Retail Payment System Bill

I present a legislative statement on the Retail Payment System Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Retail Payment System Bill be now read a third time.

It feels like only yesterday we were all here in the committee of the whole House discussing the Retail Payment System Bill, and here we are today, passing this bill through into legislation. The bill aims to ensure that we have a competitive and efficient retail market—

💬 Andrew Bayly: How?

—in New Zealand. It’s vital for consumers that the retail payment system is both competitive and efficient, and I look forward to explaining how for the benefit of members opposite, who expressed a keen interest.

In an increasingly cashless society, of course, it is easy for any one of us to forget just how important retail payment networks are. It all happens so quickly and so easily: money is transferred from our wallet quite virtually into a business as a payment for goods and services. But it’s been apparent for some time now that in New Zealand these payment methods that we are so familiar with attract higher merchant service fees than they should. That’s why in the 2020 election, the Labour Party took a manifesto commitment to reduce these fees and to bring them into line with comparable countries, and today we make good on that promise. This bill establishes a new regulatory regime that’s concerned with the underlying causes of high merchant service fees. However, it also takes much more direct and immediate steps to lower the fees in a short time horizon and be clear that payment networks where those problems are most acute are designated immediately.

While I don’t want to prolong the bill’s journey through the House, I do want to make a few acknowledgments and remind the House of the ways that this change will benefit merchants and consumers. So, quickly on the history: the possibility of regulating the retail payment system has been considered by successive Governments, and after pledging to get on with it and to actually regulate these fees at the 2020 election, as the newly minted Minister of Commerce and Consumer Affairs, I set about my task with alacrity. Straight away and at pace, we put together a discussion document to go out to get feedback from the public so that we could make sure that we did this in the way that would be enduring and would achieve the purpose we’d set out.

Now, policies for this bill were agreed by Cabinet in April and July following that consultation last year. I was then able to introduce the bill to the House in October 2021, and it’s carried the momentum through the select committee. I do want to thank those who worked in the select committee on this bill, from the Ministry of Business, Innovation and Employment officials through to the stakeholders who made submissions on the bill, and there were lots of high-quality submissions; the Parliamentary Counsel Office staff, who do the drafting; the Economic Development, Science and Innovation Committee, Jamie Strange—and I see the chair here; I acknowledge his work—and the whole committee; and, of course, the Commerce Commission, who fed in their expertise along the way as we’ve brought this from a rough-hewn stone to a polished product.

Now, the bill executes, as I’ve said, a short-term and a long-term strategy for promoting competition and efficiency in the retail payment system, and that is for the benefit of consumers and merchants. So in the short term, there is an intervention in that the bill caps interchange fees in the Visa and MasterCard networks for an initial pricing standard. Interchange fees, as many in this House will now know, have been a part of the debate, and what many folks at home will know is that it’s often the largest part of a merchant service fee. They’ve tended to be particularly high in the Visa and MasterCard networks, and that perhaps reflects the dominance of those networks in the New Zealand market. Capping interchange fees will happen six months after this bill has passed and had Royal assent and it will relieve a significant burden on, particularly, small merchants who face a disproportionate burden from the interchange fees. It’s been estimated that this change, this cap, this pathway that will see in six months these fees adopted as the ceiling, on a conservative estimate will save New Zealanders around $74 million a year. So that goes in the first instance to those merchants—

💬 Jamie Strange: How much?

It’s $74 million a year and it’s a conservative estimate and then many of those savings—or much of that saving—will be passed on to consumers and come back into Kiwis’ pockets.

The longer-term strategy that’s embedded in the bill is the empowerment of a regulator—in this case the Commerce Commission—to respond to competition or efficiency issues as they arise in the markets. So, essentially, we’re futureproofing here but also giving them the powers to investigate once a payment network’s been designated to dig into it and to make further decisions about how it should be regulated—make sure there’s transparency in the system, and so on. So the Commerce Commission are given regulatory tools through the passing of this bill and those tools—as I say, the process for designating networks which the commission can then regulate—are designed to be flexible and responsive as the retail payment system continues to evolve over time.

💬 Andrew Bayly: Is that how it assists with competition?

It certainly will assist with competition, Mr Bayly—absolutely. The commission will be able to regulate designated networks through network standards and directions and it enables them to do some very specific things, which I’ll just share with the House: require network participants to disclose information, regulate prices they charge for payment services, require participants to allow entrants to access certain critical services or network infrastructure, require network rules to be set, and scrutinise certain changes to network rules. Now, those are quite technical aspects but indeed they do get to making sure we have a competitive market.

Importantly, there are several constraints on the Commerce Commission in the use of these powers. They’re only available in relation to designated networks. The bill prescribes a process for designated networks that involves them going out, setting out network standards and directions. They are subject also to criteria, to processes. The commission must publish any proposed standard or direction issues and its reasons for proposing that standard. They must also consult affected persons before they can issue any standard or direction. Ultimately, the commission is bound by the purposes and the principles that are embedded in the bill in terms of the way that they conduct themselves as regulators. Finally, the standards and directions are secondary legislation, meaning they’re disallowable by Parliament, so Parliament retains a degree of oversight here.

