrong at Wellington Airport or Auckland Airport that needs to have specific inquiries into it—all of which I know will cost those companies tremendous amounts of money, which will then be added on to tickets when people travel there. So I would really like to understand that.

I also note that replaced section 56F of the Commerce Act, set out in clause 10, makes it quite clear how a commission or inquiry is to be triggered, which is that the commission must hold an inquiry if required to do so by the Minister and also may hold an inquiry on its own initiative. So I’m not quite sure why we’d want to have it to be both the commission and the Minister. Why not the Minister? Obviously, the commission would come to see the Minister and would speak to the Minister who’s in the chair—who could be slightly more generous to us, because we’ve been so generous to him, quid pro quo, and all that.

He could actually—you know, if they had a problem that they wanted to solve, I don’t see why they wouldn’t go to him to discuss it. I’m sure his door is always open, as it always was when the Hon Jacqui Dean was the Minister—always willing to listen. So who’s going to pay for it? Well, the answer is the consumers. That’s who pays for it. I think that the Minister does need to realise that whether it’s fuel or anything else, every cost from a business ends up being paid for by the consumer. That’s who pays for it. There’s no point talking about business paying for it. Business will pass it on and if business can’t make a profit it won’t be in business. So let’s just be real here.

The cost of living is not something that we should think is somebody else’s issue. It is an issue for all of us and it’s one of the issues that the New Zealand public has said to us is one of the most important issues it is facing. And just added cost to everything, more regulation, less in terms of outcomes—I think we deserve an answer in the committee from the Minister as to the problem that he’s wishing to solve. And, by the way, how’s that not going to be passed on, the cost of it, to the consumer? We’ve taken his message and we’re going to talk about that.

Thank you, Madam Chair. I just want to take an opportunity to respond to some of the comments made by members of the National Party during this debate so far. Can I begin with those made immediately before I took to my feet in respect of section 56F, in clause 10, where the commission can hold an inquiry at the behest of the Minister and of their own initiative. I’m assuming the Opposition has a problem with that because it had a fundamental problem with Part 1 of this piece of legislation.

Can I just point out that this is kind of one of those quasi-operational roles for the commission. The commission is not waiting around for the Minister to tell it what to do. It has powers to make sure that it does protect consumers and competition. So, to the member who asked the question in and around section 56F(1)(a) and (b), the commission can either initiate itself or the Minister of commerce can ask it to initiate an inquiry, which I think we should see fit to it doing.

Can I also respond at a relatively high level to Mr Hudson’s concerns around the increased regulation or potential regulation for the airports in and around Part 2. In his Part 1 speech he was talking about putting a fence at the top of a cliff. In essence, I believe this is an example of where we are putting a fence at the top of the cliff to make sure that if an information disclosure regime for those airports which are currently regulated does not work, we do have the ability to further regulate. So to answer the question that the Hon Judith Collins made in terms of what we are trying to fix, I would note that the airports themselves welcome the clarification in and around this piece of legislation, but while the information disclosure regime is working at the moment, this piece of legislation, as I mentioned before, in and around section 56F allows for an inquiry to be started if we believe that the information disclosure regime isn’t working any longer.

Now, I don’t see the sense in us giving the Commerce Commission the ability to have an inquiry if we don’t give it the option of further regulation down the road, because at the moment we’ve got an information disclosure regime that works well. We can’t guarantee that it will always work well, but if it does not, if the integrity of it is called into question, then having a look at it and then having a further regulatory regime already there within this piece of legislation there ready to go, makes sure that this legislation acts, I guess, in a way as a deterrent for those airports that are regulated, which, as Mr Falloon mentioned, are currently Auckland, Wellington, and Christchurch—there would be another regulatory step available to the Commerce Commission.

So, I guess, that’s the response to the questions that have been posed so far by the members of the Opposition. Making sure that we can ask these questions is a right and proper thing to do, but, I guess, to answer Mr Hudson’s question again, not giving any regulatory ability beyond what is already there doesn’t make sense if we’re going to give the Commerce Commission the ability to inquire.

