Fuel Industry Amendment Bill

I present a legislative statement on the Fuel Industry Amendment Bill.

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

Hon Dr MEGAN WOODS: I move, That the Fuel Industry Amendment Bill be now read a third time.

In 2019, the Commerce Commission released its fuel market study. The commission’s report indicated that fuel companies had been making persistently higher profits over the previous decade than could be expected in a competitive market, and there is limited competition in the wholesale markets, and this flows through to the retail markets and to consumers’ pockets. One of the commission’s key recommendations was to create greater transparency by requiring fuel companies to publish wholesale spot prices at fuel terminals. The passing of the Fuel Industry Act in 2020 saw the introduction of a terminal gate pricing regime for wholesale suppliers, to make entry easier at the wholesale level.

However, the commission also identified two possible risks to the success of the terminal gate pricing regime: (1) that fuel companies use the terminal gate pricing regime as a vehicle to coordinate prices, and (2) that in some areas, particularly where a terminal is isolated, a fuel company could exert market power at the terminal. As such, the commission recommended that a regulatory backstop be introduced to ensure against the failure of the terminal gate pricing regime. This Government is implementing just that recommendation through this bill.

The bill provides an incentive for wholesale engine fuel suppliers to offer competitive terminal gate prices. It does this by providing a process by which these prices could be regulated by the Commerce Commission after an inquiry and recommendation to the Minister. The Minister could then recommend to the Governor-General that an Order in Council be made declaring particular terminal gate prices subject to price regulation, and the Commerce Commission would be responsible for setting the form of the price regulation and enforcing it. This would deter the misuse of market power and ensure better competition in the wholesale market.

We do this because we expect this to flow through to consumers at the pump in the medium and the long term. This is a well calibrated process. It is not a return to the price regulation that we have seen in days past. This is a new power for the Commerce Commission, and if the market works as it should and in line with what we expect, then fuel companies should have every incentive to compete hard and to avoid being regulated.

After experiencing high pricing volatility in 2022, the regulatory backstop mechanism is a necessary measure to give consumers confidence that increases in fuel prices are not being driven by unreasonably high margins. This is about a Government that is standing up for and alongside consumers and ensuring that they are protected.

We have already seen that the Fuel Industry Act has contributed to more competition in New Zealand. The terminal gate pricing regime has supported the expansion into new areas by low-priced retailers such as Gull, NPD, and Waitomo. Gull has publicly stated that without the Act that our Government passed, it would not be able to competitively source fuel to operate at South Island outlets and provide that competitive tension. I can tell you, as a South Islander, this has made a huge difference in our part of the world, and that is because we had a Government that was willing to act on the side of consumers. This bill further supports these trends by providing strong incentives for fuel companies to ensure that terminal gate prices are competitive and provide insurance against anti-competitive behaviour that contributes to higher fuel prices and protects consumers from that.

This Government recognises the need for a more transparent fuel system that works for New Zealanders. Though this backstop mechanism is just that, a backstop, it is a clear signal to the fuel industry that the Government is not afraid to step in if prices are not consistent with what would be expected in a competitive market.

I want to thank the Economic Development, Science and Innovation Committee again for their work and for their consideration of this bill. I believe that the changes that we have made to the bill as a result of the select committee process have resulted in a better and a more robust piece of legislation. I also want to thank all those who contributed to the preparation and passage of this bill, and I look forward to seeing competition in our fuel sector continue to evolve and for New Zealanders to feel the effects of improved transparency in wholesale pricing flowing through to prices at the pump. I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It is really good to follow the Minister on this bill, it was almost like reassuring words before bed, too: all is well because the benevolent hand of the Government is there to control the market. Unlike Adam Smith in his seminal work right back in 1776—invisible hand of the market—but we no longer have “the invisible hand” of the market; we now have “the benevolent hand” of the Labour Government. I think this is absolutely hysterical. Today, we found out we have, you know, inflation at 6 percent, non-tradable inflation at 6.6 percent—so that actually directly points to the actions of the Government that have caused this inflation and non-tradable inflation being at such highs, and we’ve got a very confused Government trying to implement policies in the name of helping consumers, and actually having the reverse effect.

I’ll take you back, Madam Speaker and members of the House, to the Government removing the excise tax from fuel. The emissions trading scheme, the main plank and method of getting our emissions down, actually works by putting the price up according to what emissions you make. That all got too frightening for them, because the fuel prices went up and actually, consumers didn’t like it; what a surprise. So the Government stepped in and removed the excise tax to the tune of 29c a litre, and lo and behold, that made it cheaper for people to use their cars—and what if that’s less incentive for people to go to an electric vehicle and to alternative transport?

