Grocery Industry Competition Bill

Members, we come now to Part 3, and this is the debate on clauses 17 to 112, “Wholesale supply of groceries”. The question is that Part 3 stand part.

Thank you, Madam Chair. Earlier, when I was talking about the growers, whether it’s actually green- or brown-potato growers—I think this section probably is where it fits, because it is actually about the wholesale supply. I think that when my colleague Andrew Bayly talked about that particular—actually, I think we were thinking similar things in that we actually want equitable ways that our suppliers could have their view and their produce marketed. As Andrew Bayly said—I think it was Turners and Growers that you were actually thinking about a long time ago—I remember going to Turners and Growers and actually putting hands up early in the morning to bid for those vegetables. They even had flowers there as well. But in terms of wholesale supply of groceries, I think what we want to see is a framework that provides transparency, and it actually says that in clause 18(2)(b)(i). We just want to make sure that the retailers will make decisions about price range, quantity, and frequency, in terms of conditions.

The question I actually had for the Minister of Commerce and Consumer Affairs was that concerns were raised with me that sometimes growers don’t necessarily want their produce to be sold at a particular retailer for whatever the reason. If they actually supply to an entity—some of these grocery retailers are also wholesalers as well, and when they actually supply, they currently only wholesale to their own market. But if they’re actually opened up so that they have to supply wholesale to other retailers, then they would have a problem with that. I think the question that I actually had earlier for the Minister fits into this section and I wonder if he could potentially address the concern of some of these growers who actually are brought into this scheme. But if they don’t actually open up—if their goods are not actually opened up to other people who are actually purchasing through the wholesale entity that they had a deal with, initially, to only supply to a particular market—they could actually be in trouble.

Minister, do you believe that forcing supermarkets to act as wholesale suppliers to their competitors—would it discourage international food retailers from entering New Zealand, and, if not, why not? Is the Minister concerned that requiring supermarkets to act as wholesale suppliers to their competitors would encourage existing New Zealand retailers to raise their prices to cover losses they may incur as a result? Finally, in any socialist or capitalist country in the world, has the Minister or his advisers identified anything that shows that compulsory Government pricing is an effective tool of increasing competition?

To the Hon Melissa Lee, it is an interesting point as to whether a supplier can require that their products, whatever they be, should be permitted to only have been sold through particular outlets. If it’s, you know, Nike or Lululemon, there’s probably not too much concern, but when you have a duopoly for food, such—I think they used to be called soulless agreements—sole supply agreements are problematic because they tie up the market. So, in fact, the fact that a supplier, if they want to sell into Foodstuffs, might also find themselves appearing in The Warehouse might not be a perfect outcome for that supplier, but I think we need to hold front and centre that this is about having fair agreements both at the supplier end but, more importantly, at the consumer end. If that means that that’s the outcome so that we get cheaper prices at the checkout, then that’s what will happen.

Mr Damien Smith: will it discourage international investment? Well, I’ll tell you what discourages international investment: the vertically integrated duopoly we’ve got now. It’s an absolutely impregnable market, and up until this Government commissioned this Commerce Commission market study, there was no movement whatsoever, and now we are seeing movement. What this does is it facilitates entry, so anyone can come to New Zealand or start up in New Zealand and, without having to have the barrier of standing up an entire supply chain, can be competitive. That’s because of the strength of their market position through the vertical integration of logistics, supply chain, and retailing. In terms of compulsion, on prices, there’s no compulsion in this legislation.

Madam Chair, thank you. I know the Minister only shops at Moore Wilson’s, and I do look forward to taking him to Costco. Actually, I’ve courted Moore Wilson’s as well, just assessing the competition myself.

But he didn’t answer my question about whether the advisers and himself can show anywhere in the world where compulsory Government pricing is an effective tool in increasing competition—the question of the night.

Thank you, Madam Chair. It’s a very quick one in relation to the answer that the Minister gave. I’m wondering if that changes if the supplier had a specific reason, like for religious purposes, that perhaps it was a halal issue or a cultural issue that they oppose a particular wholesaler to supply to other people for those particular reasons.

Thank you very much, Madam Chair. I appreciate there’s a little bit of competition on this side of the House this evening, isn’t there? What a good sign. I do want to just compliment my colleague Melissa Lee for her last contribution. But, Minister, I’m going to move to a different clause, if I may.

You’ve just mentioned a number of aspects around your keenness to see more competition in the grocery market and more international players coming in from overseas to compete in this market. I’m interested in your observations that one of the players within the duopoly—Foodstuffs—is 100 percent New Zealand - owned, owned by Kiwis, employs Kiwis, and, potentially, your policy of promoting overseas players that are going to come in from Europe and send their profits back overseas and not stay in New Zealand, for some, may be a slight issue.

