Fuel Industry Bill

Madam Chair, thank you. I’m glad to see the Minister in the chair, the Hon Jenny Salesa, and I hope she’s been following the debate very closely. She may have heard just before that I was talking about the issue of spot prices and the difference between New Zealand and Australian spot prices—the mechanism—and I ask whether, in fact, she feels there’s sufficient depth in the New Zealand spot price for petroleum products. So that’s my first question, because I think that’s a fundamental sort of issue around the effectiveness of this.

The other aspect is around the terminal gate price and how that is going to operate, and her observations around that, because, again, that’s a central sort of linchpin for the operation of this bill. Any observations around that I would really much appreciate.

The officials did raise the question around the terminal gate price regime, which could impose additional costs, and the advice that was given to the Minister was simply that if the wholesale competition does not increase, then there is a possibility to adjust the industry code on a timely basis if required. My question to the Minister is: what is the time frame for that observation, and how long would it take for the Minister to adjust the industry code on a timely basis? Essentially, what I’m asking is: how responsive will be those adjustments to the code in terms of then being able to see a better competitive wholesale price be reflected into the market?

I raise a point of order, Madam Chair.

CHAIRPERSON (Hon Ruth Dyson): Point of order, Andrew Bayly.

Thank you, Madam Chair. Just to clarify, we are in the committee of the whole House. I just want to clarify, we’re following the procedure that’s been adopted recently where we ask quick questions rather than do long speeches. Is that the protocol tonight?

Yes.

💬 Andrew Bayly: Oh, good.

CHAIRPERSON (Hon Ruth Dyson): That’s not a point of order.

💬 Andrew Bayly: Well it’s clarifi—

CHAIRPERSON (Hon Ruth Dyson): Great conversation.

💬 Andrew Bayly: Clarification, at least, Madam Chair.

CHAIRPERSON (Hon Ruth Dyson): And you know that—all members will know that the Minister isn’t required to answer the question immediately, if at all. But the expectation is there that the Minister will answer questions, particularly when they’re proper questions—for want of a better term—as have been delivered. Any further questions to the Minister?

I know, I know, I know—I’ve had my valedictory and I shouldn’t be standing up, but I’m here again. I do have a couple of quick—because the spot market, the question that Andrew Bayly raises, is important. If there’s not the ability for people to compete in a market because of the illiquidity, or the lack of liquidity, in a particular area, that is a problem, and I think it’s a very good point that Andrew Bayly raised. I was interested as well in the same question and how that pricing mechanism would operate, and the Minister’s view on the issue of the spot price in a particular area being unavailable or different from a place such as Auckland, where there’s lots of storage and competition. That’s my question. Thank you.

Can I just say, before I call Jonathan, I know it’s customary that we think of it like that, but there’s no restriction at all on members who have given their valedictory seeking further calls in the House.

💬 Alastair Scott: Thank you to the—

Tim van de Molen: Please don’t encourage him.

CHAIRPERSON (Hon Ruth Dyson): Thank you—you may have encouraged me, Mr Scott.

Look, Madam Chair, before I come to my question to the Minister in the chair, the Hon Megan Woods, can I just express my appreciation for your service in this House—

CHAIRPERSON (Hon Ruth Dyson): Thank you.

—for 26 years, and also your role as Assistant Speaker and, obviously, Chair of the committee tonight. We will miss you from this place.

My question to the Minister is one which has been raised from one of the fuel companies, and perhaps the Minister can give us illumination on how the Government of the day would address this, and that is around the expectation requirements of this bill for retail outlets to have full signage of prices of their different fuels, whether that’s 91, diesel, 95, 98, or whatever it might be, and if a fuel company is providing what is called a “truckstop”, where the customers who pull into a truckstop are actually commercial customers that often will have a fuel card, will often have negotiated prices, and so what is on the price board may not be relevant. The concern that, I think, was expressed was that this would make it look like a normal retail outlet, and the concern would be that it’s actually not designed for that. Is there provision for some exclusion from those requirements? Because, as one fuel company said to me, for them to go through and put all the complete list of fuel prices—and in this case it was the premium fuel prices—on all of their signboards over the country, it was going to be $1 million, and that—just that—is going to be a cost to business that will get passed on to consumers, to motorists.

💬 Andrew Bayly: Does that mean a higher price for fuel?

That means a higher price for fuel, it does. Or else what it means is lower margins and less participants in the market, which means a higher price for fuel whichever way you look at it.

So, look, what I’d just like for the Minister to be able to respond to is: is there capacity for exclusions that would enable those customers who are contracted, who have contract prices, and whatever’s on the board is not what they pay anyway, to be able to be excluded from the cost of that, which can be quite substantial? Thank you very much.

Another question?

Tim van de Molen: We’ve been going for 20 minutes, Minister, and you haven’t answered a single question. If you’re not interested in engaging, then we’ll finish.

I’m pleased to be able to take a call on some of the questions that I’m more than willing to engage with. I think the question has been put to the committee around the spot prices and whether there will be demand from players. Yes, we know the likes of Gull. We know the likes of Timaru Oil Services. What we do know in terms of the spread of pricing around the country and what we have seen of this—I know that there is a lot of talk often from the Opposition about the impact of the Auckland fuel price, but as a South Islander, I am very keenly aware that, actually, even with regional fuel taxes, we pay higher prices for petrol in the South Island than you do in the North Island.

So what we are looking to is new market entrants to be able to enter the market, and this what this piece of legislation will allow. So that is an important part of it.

I will address some of the further questions in subsequent calls.

Parts 1 to 3, Schedule 1, and clauses 1 and 2 agreed to.

House resumed.

The Chairperson reported the Fuel Industry Bill without amendment.

Report adopted.

Third Reading