Anyway, that’s all run its course now, they’ve become very afraid of that, and on 1 July, 29c a litre went back on. We’ve just had the inflation figures to the end of June. What’s going to happen now? We’re going to have more inflation going out into the future, because they’ve stoked it along with a 29c increase in fuel. So it’s a very, very confused Government that doesn’t quite know what they’re doing; they’re running around in circles trying to come up with things that really just try and plug a hole in the dyke, if you like. But they’re actually causing more problems than they attempt to solve.

Terminal gate pricing that the Minister referred to: yeah, that’s moved things along, there’s no doubt about that. But to then come in and try and regulate the market when we found, in the committee of the whole House stage, trying to ask the Minister for a definition of the pricing principles; the pricing principles that the Commerce Commission would need to take into account. I could not get a definition: “We don’t know what those principles are.” If you don’t know what those principles are, how can they be applied? How do we know if they are being applied in a way that is actually fair and reasonable, and how do we know that we’re getting the best bang for our buck when we have what will it end up being a regulated market? We know that regulated markets do not work. We know for the gas market in the UK, the same sort of thing was tried and it led to higher prices and shortages. We’ve got huge issues when the Government’s hand gets involved in the market, and we can’t actually predict how that will play out. The way the market works is by price discovery, effectively: so companies operating in the market, they find the best price for them to operate. And if they’re too high, of course, someone else will come in and set up business and compete against them; thereby, innovation and innovative practices are being driven by the market forces and the Minister herself even mentioned Gull and Nelson Petroleum Distributors (NPD) and others who have set up in the market and are actually offering a different offering from the major fuel companies—the main fuel companies which I think everyone knows. But with those new entrants into the market, it has driven a whole lot of innovation. For example, when you go to the supermarket, you can get a little code on your receipt, which if you take it along to some fuel companies, you’ll get a discount off your fuel from your grocery docket. That’s great; that’s innovation; that lowers prices.

Then you’ve got operators like NPD and others that have very aggressive pricing strategies at times. I know my local NPD has 20c a litre off quite often, and flashing up on the sign when I drive past it—it’s quite close to my house. So it’s a very innovative market player; it’s grabbed a lot of market share by giving its customers what they want and what they need, which is the ability to buy fuel, at times at very low prices. So what is the problem here? We have heard from the Minister that there was a study that showed that there were unreasonable prices, but we don’t know what is unreasonable. And we know that in places where NPD—or what is known as, I’m sure you’ve heard of the Gull effect: when Gull comes to town, prices drop by about 30c a litre. So that is about competition. We have not heard, through any of the stages of this bill or select committee, why we wouldn’t just be looking to ensure that the conditions are right for Gull or players like them to expand out into other areas—and they are; they’re doing that anyway, they’re moving out into the market. These things take time, there’s a lot of capital to invest, and then on the other hand we’re getting the Government telling them “Well, actually, the days of fossil fuels are very much numbered”, so why would they invest?

So we end up with this really quite confused response from the Government—which I alluded to at the beginning of this speech—where the Government on the one hand removes excise tax because they panic and the public don’t like higher prices, then they bring it back in because they have to at some point. You know, it’s just really quite confused and they drive inflation along. And as I said, we are in a significant cost of living crisis, partly driven by the unwise and ill-thought-out actions of this Government. I am still very concerned—and we did try to get to the bottom of all of the mechanisms that are going to be used under this new legislation when it comes through, and there’s no doubt it will; the Government’s got the numbers, so it’s going to pass—how it’s actually going to work in practice. Despite a number of members in this House asking quite direct questions; asking for some of the details about how these things would work, we got little to no information from that questioning. It’s very concerning that we’re at this position. I think that we have a well-functioning market at the moment. We have a Government with a solution looking for a problem to apply it to and to actually appear to be doing something, when really, the best thing they could have done would be to just leave the market to solve the problem. And it isn’t actually a problem at this stage, I don’t believe—and certainly with the entrance of NPD and others, I think that that is the best way for us to go.

Price controls, we know, do not work. We know that pricing principles and price discovery has worked all around the world; it’s worked in every other market; it is working in the fuel industry market at the moment. There is no need for this legislation. We oppose it; we think it is another bureaucratic sand in the gears of the economy, adding costs needlessly to Kiwis going about their daily lives. We know that fossil fuels literally fuel our economy. We all get to and from work by it—almost all of the MPs from outside of Wellington fly here and fly back all from fossil fuels. This legislation is not going to do any good it all, it is just a needless waste of time, I do not support this bill.

Thank you, Madam Speaker. After that speech, I think it is quite challenging for us to sit here in this House and listen—especially to a member who otherwise, I don’t think, does much reading at all, whether that’s reading of the bill or reading of the news that about two hours ago announced that inflation has just reached 6 percent in this quarter.