I’m interested in your balancing act around the fact of whether you think, actually, nope, that’s all fair and dandy; as long as people get the lowest price at the checkout, then you’re not really that bothered around what happens and what are those organisations that are participating in the market. So that’s the first question.

The second question is in regards to clause 18(2)(a), which is in regards to “the Commission may hold an inquiry … into whether the wholesale supply of groceries should be subject to additional regulation”. Gilmours, I understand, is the wholesale entity under the Foodstuffs group. I guess what is being proposed here, and I’m just wanting to get the Minister to articulate the practicality of what’s being proposed, is that, in effect, Gilmours may be subject to a review and may be subject to additional regulation if they potentially, for some reason, don’t supply one of these international grocery providers that comes into the market.

One of the challenges, obviously, in the context of competition and low prices is that scale is a considerable factor, and, particularly in the New Zealand market, it is a small market. The reality is that subscale entities are going to potentially be more expensive. So the potential reality of trying to slice that up even more may actually lead to higher prices at the checkout, which doesn’t necessarily correlate with the Minister’s intent around what he is hopeful this will achieve.

So I think there’s two key questions there. [Interruption] Sorry, Simon O’Connor—

Simon O’Connor: I’m just saying it’s like the tenancy changes.

SIMON WATTS: Tenancy changes? No, good point. I didn’t take it from that perspective, but thanks for raising—maybe another bill will cover that point. Those two questions, Minister, if I may.

Thank you, Madam Chair. Firstly, just a clarification in respect of Ms Lee’s earlier question around the suppliers having to sell their products. It’s just important to note, of course, that there is no compulsion for a supplier to sell into any particular grocery supplier. Obviously we want suppliers to do their part to improve competition, including taking up the opportunities to sell their products into new grocery retailers, either through an established wholesaler regime or directly.

This feeds into Mr Watts’ question, because if suppliers don’t and that was having an anti-competitive effect—and that is to say, it is lessening competition—then there is a backstop framework. This is the point that Mr Watts was referring, clause 18(2), that it’s possible to have backstop regulation which could conceivably pull suppliers in.

Now, that’s not going to be some small supplier who’s got a few lettuces or cabbages or some niche goods, but if some large manufacturer starts acting in a way, essentially throttling the supply chain, that would be problematic. So it’s not prohibiting exclusive supply agreements under the regime to facilitate wholesale agreements suppliers may choose to opt-in there.

In terms of overseas investments, profits going overseas, it’s interesting to hear the National Party being—

Simon Watts: Oh! Looking after your rich mates!

Hon Dr DUNCAN WEBB: —protectionist. I just have a little chuckle to myself in respect of that. The Labour Party and this Government are very happy to be an international player, to be promoting free trade, and to have appropriate and well-managed overseas investment. And if that’s an overseas player coming into New Zealand, whether in partnership with New Zealanders or otherwise to improve competition, to improve our market, and to lower prices, then that is a good thing. And, Mr Smith, there is no compulsory Government pricing.

Thank you, Madam Chair. Well, this part is probably the most contentious part of the bill, because what this part does is it legitimises and, in fact, encourages the regulated grocery retailers to move into wholesaling. And if this works well and it allows third parties to come into the market, that would be a great outcome. But the reason why this has probably got the most concern, and certainly some of National’s concerns about this part, is if it’s wrong and we don’t end up getting a better outcome, then what we’ve done is enabled the supermarkets, the large supermarkets, to increase their bandwidth from retailing right back into the wholesale chain. So there’s an underlying assumption the Government has adopted in this bill that by regulating this, you will get a better outcome, and the jury’s obviously out until we see that occur. That’s the first point. I’d just be interested to get the Minister’s reflections on why he believes this will be effective. It’s the difference from what is sought to be obtained, which is making products more available to a wider great group of competitors, but what assurance can the Minister give us that this will actually occur and we’re not here in five years’ time looking at this and saying, “Well, that didn’t work.”?

The second thing: the Minister made a comment about Costco and other competitors coming into New Zealand. One of the things I think I understand is that Costco actually hasn’t had to rely on these wholesale provisions to get established. And clearly they’ve got an operation in West Auckland and, hopefully, they’re going to roll out more operations across New Zealand. But I think that Costco, if my understanding is correct, has shown that, actually, a large competitor—Costco has always been mentioned; ALDI is another one—can actually enter the current market, contrary to the Minister’s assertion that it’s really difficult, by actually just entering into direct relationships with suppliers because they’re of a scale that suppliers want to offer them goods and services. So I just want to remind the Minister that that is the situation and so his assertion before, that this would encourage that—what I’d suggest to him is it’s already occurred without the effects of this bill coming into play.