The bill also enables the commission to intervene should it wish on surcharging standards, surcharging practices, and could set standards to make sure that merchants aren’t over-recovering on their costs. It’s quite reasonable when you see it: sometimes merchants are charging a surcharge where they face a higher fee and it seems reasonable to allow them to pass that on to consumers because some networks are more expensive to use than others. But the commission will have the power to intervene if they see abusive practices evolve in this area. Now the commission has the flexibility in how it uses any merchant surcharging standards to achieve that. But the flexibility is likewise subject to constraints and procedural requirements.

Network operators and card issuers will need to be in a position to comply with the initial pricing standard within six months of the bill coming into force—and I do want to thank the support around the House for making this happen. This is a very direct intervention. It’s a way of making sure that this pledge kicks into action sooner rather than later, as the commission may take some time, in my experience, to do their analysis on certain things because they are thorough. This sets an initial standard that is comparable to what we have in Australia.

I want to thank the House for prioritising the passage of this bill to ensure that the savings that it generates are passed on to merchants and to consumers. As the Labour Party made its pledge, front of mind was those small businesses that talked about how tough it was. I spoke to a number of small businesses, particularly around this announcement originally, and as we went out with consultation documents and the like they shared with me just what a burden it is with some of the fees. They don’t have the leverage with the banks and the schemes to demand different network fees. So this cap will make a meaningful difference for small businesses, and if small businesses flourish we know we will have a more competitive landscape for consumers and we know also with the cap on fees that that money not only lands back in the merchants’ pocket but gets passed on to consumers.

So this is good for small business. It’s good for consumers. Reducing merchant service fees has been a priority for the Government. We’re now passing this bill. It’s a good day. And it brings me to the end of my speech with great pleasure as I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It’s a pleasure to be speaking on the third reading of the Retail Payment System Bill. That wasn’t a bad effort from the Minister, and I just wish we all had the opportunity to have people write us notes.

But I think the first thing I’d like to say is, after socking small businesses with about $3.5 billion worth of extra costs over the last nearly five years, I’ve got to say—when you think about all the different things, all additional taxes that Labour have thrown at small businesses—I hardly think this bill is going to cut the mustard. It is good, we will support the bill; we have supported the bill. But if you think $74 million against $3.5 billion that’s been thrown against our small - business owners is going to really save them, I don’t think so.

The other thing I find amusing is that the Minister said, “We’ve fulfilled Labour’s 2020 election promise.” So we’ve just had two years where many small businesses have just about gone out of business, if they haven’t already gone out of business because it’s been so tough during COVID lockdowns, particularly for businesses in Auckland and the Waikato, but across the country—even in Dunedin, where the Minister comes from. Here we are, and this thing is going to take—it will be in force, come into play, six months from now. So, effectively, we’ve gone from 2020 to 2023 before small businesses are going to benefit from this $74 million benefit. If it was that high of a priority, why haven’t you pushed it through under urgency? All the urgent bills that have come through this House over the last couple of years, why didn’t you push this through if it was so important? Why didn’t you help our small - business owners quicker, with at least one little thing so they can think, “Well, I’ve got something out of this Labour Government.”?

But just to put it in context, $74 million across 536,000 small - business owners. Not everyone’s going to be using credit cards and so on, but let’s say that’s about $110 million a year—$110 million is the savings a year. There will be some that get a higher amount of savings, there will be some that get less, but it hardly is going to help it. But none the less, we will support the bill and we have supported the bill.

But I don’t think Labour members should stand up and say, “This is a panacea for our small - business owners.” Because, unfortunately, it’s not. Unfortunately, if we get the opportunity to get back in 2023—if we get the opportunity—one of the big things we’re going to have to do is to deal with the huge avalanche of costs and compliance issues that have been imposed on them by this Labour Government.

Anyway, there are good parts, as the Minister talked about. Just to be very specific—if people are listening at this stage to this third reading, which means it’s going to pass tonight—there’s going to be a cap on the interchange fees. As the Minister quite rightly said, interchange fees are the major part of merchant fees, so there’s a cap of 0.8 percent on credit card transactions, 0.6 percent for online debit card transactions, 0.2 percent—or 5c per transaction—for a contactless debit. So what this means is that if you have a Visa or MasterCard, they will be subject to these fees. Just to be clear, Diners and American Express (Amex) are not included under the current regulations, and I do stand to correct a comment I made at the second reading. Amex weren’t covered by this arrangement in Australia when it was put in place—and, of course, this is mirroring what went on in Australia. But none the less, this bill gives the Minister and the Commerce Commission to recommend, of course, that if one of those entities should be part of the regulations, then the Commerce Commission will have to recommend it to the Minister.

The big thing we talked about yesterday during the committee of the whole House stage is, what is the threshold that a new card might enter this arrangement? It was very unclear whether it’s a market value test, a market share test, because the rules around that are very unclear. It just sets out the process and some of the guidelines that the Commerce Commission might adopt, but without really tangibly helping anyone to assess whether or not they might be put in place.

A lot of changes made in the select committee—I think some of them are very good, and I thank all colleagues across the House in terms of making those. One of the big things is MasterCard and Visa are large, internationally arranged businesses. New Zealand needs to be careful that if we’re going to impose regulations on a global operation, then we need to be mindful that we are at a very small end of the global arrangements. So one of the important changes the committee did make is the process for the Commerce Commission, how it would engage with those network operators to make sure that any changes—if they were so sought in New Zealand—could be put in place where appropriate, because the last thing we’d want is some of those credit card operators to pull out of New Zealand.