So this is a bill that we are extremely proud of after the research that the Commerce Commission has done into the fuel market. This is a bill that the Commerce Commission had recommended in terms of making sure that Kiwis get a fair deal at the pump—our small economy of 5 million New Zealanders—when competition doesn’t happen the way it should, purely sometimes because of scale and other reasons as well. Sometimes because of actors in bad faith or other things—and also geographic area in the world as well, actually—we often don’t get the amount of competition that we deserve as New Zealanders. So I don’t agree with the member Stuart Smith, who’s just assumed his seat and who says that the market always solves itself. By nature, companies are there to try and look after their bottom line, so this is why we need to make sure that we have a Government that stands up for its people and that stands up for New Zealanders. So that’s why I commend this bill to the House.

Thank you, Madam Speaker. It’s a pleasure to rise to participate in this debate. First of all, I’d like to say I concur with my colleague Stuart Smith, who had a wonderful contribution, I believe, in opposing this bill. But before I actually begin talking about this bill, I’d just like to give one piece of advice to the member who just sat down who has been chairing the Economic Development, Science and Innovation Committee. In a debate, you don’t necessarily get up and accuse a member of not having actually done something when you haven’t listened to the debate, because one of the first things that Stuart Smith actually said was talking about the inflation rate, that it has reached 6 percent but the non-tradable rate was 6.6 percent. That was the first thing he actually talked about. So if the member was not listening properly, you do not actually get up and accuse the member of not having actually done the job or read the news. Or, if the member has no idea about how business operates, perhaps she should not be talking about business and the market, because she’s probably never owned a business before and doesn’t understand what it actually is to run a business.

One of the things that I find incredible about this Government is that often they believe that they’re doing the right thing, and that’s honourable, because we all, as members of Parliament, want to help communities, want to help New Zealanders, want to help the economy; we actually feel that we’re doing the right thing. But sometimes this Government seem to have the wrong end of the stick. They don’t actually understand that when the Government intervene and try and control prices, what they effectively do is actually, by trying to reduce the cost for consumers, it reduces competition, which, effectively, means that it distorts the demand and supply, which, effectively, will end up with costs being higher for consumers, because when the cost actually affects the businesses, businesses—what do they have to do? If the cost goes on the businesses, it costs businesses more to operate their business, they’re not going to wear it. Why should they? It costs more for them to run their business, to pay people, to actually employ people, to actually rent the premises, do their business. How is that actually going to affect? It’s going to basically go on to the consumers and it’s going to cost consumers more. This bill, effectively, does that.

The key intervention, which the Minister had actually talked about, in terms of the terminal gate pricing, which is the bill that we actually passed, the Fuel Industry Act of 2020—we actually supported that bill. The fact that the Minister says that it has had an impact in the way that terminal gate pricing actually works, that it actually allowed for more companies to participate, including new entrants to the market, and, you know, where prices are 10c to 30c cheaper in areas where Gull operates or the Timaru Oil Services operate, that is a wonderful thing. So why is the Government now trying to control prices if the market is operating the way that the bill that we passed in 2020, the Fuel Industry Act, is actually doing its job? This is a Government basically wanting to control the market. It’s like basically saying, “We know better than the business, we know better than you, the consumers, because we will dictate how much you actually pay for it.”

Perhaps I may not be very popular if I talk about the dentistry industry, because recently I went to get my teeth cleaned—you know, annual event for my family—and, you know, literally, it was a 20-minute session, a quick check-up, no X-rays and a quick dental hygienist operation cleaning my teeth. Only 20 minutes—apparently I do a really good job with the brushing—cost me $350. Twenty minutes—perhaps the Government could regulate that price. You know, it literally cost $1,050 for three members of my family—me, my son, and my mother—$1,050. I didn’t actually realise that that was the price. Inflation has cost that—inflation. Non-tradable rate at 6.6 percent, and it is the direct impact of this Government’s failed operations in setting the rules. This is the inflation overreach that creates higher prices for consumers. This Government has no idea how business actually operates. This is a bad bill, and we don’t support it.

Kia ora, Madam Speaker. It’s disappointing to hear the rhetoric from the other side of the House when we are looking here around something we want to promote: competition in this space around the fuel industry. I want to ensure that our wholesale engine-fuel markets are in a place—and when you have people, like the Gull, NPD, and Waitomo retailers, all speaking in favour of what this can actually do—the cost-saving retailers that they are—I think there is something to be listened to by those retailers who are actually supporting what we are doing on this side of the House.

It was a privilege to be part of the Economic Development, Science and Innovation Committee that looked into this legislation, that explored it. And I think most of what’s been said has been said, so, therefore, I commend the Fuel Industry Amendment Bill to the House.

ACT won’t be supporting this bill; this bill is rubbish. Let’s have a look at the problem the Minister claims to be solving.