Just a related question is what is the Minister’s view around the logistics and supply arrangements that come with this natural extension back into wholesaling? Does the Minister believe that the commerce role will extend to making sure that their logistical and wholesaling warehousing arrangements are also subject to oversight by the Commerce Commission, or is that not part of the remit of the Commerce Commission because you cannot talk about wholesale supply without actually also talking about the logistics and the warehousing of those products, because obviously they’re bought bulk and then distributed, and we’re trying to set up an arrangement around that. So I’ve got some more questions, but I just want to leave those three points there.

Thank you, Madam Chair. In respect to the suggestion of a wholesale duopoly, this bill does anticipate that possibility and lays it off. In particular, this bill will encourage commercial wholesale by Foodstuffs and Woolworths, but it also includes several safeguards to stop a wholesale duopoly which include protections for the ability of suppliers and wholesale customers forming trading relationships and also, of course, probably most importantly, monitoring by the Grocery Commissioner to see if that looks like it’s emerging. And of course the backstop: the fact that the commission can impose regulations, appropriate regulations to address that, should it be seen as emerging.

I’m not quite sure, really, what the point is around Costco and the fact that it’s entered, and I think the suggestion was that this wasn’t related to the grocery reforms, the market study, the removal of land covenants, and the fact that this Government has at last created an environment where competition is on the horizon and people like Costco are happy to come in.

In terms of those other logistics and supply chain questions, one of the things in the Supplementary Order Paper that is scattered throughout it is the inclusion of ancillary services, which would capture things like cold storage or trucking services that an operator might use to gain advantage when they can’t price the goods themselves in any particular way. So they are drawn in for pretty much exactly that reason.

It’s always a pleasure when the Minister of Commerce and Consumer Affairs articulates that the Government are proponents of a free market and more competition and all of those aspects—if only that was the case.

But let’s take a look at clause 18(2)(b)(i). This is in regards to the overview of regulation of wholesale supply of groceries. It articulates the requirement of one or more of these regulated entities to have what is referred to as a framework, which provides transparency about how these retailers will make decisions about prices, range, quantity, frequency, terms, and conditions—all regulated aspects. In regards to that—gosh, that sounds like a blast from the past, if you go into Eastern Europe, in terms of the Government dictating the frequency of how many cauliflowers you can sell in Ōrewa. The Hon Mark Mitchell—good to have you here.

But the question, really, for the Minister, in regards to that framework, is that in reality, how does the Minister see that is going to work in practice? Is it genuinely going to be able to get to that degree of minutiae around the range of—well, let’s talk about some products you can buy at the local supermarket. Maybe eggs—free-range eggs, of course; we’re not into caged eggs. Free range. But there’s a huge variation in terms of the range of the size of the eggs, and all other factors around it. But is it going to get into that degree of detail? And I know that because I do the weekly shop on a Sunday, just for the record. Damien Smith’s looking at me, going, “Are you sure?” But no, I do do the weekly shop. And is—

Andrew Bayly: Oh, does he?

SIMON WATTS: What was that, Mr Bayly?

Andrew Bayly: I just wondered whether you did do the weekly shop.

SIMON WATTS: Can I just clarify that that’s not a question for the Minister, but he can answer it if he wants. In regards to that framework, how is it going to work in practice?

The other point around this is in regards to the compliance costs on these wholesale entities in regards to meeting these obligations. Who will bear the cost in regards to the obligations around meeting those wholesale frameworks and the frameworks that I’ve referred to? What is the estimated cost that the industry as a whole will bear as a result of this increased regulation? And has there been any consideration or assessment in regards to the additional cost burden that may be placed upon the industry and what that will result in, in terms of price increases for that carton of a dozen eggs that you pay at the counter when you come up? [Interruption] Sorry, what was that?

Sam Uffindell: If you can find them.

SIMON WATTS: If you can find them—and that may be an issue in some parts of the country, I acknowledge that. Thank you to the member for Tauranga there, articulating some good challenges of what is faced by many communities.

But interested in context around the cost that is imposed and whether any assessment or analysis will be done in terms of flow-through to the consumer.

Thanks, Madam Chair. Those were very good comments from my colleague Simon Watts there; I’m looking forward to the Minister of Commerce and Consumer Affairs’ answers.

