Webb DuncanGROCERY INDUSTRY COMPETITION BILLSecond ReadingHon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Grocery Industry Competition Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DUNCAN WEBB: Thank you Madam Speaker. I move That the Grocery Industry Competition Bill be now read a second time.It's actually a really momentous day to move this important bill along in this time when the cost of living is front of mind. I would like to thank the members of the Economic Development Science and Innovation Committee for their collaborative consideration of the bill and I would like to acknowledge the chair Naisi Chen and of course the former chair Jamie Strange who did great work. The committee's unanimously reported this bill back to the House and recommended some amendments which I endorse. But I'd also like to thank the submitters on this bill who took time to provide comments to the committee especially over the tight holiday period. The committee received 32 submissions on the bill and heard oral evidence from 12 interested parties. Most of those submitters—it's really important—supported the bill including the major players and I know that many submitters and all of the consumers want the benefits they can get from more competition in the form of better prices and more choices as to where to buy their groceries. This bill is really needed to benefit consumers by improving competition in the grocery industry. We know from the Commerce Commission's market study that consumers aren't getting a fair deal at the checkout due to systemic competition problems in that grocery sector. The sector is dominated by a duopoly of Foodstuffs and Woolworths. Between them the duopoly are taking home more than $1 million a day in excess profits from the money that consumers spend buying groceries. So that's an unfair transfer of $1 million a day from consumers to duopoly holders and that's not good enough. This is at a time when food prices are rising faster than inflation and at the end of 2022 the Consumers Price Index measuring inflation was 7.2 percent but the food price index was 11.3 percent. So consumers deserve and are going to get a more competitive grocery industry. We're advancing this bill because we want grocery retailers to genuinely compete against each other to provide consumers with the best price the best quality and the best range of food. We want to create an environment in which new entrants are not scared off by high barriers to entry or the prospect of unfair use of market players by other players. We want a sector where the grocery retailers have to give a fair deal both to consumers and to suppliers. We want a grocery industry that is innovative and provides consumers with clever ways of shopping that save time and effort and we want a grocery industry where suppliers have more grocery retailers that are interested in stocking their products and selling them to consumers. So this bill has real impact for everyday consumers—everyday New Zealanders doing their normal weekly shop; buying necessities and making those trade-offs at the checkout. I think about constituents I've talked to—Sarah who talked about the increasing financial strain of cost of living that her grocery shop is causing her. She said it's not about skipping luxuries any more—it's not about skipping the ice cream or the treats—it's about the affordability of good healthy choices for her food for her family. That's why this bill is important. We need more competition and a fairer playing field to drive prices down. By this Government making these changes we're already seeing confidence in other players—like The Warehouse investing in their grocery range and providing a different offering and other newer internet providers trying to do things a bit differently. I encourage new entrants to the market and new innovation—just different offerings so that families have choices and can help their families eat well and properly. With this bill going through we will see more and fairer wholesale agreements in place so that small businesses can compete with the big guys too. So this Grocery Industry Competition Bill will regulate the grocery industry to benefit consumers by providing a platform for retailers to enter and expand in the grocery industry and to compete directly with the existing duopoly. The bill will create a grocery commissioner to monitor and regulate the industry and keep the New Zealand public informed of what is happening. The bill will impose new requirements on the duopoly to facilitate commercial agreements for wholesale supply of groceries to other grocery retailers on the same advantageous terms they give their own supermarkets. The bill will provide a flexible toolkit as a grocery supply backstop to allow the commission or the Government to impose additional regulation if improvement is needed and it will provide new protections to suppliers such as a grocery supply code to limit the ability of the duopoly to pressure suppliers into accepting contracts that are wholly one-sided. The bill will pave a way for a new dispute resolution scheme to quickly resolve issues that arise. I'd like to speak to some of the changes made by the select committee. I fully endorse the committee's recommendation to provide the commission with greater monitoring powers and to clarify the objective of its reporting obligations. This will ensure that New Zealanders have the best information about what is happening in the industry and that the commission will have all the tools it needs to improve competition for consumers. I've asked the Commerce Commission to act confidently in exercising its powers across the board and ensuring that they have the right powers in the grocery sector is critical. The committee has recommended that the commission should be in charge of making and reviewing the grocery supply code but the Government should continue its work and make the first grocery supply code. It also recommended that the code should be able to regulate businesses that are under the influence of the duopoly to ensure it protects suppliers.I endorse these changes. In particular I think it's great to have the commission responsible for the grocery supply code in the long term. It will be best placed to ensure that the code achieves what it's intended to and that it addresses any creative shall we say new conduct that may arise. The Government has undertaken significant work to develop a grocery supply code and this needs to be put into use to make the first code as promptly as possible. Given the importance of the first code and the work that has been done to date the first code will be drafted by the Government and ongoing responsibility for it will be handed to the commission. We will work very closely with the commission in getting the first code right but I think it important that the initial rules are created by the Government. This differs slightly from the approach suggested by the select committee and a supplementary order paper (SOP) will be introduced to make this minor adjustment. I support the committee's changes to the wholesale supply regime. In order for the wholesale regime to benefit consumers it's clear that wholesale customers need reasonable access to the benefits of scale and efficiency-based discounts or rebates by suppliers. Wholesale customers also need to be able to buy a reasonable range of groceries either from the duopoly or directly from suppliers. I note that the wholesale code may now regulate suppliers in the event that they are creating problems that limit retail grocery competition. There are some suppliers that themselves have such market power that they may be able to distort the market. They may be near-monopoly suppliers of some goods or have such brand presence that some people wouldn't go to a retailer that didn't stock them. It's important that a grocery retailer especially a new entrant is not hindered from making a competitive offering due to the market power of any given supplier. This regulation has a civil liability for a supplier contravention and I think that we've struck a fair balance there and one that no reasonable supplier should have any difficulty with. Now that the wholesale supply regime is clearer I expect that the supermarkets as well as suppliers and wholesale customers will do their very best to engage with the reforms for the benefit of consumers. So the committee's made some really excellent adjustments and improvements to the bill especially in that wholesale supplier space and balanced the views of suppliers Foodstuffs Woolworths and prospective wholesale customers. So thanks to the committee for its efforts. But this bill and continuing with this bill signals how serious this Government is and how far we will go to see a more competitive market with new grocery retailers to ensure Kiwis can buy groceries at affordable prices. I think this bill is making real change. The market and the changes to the market that we're seeing shows that we're making real change. If the change doesn't happen there are more tools in the tool box and we won't shy away from continuing down this path if we need to. But for the time being this is a massive step forward for New Zealanders—one that this Government is proud to take. I commend this bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.