Dalziel Lianne: Commerce Amendment Bill — In Committee Third Reading 
Text is incorporated into the Bound Volume 
Dalziel Lianne: Commerce Amendment Bill — In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18541. Text is incorporated into the Bound Volume.] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I would like to thank the member for his constructive contribution to the debate on this bill and indeed we have had really good cooperation from the Opposition in respect of the matters contained within it. 
I will deal with the first point that was raised which is about how we judge the interests of future consumers versus current consumers. I think that is set out in the purpose clause. The purpose is “to promote the long-term benefit of consumers in markets … by promoting outcomes that are consistent with outcomes produced in competitive markets such that suppliers of regulated goods or services—(a) have incentives to innovate and to invest including in replacement upgraded and new assets;”. I do not think we should ignore the fact that that is No. 1 of a series of four tests against which those outcomes are being measured. 
Starting with the incentives to innovate and to invest is really sending a signal about how important it is not to forget that future needs are just as important when we are looking at a non-competitive market. New section 52A to be inserted by clause 4 sets out incentives for suppliers of regulated good or services to innovate to improve efficiency and to provide services of a quality that reflects consumer demand—that is current consumers. The purpose of this provision is also to ensure that suppliers share with consumers the benefits of efficiency gains and to limit the ability of suppliers to extract excessive profits. I think we have the order right and that sends a very good signal. 
The amendments to Supplementary Order Paper 244 are technical amendments. Perhaps as we go through the debate there may be particular questions the member would like me to refer to. There are no material changes to policy contained within these amendments. Essentially the first one is to clarify that input methodologies cannot provide for the legal costs of appeals to be passed through to prices. That is probably one of the less technical aspects of the changes being promoted by the Supplementary Order Paper. I will use new section 54T as an example. The Commerce Committee recommended that the power to transfer jurisdiction be limited to Transpower only. Therefore the Supplementary Order Paper makes a consequential change to section 54T to limit the criteria and consultation requirements to Transpower and transmission issues. If the member goes through the different parts of the explanatory note of the Supplementary Order Paper then he will see that the amendment is simply designed to deliver technically what has been approved by way of policy. 
The third area that I want to spend just a little bit of time on is the question of appeals on input methodologies. It has not been a controversial area but it has been an approach we have adopted to try to achieve a purpose. The purpose is certainty in an area where the previous law has not allowed for certainty in investment decisions. The only way to get in front of the Commerce Commission in respect of negotiating administrative settlements was to breach a threshold. We are already on the back foot when we are doing that. We are being punished as it were for failure in the past instead of a forward-looking approach being taken which is what the new provisions of the bill allow. I personally was very passionate about having appeals at the input methodologies stage because it is really important that when businesses are making investment decisions they have certainty in respect of how the regulator will act. Businesses actually could not be certain in this area of the input methodologies which I have to say are pretty much the basis for all of the court cases that have been taken in respect of the Commerce Commission and Part 4 and Part 4A. 
We recognise though that the input methodologies having appeals in the High Court will present some novel challenges for it. I think we will have to use constructively the period between the passing of this legislation and the implementation of the input methodologies and the appeals that may arise from that. As we have 2 years essentially through to 2010 there will be ample time to appoint suitable and available experts—the panel of lay members. We will be ahead of the game as it were. In that time the High Court will be able to consider the best way to optimise the appellate process so that it is fair to all while dealing efficiently with the issues raised in appeals. 
Once this legislation is passed I intend to write to the Rules Committee to ask it to start thinking about the processes around High Court appeals to deal with this rather novel area of law as it will become. I think it is worth doing that because the alternative would have been to set up a specialist tribunal just to deal with this. I believe very firmly that the first time this occurs and the input methodologies are then set appeals will arise out of that. I think that is pretty much a given. I believe that will settle it for quite some considerable time. Even though the system may be reviewed again in 7 years’ time I do not think we will see significant changes beyond that initial period. 
I am very keen for the High Court to give some thought to how it might handle a process where it might be better to get people around the table to talk about issues and really thrash them out rather than leaving the case for the Commerce Commission with the case for the individual parties to be made by counsel and then for rulings to be made. I think that will be a challenge in terms of the new process but I think it will be worthwhile. I am very grateful that we have the support of the Opposition on this bill. I believe it will improve investment in our important infrastructure companies.