The big question, apart from the issue of whether or not these regulations are going to work for wholesaling, is the vexed question of whether, in fact, the wholesaling arrangement should apply to the grocery retailers’ own brands. The bill states that it doesn’t. There’s an exclusion, as I understand it. Of course, the reality in the market is that when you go to a supermarket, there will be a lot of products in the name of the supplier and there will be significant numbers of products under the category of home brand. If you look at trends going forward in places like Europe, home brands now account for two-thirds of many of the product offerings, as I understand it. So they’ve increasingly over time become very significant. The interesting thing is that many of those home brands are exactly the same product that had been produced by the supplier but are just produced in a different carton and delivered to the supermarket.

So the issue is: why did the Minister believe that own-brand pricing arrangements for wholesale arrangements should be excluded? Again, there’s many people concerned that the supermarkets can leverage their scale to drive down the cost of home-brand products, but new competition, such as Costco or ALDI or whoever we envisage might be going to come in, can’t access those; they can only access the wholesale price that the supplier receives, not what it receives from the own brand product. So I’d be interested to understand from the Minister why the home-brand pricing arrangements, that are often cheaper, are not included in the bill.

Thank you, Madam Chair. Thank you, Mr Bayly. I understand that, in fact, the Economic Development, Science and Innovation Committee did address that problem, and recognised it in that there’s no material differentiation between own brand or home brand—whatever you want to call it—and other products in the bill.

In respect of Mr Watts, I want to make it clear that the regulations he’s referring to are backstop regulations. They are regulations which will only be put in place where there is, essentially, market misbehaviour. You can have a read. You referred me to clause 18; if you’d read the whole section, you’d see that. So when you talk about, “Will it go down and get down into the minutia?”, it’s highly unlikely that that will be necessary, because the fact that that backstop is there will, in fact, create market discipline. But if there is market behaviour, I would expect the Commerce Commission to use it as a confident and responsible enforcer.

In respect of the cost, do you know what the cost is? The cost is between $350 million and $500 million a year, and the people who are bearing it at the moment are the consumer. That’s the real cost of not doing this before. So, yes, this does impose some costs on the retail duopoly, and that cost can be drawn from the super-profits that they’ve been making to date because they’ve been taking out of the pockets of ordinary New Zealanders.

Yeah, thank you, Madam Chair. I think I’ll leave my good colleague to respond to the other bit, but the Minister has not addressed the issue around own-brand pricing, and the assertion that own-brand pricing has little difference in the price paid to the supplier. I just want to clarify that that’s what the Minister believes, because if that is the case, I think the Minister perhaps needs to get out and talk to a few more people because that is not the situation. So there’s been a deliberate reason why own brands were excluded, and I’m very keen to understand from the Minister why he, as the Minister, thought that there should be a differentiation?

It’d be helpful if Mr Bayly could show me where in the Supplementary Order Paper version of the bill own brands are referred to as excluded, because the Economic Development, Science and Innovation Committee addressed this matter.

I wanted to come back to the responses from the Minister in regards to my questions in clause 18(2)(b)(i). The response given referred to the concept of the reasons for these reforms being because of the super-profits that these grocery entities are making, and referred to numbers, I believe, around $1.5 million or so. My question is quite simple: does the Minister believe that the policy decisions by this Government in order to restrict people to only shop at the supermarkets during the lockdowns in Auckland and not allow consumers to shop at butchers, greengrocers, and small retail outlets led to an inflation of the revenue and the profitability of the entities of which the Minister has just articulated in his response to my question: the reason for this reform is because of those super-profits.

My challenge to the Minister is: actually, the reason why these entities in the period which is under review have made significant profits is because of Government policies that have led to a cost of living crisis in this country, and the Government policies that led to a restriction of consumers only being able to shop at these supermarket entities. So I don’t think it’s unreasonable to see that there is a little bit of a problem here in regards to the basis for the reforms actually being the result of this Government’s policies. And I’m interested in whether the Minister accepts that, or, if not, what factor, if any, did those policy responses make in regards to the profitability of these entities?

Thank you, Madam Chair. I’d like the Minister of Commerce and Consumer Affairs to look at Part 3, clause 38, “Regulated grocery retailer must ensure transparent pricing under wholesale agreement”. The issue that I’d like to bring to the Minister is whether he actually believes that the practice that I’m going to sort of iterate for him is, in fact, transparent or fair, and should that continue, and how would that be made fairer or more transparent?

