Hughes GarethGARETH HUGHES (Green): Kia ora Madam Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. I'm just sitting here listening to the debate and reflecting on when I first entered Parliament and became the Greens' ICT spokesperson. We still had a thing called Telecom our internet was slow we had things called data caps where if you went over a certain limit you had to pay extra. We had local loop unbundling; it happened a few years before under the Hon David Cunliffe but still our internet was slow and unaffordable. We were down the international rankings. But I'm trying to acknowledge both sides of the House. Think of what we've seen in progress over the last eight years. We've seen ultra-fast broadband rolled out to more than 75 percent of New Zealand homes—a massive Crown investment close to $2 billion. Telecom is no more; it's been split into Chorus and Spark. And I think for me it's quite a telling sort of example but any parent in this House or watching will know about the phenomenon that's Fortnite. A couple of months ago we demonstrated the resiliency and the effectiveness of our internet system in New Zealand. What we saw a couple of months ago when a Fortnite upgrade was released to the internet we saw the most unprecedented highest amount of internet demand in our country's history: 20 percent above normal. In fact there were 30000 gamers downloading it simultaneously while everyone else was downloading Netflix. In other countries their internet falls over it slows down. In New Zealand we are able to resolve an unprecedented challenge.So when you think what we've done over the last 10 years—it's been building this network the Ultra-fast Broadband Initiative and the Rural Broadband Initiative. What Parliament is doing tonight is turning to what's next: how do we deal with a system which has been built with taxpayer contributions; significant private contributions I'll add as well. But what's the appropriate regime? I'm glad to see unanimous support amongst the House for a regulatory regime built around the utility model which is basically a regulated monopoly with an independent body in our case the Commerce Commission in New Zealand regulating it. I think we've seen widespread support from numerous players in the market through to commentators that this is the appropriate model for what's next.I want to thank the Economic Development Science and Innovation Committee thank the chair and thank the submitters. I understand there were 257 submissions 31 of them oral—many of them incredibly technical and multi-page; some of them no doubt written by lawyers. But I want to acknowledge the substantive work the committee did. This bill has been substantially improved. It's important that it was improved because what we are talking about is hundreds of millions of dollars of taxpayers' money that's going into it and where money can be made on that Crown contribution but I think more importantly the billions of dollars of New Zealand consumers' money which is going into telecommunications in New Zealand.I was really excited by this legislation because having a wide interest in electricity market regulation there are very close parallels with what's happening with this Part 4 of the Commerce Commission - type utility model. Two I think quite fixed issues facing the committee were—in the electricity sector analogy it is vertical integration and the second was the regulated asset base the RAB regulated under Part 4 of the Commerce Act. First was the line of business restrictions. Now it was interesting hearing from officials that they hadn't anticipated such widespread—quite frankly—opposition from retailers with the original legislation. Under the Telecommunications Act line of business restrictions were established when Chorus was split from Telecom basically saying that Chorus' job was to focus on the wholesale market; they weren't allowed to enter retail. The idea of the original incarnation of this legislation was to weaken or relax those business line restrictions. The theory of course is that you promote innovation and competition in those markets.What we heard very clearly from retailers was that an impact of such a large vertically integrated wholesaler-retailer which is what Chorus would've become would've been damaging to the market and damaging for consumers. So the business line restrictions have been retained in the legislation but I think what we've tried to do is find that flexible approach because there is a potential need for those restrictions to be eased in the future and that's why the committee has delegated to an independent body the Commerce Commission who I believe is best fit to make those decisions.The analogy in the electricity sector of course is that our local lines monopolies the distributors are now getting into other markets such as battery services demand response—would love to get into retail markets. But if those local monopolies become vertically integrated they can exercise that market power but also—and this comes to the secondary major amendment in the legislation—can manipulate the market in such a sense that they can invest in assets put it in their protected regulated asset base and get a guaranteed rate of return based on the input methodologies of the Commerce Commission which is acting in an uncompetitive fashion for other players in the market who can't access those regulated asset bases