Look, there is a whole lot of other stuff, but I’m not going to talk about it. I think we’ve canvassed it. As the Minister said, it was only but yesterday that we were going through the details of this. We move on and just acknowledge, as I said before, members of the select committee and also the officials.

Long may our small businesses prosper and hopefully get over the past two years of such a dreadful period in New Zealand as we’ve gone through this period of COVID lockdown, and hopefully this is but a small part that will help them on their journey. My view is that we need to look after every small business, not only the owners and the people who put up the capital, but the people that work in them. They are the driving force—the economic force—of New Zealand, and it’s so vitally important that we look after them.

Thank you, Madam Speaker. That was a rather unusual speech from someone who’s supporting the bill, but we do hear a bit of confusion over on that side of the House, at times. But I do acknowledge the support from the National Party for this piece of legislation, and I’m hopeful that other parties will also speak and vote in favour of this piece of legislation, which the member says is insignificant, but $74 million per year for businesses and consumers, I would argue, is significant. For the businesses I’ve spoken to about this—and I’ll give a couple of examples—they’re certainly very much looking forward to this piece of legislation coming into law in six months’ time.

On the weekend, I was in Te Awamutu—lovely, lovely spot, there near Hamilton—and I purchased some fish and chips for my family for $32 and I was about to put the card through their machine, payWave, and I noticed on the machine that the surcharge for the payWave was 66c. I paused for a minute, “OK.”, so I actually got the chip on the card and put it into the machine, and, unfortunately, it didn’t recognise my card. So I swiped it, still didn’t work, and so I had to do the payWave thing, so I, obviously, paid the 66c for that. But I spoke to the owner of that small business and I told her about this piece of legislation that’s coming through in terms of significantly lowering those surcharges, and she was absolutely delighted. She said, “Oh, wow. I’m so excited about that.” She wasn’t aware that it was coming through, and I believe that I really made her day, because the reality is that it is quite challenging for, particularly, small businesses to absorb those fees. We have seen quite large fees when we compare to other countries over recent years. So this is a piece of legislation that I expect will be well received by our small businesses and our consumers, as this passes through.

I’d like to acknowledge the Minister for bringing it to the House. I note the previous speaker said this should have come through urgency because it is such a good piece of legislation. Look, it is a good piece of legislation. We made the commitment to do this within the three-year period, and we are sticking to our word on that.

I’d like to acknowledge the select committee, as the chair of the Economic Development, Science and Innovation Committee. I believe the member here—we’ve got Melissa Lee; I believe it’s just us in the House, but I certainly acknowledge Melissa and the other members of this committee. We are a committee that do take our role very seriously. We look at these pieces of legislation. We have quite extensive conversations with the officials. This was a very technical piece of legislation and there was learning for all of us in terms of how those fees are worked out, and there are quite a few components and there’s quite a disparity in terms of different providers. So there were some complexities around it, and, in terms of that, I’d also like to acknowledge the officials who guided us through the process in terms of that.

The Minister has outlined what the bill does, so I won’t go into that level of detail, but just to say that this is a piece of legislation that will make a significant difference for our small businesses. I’m thinking of the dairy down the end of my street. I was recently in there with my son, purchasing some food, and I spoke to the dairy owner about it and he said, “Very much looking forward to this piece of legislation.” Many of us when we’ve been to, particularly, a dairy or a very small business, we’ve seen on the EFTPOS terminal “No credit.” The reason they say “No credit” is because, when you pay by credit card, the owner of that store has to absorb that cost, often up to 3 percent of the sale. So the reason that we are putting this through is so that people can use their credit card, they can use the payWave, and the fee to the business owner will be significantly smaller. It’s an excellent piece of legislation. I commend it to the House.

Thank you, Madam Speaker. It’s always a pleasure to rise to speak on bills that the Economic Development, Science and Innovation Committee have worked on. It is also an opportunity for me to acknowledge the chair, who has just sat down. I have to concur with him that the select committee does, in fact, work very hard—although it’s a very small committee but a very tight-knit committee, and very focused on the work that we do. I’d like to commend the chair because he is a fair chair. I’m not so sure if I’m actually helping his political career by saying that. But he is an excellent chair and respected by everyone in that committee, I have to actually say.

On to the bill, the third reading of the Retail Payment System Bill. Obviously, my colleague Andrew Bayly had actually said the National Party, on this side of the House, supports the bill—we wouldn’t have if it wasn’t something that benefits the consumers or if it was a terrible bill. But I think the issue that he was actually raising was the situation currently in New Zealand. I know that Andrew actually speaks with lots of passion and lots of whoomph, and sometimes I wish I had his energy level as well. But this bill—as the Minister, the Hon Dr David Clark; Andrew Bayly; and Jamie Strange have said—reduces the amount of fees that both consumers pay and merchants have to absorb. And I think that’s a really, really good thing.

Anything that supports our consumers to pay less—and we’ve all seen it, I think. I’ll give you an example. When I was purchasing an air ticket to go back home to visit my family in Korea, I tried to use an American Express and the travel agent basically said, “Oh, that’s going to incur a certain amount of percentage extra than what you pay.” And I thought that’s ridiculous; that was a ridiculous amount of money that I had to pay for the whole family to travel. But if you give me Visa it will be a slightly lower percentage. So I went for the slightly lesser percentage surcharge to actually get a cheaper deal.