One of the things that actually happens with the big multimillion-dollar - making supermarkets who also own the supply wholesale business is that they spread their costs by—for example, they have Countdown or New World all over the country, and they may, from their own warehouse, supply to those supermarkets up and down the country, which are trucked to those places. But instead of charging different pricing for each truck that gets delivered to, let’s say, Invercargill or to Hamilton or Waipukurau, they spread the cost evenly so that the cost is sunk and the business shares the costing, so that it’s sort of not unfair for those more remote places to pay a higher transport cost. For example, when cyclones happen and bad weather hits, they often helicopter groceries to those remote places, and that cost is shared right across the business.

So in order to actually insist on their wholesale methods being more transparent in how they are calculated, is it really fair to say, that well, it’s spread right across their business. Now that new entrants come in—let’s say Costco wants to be part of the business that buys wholesale food—should Costco benefit in that sharing of that spread for transport costs, for example? Do you think there is a better way to make that cost more transparent and fair?

In respect of Mr Watts’ contribution, the commentary around lockdown policies isn’t relevant to this debate, and didn’t feature in the Commerce Commission market study.

In respect of the honourable Melissa Lee’s contribution, it’s not for me to say what transparency is; that’s the role of the Commerce Commission when those decisions are made. I won’t venture into a specialist area tonight.

Thank you very much, Madam Chair. I’d like to move to clause 48 in Part 3, which is in regard to the commission’s inquiries, a new area that we haven’t traversed so far this evening. But I must acknowledge the Minister for his responses to the questions that we are asking and for doing so in a diligent manner, even though some of the responses don’t necessarily meet the threshold. But anyway, we are engaging in some form of to and fro, which is appreciated.

My question in regards to clause 48(1), in particular, is around how the commission’s inquiry is initiated, and the consideration and criteria around that. I would appreciate it if the Minister could provide some context in terms of how he envisages what the threshold is around the triggering of that inquiry and what are some of the considerations that would be considered. It says there “if required to do so by the Minister”—so giving us some context around at what point would the Minister consider it, taking into account the significance of such an exercise and the impact of that, both in terms of the entities under review but also the other parties.

The second aspect in regard to that inquiry is to look at clause 48(2) around the duration. So I’m interested to hear from the Minister in terms of providing context around how long the Minister would envisage such an inquiry taking. Are we talking about it being a year long or two years or three years, or more sort of short and sharp? Just a bit of context around that, taking into account the burden of such processes, and, actually, as a result of those inquiries in regards to potential recommendations, what the Minister’s expectations would be around how the translation of the recommendations—including those reports—will actually translate into action that will actually derive changes that the consumer may or may not see as a result of that piece of work. Thank you.

Thank you, Madam Chair. Just two things—the first one is about the regulatory backstop that the Minister referred to earlier. Can the Minister lay out what his expectations are of the possibilities of the regulatory backstop? There’s an assumption that it will require more legislation, more regulation. And, of course, having been through this bill, there is a significant amount of legislation already provided for. What further regulation would he envisage to take place if there was a regulatory backstop imposed? And does that go to the extent of requiring operations to be divested—so that’s one option; separation of operational arrangements between wholesale and retailing operations, both at a profit or company structure, or whatever that might be; or is it just, in his mind, tightening up regulations even further, and, if so, what potential areas? I’m just very keen that the Minister lay out for everyone what a backstop means.

Those two themes are, in fact, quite closely related, because they’re both asking about the exercise of ministerial discretion. In respect of the inquiry question and time, I think the really important point is that that depends entirely on what the inquiry is into. It could be a short, discreet matter—that could be a matter of weeks—or it could be a very complex and deep matter, which may be many months or possibly more. So it’s entirely impossible to say what that would be.

In respect of what would be the relevant considerations or when would further backstop regulation be triggered, or when would the inquiry be launched, I’m very aware that the words spoken in this Chamber sometimes are used as guidance in making those decisions, and one thing I certainly would not want to do is fetter that discretion. We know that any decision along those lines is reviewable. The basis upon which those decisions are made must be rational, using relevant considerations, and bear a rational connection to the outcome sought. But, other than that, it’s not for me to place fetters on a future Minister, whether from this side of the House or the other side of the House.

Thank you very much, Madam Chair, and I thank the Minister of Commerce and Consumer Affairs for his responses in regards to questions around clause 48.

I want to move now to clause 51; this takes us on to the actual preparation of the report. And a little bit more context would have been appreciated around the answer that the Minister proposed, which is “Well, it sort of depends, really, around what we’re going to do.” And I acknowledge there is a bit of variation, but that is pretty wide-ranging. But clause 51(2) provides a number of areas in which the commission may include other recommendations that it thinks fit, including recommendations, and it outlines, from (a) to (e), a number of those. I particularly want to look at clause 51(2)(b)—this is what the commission can recommend—“changes to the policies or practices of central or local government:”. You know, that’s sort of buried on page 40 of the legislation, but I think it’s—the context around the commission actually being able to have carte blanche ability to make recommendations around changes of policies and practices of central or local government pretty much means that it can make recommendations about anything in regards to Government.