and guaranteed rates of return. So I'm really glad that we saw those business lines restrictions. It's a big deal when you've got 5G wireless coming. We want to see a thriving innovative retail market in that area not old-fashioned Telecom thinking but I think we've found the balance quite right.The second thing I was touching on was the regulated asset base and this is important because of the significant Crown contribution. Now the committee process was incredibly constructive—we worked together—but here I am going to make a political point because in the original legislation there was absolutely no certainty or clarification or guidance for the Commerce Commission as they were going to go about deciding the input methodologies for Chorus' asset base. Basically what I'm saying is the previous Government's given Chorus a ton of money and in drafting this legislation didn't tell the Commerce Commission how to approach that Crown contribution which we know is close to $2 billion. This is why I'm saying it has tens of millions of dollars of impact for these companies because if they could put the entirety of the Crown contribution into their regulated asset base get a guaranteed rate of return on money that wasn't theirs that was the taxpayers' that's a huge wealth transfer from taxpayers to consumers.So what the committee has gone and done is clarify the treatment of the Government's contribution—this is new section 176(3A) inserted by clause 23. What the committee has agreed is that recovery can only be limited to actual costs. This is incredibly fair and reasonable. Chorus should not be able to recover the costs which weren't a result of their investment. What the committee has decided is that it's fair that they can recoup money from that base to pay back the Crown loan but the Commerce Commission cannot presume a commercial interest rate on that theoretical—it was theoretical—case of an interest-bearing loan. This is incredibly important to provide certainty to consumers and the players in the market that we do have a fair robust and transparent system.The analogy here in the electricity sector of course is: should these companies and lines monopolies investing in batteries be able to put it in their regulated asset base and get a guaranteed rate of return stifling other competitors? We heard the analogy of say someone who's wanting to underground a powerline and there was a private contribution towards undergrounding that powerline—whether the lines company should be able to put that in their regulated asset base even though it was a third party who actually paid for it—and in the electricity sector that isn't the case. I'm readily running out of time but these were the two areas that I was particularly focused on to make sure we got a fair suck of the sav for Kiwi consumers and a robust market going forward.I want to touch on Tracey Martin's point which is Part 2AA deregulating the copper market in specified fibre regions. Now I understand the concerns and we did hear them from a few submitters. The problem or the concern is that the country and consumers can't afford to fund and maintain two totally separate networks when most—the vast majority of—consumers are using a fibre network. Paying for and the maintenance costs of an increasingly old and out-of-date and hardly used copper service is becoming increasingly unaffordable and the country can't afford to pay for two networks when there's only an absolute minority using that old network. Now I've been raising this issue with the previous Minister as well and I understand there is need for amendments at the committee stage because we do need to make sure those vulnerable consumers are protected.The answer of course isn't throwing wasting billions of dollars in keeping two different networks alive; it's about protecting those vulnerable consumers and I know the Minister has a great interest in that. So there is a code to protect them but more work I agree needs to be done.Other areas of the legislation that were improved were making sure that the Commerce Commission would have to make a decision based on the long-term interests of consumers. Previously in the first iteration of this legislation it was the long-term interests of fibre customers. Now when you've got these questions of the copper network wireless markets it makes sense to have an integrated system where the Commerce Commission is actually looking at all consumers in the market. We've seen changes to information disclosure and importantly for players in the market some confidentiality requirements as these companies are providing information to the Commerce Commission. We are seeing I guess a pragmatic move in terms of a potential deferral for entry of the model if the Commerce Commission requests that the Minister—if they haven't had enough time to develop those input methodologies that they can ask for a two-year deferral. I hope that's not the case. I think all participants in the market want to see certainty as soon as possible. A new levy's been introduced raising I believe $12 million for the Commerce Commission to undertake their work and then of course anchor services.But all in all this is good legislation setting us up for the next few decades of the fibre network in New Zealand and I'm glad that all parties have worked together to protect our consumers and make sure we've got a great modern fast fibre network.