But surcharging has actually been around for quite a long time. This bill actually reduces that surcharging by retailers, who actually get those fees charged by the issuers of the cards in interchange fees, and I think that is a wonderful thing. I think it will help everyone.

However, although the initial cap on the card fee—reducing it’s a really, really good first step. But in terms of retailers and small businesses, as Andrew said, they have been hit really, really hard. Even before, they were doing it tough before COVID-19 actually hit. But even with COVID-19, before the Delta lockdown happened, 12,000 businesses closed permanently. I think what we were actually saying is that if the Government is so focused in reducing cost and improving the lot for small businesses, there might be better things that they could have done instead of just reducing the cap for the interchange fee—that’s what we’re actually talking about.

In particular, the hospitality sector and the retail travel that I just talked about—I mean travellers. A lot of ethnic-community businesses deal with inbound travel businesses. A while back, especially after the initial lockdown, I had a meeting with about a dozen inbound tour operators whose businesses were absolutely decimated, they could no longer actually operate. The stress that they’re under—and I have never actually seen grown businessmen, who happen to be of Korean descent, sit in front of a woman, particularly a woman and an MP, and cry. It is so stressful for these small businesses trying to sustain their business, run a business, and to earn a living for their family.

This is where this Government has actually failed them. The mental health situation of these families, the businesses that have failed—how are we supposed to resurrect these people’s lives? Yep, it’s a pandemic, it’s affected everyone around the world—but what is this Government doing to help those small businesses that have actually collapsed? They’ve poured their life savings into it. They’ve worked day and night to grow their business. They’ve often not taken salaries for themselves, trying to grow their business. And yet tourism is only now just opening up.

I know the announcement was made today that, from the end of July, we will actually have people coming into New Zealand—the New Zealand border’s going to be open. But at the moment it is only open to visa-free countries. That means that even we, members of Parliament, can’t meet with people—other MPs from around the world, or politicians, or Ministers—who want to come to New Zealand.

This particular bill deals with retail payment systems and it is a very small part of a huge industry called the small to medium sized enterprise sector, which is the largest sector that drives the New Zealand economy. It is the engine—the literal business engines—that drives the big engine called the New Zealand economy. I wish—I wish—that the Government would be a little bit more ambitious than reducing and putting a cap on retail payment systems. However, we support the move—however little it is—to benefit the consumers and the business sector. Madam Speaker, I commend the bill to the House.

Thank you, Madam Speaker. It’s a pleasure to be able to speak on this bill, because it’s actually not a bill that came before the Finance and Expenditure Committee, which I was on. It’s really nice to be able to come into the third reading of a bill that I’ve actually been really looking forward to because it was something that was in our manifesto. This bill fulfils one of our commitments relating to merchant service fees charged to retailers. It wants to bring them in line with comparable economies across the world because New Zealand fees are higher than some of our other counterparts.

Retail payments are the nuts and bolts of the market economy. The retail payment system is what makes it possible for consumers and merchants to sell and receive goods and services. The common ones that have been spoken about tonight and right throughout the whole bill process have been credit and debit cards and EFTPOS cards. These are all really familiar not just to the House but to everyday New Zealanders, because we are one of the highest users of EFTPOS cards throughout the world.

The issue that this bill resolves is that the fees that sit behind them are simply too high. This has been a problem for a while now, but COVID-19 has accelerated the reason for us to have to put this bill to the House and put it forward. COVID-19 changed the way that we spend our money, and online and contactless transactions are being used more. These payment methods currently, again, have higher fees, and they put additional pressure on businesses who then pass it on to the consumers.

For most people, they’ll know that when they do some transactions—when you go through payWave—it says “Do you accept the 0.02 percent” or the 0.2 percent “merchant service fee?”, and you have to say yes in order to pay for it with that credit card. But it’s not necessarily 0.02 percent; it’s usually 2 percent, 3 percent, or 5 percent. It’s too high compared to the rest of the world.

Again, I was not a member of the select committee, but I sat through the committee of the whole House debate yesterday. I want to congratulate the Economic Development, Science and Innovation Committee. I heard very loudly and clearly—right throughout the debate last night and a number of times tonight—that they are a very small but hearty committee. So congratulations to the members across the House and to the chair, the member Jamie Strange.

Examining their report back, the bill seeks to address four main problems: higher merchant service fees; lack of competition in the market, which is why you can have higher service fees; and the incentivisation for customers to use these payment methods because they get the kickback of a reward. There are a number of reward services that most people are familiar with, with credit cards and some of those particular services. This incentivises them to use it in order to get a reward somewhere else. The other issue is that high merchant service fees disproportionately affect small businesses. For those not familiar in the House, 98 percent of businesses in New Zealand are small businesses, and a large proportion of them are retailers, particularly in an electorate like mine, Mana, where I think retailers are around about the fourth-highest industry out of our electorate.

During the campaign, I remember talking to one of my regular coffee cart owners. His name was Kenny, and most people know his coffee cart, which is near the Harvey Norman and the Pak ’N Save petrol station. He talked about the monthly fees he was having to pay to his merchants, and he said it was around $6,000 a month. From his perspective—and I absolutely agreed with him—$6,000 was too high for a small coffee cart owner. But the reason why he still paid that fee was because he felt like he had a moral obligation to his customers. Given COVID, he wanted to minimise contactless transactions as much as possible. So I say to Kenny and to all those small - business retailers across the country who we promised that we would make this commitment that we would reduce the burden on them in relation to merchant service card fees, we are doing that tonight.