Well, there’s a risk, apparently, that fuel companies will charge excessive prices, wholesale prices, for fuel, even though fuel companies already publish their prices at the terminal—the wholesale prices—for anyone to see. Of course, if you’re a big fuel user—if you run a fleet of trucks, if you run dozens of diggers and bulldozers—you can go to a fuel company like an Exxon Mobil, like a Chevron, Caltex, or a British Petroleum, or an Ampol, or a Z—who all operate in New Zealand—and you can get a better deal than shown at the terminal where the prices are listed. The Minister doesn’t seem to understand that.

Now, let’s assume that the problem definition is just plain wrong and there’s no purpose for this bill. So then you’d say, “Well, what other purpose could a Labour Government have when they claim to want to have the power to set wholesale fuel prices because the poor consumer is suffering from excessive fuel prices? Why would a Labour Government want to take that power unto itself?” Maybe Dr Webb could offer a perspective. Maybe it’s because a Labour Government is actually hoping to convince consumers that the problem with inflation and the cost of living is not the Labour Government’s fault; it’s the bad, bad fuel companies’ fault. But the ACT Party says that’s a load of rubbish, just like this bill.

What has created the problem, though, potentially, with people’s concerns about fuel prices? Well, of course there was a Russian invasion of Ukraine which pushed up the price of fuel temporarily—that’s settled down. What else has caused a problem with the cost of living and fuel prices? Well, there was COVID, where shipping was disrupted for some time—that’s resolved itself. What is the greatest influence on retail fuel prices then; the prices consumers pay at the pump? Well, it’s actually the Government’s own fuel tax, the fuel excise duty.

Because even though the wholesale price of fuel—say, take a litre of regular 91—is about $1, maybe $1.10, and the fuel company’s wholesale margin is around 32c on that dollar. The Government takes $1.30 in fuel excise duty—$1.30; four times or more what the profits that the fuel companies are making.

So what is the problem here? Well, I don’t think Kiwis would mind paying a fuel excise duty—a fuel tax on petrol and diesel—if they felt they were getting value for money from that. Because people don’t mind paying taxes if that money goes to paying teachers and nurses and police more, and providing health services. We don’t mind paying taxes for those things.

But what we do really dislike paying taxes for is when successive Governments have failed to invest in the roading infrastructure and the road networks and public transport in places like where I live in West Auckland. They’ve failed to invest, including this Government, which announced to Auckland Light Rail, the first train arriving at a station in Mount Roskill in 2021. The business case already pushing towards $100 million in cost; they haven’t even completed the business case, let alone lay a single track.

Kiwis don’t mind paying for things if they feel they’re getting value for money. What this bill demonstrates is how cynical this Labour Government is in claiming that they’re going to somehow take control of the wholesale fuel prices if the Commerce Commission or the Minister decides that they’re unfair. They’re going to take control of them and they’re going to use a mechanism which gives the Governor-General the power to set a wholesale fuel price through regulation through an Order in Council.

Now, deeply cynical behaviour, but of course to be expected from this Labour Government. But what is the likely outcome from setting a wholesale fuel price; from telling businesses what they are allowed to sell their products for? Well, we have lots of examples of this in history, where Governments have attempted to set prices because, say, the price of some commodity has gone too high. What happens then? Well, the people who still have to pay to supply the product into the market simply decide not to supply it at the rate that Governments have mandated.

Can give you a classic example. We hear a claim often from parties on the left about why we need rent control. Well, you only have to look at where Governments set the price of rental accommodation. What happens? You look at a city like New York, where the price of rental accommodation is set by the city. What’s happened? There’s a shortage of rental accommodation, the quality of rental accommodation is significantly worse—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! The member will come back to this particular bill. Thank you.

SIMON COURT: Madam Speaker—where Governments set prices that causes either a shortage of supply or a reduction in quality because fourth-form students, or year 10 students, who study economics—or I think it’s called business these days—would understand the price-quality triangle. There’s either going to be if you reduce the price, then there’s more supply comes into the market. If the Government sets the price, something else has to give: supply or quality. Basic economics, but clearly absent from consideration by the Minister of Energy and Resources, and this Labour Government.

So what would ACT do? What would ACT do? Well, how about if we want businesses to be confident to supply goods like fuel into the New Zealand market at good rates at a good wholesale price—that’s what this bill is about: it’s about bulk purchases of fuel, wanting to have access to some clarity about what the pricing regime might be between competing suppliers and being able to make a good decision about where they buy fuel from.

It’s not about, “Hey, look, you know, we rocked up to the terminal at Wiri in South Auckland—by the way, there’s only one terminal in Auckland—and there’s a number of prices on the gate and we’re not happy; we think that the company is making too much money. Could the Minister for Energy and Resources or the Commerce Commission look into it and the Governor-General set the price?” That would never happen because businesses who are rocking up to the fuel terminal to buy gas will already have a commercial arrangement with the fuel supplier, right?