So I’m interested around why that is such a broad-ranging aspect around recommendations, and is the intent of that, particularly around local government, that the commission is actually able to, you know, get into details such as the Resource Management Act, consenting, or zoning, or whether a food safety certificate is applied within a certain duration by a council—what is actually the expectation of what you would expect to see? What’s an example of one of the changes in policies around local government and the other aspect, around central government? Well, that includes all of central government, so, pretty much, you know, I can imagine—well, I don’t know if the commissioner is paid by the hour, but, I tell you what, if you were paid by the hour, jeez, you could come up with a lot of recommendations, couldn’t you, if that was the scope of your ability? I guess one has to be considerate around whether that’s actually going to add value or not. So some context around that subpoint would be interesting to hear.

I also—51(2)(e): “persons within the grocery industry changing their behaviour.” An interesting clause in itself in that now the commissioner has the remit to make recommendations around the behaviours of individuals, of persons, working within the sector and where they need to change their behaviour. And it sort of reminds me of the good old days of the school teachers sort of, you know, saying—I’m sure it wasn’t the case, the Hon Mark Mitchell, because you were always well behaved at school; we know that hypothetically—hypothetically—you were, maybe, on one day misbehaving, and a teacher had a little chat and said—well, saying “the Hon Mark Mitchell” for the purpose of this conversation—“You need to change your behaviour.” But, you know, what, realistically, are we talking about here? Because there’s a heck of a lot of people that work within the grocery sector, and this is right down to “persons within the grocery industry”—actually, it’s bigger than just that. You know, realistically, what are we talking about here in practice? Is the expectation that, actually, everybody is in scope, and what would be an example of the recommendation? Because it says that the commissioner, if they think fit—so, basically, if they feel like it—they can make a recommendation. Realistically, what’s going to happen? I appreciate context on clause 51 please.

Yeah, thank you. I just refer back to the Minister of Commerce and Consumer Affairs’ earlier response where he said, basically, he was very reluctant that any utterances in this Chamber might be used as a guiding principle if there were a court case or whatever—I think that was the implication—and therefore that’s why he wasn’t prepared to say what might be the process for implementing or initiating the regulatory backstop. But I did ask about what would be the range of measures that the Government and he, as the Minister, might contemplate in a regulatory backstop situation, because, I think, it’s very important. I would hasten to say that the former Minister of Commerce and Consumer Affairs has made comments around the possibility or not of requiring sale divestment of operations. But I gave three examples: operational separation or management separation, through to sales, through to just more regulation. So I think it would be useful for the Minister to be clearer about what might be ruled to be acceptable and, perhaps, what would be ruled not to be acceptable as an option that could be pursued under the regulatory backstop.

Related to that, under clause 79, I note that the bill provides that the Minister—the way that I read it—may propose, contrary to the recommendation of the commission, to make a recommendation of Order in Council—obviously, subject to the commission giving written advice. But this means we’ve got a new Minister who suddenly determines, yes, they do want to require the supermarkets to sell off a whole lot of their chains—would that be possible under clause 79? Is that what clause 79 provides for? So, again, I think the question that I asked earlier, in the context of what clause 79 lays out—what is the Minister’s expectation and even sort of the boundaries of which he might contemplate if he did go down the situation of imposing a regulatory backstop?

Thank you, Madam Chair. In respect of Mr Watts’ contribution, once again, I don’t think it’s really for me to speculate on a hypothetical of what might happen in the future, in respect of an inquiry and what responses a commission, which is an independent entity—what suggestions to changes and policies local government or central government they might make. So that’s entirely speculative, and I won’t engage in that.

In respect of Mr Bayly, I think Mr Bayly’s real question, down to the nuts and bolts of it, is: would this bill enable some enforced structural change, such as divestment? This bill is about regulating the industry, not about breaking it up. So I don’t think that this bill equips the commission or the Minister through the second power, which Mr Bayly referred to, to require the divestment of any particular assets or any other fundamental structural change to the market itself.