I would like to once again thank the Minister for his work on this, thank the select committee for their review of this, and thank the 30 submitters on this particular bill. Thank you, Madam Speaker. I commend this bill to the House.

Tēnā koe, Madam Speaker. It’s really nice to speak on this third and final reading of the Retail Payment System Bill. As we’ve said in previous readings, this is a pretty common-sense bill and I think it’s about time that we updated our regulatory frameworks for merchant fees for debit and credit card systems, payWave, and other similar services.

I wanted to pick up on what the member to my left, Barbara Edmonds, was talking about regarding New Zealand having a really high rate of use of EFTPOS and payWave services. It really struck me when I first came to Aotearoa 16 years ago—and I kind of crossed through bits of this in the second reading. As a migrant I was really struck by how much of a cashless society we already were back then in 2006, and COVID really pushed us to not only become cashless but contactless. And as Barbara was talking about, many of those small-business owners are paying really high fees to use the services.

One of the things that the Economic Development, Science and Innovation Committee report talked about was just the regressive nature of this bill. It traversed some of the tactics that small businesses ended up employing to cope with those fees that, unfortunately, meant that some of these costs were being passed on to consumers, with low-income consumers facing a disproportionate brunt. Tactics such as loyalty cards were being used, and loyalty schemes, to try and alleviate the costs. But the perverse outcome was that low-income people ended up paying, effectively, a disproportionate amount towards these costs. Low-income people cannot actually often fully participate in those loyalty schemes and end up subsidising high-income earners, who have much more of an ability to reap the rewards of such loyalty schemes designed to actually pass some of those costs to consumers. So we really welcome the Government fulfilling its manifesto promise to set up this regulatory framework.

We also acknowledge that there will be around $74 million worth of savings in the economy as a result. And I repeat again that while this is not a massive amount of savings in the scheme of the broader economy, I think it’s about the principle of creating a less regressive system that is really important. I think there will be other conversations that we’ll need to have around the types of cards that are being included in this regulatory framework, and I welcome the ongoing conversations.

I’m not a member of the select committee that discussed this bill, and so I mihi to the group that participated in reviewing the submissions and ensuring that we ended up with actually a pretty strong select committee report that has made it really easy for us members who are not members of the committee to participate. I also thank the officials for, I think, really capturing, as I traversed, the regressive nature of the current system. So I am really happy to commend this bill to the House and I look forward to reflecting on the continuous need to tweak and reform capitalism’s ongoing failures.

Thank you for the opportunity to speak on the third reading tonight. The ACT Party favours competition and efficiencies in all charges and fees with regards to assisting small business. Just to clear up on our friends with American Express, it is a different network and it has a substantially different business model to some of the other players that are right there. But my address tonight is more about the largesse around the Commerce Commission and where this is a classic example of how Government intervention actually takes away some of the value that’s supposedly being created in savings, and I’ll touch on that later.

But given that the Commerce Commission has the ability to designate schemes, I’d say—those that are already in the bill—it would be good to get a stronger commitment from them that they will actually monitor the costs of the unregulated system and will be beneficial for merchants and customers. And this is one of the important things for Governments to ensure, that they’re active in ensuring a level playing field while actually delivering these savings. And if you crunch the numbers, it does look like we have Peter robbing Paul, where we’ve got a $15 million business empire created, again, at the Commerce Commission, to collect $75 million. And that is even questionable, whether that $75 million will actually get to the merchants or the consumers, if you divide it by the number of transactions that are occurring electronically and digitally in New Zealand.

The Government considers that a targeted regime is the way forward. The bill introduces a role for the Commerce Commission that allows it to not only build an empire like the raw milk pricing team it’s got, or the telecommunications team that it’s got, but it just adds to the largesse of that administration structure. I think Barbara Edmonds and I and Minister Clark could sit down every six months and actually set these designations and charges that would go out into the marketplace, and that would be the end of it, as opposed to building a quagmire. One of the things that the ACT Party truly believes in is that after two years, these savings should be analysed and the department’s role should be assessed to see if it’s actually delivering the value for money that it said it would and that the Ministry of Business, Innovation and Employment said it would in its initial analysis. To me, it sounds like good politics. We’re all for saving money for the small-business owner. But, again, we have seen no evidence that it’s actually going to get there and that it’s actually going to get through to consumers and help them.

So the Government is giving the Commerce Commission, again, a broad range of powers. We hope the Commerce Commission should be sensible and consumer impacts around innovation and competition and new products won’t be hampered by what the Commerce Commission will do, and that it will be ready for a new set of products and suites to come through. One of the things we have to really recognise is that the more sophisticated these products become, the more that they do have to charge, and that they will be more value-added products in the New Zealand market. And it is a bit of a test bed for testing what then eventually goes on around the world.

The Government’s made the decision to empower the Commerce Commission. It’s now got to stand by and deliver these savings. The reduction in interchange fees and merchant services fees allows us to actually have some benchmarks, which will show us how those suite of powers have worked and how they have recommended to the Minister how they’re going go about their business. The Commerce Commission will be able to determine and issue directives, regimes, access for new participants. And we think it’s going from, as Kirk Hope said at BusinessNZ, what should have been a very light-touch mechanism to something now that’s really heavy touch and brings into question the actual efficiencies that were marketed and promoted by the Labour Party in its manifesto. So we are not convinced.