So, I mean, the whole basis of this bill is rubbish. But what would ACT do? Well, firstly, we’d stop threatening businesses to strand their assets because they happen to be involved in supplying high-density liquid hydrocarbons—otherwise known as petrol and diesel—to 5 million consumers. We’d stop threatening to strand their assets with poor climate policy and gas transitions and transitions to a low-carbon economy; an emissions reduction plan which threatens to take businesses and private property rights off people.

Because why would any business invest in supply, distribution, and actually delivering a service to customers in a sovereign nation like New Zealand where the Government of that sovereign nation is threatening those very businesses’ existence and insisting it will put them out of business, like the climate Minister James Shaw did when he threatened that their energy assets and hydrocarbons would be stranded?

So what would it do? We’d get rid of that dumb climate policy. We’d scrap the zero carbon Act. There’d be no emissions reduction plans required from Government under ACT because the emissions trading scheme—which is another price that we pay on fuel in addition to fuel excise duties, in addition to GST; every consumer pays for their emissions under the emissions trading scheme—we would let the emissions trading scheme set a price on emissions so that none of this crazy, ineffective, terribly expensive climate policy is necessary.

ACT would also repeal this bill because a Government that involves ACT would not allow Government to set the price for any commodities, including fuel, that are supplied by the private sector. Now, Governments might negotiate to procure goods and services—to procure fuel for their own purpose; their own Government department—but they will not be setting the price for businesses and consumers. Thank you, Madam Speaker.

The Green Party is supporting this bill. Based on the debate that I’ve just heard, I think it might be useful to just go back to the history of this because the previous speaker, Simon Court, was implying that this bill had just been dreamt up in the last year as a response to high cost of living. But in reality, in December 2018, the Government asked the Commerce Commission to undertake a study into factors affecting competition for the supply of retail, petrol, and diesel. Now, I would think people who care about functioning markets would understand that that is the purpose of the Commerce Commission—it’s to look into those areas where there might not be sufficient competition, and consumers, as a result, are paying higher prices than they should be, and that results in higher profits for those fuel companies. But it’s not an economically optimal situation.

So just to quote from the draft report, which, you know—I realise the member previous was elected in 2020, so he may not have been aware of the history of this. A draft report was released in August 2019, and then there was a full and final report. But the Commerce Commission chair said, “As a result of our study, we consider many fuel companies have been making persistently higher profits over the past decade than we would expect in a workably competitive market.” So anyone who’s taken fourth form economics, I think, understands that markets are not efficient in and of themselves. They need to have Government—which is all of us, which is all of the people working together to make sure that we’re creating the conditions in which consumers get treated fairly and there isn’t profiteering. And that’s, essentially, what this bill is about, it is preventing profiteering—so it’s for the benefit of New Zealanders.

Obviously, the ACT Party is in denial about profiteering, or as their founder, Roger Douglas, pointed out yesterday, the party now is all about profiteering, it’s all about the top 1 percent getting richer and richer. I mean, that’s their raison d’être. And you can, you know, tell that’s who funds them. So the goal of the ACT Party seems to be that consumers do get ripped off by big corporates who are able to make excess profits over and over again. They don’t believe the Government should step in and try to fix the situation so that we do have competitive markets, because they just believe that if you just leave things to the market—you know, with no intervention whatsoever—it’s a good thing if a small number of people get richer and richer and richer and make excess profits off selling a commodity that is actually slowly smothering the planet on which we live when we use it.

You know, we do know that fossil fuels are creating a blanket of pollution that is smothering the planet. And as a consequence of that, in the last week—I know the ACT Party are probably climate change deniers as well as profiteering deniers. In the last week, we’ve seen the hottest days on record. In the Northern Hemisphere, they had three of the hottest days ever recorded in human history in at least 10,000 years. Now, that is a very concerning situation because it does mean that climate change, global warming, global heating caused by the use of fossil fuels since the industrial revolution—and, of course, land-use change, cutting down forests, etc.—

Simon Court: Point of order, Madam Speaker. The member has raised what I consider to be an imputation of improper motives against the ACT Party by using the term “climate change deniers”. I would ask the Speaker to consider whether that is in fact, in terms of Standing Order 120, offensive or disorderly.

Hon JULIE ANNE GENTER: Speaking to the point of order.

Simon Court: I’m still on my feet.

ASSISTANT SPEAKER (Hon Jenny Salesa): He’s still giving his point of order. Then I’ll come to you.

Simon Court: Thank you, Madam Speaker. Because the imputation is that the ACT Party refuses to accept the reality that the climate is changing and that humans’ effect on the planet, because of our anthropological activities, has no effect on the climate. And that is quite incorrect. That is not our position and it’s not a debateable point. There is an imputation which is incorrect.