Thank you very much, Madam Chair. Look, I must say, I thought my questions in regards to clause 51(2)(b) and (e) were pretty reasonable in terms of just asking for one example that the Minister would foresee around those examples, taking into account the scope of those points are so wide ranging. But a sort of flippant far away comment that, you know, “I’m not going to get into the detail because it’s up to the commissioner” is, I don’t think, a satisfactory answer. But I’ll maybe give the Minister a little bit more time to think around a little bit more of a satisfactory answer, because I think that’s a reasonable question to ask.

I’ll move on to clause 52, which is below that and which is in regards to the consultation of the draft report, and I do ask the Minister to provide a response which is not just, you know, a throwaway comment. But the point of this clause 52(1) is that before the report or the inquiry report is finalised, not only should a draft report be published but, more importantly—and that point around my question—is that there is reasonable time allowed for comments on the draft.

And my question for the Minister in regards to 52(1)(b) is: does the Minister foresee that that process in the public forum would be that there would be a mechanism in terms of consultation that would be similar to, say, consultation that local government does around specific projects—i.e., there is a mechanism in which the public can provide submissions and there’s a mechanism for those submissions to be considered and heard and, potentially, feedback given back? What does the consultation of the draft report consider? Because I acknowledge that, as the Minister noted before, the scale of the inquiries may be big or small. I guess I’m particularly interested in when the inquiry is dealing with a large-scale issue which is meeting the threshold where it would be reasonable to expect that there is a public interest in regards to that. So can you give us some context in regards to how that consultation process would look. What would the Minister consider is a reasonable time? Are we thinking a reasonable time as in the context of what we would use in this House for a select committee process? And what are the mechanisms in which the public can engage in such a process to reduce the barriers of people being able to participate in such a feedback process, particularly where the scale of the inquiry is a degree of scale that has public interest.

I then want to move on to clause 54, if I can, and, just in the interest of time, this is where the Minister then gets back that report after that consultation and the report is finalised. This is clause 54, “The Minister must, within 1 month after receiving the final report, present the report back to the House of Representatives.” It’s interesting that that is such a prescriptive number—and Andrew Bayly is looking at me going, “You’re right, I didn’t pick up on that”, and I know he did because he was very diligently looking at this bill through the select committee process which we both were part of. And, you know, well, some may think a month is a long time. It’s a long time in politics, isn’t it, when you think about the last month in politics. Crikey, won’t get into that because it’s not part of the bill. But, geez, what a last month it has been for some parties in this House. The one month in terms of the scale, you know, how do we get to that; is it appropriate? We’re talking a large-scale review. Is that genuinely going to be enough time for the Minister to be able to take the recommendations, which, as I outlined in clause 51(2)(b) and (e), could be significant and wide ranging and of scale and be able to then provide that feedback back around the final report in order to then table it in the House. Some context around whether the Minister is comfortable that that is appropriate around what is required would be very helpful in that regard.

I move, That the question be now put.

Thank you, Madam Chair. Just on the principle of clause 19, ACT normally is against any level of excessive bureaucracy, but I am beginning to think that you may have to become the “Minister of Groceries” full time, Mr Webb, to actually just see how the relationship between, under “wholesale offerings to wholesale customers”, the Minister and the commission will actually work. If you look at the clauses on pricing; range, quantity, and frequency; quality; and commercial relationships, there’s a lot of stuff there. In principle, how dynamic would that be, and how would the players in the market interact with the commissioner and yourself on that aspect?

This is an exciting and probably the most important part of the bill, so it’s well worth spending a bit of time on it. I want to return to clause 82 “When suppliers may opt out”. Obviously this lays out, essentially, four options for suppliers. And I just wanted to understand what the Minister’s view was around this, because I think there’s some anecdotal evidence already starting to occur or become available that larger suppliers are choosing to opt out of the wholesale arrangements. Of course, this bill provides for it. Many of those companies are very large and, in many cases, global, international-based companies who supply a range of food products to the New Zealand market.

And I suppose the question really is: is the Minister concerned that those very large, significant suppliers are choosing to opt out and many increasingly choose to opt out, which means this bill only really captures the smaller suppliers, and therefore does it undermine the concept that the whole raison d’être of putting in place a wholesale arrangement was that if you were a new competitor to the market, you could easily go in and replicate those wholesale arrangements across all the range very quickly, and therefore be able to get up and running on equivalent competitive terms? So the big question is: is he concerned that there might be a trend that we see many of those very large suppliers not actually participating in this market, and therefore undermining the whole purpose of this part of the bill?