Overall, the package considers selling services in the marketplace where you’ve got retail sales of $100 billion, so a 20 percent reduction in credit card interchange fees is equating to the figure that the Minister’s promoting. The biggest risk here is that the model relies on providing the Commerce Commission with tools, but the practical applications of these powers have not been ascertained, and the legislation needs clearer objectives. We think, to reduce systemic risk, the Financial Markets Authority should have a look at this after two years.

In terms of the guaranteed $74 million, we believe it’ll get stuck in the legal system and not get to business and consumers in the quantums that are discussed. We believe the administration fees—well, if you divide that $74 million by 15, you’re already taking away 15, 20 percent of the benefit, just by setting up a Government department. So what is that all about? This is the problem with these types of laws, right? Giving the powers to the Commerce Commission does not reflect actual savings, and so it’s disingenuous to actually say that the consumers and merchants are going to get these.

So we believe we need a bill that’s fit for purpose. Elements of the bill in terms of charges are acceptable, but the actual role of the Commerce Commission is not acceptable. And if you want to save money in the marketplace in New Zealand with regards to charges, you have to take in a holistic ability, which has been disturbed by the Government’s handling of the Credit Contracts and Consumer Finance Act (CCCFA), that people use these charging services for cash flow for their businesses as well. Right? So sometimes they’re really willing to take this payment because that helps them run their business day to day, and so as long as they’re getting the benefits and as long as the Commerce Commission isn’t stopping that—but we know with even getting a credit card now, it’s extremely difficult under the CCCFA.

So ACT will be opposing this bill not because of the savings but because of the Commerce Commission’s undefined role inside it. Thank you.

Thank you, Madam Speaker. It’s a pleasure to take a call on the third reading of the Retail Payment System Bill, and I just want to note some comments following the previous speaker from the ACT Party, and I want to note—just regarding his speech tonight—that last week ANZ reported their half-yearly profit which was up 18 percent on the previous year, showing a record profit of $1.1 billion. And it’s very interesting to note that the ACT Party have chosen, on this bill, to side with big business, with the banking sector of New Zealand, instead of supporting small businesses who have been doing it tough. It’s interesting to hear the ACT Party show their true colours in Parliament and refuse to support a bill that is intervening in a market—

💬 Damien Smith: Point of order, Madam Speaker. There is no way you can make that comparison of a company’s results, that sell mortgages, business finance, corporate finance, and in fact—

ASSISTANT SPEAKER (Hon Jenny Salesa): That is not actually a legitimate point of order—

💬 Damien Smith: No, no, that is not a reflection of our position and I’d like it withdrawn—

ASSISTANT SPEAKER (Hon Jenny Salesa): I ask the member to take a seat. That is not a legitimate point of order. Rachel Boyack.

💬 Matt Doocey: I seek leave for Damien Smith to make a personal explanation.

ASSISTANT SPEAKER (Hon Jenny Salesa): When one makes a point of order, usually they should actually quote the Speaker’s rulings that they’re making a point of order about and, as the Chair of this House, it is up to me to decide whether or not a point of order is legitimate.

💬 Simon Court: Point of order, Madam. In terms of Standing Order 121, “Personal reflections”, I’d just like to ask if you feel that the member Rachel Boyack, through her comments about ACT policy, and about the ACT member Damien Smith, in fact made an imputation of improper motives against a member, and whether that would, if she had done so, require her to withdraw and apologise. I’d like to hear your opinion on that, Madam Speaker. Thank you.

ASSISTANT SPEAKER (Hon Jenny Salesa): The Standing Order that you referred to was 120. Is that right?

💬 Simon Court: It was 121.

ASSISTANT SPEAKER (Hon Jenny Salesa): Standing Order 121, “Personal reflections”. In my opinion, that is not a point of order; the Standing Order does not apply. Rachel Boyack, continue.

Thank you, Madam Speaker. The point I was noting there is that there are times when it is appropriate, when a market is not delivering for people or for those involved in that market, for Government to intervene, and that is exactly what we are doing: delivering on a manifesto commitment from 2020 to ensure that the retail payment system is fair. Look, in my electorate of Nelson, this is a policy—a piece of legislation—that is incredibly popular. I’ve spoken to many dairy owners, cafe owners, who often feel quite embarrassed, quite frankly, that they have to add an extra fee on to the payments that people are making—adding that fee to the transaction value. For example, they’re often using payWave because of their commitment to keeping people safe; they want people to be able to make a contactless transaction. So this bill is actually going to ensure fairness in the system for consumers and for the retailers and those hospitality, small businesses who are affected by this particular issue.

One of the points I’d like to make is the importance of ensuring that all parts of this system have regulation attached to them, so that’s the totality of charges that are faced on a transaction—including payWave, credit and debit card fees, and the interchange fee that has been talked about tonight, so that, for example, a merchant, a bank couldn’t perhaps see one set of those fees reduced and then increase another fee to cover that. So one of the things that the select committee has done, which I think is very good, is they have looked at that totality of charges to ensure that there is fairness in the system.

The Minister, earlier tonight, noted that there would be some initial designations. There are some areas where the Minister will be putting initial pricing standards in place—and specifically MasterCard and Visa credit and debit networks—so while the legislation will be another six months prior to it coming into effect and for the Commerce Commission to take on their role, in the meantime the Minister is making some initial designations, which I think is a very pragmatic way forward. So I want to thank the Minister, thank the officials and the select committee for their outstanding work on this very important bill, which will make a difference to New Zealand businesses and, on that note, I’m looking forward to this becoming law, and I commend this bill to the House.