Hon JULIE ANNE GENTER: Speaking to the point of order. I believe that if you look at the Hansard, you’ll see I said “probably climate change deniers”, and I absolutely believe that that is a debateable point based on the content of his previous speech, where the speaker was saying they were going to get rid of all the climate legislation.

ASSISTANT SPEAKER (Hon Jenny Salesa): I will allow the member to continue on with her speech. This is actually a robust discussion, and when the ACT member was giving his speech earlier on, I could have stopped him at many points. I call on the Hon Julie Anne Genter.

Hon JULIE ANNE GENTER: Thank you, Madam Speaker. Just to make the point that it is really important that we have a plan to reduce fossil fuel use in a very rapid time frame. People all around the world will have been experiencing these extreme weather events—extreme flooding and storms here in New Zealand—but now the hottest days in over 10,000 years in recorded human history. There will be consequences if we don’t have a plan to rapidly phase out fossil fuel use.

At the same time, because this work started at the end of 2018, before COVID, before the inflation, before the invasion of Ukraine, it is still making the point that there is a lack of competition in the wholesale fuel market because the major fuel companies, as the Commerce Commission wrote—Z Energy, BP, and Mobil share joint infrastructure network, which includes coastal shipping operations, storage terminals, regional ports, and it did include the refinery before that closed. And they use that network to supply 90 percent of the nation’s fuel through their own branded retail sites or via other distributors. So it’s the combination of infrastructure sharing and restrictive supply relationships that gave the major fuel companies an advantage, and that resulted in higher profits over a sustained period of a decade that was—you know, has nothing to do with global energy prices spiking because of the invasion of Ukraine or to do with supply chain issues to do with COVID. So the purpose of this bill is to implement a recommendation of the Commerce Commission—that is, to ensure that consumers are not being fleeced.

We know, Aotearoa New Zealand, we’re a small country. We’re not as big and populous as other competitive markets. So we do have a problem getting competition in some of these areas, particularly where there’s limited infrastructure. And it wouldn’t benefit New Zealand to over-invest in the infrastructure either. So this is a sensible solution that the Commerce Commission recommended and, indeed, their recommendation around the transparency around a terminal gate pricing regime is based on an Australian equivalent. So when the National Party and the ACT Party try to pretend that this is some sort of outrageous thing, the truth is either they don’t know what’s going on in the world—which is entirely possible—or in comparable jurisdictions to us, like Australia where they have a similar terminal gate pricing regime, or whether they’re just playing politics on this bill because they think they can get a hit on the Government by dramatising and talking about the bill without giving the full context of the bill and the study into it and what the purpose of it is.

The previous member also, of course, raised the issue around fuel taxes. And I thought he made a really good point where he said people are happy to pay taxes when they can see what they’re getting out of it. And as we heard from the Minister of Transport yesterday, Waka Kotahi repaired over 60,000 potholes last year. They massively increased their maintenance and renewal programme thanks to the coalition Government with the Greens last term increasing the funding available for maintenance and funding of roads after a significant under-investment in maintenance and renewals from the previous National Government. That’s on the record—very easy to go out and claim that—

ASSISTANT SPEAKER (Hon Jenny Salesa): Order! Order! If the member would just come back to this bill, thank you.

Hon JULIE ANNE GENTER: But the point is that there’s a very good reason why we have fuel taxes where they are, and that’s because there is a cost to building and maintaining our road network and investing in our transport network. And to be fair, the fuel tax doesn’t even cover that. No, the fuel tax doesn’t even cover the cost of roads that Government is building and maintaining. So the reality is taxpayers are subsidising roads quite considerably and they aren’t necessarily the most efficient, and certainly not the most climate-friendly, way of solving our problems in the future. We need to invest in much better public transport, regional rail, and things right across the country.

But the Green Party supports this bill because it is a sensible recommendation from the Commerce Commission addressing a problem that was a longstanding problem with excess profits. And of course we should. I think New Zealanders would like to see a Government ensuring that they are protecting New Zealanders from profiteering and from climate change. And that’s why, of course, New Zealanders should vote Green at this election.

Thank you, Madam Speaker. It is a pleasure to rise and take a call on the Fuel Industry Amendment Bill. I’m just concerned that there are people across the House who have clearly demonstrated today that they didn’t get past year 10 economics, because in year 12, what you learn is you learn about market failure and how appropriate it is for the Government to intervene at that point. This bill really clearly helps the Government to intervene with this market failure. So when you have a lack of competition, there’s a lot of causes of that. One of the causes of that—for those who missed out on year 12 economics—is barriers to entry, and this bill helps to reduce those barriers to entry and improve the competitive environment. That’s one of the causes. One of the symptoms is prices, and this bill helps improve transparency, and when that doesn’t work, it gives us a really good, nimble, responsive regime to respond to that. Consumers want their purchasing power back. I commend this bill to the House.

