Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): Madam Deputy Speaker I'm very pleased to take a call on the Commerce Amendment Bill—particularly pleased because this bill of course is being put forward to the House by the Hon Kris Faafoi. Some people value his presence in this Chamber because of his good looks his witty repartee and his sharp wit. All of those things which are—Matt Doocey: Name one person who said that.MICHAEL WOOD: —all of those things which Mr Doocey aspires to achieve one day—but actually I don't think that's his chief contribution to this Chamber. His chief contribution is that he is a Minister in his portfolio as the Minister of Commerce and Consumer Affairs who's actually really picked up the mantle and is an active Minister who is getting stuck in with a legislative agenda that is about making sure that we have modern fit for purpose regulation and laws to make sure that Kiwi consumers and Kiwi businesses are treated fairly. That ultimately is what the regulatory framework in the Commerce Act is all about. So I want to commend Minister Faafoi for that.Why is this bill important and why in fact is the whole rubric of legislation that we have in this area important? Well there are three things I think we can point to. One is about providing appropriate protections for consumers because we are dealing in the space that this bill deals with with large commercial institutions who have a great deal of market power. And the risk as we know is that if you don't have appropriate regulation and you have organisations with a lot of market power they tend to abuse it. So if you don't have good regulation in place the people who cop that are the consumers at the far end of the process. They end up paying higher prices than they should do in a competitive marketplace.The second reason and I think this is often overlooked is that often in these sectors we have companies that want to do the right thing that actually want to behave in an ethical way that want to operate in a competitive market and that want to do the right thing by the consumer but unless everyone else is playing by the rules they actually get undermined and their business model doesn't work. So it's important that we have good regulation to support the good businesses in the sector as well.The final thing is a whole-of-economy question and that is the value of having efficient competitive workable markets. If we don't have them if we have a small number of market players taking advantage of lax regulation they make supernormal profits. It's actually inefficient across our economy. We lose productivity. Those businesses aren't driven to improve their service to consumers and to the broader economy. So this sort of regulation is extremely important.There are three major areas that this bill addresses and most of them are actually pretty long-signalled by a series of reviews that began under the previous Government. The first thing that the bill does is introduce a new power to the Commerce Commission to initiate market studies and to produce market reports. This is extremely important and it will be the main topic of my comments later on. I think this is an incredibly important new power and I'll get to some of the reasons for that.The second area that it does address is a bit of an overhaul of the regulatory regime around our airports which of course in their catchments tend to be natural monopolies. There are always tensions around the way that they operate and the way that they price so it is appropriate that we have a robust regime there and there are some improvements that are made through this legislation.The third area relates to the enforcement mechanisms that the Commerce Commission has and—quite sensibly I think arising out of a process of reviews—it looks to repeal the current cease and desist regime and replace that with some more workable and useful mechanisms for enforcement.Before getting on to those I want to talk about a study which emerged last year which I think points to the very good reasons for having an enhanced market studies and market reporting regime to sit with the Commerce Commission. It was a report that was released last year into the operation of our retail petrol market and I think most members of the House will recall this. It came out in about July of last year. It was overseen by the Hon Judith Collins at that time the energy and resources Minister. What I want to draw to the attention of the House is the incredibly strong language in the way that these things are done that is actually used in that report to talk about this incredibly important sector.So let me quote here. This is from a National Business Review (NBR) article which was summarising the findings of the report: The study's primary conclusion is that 'we cannot definitely say that fuel prices in New Zealand are reasonable and we have reason to believe that they might not be'". This study was carried out by three independent economic consultancies working with the Ministry for Business Innovation and Employment (MBIE). It went on to say "We can indeed identify features of the New Zealand fuel industry possibly giving cause for concern that consumers are not as well served as they should be." Further it says "Furthermore the market studies powers"—so this is from the Minister herself Judith Collins. She took note of these concerns and said "Furthermore the market studies powers announced recently by the Minister of Commerce and Consumer Affairs will give the government the option to direct the Commerce Commission to undertake a further competition-specific fuel market study". So she was picking up on these concerns that came out in the report and pointing to the need for the Commerce Commission to have increased powers.The final comment that I want to draw the House's attention to—let me just find it here in the NBR report. Here we go. The MBIE report said that there was "some suggestion that the major companies subsidise the cost of fuel in competitive places in the North Island through fatter margins in Wellington and the South Island but there was a lack of available information to determine that conclusively." What was the reason that there was a lack of available information? Well it was because the major players—and let's name them in the House here: Z Energy BP Mobil Caltex and Gull—did not provide comparable financial data and some did not provide sufficient information within the timeframes for the study's authors to report. In other words under the mechanism that we have in place at the moment the big boys in this incredibly important industry simply refused to cooperate. They simply refused to front up with the information that this Government-initiated inquiry into their practices required to draw any firm conclusions. That is utterly unacceptable in a sector that is as important as the fuel sector is to the New Zealand consumer and New Zealand economy. So it's incredibly important as Minister Judith Collins said there that we actually give the Commerce Commission the appropriate powers that it needs. So what do we get through the implementation of an ability to implement market studies and market reports? Well it actually means that we get a regime whereby the Commerce Commission can actually properly look into these areas and can actually require that evidence is produced.I want to address one of the concerns that the previous speaker Mr Hudson raised. This is one of the changes that the Government has made. The previous Government said that only a Minister should be able to initiate such an inquiry. Minister Faafoi in this bill has been very clear that we should actually as well as giving Ministers the power to initiate such an inquiry give the Commerce Commission that ability as well. I simply can't understand any good arguments for not giving that independent body—which has the oversight which has the institutional knowledge which has expertise—the ability to initiate an inquiry off its own bat. Now this is an active Government that doesn't stand for big companies ripping off Kiwi consumers but imagine if at some stage in the future we had a laissez-faire Government that was more relaxed about these things. I think that Kiwi consumers would want to know that we had an independent Government agency that had the ability to pick up the cudgels itself and go into bat for them.Just to deal with Mr Hudson's suggestion that this would sort of be done with no oversight no controls whatsoever the bill is very very clear that if the Commerce Commission does go down this track they have to provide full justification for it they'll be consulting with other Government agencies they'll have to produce a draft report and they'll then have to allow the market players an ability to comment on that and provide a response before there is a final report which of course can actually only offer recommendations to Cabinet and to Government agencies. So any report that is produced by the Commerce Commission any market report as a result of a market study won't on its own actually be able to require a change of behaviour. There will still have to be a step where at the political level that is put into action. So I simply don't think that those concerns raised by Mr Hudson are adequate to oppose this measure which is an incredibly important measure to ensure that Kiwi consumers aren't being ripped off by the big boys at the top end of town. I hope that the Opposition does have a bit of a rethink about that issue.The other two areas that the bill addresses are a bit of an overhaul of the regulatory framework around our airports—particularly the three major regulated airports being Auckland Wellington and Christchurch. These airports are natural monopolies. Mr Hudson is correct to say that competition between airlines is more likely to have an effect on the ticket price that the consumer pays but that doesn't mean that we shouldn't have an eye on the other issues around whether they are engaging in fair pricing behaviour. All that this legislation does is effectively provide a bit of a regulatory backstop if that isn't happening.This is a good bill it's about making sure that Kiwi consumers and good Kiwi businesses are protected from predatory monopolistic practices and I commend it to the House. Thank you."