Madam Speaker, thank you very much for the opportunity this evening to speak on the Retail Payment System Bill, third reading. And I must acknowledge, listening to the contribution of the last speaker, Rachel Boyack, when she singled out support for big business—well, let’s just remind the House and those at home that that big business that she referred to employs 9,000 people in this country; hard-working Kiwis in every corner of this country, working in branches, in head office, supporting our economy, supporting business, supporting our agri-sector, and that side of the House categorically says, “You guys are bad people because you support big business.” Well, implicit in that conversation is their saying that they don’t support hard-working Kiwis, and that is greatly disappointing.

I’d love to get back to the bill, which we’re here to speak about tonight, because while National supports this bill, it is on the backdrop of Grant Robertson’s largest increase in Budget in the history of this country—$6 billion of additional spend is going to be spent. And so we talk, this evening, of savings of $74 million, and, well, we go, “Wow, that is a big amount of money.” It’s not a big amount of money in terms of the consultant spend and contractor spend in the three waters campaign, which is $21 million, but we don’t want to talk about that, so we’ll get back to this bill in itself.

But what the challenge is in terms of making savings around this bill, which we’ve articulated, is, yes, it sounds nice in terms of that, and we do believe, but it is a very small step in terms of what is required by our communities and our business sector in this country. They are burdened by a huge amount of regulation under this Labour Government, a burden of regulation and compliance that is adding additional costs, and this bill will take a little bit off that but will be inconsequential in the context of cost burden and regulation placed on hard-working Kiwis across this country that, today, are struggling to pay the bills, because inflation is running twice as high as wage growth and every Kiwi out there at home—that squeezed middle—is struggling to pay the bills.

So why aren’t we seeing more examples of things like this bill on a much larger scale that actually truly deliver benefits into the back pockets of hard-working Kiwis? Well, I’ll give you a little insight in terms of why we’re not seeing that: because that side of the House do not understand the reality that Kiwis are facing today. They have no idea. They are out of touch. They do not understand how business works. They don’t have communication and conversations, like people on this side of the House do, with hard-working Kiwis that are really struggling at the moment, and that is what is so disappointing.

One of the things that National would do in regards to dealing with the cost of living crisis is we would stop adding cost to businesses, employers, and the productive sector. And, in regards to this bill, while it takes a little bit of benefit out and puts it in the hands of our businesses, we need to scale that up significantly. We need to ramp up the support that we’re providing for hard-working Kiwis so that they can get on and achieve an aspirational future for this country—that they deserve, that we all deserve, and that will make this country stronger in the future.

The challenges around putting in place aspects such as this are that while the regulation will impact around setting a charge, I think, in fairness, when you look at the feedback made by a number of the associations, including the New Zealand Bankers’ Association, they noted very clearly that there is another way in order to achieve this outcome. And, therefore, the regulatory framework that is being put in place here is not industry led, and National would, if we were in Government—and will be—in 2023, undertake industry-led self-regulation in this space, because that is what’s required. We don’t need to come down with a hammer on these types of organisations. They’re already doing the best thing for their customers and their people, and this type of regulation is a big hammer hitting a nut. I want to just finish off by saying that while National supports this bill, we are opposed in terms of the costs that it will play in a broader sense.

E te Māngai o te Whare, tēnā koe. Actually, I was listening really carefully to that contribution and I was a bit confused; I thought that the Opposition were supporting this bill this evening. While I think that was just a slip of the tongue at the end there, the point is that you are supporting it but still take some issue with it.

💬 Arena Williams: Give them a personal vote.

Arena’s saying, “Call for a personal vote.”

Anyway, I just want to take a brief contribution, as the Māori Party aren’t here tonight. So I’m taking this opportunity to add my bit to it. I actually heard the member opposite saying that we don’t have conversations with hard-working Kiwis—oh, he’s left, so now he can’t hear the rest of my contribution. But it is on the basis of conversations that I have had with hard-working Kiwis, with our small businesses, in places like Kaeō, Kawakawa, and Ōkaihau, who all, when we were talking about this as part of our manifesto for the last election and when we made announcements that we were introducing this legislation, said, “Yes. Make that happen.” So I can say to the business owner in Kaeō, tonight we are going to proudly pass this bill and it is going to come into force and it is going to make a difference for their small businesses.

So, for all of our small businesses out there, we know that you are the centre of our economic recovery. That’s why we introduced the wage subsidy scheme. You’ll see today that over 50 percent of our businesses benefited from that. This is another step that we can do to support our small businesses. Without prolonging the debate any further, I wish to commend this bill to the House.

Tēnā koe e te Māngai o te Whare. It is a privilege to rise and speak on another manifesto commitment delivered by this Labour Government. Reducing merchant service fees is something that Minister Clark has worked hard on since taking the commerce portfolio, because a lack of competition within our retail market has meant that New Zealand retailers are paying higher fees. But it’s a bigger challenge now that COVID-19 has meant the use of contactless payment has become ubiquitous. And so it’s a real pleasure to speak on something like this which has been moved quickly by the Minister.