Thank you, Madam Chair. I thought I should just round off some of those questions while we’re winding up here. Look, Mr Watts, in respect of some of your questions, you asked me to look forward to a future, and it’s really not appropriate, on a hypothetical, for me to speculate about what the commission might do. Then you talked about what is a reasonable time—in respect of, I think it was, clause 52. Once again, it’s entirely circumstantial in terms of the time for a draft to be out there for responses. It’s not a consultation; it’s a draft being published and then people submitting. If it’s a short document, not very long; if it’s a long document, a long time. And, in respect of clause 54, which was the presentation, you need to do your time on the Regulations Review Committee, because presentation is a very formal thing, where it’s simply the provision of the document to the Clerk of this House, and there’s not really much involved in it at all, other than that.

In respect of Mr Smith’s comments around the wholesale market and dynamic competition, I think it’s a really good point that dynamic competition is what we want to see—competition that doesn’t stand still; a market which is rapidly changing—and I think you’re right that we do need to absolutely keep an eye on it. That’s one of the reasons why the commission will have a role to play in, essentially, maintaining the code and keeping it up. In terms of large suppliers, obviously that’s something that was before the select committee, and that’s why the commission does have a power, essentially, to carve out those large suppliers from the arrangements, so that those very large suppliers could exert market dominance. The commission can carve those out to ensure that that dominance isn’t affected.

I move, That the question be now put.

The question is that the question be now put.

Point of order, Madam Chair. Well, (a) you can’t make two closure motions, and, secondly, you can’t preface it with “Madam Chair”.

CHAIRPERSON (Hon Jenny Salesa): Sorry?

ANDREW BAYLY: Just in relation to that closure motion on this particular part of the bill. My understanding is that (a) a person can’t make two closure motions, particularly following one another, and the second thing is you can’t preface the closure motion by saying, “Madam Chair”; you stand up and say “I move that this motion” whatever. But the member who chose to make that closure motion didn’t do it in an appropriate manner.

Dr Tracey McLellan: Speaking to the point of order. I believe, Madam Chair, that I said “Madam Chair” to get the call, and said nothing else after taking the call, apart from the correct words of the closure motion.

CHAIRPERSON (Hon Jenny Salesa): That’s right. She did call out. There was no one else that actually took a call within those few seconds, and she was the one who first called out “Madam Chair”, so she was getting my attention.

Simon Watts: Madam Chair?

Are you taking a point of order?

Simon Watts: No; just a call.

CHAIRPERSON (Hon Jenny Salesa): I’ve accepted the closure motion, though. So the question is: is someone asking for a vote to be called?

Point of order. I’m not sure how you can accept a closure motion which wasn’t put to you correctly.

CHAIRPERSON (Hon Jenny Salesa): She did actually put the point of order to me correctly. She called out “Madam Chair”, which—

SIMEON BROWN: The process is “Point of order. I move, That the question be now put.”, not “Point of order, Madam Speaker”.

Camilla Belich: Speaking to the point of order. Madam Chair, you will be aware, as all members of this House will, that often when we’re seeking the call, we need to make the call to the Chair or the Speaker on multiple occasion, and this is indeed what happened in this instance.

The Speaker’s ruling is that she is allowed, actually, to call out my name before she seeks the closure motion, but it can actually be asked for again—the closure motion.

I move, That the question be now put.

Thank you very much, Madam Chair. I’d like to move to clause 53 of the bill in regards to Part 3, a clause that we haven’t touched on yet. I’d be interested in the Minister’s comments in regards to where the “Commission must give report to the Minister and publish it”. This clause, in particular, outlines that the final report, which I questioned before in regards to clauses 52 and 54, which the Minister provided some response but not necessarily one that provided adequacy—refers to the fact that the final report on the inquiry to the Minister, which must be submitted “as soon as practicable after completing it”, which obviously makes sense, but my question is in regards to this point. It refers to 53(1)(b), which is “at least 10 working days later, publish the final report.” I’m interested in whether—well, that one looks to be a potential conflict in regards to those two specific clauses. How does point (b) in regards to the 10 working days later of publication of the report actually work in regards to that clause?

The second clause I want to get into is clause 56, another clause that we haven’t touched on yet this evening, which is in regards to the Minister publishing the Government’s response to this, and as we’ve articulated earlier this evening around some of these reports, which may be of scale and substance in dealing with issues in the public interest. In terms of what the Minister foresees in regards to what is a reasonable time after receiving the report that this final report is actually published, are we talking weeks or months or years? Sometimes, when we on this side of the House consider what is reasonable in terms of the provision of information which is in the public interest, that information is not readily available. So some context around what the Minister expects in regards to 56(1)(a) would be appreciated, and we’ll leave it at that.

I move, That the question be now put.

The question is that the Minister’s amendments to Part 3 set out on Supplementary Order Paper 353 be agreed to.