The next call is a split call. I call on Todd Muller for five minutes.

Thank you very much, Madam Speaker. It’s great to see that the Green Party and the ACT Party are still having the debate to my left. The mischievous part of me listening to that conversation thinks, wouldn’t it be hilarious to have a grand coalition postOctober just to see their faces as they seek to carve out for the New Zealand populace their vision of the future as they drag the centre-left party left and the centre-right party right. Well, you know, we’re not Germany, so that won’t happen—as I said, too mischievous for a long Tuesday afternoon.

There is a clear philosophical difference when you sit and listen to this debate. I haven’t sat through the select committee. But on the one hand, you have an incumbent Government that looks at prices at the pump rising rapidly. We all understand a lot of that is driven by global forces, but as has already been outlined, there are significant taxes that get put on the top of that. Actually, getting close to three bucks a litre is getting really tough for a lot of families, so they create this sense that perhaps what’s sitting beneath this is a cabal of oil companies that should be smashed. And so the Commerce Commission gets sent on the way to do some sniffing, comes back with a view—some of which, I think, makes sense: there should be a bit more transparency with respect to the terminal gate price that gets adopted.

But that’s not good enough for this Labour Government; there needs to be a threat of regulation where a Minister can decide, in the future if the prices are still high—and it’s coming up to an election—to ask the commission to go and look again with the regulatory backstop of essentially a Government stepping into the market and saying this is what the price should be. And as has been articulated by many on this side of the House, the Government stepping in and trying to decide what a market price should be is just a recipe for, at the very least, inefficiency but, frankly, worse than that: a whole lot of waste and additional cost for New Zealand businesses and society.

And then when you look at the detail of the bill and actually test the thinking that sits behind here, as we have sought to do through this process—and I appreciate we’re in the third reading as opposed to clause by clause analysis, but this clause struck me as interesting, clause 29C, which says that the terminal gate prices will be regulated or may be regulated when it is agreed or assumed by the Minister that the prices are above what would be expected in a competitive market. There’s no confirmation of what that criteria would be. So what’s above? Is it 5c above what everybody else is doing? Is it 10c? There is no logic apart from a subjective assessment, which will be absolutely driven by a political determination by the Minister at the time. This is a political, sensitive issue. Therefore, let’s create a regulatory impost to give the impression we’re doing something but, at the same time, ignoring the fact that the great driver of wholesale prices is what’s happening globally and that the impact on retail prices is the function of the various road, excise, and GST taxes—and emissions trading scheme (ETS) taxes—that actually inflate the petrol price to be quite a punitive and tough cost for a lot of New Zealand families.

And that then sits at the core of the lack of logic in terms of the Government’s approach, because with the same breath, they will talk about the leadership they are seeking to take with respect to climate change action, but at the same time, they will water down ETS settings, will make sure that the price that arguably should be reflected at the price pump, reflecting the cost of carbon in that vehicle—they will dilute that because of political pressure. So there’s a lack of logic. There’s a lack of coherence. And, again, we would say there is a far better area of focus that the Government should be working on, which is sorting this economy and reducing the cost of living for New Zealanders.

Thank you, Madam Speaker. I’m pleased to be taking the Māori Party slot on the Fuel Industry Amendment Bill, third reading. I was just reflecting on what people were saying this morning. But just reflecting on the reasons for this bill, if we reflect back to 2022, and the high price in volatility, there was some indication then that some regulatory backstop mechanism was necessary. So, hence, here we are, and I want to commend this bill to the House.

Thank you, Madam Speaker. I, too, would like to commend this bill to the House. It talks about encouraging competition and having a regulatory backstop. In the end, the people that will benefit from greater competition are always consumers. As somebody who does own a business and has been very much in a position to see what competition does—and thrives—this is what we need and it will result in lower fuel prices. I commend this bill to the House.

Well, thank you, Madam Speaker. We are here under urgency, debating the third reading of a Government piece of legislation called the Fuel Industry Amendment Bill. Although I didn’t have an opportunity to sit on the select committee and hear submissions from interested parties, I have been listening very carefully to the debate this afternoon across the Parliament, and I want to pick up on a point that my colleague Todd Muller made about this bill. Innocuous as it might at first seem, it actually is a marker of a fundamental philosophical difference between members of the parliamentary left wing—the Government, the Green Party—and members on this side of the House: the ACT Party and the National Party who have a completely different approach to free enterprise, to markets, to capital, and to how to encourage an economy to thrive, grow, and to be contributing to the welfare and wellbeing of all New Zealanders.