Now, I won’t make this a long speech, but I do wish to thank the Commerce Commission for this work. We love it on this side of the House when the Commerce Commission is brave, takes on big challenges like loan sharks, backed by a Labour Minister who backs their work for consumers, who makes it possible for changes that make big changes to people’s fees that they are paying. This bill, though it is a small bill, will save $74 million in fees for the people who use these payment services. We’re proud of the Commerce Commission’s work on the supermarkets, and there’s more to do. We love it when the Commerce Commission take on these challenges, and I commend this bill and their work to the House.

Thank you, Madam Speaker. That last speaker talked about the supermarkets and the Commerce Commission and how great they were. Remind me, but Labour’s done nothing in that area and basically has done an inquiry and said, “Oh, there’s something there, but we don’t want to do anything about it.” It was like their great inquiry into petrol prices that was going to be there. I remember that one. Stuart Nash was going to get out there and smash those companies. He was going to make petrol cheaper and then we were going to have—

ASSISTANT SPEAKER (Hon Jenny Salesa): I invite the member to come back to this particular bill.

Well, we are on this bill, the retail payment system. What’s more retail than supermarkets and petrol? So we had the Labour Party with all these great plans of how they were going to change the world and then we get this bill. They actually are doing something. We will support it. It is good law. It will make a slight little difference for New Zealand consumers and it is something that we as a National Party will support.

But the big issues out there haven’t been addressed by the Government. They haven’t got into the supermarkets, they haven’t got into the fuel, they haven’t actually looked at the cost of living increases they’re putting on consumers. If they really wanted to do something, they would work out the supply chains in New Zealand, they would work out the labour supply issues in New Zealand, they would work out the skills gaps in New Zealand. They would make sure that New Zealand workers were in the cities and not staying at home necessarily and supporting our urban businesses. They would be actually doing some practical things that made New Zealanders’ retail spending stronger. They’re doing the opposite. They’re actually hurting Kiwis by putting up the cost of living and they are hurting Kiwis by putting up interest rates and they’ve hurt Kiwis by putting up the price of their properties.

If the Labour Party were genuine about helping people, because the fundamental premise of this bill is to help people through the cost of retail transactions, let’s look at some of the fundamentals they could actually be doing to really help business. They won’t do those things. It’s all these glorified plans of the future. But what about little things now about getting that trading going, about getting the supply of services, about getting people back into work and doing it properly? That’s what business wants now. They will take this retail payment system change, consumers will take that, but it’s not actually what they really need. They need a Government focused on making business work now; not these grandiose plans of 10 years’ time. Business is in trouble and if business can’t work now, then we are in that circle of increasing inflation, increasing costs, and the loser in the end is the consumer, and especially the more vulnerable consumer, because those on fixed incomes are going to be the ones that lose out the most when you’ve got the inflation spiral that you’ve got going on.

So in the end, it’s great that the Labour Party comes to House with little bills like this but let’s do something about immigration, eh? Let’s actually let some people in with some skills. Let’s do something about getting those Government employees back into the cities—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! I remind the member to come back to this retail bill.

It’s about consumers. If the Labour Party was so supportive of business they would do some of these things. They would actually sort out the supply lines. They would actually help in making sure that we have the skills in New Zealand. They’re not doing any of that stuff. All we’re hearing is—going to hear about is—how they’re going to change the environment and how they’re restructuring health, restructuring local government. They’re not talking about the actual things that make money today. And they give us a bill like this to say, “Oh, look at what we’re doing, and it’s a matter of dollars and cents.” We’ve got businesses that are going under, businesses that could be doing much better.

If the Labour Party really wanted to do its job it would get out there and do those fundamental aspects of making business operate now, and they’re not. And so be proud of this, the Labour Party. This is all you’ve got to deliver for business and consumers in New Zealand. Good job. At the same time, you’re killing them day by day by having the inflationary spiral and bad economic policy and a failure to listen to what they need. So good luck making it work for the New Zealand economy. But this is not going to change the nature of what business needs. Business needs good Government that listens and does things now that will enable them to succeed in the future. Thank you, Madam Speaker.

Thank you, Madam Speaker. Despite what the Opposition member has just said, this isn’t a little bill. This is a bill that is significant to a number of business owners. This is a bill that is about the conversations that we’ve had in our local communities. I know that this bill means a lot to Jamie at the Greenhithe store, to Aki at Peko, to Koshe at West Harbour Superette, to Barry and Holly, who run Beer and Kai on the North Shore, who I’m sure the other member who spoke about us not reaching out to communities will know well because they are a North Shore institution. We are out there speaking to communities. We know what matters, and this will make a difference for people.

I think what I’ve heard from communities echoes what I read in a Newsroom article where they analysed the results of a Retail New Zealand survey in 2018. The numbers there were really horrifying. They found that the retail margin was about 3.7 percent—much lower than I think a lot of people realise for many small to medium sized business in particular. What that meant was an average profit of $96,000 of which, on average, those businesses were paying $26,000. This is not just dollars and cents that mean nothing; this means a lot to those small and medium sized businesses. What was especially horrifying is that the article made the novel point that when a cardholder’s bank is the same as the store’s bank, the bank is getting its share of that 1 percent of sales by moving money to itself. So really horrific—we knew that something needed to change. That is what this bill’s about.

This bill is about accountability. This bill is about transparency, and it’s about putting in a framework now so that our businesses get some relief. I commend this bill to the House.

I declare the House in committee for further consideration of the Maritime Powers Bill.