Dean Jacqui; Clark David; Bayly AndrewPart 8 Administration secondary legislation and other mattersCHAIRPERSON (Hon Jacqui Dean): Members we come now to Part 8. This is the debate on clauses 114 to 153 and Schedules 2 and 3 Administration secondary legislation and other matters". The question is that Part 8 stand part.Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Part 8 of the bill sets out a number of further administrative matters relating to the functions and powers of the commissioner maintenance of the plant varieties rights (PVR) register and the regulation-making powers. Comments raised by submitters on Part 8 were largely technical in nature and a number of changes were made as a result. The PVR regulations which are currently being drafted are based largely on the patents regulations as there are a number of procedural similarities between the two regimes. And just to note that Government Supplementary Order Paper (SOP) 155 responds to some technical issues in the bill that arose in the drafting process. SOP 155 which I've tabled makes some changes to the bill to ensure that the regulations are adequately supported.ANDREW BAYLY (National—Port Waikato): We're having an exciting morning and I've got to compliment the Minister for introducing each part! My first point just relates to clauses 119 and 140. These are hearings and the provision of evidence to the commissioner in respect of clause 119 and clause 140 "Obligation of confidentiality on applicant iwi and hapū etc"—obviously when going into engagement with iwi in the various capacities set out in the bill. My question really is: what is the guarantee around confidentiality? I presume with the commissioner any evidence given is in private. Or can a plant variety rights applicant request privacy around that? Is the commissioner subject to Official Information Act requests?And if an applicant is making applications or having discussions of a confidential nature maybe before they have even filed an application or made an application for a right is there the ability to have private conversations that are not subject to public scrutiny? Certainly that's in relation to the commissioner. In relation to clause 140 particularly where you're going out and consulting—engagement is required if it is deemed a kaitiaki relationship before it goes to the Māori Plant Varieties Committee. What is the certainty around confidentiality? And if someone were to breach that confidentiality are they able to be sued? And what is the process for redress for people who may be making an application or have received an application and their intellectual property has been made public?Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): In terms of the hearing of evidence any party can ask for it to be private as the member suggests. In respect of confidentiality I think the member helpfully draws to the committee's attention the material and clauses 140 141 and 142 also deal with that in terms of the remedies. But clause 140 is very clear that there is an obligation on parties to keep confidential all information that comes into their knowledge as a result of engagement even before an application is made. The remedies available for breaches of confidentiality are laid out in clause 142: "The relief that the court may grant for a breach of confidentiality includes (a) an injunction; and (b) at option of the plaintiff damages or an account of profits."ANDREW BAYLY (National—Port Waikato): Thank you for that response. I now want to turn to my Supplementary Order Paper (SOP) 191. There are a lot of concerns in the industry about the proposed fees structure that Government officials are keen to implement. My SOP really reflects some of those concerns. The first thing I'm proposing new clause 149A is saying "Before any changes are made to the fees prescribed by regulations"—which means—of course everyone in the Chamber knows this but people listening in won't—it's not subject to Government oversight. Regulations are approved by the Minister and the Minister alone. So there is no transparency around the decision-making process and it's certainly not subject to a public debate like we're doing now.What my SOP says is that before any changes "the Ministry must (a) undertake a review of the fee structure including consideration of (i) the impact of any proposed increase in fees; and (ii) whether the proposed increase in fees is in the public interest; and (b) provide a reasonable opportunity for the public to make submissions as part of the review". The central point here is that the industry—and I'm talking about groups that actively and consistently develop new plant varieties—are concerned about some of the fee structure and the fee proposals and the quantum of those. So they're very strongly of the view that before any changes in the fee structures occur a review actually takes place so that they have certainty around that and have the opportunity to have some input during it. So first of all I'd like to hear whether in fact the Minister is open to that.Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): The answer—the advice I've just received is what I would have expected—is that there is already a review going on of fee structures and they are done periodically. I mean this is something that is done from time to time and there is a view which has been presented to me previously when I've asked it that actually the fees risk being below cost recovery. They're certainly a lot lower than in overseas jurisdictions and it's appropriate that we do have reviews periodically but we don't need specific legislation to lay that out. It is good practice and it happens and there is not in my view any merit as long as the principles of the Act are laid out in prescribing rigid things that create more work for a bureaucracy. It's appropriate to do them regularly—I take the member's point—and it's appropriate to make sure that the fees are the right ones.ANDREW BAYLY (National—Port Waikato): So that gives rise to "What's the nature of the review?" Is this going to be the Reserve Bank's "I'm going to review myself and give myself a double tick." as they've just done in the last couple of days? Because gee they've done a great job! I'm using that as an example which is a Government entity who undertakes a review of its own performance and comes up with a double-tick response in saying how great they've been. So is the fee review that the Minister is referring to undertaken by the ministry? And first of all does it involve consultation with the industry? And I mean not just having a bit of a chat on the phone because there has been some concern by a number of participants in the industry who are concerned with the level of consultation undertaken by the ministry particularly around this bill. So does the fee review involve open public consultation? Is there going to be an opportunity for those members of the community to actually engage in a proper review process or is this just going to be a closed-shop ministry review saying "We've consulted with a few people and we're still going to put up the prices."? That the first point: the nature of that consultation.The second thing is: how do we ensure that the fees firstly reflect cost recovery and incentivise people to do this and not create a disincentive? I've sat on the Regulations Review Committee. I know the Minister has been around a long time. We all know about certain Government departments who choose to put in fee structures which are found later to not reflect cost recovery. So what certainty can you provide for the industry that the fee structures that are proposed to be put in place do actually reflect cost recovery—and whether that's again going to be a transparent calculation or not? Two big questions there.Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Thank you Madam Chair. I thank the member for the question and it is an important question. I want to acknowledge that from the outset. It is a cost recovery model. The costs for administering the plant variety right (PVR) regime like the other systems for registered intellectual property rights—such as patents trademarks and industrial designs—are met on that cost recovery basis through fees charged to the users of the systems. Now since 2002 the costs of administering the PVR system have risen substantially. The current fees now cover less than a third of the costs of administering the PVR system. I have alluded to this but I've dug out now the more specific information. Keeping the fees at their current levels obviously is unsustainable. It's not a cost recovery effectively. So a review of the PVR fees has recently been undertaken to determine a new fee structure for the PVR system. That review which included consultation with the users of the PVR system considered the impact of increased fees on users and also considered the public good aspect of plant breeding and innovation. In recognition of those factors—and I do want to credit the officials with firmly presenting this view. There's merit in erring on the side of keeping those fees lower if that makes sense. So the Government has agreed to partially fund the PVR system to reduce the increase in fees that would otherwise have occurred if they were set to recover the entire cost of the PVR system. So there's a graduated response. The review of the fees has therefore already considered the factors that the Supplementary Order Paper suggests should be considered before increasing fees and officials have been directed over the next three years to consider the economic benefits of the PVR system to determine the optimal balance here in the regime—the balance between the funding contributed by Government and the fees paid by users. So I don't consider there's need to freeze the PVR fees at their current level while analysis is carried out. I think we've done some of that analysis. But it does highlight that the member is on the money actually with raising this issue and it just so happens that we have progressed some work to address these matters already.ANDREW BAYLY (National—Port Waikato): Thank you Minister for that response. So when might the fee increase come into play? Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): Look I'm just—I will check with officials and they'll tell me if I've got this wrong but it's a graduated response so—Andrew Bayly: Starting from when?Hon Dr DAVID CLARK: I would assume from the next—early next year. Early next year is what I'm being prompted with. But it's a graduated response while we do that work to ascertain that right balance."