So this is a piece of legislation that, listening to the Minister giving her speech leading off this debate, my colleague Stuart Smith said sounded like almost she was lulling the House into a sense of a sweet lullaby—almost a bedtime story—that this was a bill that was designed to be sweetness and light, and everything was calm, and lovely, and nice. Actually, nothing could be further from the truth. This is a piece of legislation that, essentially, creates a regulated market intervention, of the sort that we know from experience all around the world does not work. The number of situations, both in history and current today, where Governments have sought, maybe with good intentions, maybe with the best of motives, to intervene in market drivers—simply doesn’t work. In fact, not only do interventions of this sort not work, they don’t create the level playing field or the benefits for consumers that the perpetrators of legislation like this seek. In fact, more often than not, perverse outcomes are generated by market regulatory intervention of this sort.

Now, it’s worthwhile going back just a little bit in the history, because there was a period of time, towards—about this time last year, actually, when fuel prices were dramatically increasing, and the Government realised that they had a massive cost of living crisis on their hands. So they intervened in the arrangements relating to our emissions trading scheme (ETS) to artificially change the impact of the ETS on fuel prices by removing the fuel excise tax—reducing it for a period of time. Now, they were able to sustain that for the best part of a year or so, and people who bought petrol at the pump received a financial benefit funded by all taxpayers using borrowed money, which only actually added to the inflationary pressures that the Government finds itself still in today. A fundamental misunderstanding about how economies work, and how intervention of this sort impacts on it.

So they created inflationary pressures within our economy already under pressure, under stress, and today we’ve seen the impacts of it with a non-tradable inflation rate of 6.6 percent. Remarkable—6.6 percent—

Hon Louise Upston: Ouch!

Hon SCOTT SIMPSON: Ouch—my colleague Louise Upston says “Ouch!”, and she’s absolutely right because that hurts consumers. This piece of legislation, as feel-good as the Government may want it to be, hurts consumers, because intervening in a market in a regulated way ultimately will create perverse outcomes that will be detrimental to consumers, and nothing good will come from it.

So on this side of the House, we stand opposed to the legislation not only on the basis of principle but on the basis of practicality as well. What we don’t know from this piece of legislation are some of the very basic questions that need answering. So what does unreasonable pricing mean? Who decides what is unreasonable and what’s reasonable? Is that simply a creation of a Minister sitting on the Labour Party’s current front bench, or is that a reasonable test that is decided by market players? Or is that a reasonable test that is decided by consumers who are free to make decisions, for instance, whether they want to drive a fossil fuel driven vehicle or not? There are some, like myself, who choose not to. So petrol pump prices are actually quite irrelevant. One of the great things about driving an electric vehicle is that suddenly—suddenly—petrol pricing becomes utterly irrelevant to your life in every respect; it becomes utterly irrelevant. So there are a range of options for consumers to adopt and adapt to, should they wish. But no, here is a Government determined to act upon their philosophical base, which is to put their sticky fingers into the marketplace and then give it a good stir and hope that their intentions will result in what they think will happen.

Well, I’ve got news for them. I think that the opportunity for perverse outcomes is very high. So we come back to questions that need answering. So who decides the point at which this intervention will be made? Who decides what’s reasonable? Who decides what the pricing will be, and how is it going to work in practice? These are questions that are superficially addressed by Government members. They don’t seem to be addressed in any detail. I find it hilarious that Government members should stand up and then proceed to lecture members on this side of the House about the economy, about economics, and about how markets work, or they don’t work, because what we know for absolute truth is that the current Labour Government, like all socialist Governments around the world, have no understanding about how economies work. They have no understanding about how markets work, and cannot resist the opportunity to meddle in them.

So we think on this side of the House that this legislation, as well-meaning as I think Government sincerely believes it to be, but we think on this side of the House, that this is really a solution looking for a problem. A solution looking for a problem that the Government hasn’t identified, can’t control, and will not be able to resile from once it is imposed. So ultimately, our opposition to this legislation is not so much with the Government’s intent, because I think everybody has an intent to try and make things better for consumers. But by meddling in a regulated way, in a regulated marketplace, no good can come from that. No good can come from that at all.

So on this side of the House, we oppose this legislation. We don’t support it, and we think that the current Government should actually go back to school and learn a little bit about how economies work, learn a little bit about proper economics, and get on to a better understanding of what damage they’ve done to our economy, what damage continues to be done by this Government, and how a re-elected National-led Government in October is going to have to get the country back on track.

Thank you, Madam Speaker. I am one of many MPs that are deeply committed to addressing the cost of living challenges in front of many Kiwis at the moment. When we look at the basics of what people need, absolutely the cost of petrol at the pump is one of those priorities. I find it quite naïve that some people in this House think that Government shouldn’t be involved in addressing the market challenges—market challenges that were identified back in 2019, when the Commerce Commission published its retail engine fuel market study. This piece of legislation adopts the recommendation from that study to address the issues that were raised. And I think it’s responsible of a Government like ours to step in and address those. So this is taking action to that; it’s enabling and enacting those recommendations. So, with that, I commend it to the House.