Oh, thank you, Madam Chair. First of all, I’d just like to acknowledge and thank the Minister, Kris Faafoi, for stepping up to the plate and actually trying to answer some of the issues that have been raised by members from our side. I think the first thing I would do is I’ve got to make a disclosure. I’ve got to come clean: I am a consumer. I heard earlier before that it was all about the consumer, so I just wanted to say to the Minister that I am a consumer and I do use and avail myself of airport services, as no doubt he does from time to time.

I just want to reiterate the same point I made earlier, that this is all about making sure that we as consumers get the right services and products, at the right time, and at the right price. So that’s a given—that’s a given. But here we are. We’ve got another example, I think, of the Minister being soft—soft.

The Commerce Commission has a very important role. We know that it regulates the telecommunications, electricity, dairy, and, of course, the airport industries. This legislation is particular to three airports: Auckland, Christchurch, and Wellington, of course. Of course, we’ve got lots and lots of other airports in New Zealand. Before I came to Parliament, I actually advised one of the airports—not of the three specified but one of the others—and I found it interesting. It is the most technical economic aspect, working out whether an airport is charging the right fees. You’ve got terminal fees, you’ve got landing fees, you’ve got car parking, and you’ve got passenger levy fees. But the terminal, as an example, when you come to calculate that, you have to look at their public spaces as opposed to office spaces, as opposed to areas used for airport functions. All that needs to go into an equation—very complicated type of stuff.

What this does, this piece of legislation, is that we’ve got a willing Minister pushed on to actually say, “Well, we think we need to do something.” I think the question that my colleague the Hon Judith Colleague asked was the most pithy, concise question, and I didn’t hear an answer to that sufficiently before.

CHAIRPERSON (Poto Williams): I think you got her name wrong, Mr Bayly.

Sorry, Collins.

CHAIRPERSON (Poto Williams): Thank you.

Thank you, Madam Chair. The question Judith Collins mentioned before—to the Minister—is that we haven’t had the answer to why we need this regulation. I understand that we do need the Commerce Commission to be able to get access to this information, and they are rigorous. They are rigorous. If you go trawling back through all the media reports over the last few years, the scraps, if I can use that word, between the airports and the Commerce Commission and just general scrutiny of those three major airports have been quite significant.

What this piece of legislation does is it says that we need to give more powers to the Commerce Commission to be able to go and do further work. Of course, if you look at some of the powers, one of the issues is there’s no specific process for imposing additional regulation if the information disclosure regulations are found to be ineffective. I do note that the ministry report said there is no case for that. The second thing is to make sure that the commission’s summary and analysis reports can comment on whether information disclosure is effective for a regulated supplier, introduce a truncated inquiry process to investigate the need for further regulation, and look at new types of regulation using an Order in Council. I’ve just got to say to you that the case for this needs to be made strongly, and I don’t think it has been.

The issue that we’ve got—and it’s the same with Part 1, which we were discussing before—is one of balance. It is one of balance. It is one of protecting the rights of consumers and, on the other side, having a sufficiently robust competitive situation, using the Commerce Commission as the prime agent to do that, to go and investigate and make inquiries as required. It is striking the right balance. What I’d like to hear more from the Minister is not just the word “consumer”, which is an important part; it’s one part of his portfolio. The other part is looking after commerce in New Zealand. That means businesses, large and small across New Zealand, to make sure that they have a fair go.

I raise a point of order, Madam Chairperson. I’d just like to reference a comment made by Minister Jones during that contribution from Mr Bayly which I believe was quite unparliamentary and brings this House into disrepute. The comment “He’s making it up”, clearly inferring that the member was lying, is absolutely inappropriate, and, given that member’s recent delicacy around a comment from Mr Hudson, I would suggest that it is indeed bringing the House into disrepute per Speaker’s ruling 42/3. I would ask that you require him to withdraw and apologise.

I thank the member for that point. You are correct in saying that there is some sensitivity in the committee today, and I think we are all aware of that. However, the term that the member used is one that is used often in this debating chamber and one that I don’t think requires the intervention that the member is seeking.

Tim van de Molen: Speaking to that, Madam Chair.

CHAIRPERSON (Poto Williams): No, I’ve ruled on that, thank you—I’ve ruled on it.

