Wood MichaelMICHAEL WOOD (Labour—Mt Roskill): It's always a delight to follow on from the Hon Chris Finlayson. He is erudite informed articulate and in these respects he singularly stands out on the Opposition benches. But in listening to the Hon Chris Finlayson it also brings a note of sorrow to my heart because it reminds us of great National Party MPs who are no longer in the House with us. And in respect of this bill I am referring to a truly Churchillian figure one of the great legislating Ministers of our times—I don't really need to say his name. Everyone knows who I'm thinking about: the man from Tukituki the Hon Craig Foss.Sitting suspended from 6 p.m. to 7.30 p.m.MICHAEL WOOD: Thank you. Well somewhat unfortunately in my opening remarks I'd just built up to a punchline just as the bells rang and the punchline was Craig Foss so let me just backtrack a little bit to give some context to members who have come to the House specifically for this debate and for this speech. Really it was a kind punchline because in my comments I was acknowledging the former Minister of Commerce Craig Foss who at the point at which the previous bill the Commerce (Cartels and Other Matters) Amendment Bill was introduced in 2012 which contained within it the criminalisation of cartels' behaviour was the Minister of Commerce. I think he's someone who we can actually look back to a little bit fondly because the passage of that bill in the latter days of the previous National Government had all of the speed and the dynamism of an aged sloth with a gangrenous leg. The first reading was in 2012 the second in 2014 and we got to the final reading in 2017. This was a bill that was dealing with the serious matter of cartel behaviour in the New Zealand economy and it took five years for it to make its progress through the House.The reason that I raised the fine example of Mr Craig Foss the former Minister is that Craig Foss actually got the issue that we are debating in this bill the Commerce (Criminalisation of Cartels) Amendment Bill. I actually want to refer back to his excellent first reading speech on the Commerce (Cartels and Other Matters) Amendment Bill back in 2012. Here is what Craig Foss the former National Minister of Commerce had to say at that point: I believe that with the introduction of criminal sanctions [in relation to cartels] New Zealand stands to benefit in three ways. First is the increased deterrence of hard-core cartels due to the severe sanctions associated stigma and possible restriction of an individual's freedom. Second is the increased detection of hard-core cartels from improving the effectiveness of the leniency regime by increasing the value to the individual applying for leniency."—I'll talk more about this later—"The leniency regime is administered by the Commerce Commission and encourages cartelists to come forward in return for leniency. Third is an improved ability to cooperate and detect cartel conduct." That was Mr Craig Foss the National Minister for Commerce in the first reading of that bill recognising the value of the criminalisation of cartel behaviour.And it didn't stop there because we got to the Commerce Committee and there was a unanimous report from that select committee—a National Party - majority select committee—that recommended proceeding with the criminalisation of cartel behaviour having listened to submissions from across New Zealand society. Mr Craig Foss in his second reading speech: "Notably the committee endorsed the introduction of criminal sanctions for hard-core cartel conduct. This change aligns New Zealand with Australia and some of its major [committee] partners." So there we had a legislative process that recognised the value of criminalising cartel behaviour right up until the committee stage. Unfortunately between that point and the committee stage we had a change in ministerial leadership and I want to welcome to the stage Mr Paul Goldsmith who took over—welcome Mr Goldsmith—and who somewhat out of the blue at committee stage tabled a Supplementary Order Paper that gutted that bill and removed the provisions around the criminalisation of cartel behaviour. All we got was basically a one-liner—a one-liner from that Minister and from the National Party—and it was one of those lame ones saying there will be a "chilling effect." "Chilling effect" is one of those phrases that you use when you just don't want to do something and you don't want to have to argue the toss and that is what happened. I actually looked back on the committee stage debate the point at which this House considered that significant change to that piece of legislation and there was a very very scant response and discussion to that major change by the Minister in the chair at that stage who was the Hon Jacqui Dean.So I just want to refer back to those comments from Mr Craig Foss. He got it right. It is entirely appropriate to criminalise cartel behaviour and he described the reasons well. Let's just go back to those: the first he said was "the increased deterrence of hard-core cartels due to the severe sanctions associated stigma and possible restriction on an individual's freedom." So it's basically that logic that we have in the criminal law that when we want to seriously deter a kind of behaviour we make sure that there are sanctions to match and in this case the sanctions potentially include imprisonment of up to five years. I think that is entirely appropriate. It is entirely appropriate because it makes it consistent with other white-collar sanctions that we see for fraud for insider trading and the like but for some reason cartel behaviour has been excluded up until this point.The second point that Mr Foss made—he said "Second is the increased detection of hard-core cartels from improving the effectiveness of the leniency regime by increasing the value to the individual applying for leniency." This is effectively where one party who may have been involved in cartel behaviour can come forward can fess up because they're worried that it might go wrong further down the line and get the information into the hands of the relevant authorities so that it can be dealt with. And of course you increase the likelihood of that happening if people are concerned about the consequences. So having some serious consequences by way of criminal culpability on the line means that the leniency regime is more likely to actually be used.The third Mr Foss noted is "an improved ability"—and I'm quoting here—"to cooperate and detect cartel conduct. This is particularly important for global cartels where information is more likely to be shared with countries that have criminal regimes." And of course this is where the rhetoric around a chilling effect becomes completely unstuck because virtually all of our major trading partners all of the major OECD economies that we trade with have criminalisation of cartel behaviour. Has there been a chilling effect on business investment in Australia in the UK in the US in Japan or in Korea? Of course the answer which we all know is no. Those countries have perfectly functional economies and the criminalisation of cartel conduct has not had any significant effect on them whatsoever. It was simply a weak excuse from the previous Government which didn't want to go down a path that quite frankly was opposed by some of the people that they have close relationships with and I view that as utterly unacceptable.There are two arguments that I want to add to Mr Foss's reasons for supporting the criminalisation of cartel behaviour. The first is consistency with other offences. What is cartel behaviour? It is powerful players often in oligopolistic markets coming together to abuse the market for their own personal enrichment. That is what it is about. Cartel behaviour is about distorting markets so that those particular players do better so they can raise the prices and reap more profit. It is about taking money out of the pockets of other businesses and out of consumers.When other people within our regime of sanctions do that whether it's a few people conducting low-level fraud in a bank or a supermarket chain or whatever those people face criminal sanction and very often for amounts that will be significantly below what we see from cartel behaviour. In New Zealand in the airfreight industry we had a well-known case a few years ago where approximately $200 million of excess profit was made because of proven cartel behaviour. Now I will warrant you Madam Deputy Speaker—I will warrant you—that people operating at a far lower level engaging in fraudulent behaviour abusing rules and breaking the law will potentially face jail terms but the big boys engaging in that behaviour at the moment don't face criminal sanction and that is simply an inequity that this Government will not stand for.And here's a final one for the sons and daughters of Milton Friedman on the other side of the House that I want to put to those members tonight: cartel behaviour is an abuse of the market place. If you believe in free and equitable and functional markets you should be taking a stand against cartel behaviour in the strongest possible terms because it undermines your economic philosophy it undermines the functioning of free and efficient markets. It is an abuse of those markets and given the scale of it why would we not stand up for it in the strongest possible terms by sending a message to those people in the towers of Queen Street that we expect them to play by the rules and that we will not stand for cartel behaviour that distorts our economy and rips money out of the pockets of our businesses and our consumers. I commend this bill to the House and look forward to other contributions. Thank you."