Russell DeborahDr DEBORAH RUSSELL (Labour—New Lynn): New Zealand is a small place. We all know each other—in fact somewhat worryingly we might even all be related to each other—and it has its problems. But one of the things that the smallness of our community entails is that it's easy to connect. It's easy to cooperate. It's easy to collude and that's when you get a cartel.On this side of the House we support that connection we support the cooperation but we draw a line at collusion and it's a firm line. That is behaviour that we think must be illegal and it's behaviour that in some circumstances warrants being criminalised. That is why we have brought this bill to the House—to stop collusion. What we're talking about here is cartels—about groups of businesses colluding to price fix to restrict output and to allocate the market in particular ways all in order to get a greater profit for themselves. It's business misbehaviour.As members on the opposite side of the House have pointed out business misbehaviour is usually just a civil matter—something that's dealt with by a fine a penalty maybe a period of time when you're barred from trading. That is what a civil penalty is for; it's because it's not criminal activity. But there is something a little bit more when it comes to collusion and that's because collusion is not just a civil matter; it is a moral matter and it is a moral matter because it is theft. That is why collusion needs to be criminalised.It's interesting how this collusion can come about. I was very very interested to listen to what Mr Carter had to say about the National Animal Identification and Tracing Act 2012 where it seemed that almost inadvertently stock companies had talked to each other they'd arranged a few things and in that way they had come to cooperate in such a way that it became collusion. In fact the word that Mr Carter used was inadvertent" and that does happen. It's a known phenomenon a known psychological phenomenon something that's studied in depth in game theory—the ongoing tit for tat where people develop a strategy of cooperating with each other until in fact they are colluding. It is done inadvertently and that's where you would have a civil penalty. We've got civil penalties for that kind of inadvertent behaviour. We've already said—and in fact it's in the legislation already—that in terms of the civil penalty it's a fine of up to $500000 for a person who's involved in cartel activity and $10 million for a company.But we need a stiffer penalty and it's a much more serious penalty where intent is involved; where people set out to defraud to steal to price fix to market allocate to take money from their fellow citizens and enrich themselves to undermine the market—the market in which members on the other side of the House so often profess to believe. Only when it suits them it turns out. One of the things about this collusion is that it's very hard to see. The people from whom money is stolen are dispersed. It's often individual consumers who perhaps pay only a small amount each but the effect is large. Again that is why this needs to be criminal behaviour.But imprisonment—imprisonment is a harsh penalty. Normally we think that it would be a good idea to keep people out of prisons. Normally we don't like to incarcerate people. Taking away someone's freedom is the most serious punishment we can have in this country. So why on earth would we do this? Why would a civil penalty not be sufficient?Interestingly members on the other side of the House gave us this answer themselves. They were the ones who made the point and I think it was Mr Bayly who said that there were hundreds of cases under the law as it stands. Surely that proves if there are hundreds of cases that the law is not working that the law doesn't have a sufficient penalty? It seems that existing businesses regard those fines and penalties just as a cost of doing business. They can stand a fine of a few hundred thousand dollars if it gives them a much better market position. So we need to find a way to signal clearly to businesses that they must not engage in this behaviour. We need a serious penalty and that is the criminal legislation—the penalty that we are putting in place.The theme was echoed by Mr Yule who said that there was no robust case for this legislation. But if there is no robust case for this legislation why is Mr Bayly telling us that there are in fact hundreds of cases? It would be pleasant if the members on the other side of the House actually cooperated at least a little to sort their arguments out.Mr Bayly also said that we were introducing a very very grey area into the law; that we were just incentivising lawyers—we'd give them a great new moneymaking field. Mrs Kuriger said that we were walking a tightrope that we were making things very difficult for businesses. You know what? It is difficult. It is hard. Being in business is a difficult game but just because it's difficult doesn't mean you're allowed to be criminal in your behaviour. So we actually need to make sure we penalise the behaviour.Mrs Kuriger also raised another issue that I thought was very interesting. She talked about the compliance costs that businesses would bear because of this change in the law. But may I point out that businesses already bear these compliance costs? There are already civil penalties in the law. Businesses are already required to assess whether or not their behaviour is acceptable under the law. The difference is they seem to have ignored it; that's why we need to have the criminal penalty. And let's be quite clear. This legislation has measures within it designed to reduce those compliance costs. A business may go and seek clearance to ensure that their behaviour does not fall within the bounds of this law. They can get clearance in advance for their connected collaborative activity. They just may not collude—that's the difference.There is something else that I really want to draw out in respect of this legislation. On this side of the House we have talked about the cost to consumers of collusion between big businesses. We've talked about how each of us as individual consumers ends up paying a higher price because of collusion because of cartel behaviour. But it is not just us as consumers who pay this higher price. The businesses who collude who engage in cartel activity don't just steal from consumers; they also steal from honest businesses. They steal from businesses who want to play by the rules. They steal from businesses who are doing the best they can and are playing within the law. You see those businesses make reduced profits or less profits because some people cheat.Let's be quite clear: this legislation is about stopping the cheats and the bill ought to be supported by the alleged party of business on the other side of the House. I put it to you that the true party of business is the party on this side of the House—the Labour Party—which seeks to ensure that honest businesses do well and that dishonest businesses are stopped in their behaviour. This is what this bill is about and it is why we should support it.You know we are hardly alone in doing this. Our major trading partners—countries that we normally like to compare ourselves with: Australia the US Canada the UK France and Japan—have all got a criminal offence of collusion. There is no reason why we can't do it too and indeed it is something that supports ordinary people and it supports ordinary honest business so it's hard to see that it's an unusual provision that we're putting in there. For these reasons—because we are supporting the honest businesses because we are supporting the little people—I urge this House to support this bill."