Goldsmith Paul; Rurawhe AdrianHon PAUL GOLDSMITH (National): Thank you Mr Assistant Speaker. Fletcher Tabuteau the previous speaker from New Zealand First was a little bit confused about this saying that we'd introduced this bill. This is a new bill introduced by this Government in order to undo what a previous bill that came through the House did—which was update the competition regime in regard to cartel behaviour and bring in an authorisation programme and a way to better manage and effectively deal with cartels—which had not taken the step of criminalising cartels and this Government is determined to it. There's lots of arguments. There's different countries around the world. Some criminalise cartel behaviour; some don't. For the history of New Zealand commerce we haven't criminalised cartel behaviour but what we've done is treated it as a very serious civil matter. So what we're talking about here is different companies secretly price-fixing or arranging their affairs so as to collude together in order to rip off consumers. Everybody agrees that it's a bad thing but throughout New Zealand history we've regarded it as a matter which should if caught be punished severely with fines and we've seen some very large fines of up to $7.5 million. Now what is being proposed by this bill is that those fines are not enough of a deterrent and that we should potentially throw the directors of companies and executives into jail as well. There are arguments both ways. My view as Minister of Commerce when this legislation was coming through the House earlier was that on balance I don't think it is a useful thing to add yet one more way for public company directors to go to jail if they get their business judgments wrong. So what you're balancing here is two competing desires. One is that it's obviously so important for this country and for consumers in this country to have a robust and effective competition framework so that New Zealand consumers get the best deal that they can and so that companies can't work together secretively to undermine the benefits of free trade and good commerce. But on the other hand what we need to also consider is a basic philosophy around regulatory restraint. If a Government doesn't think twice about as I say finding a new way to send directors of companies to jail if they get their judgments wrong then it all adds up over time because every year there's another five or six different ways that you can go to jail if you get things wrong and as a result of that there is a cost. That cost is that directors of public companies move from being very cautious about how they do things to becoming ultra-cautious about how they do things and they take fewer risks. In this area what you're dealing with is a whole lot of collaborative arrangements that companies can quite legitimately go into such as the classic example—being international shipping—where it doesn't necessarily make sense to send five ships from China to New Zealand one-fifth full. It makes more sense for those five competitors to work together and send one full ship. So it is much more efficient for the whole market and for everybody if those different owners collaborate together in order to work out what's the most efficient way of getting stuff between China and New Zealand. So there are pro-competitive collaborative arrangements that people go into but there is a line that can be crossed where they become anti-competitive. That depends on the nature of the market and what's going on and arrangements that may have been pro-competitive one year can suddenly become anti-competitive the next year if conditions have changed. So it's not quite as straightforward and clear-cut as people might seem to think. So it does lead inevitably to the level of risk that company directors are prepared to take and the consequences of being ultra-cautious as I said as opposed to being very cautious.So New Zealand has avoided the criminal regime until now. Some of the much larger economies in the world have criminal regimes and I do think it is relevant that New Zealand—a place where more than 90 percent of businesses are small businesses and don't have the ability to avail themselves of the authorisation procedures and so forth that we have established which are highly expensive. To go along to the Commerce Commission to get an authorisation on a pro-competitive arrangement is a very expensive procedure. It might work quite effectively for a huge economy such as the United States'; not necessarily so practical here in New Zealand. So anyway another element of all this is the way in which this Government operates. Just before giving the speech I thought to myself: well this is an important bit of legislation which has quite a significant regulatory effect on the way that New Zealanders conduct business in New Zealand so I wonder what the regulatory impact statement has to say on all this. So I asked for the regulatory impact statement—it's not on the Table. Lo and behold I find it here. Here it is: regulatory impact statement: Criminalisation of Cartels"—oh dated 26 August 2011. So that was some work done by the predecessor to the Ministry of Business Innovation and Employment (MBIE) whoever it was back in August 2011—and I'm reading it. It's—I wouldn't say—pathetic but it's a very cursory summary of the details in this regulation. Dr Duncan Webb: Who was the Minister? Hon PAUL GOLDSMITH: Oh this was back in the first term of the previous National Government. So this Government this Government here today in 2018 has introduced this bill making no effort whatsoever to get their officials to look at what the issues are today. Since this happened we've had seven or eight years of experience of what actually has happened with the criminalisation regime in Australia; you know not very much. There's a huge amount of work that's been done in this area and this Government hasn't availed themselves of any of that. They haven't asked MBIE to update their regulatory impact statement or to seriously consider it. Of course that should come as no surprise to anyone in this House because that's how they operated with the very significant oil and gas decision that we've been debating this week—possibly $8 billion. The decision was made before any Cabinet consideration before any analysis had been done by officials. And that's the cavalier way in which this Government seems to be operating.The problem with all that is that collectively this kind of attitude to regulation and business legislation a cavalier attitude an ideological attitude—one that announces decisions before the analysis has been done. That kind of decision making all contributes to an undermining of confidence in the way that decisions are made in this Government contributing to the falling business confidence that we see across this country generally which of course this Government regards as junk. They regard the falling business confidence survey as junk and that is because they don't have much sympathy or understanding of just how hard it is for New Zealand businesses—competing internationally in a tough old world against all kinds of headwinds—to stay in business. Every day it's a highly competitive attitude and this Government is quite happy each day each week since they've been in Government to add costs to businesses such as petrol such as minimum wages—you name it—assuming that it will make no difference to their international competitiveness.Secondly without any thought or full consideration it's quite happy to amend competition law to make the consequences of incorrect decisions much worse. Like I say I'm not saying it's the end of the world to bring in this legislation because there are plenty of countries that have criminalised cartels but the conclusion that we came to as a Government in the last term was that on balance we think the long-established very substantial civil regime with very significant financial fines for cartel behaviour was just as effective and—ASSISTANT SPEAKER (Adrian Rurawhe): Order! The member's time has expired."