I raise a point of order, Madam Chairperson. Are you now ruling that the term “making it up” is dissimilar to an accusation of lying and therefore completely unrelated?

Let me just be clear, the member did not use the term lying when he made the comment. I have said that, yes, there are sensitivities in the committee at the moment. However, it is a discussion point that has been well-made in this committee and has not been ruled on. So that’s the end of the matter. We are—is someone else taking a call?

Thank you, Madam Chair. I would like, quite obviously, to talk about Part 2 of the bill relating to airport services. I also want to point out what I see as a slight inconsistency between Part 1 and Part 2. Part 1 does not require an Order in Council, or a ministerial veto if you like, around any Commerce Commission (ComCom) inquiry. ComCom can initiate an inquiry themselves, as in Part 1. But, in Part 2, it seems—and the Minister might want to help me out here—that the Minister or Cabinet or by Order in Council, you know, gets the last say in whether a short-form process or an inquiry or a regulatory investigation into the airports takes place.

So that, to me—in Part 2 where the Minister or Cabinet has the veto—is a good thing. That ensures that public interest is at the heart of the matter. It is not a bureaucratic decision. It might be a bureaucratic recommendation, but, at the end of the day, the Minister has the say as to whether that short-form process, bothering to intervene or to compel airports to disclose more information for the purposes of transparency and commercial understanding of those airports, is with the Minister. And that’s good, but it’s inconsistent with Part 1—if I can just reflect back on Part 1. That’s where the ComCom is able to initiate an inquiry without the Minister’s veto or without the Minister’s public interest at heart. So if the Minister could help me out on that one, that would be good.

The second point is around the three airports. It does seem to be, again, an inconsistency where only three airports are relevant to this piece of regulation. There are a lot more than three airports around here that have the same market dominance in their area. If it’s good for one, why isn’t it good for another, if you like? Whether it’s Queenstown, whether it’s Invercargill—I think they’ve still got an international airport in Invercargill, correct me if I’m wrong, but they do. They’d probably like a few more passengers through there, and because of the lack of passengers, maybe their prices are too high. Maybe they should be looked at. Maybe that is an issue.

In fact, where there are more passengers and more throughput and more competition, you’ll find that—because competition’s a good thing; it drives efficiencies and it drives costs down. I would expect that where there are greater traffic flows, greater levels of international and domestic transport with people coming through, you will find that they’re able to get their costs per capita really low. Where there’s an airport—even an international one—with fewer tourists and less traffic, they will struggle because of the economies of scale and the lack of throughput through the doors of that airport. So my question is: why just the three? Queenstown’s been mentioned, but I think, as I say, there are other airports and other international airports that might serve fewer people but might well be charging way too much. Let the ComCom make the recommendation.

I agree that the Minister has the last right—the veto, if you like, or the sign-off—and that’s the way it should be, because the Minister in this Parliament does have public interest at heart, and I see that as an inconsistency with the way the Minister’s argued in the first part of this bill. Thank you.

I’ll just take a short time to respond to Alastair Scott’s points that he made in his speech. First of all, he raised the issue of only a Minister being able to initiate an inquiry and asked why Part 2 didn’t have the ability for a commission-initiated inquiry. I’d point the member to new section 56F, in clause 10, on page 9, which the Hon Judith Collins alluded to earlier in this debate, where the commission can hold an inquiry if the Minister required it to do so or the commission can “(b) … hold an inquiry on its own initiative.” So there isn’t any disparity between Part 1 and Part 2, because the commission itself can hold its own inquiry upon its own initiative.

The member also asked—which I think is a reasonable question—in and around why only the three entities currently under the information disclosure regime under Part 4 of the Commerce Act—Auckland, Wellington, and Christchurch airports—are included under that information disclosure regime. It is because there is a legislative threshold in the Act as it stands now under section 52G—and I won’t bore the committee by reading it—where, if a good or service does meet a certain threshold around competition in an area—or the goods or services offered—it does come under regulation under Part 4. So it’s not to say that, in the future, other airports won’t be included under the information disclosure regime within the Act, but, at the moment, only the Auckland, Wellington, and Christchurch airports, I believe, meet the test under section 52G of the Act as it stands.

I move, That the question be now put.