Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Mr Speaker. It is a pleasure to be talking on the Commerce (Grocery Sector Covenants) Amendment Bill's second reading. First of all I'd like to acknowledge the Minister and also I just want to make a call-out to the committee. It was a very constructive committee who looked at this bill and I not only acknowledge members from Labour but also my good colleague Melissa Lee from National who played an important role in this deliberation of a very important aspect of our lives. And of course the backdrop to this is that New Zealanders are suffering from a cost of living crisis that is growing ever more increasing and worrying for many New Zealanders because we have just got a rapid escalation in a whole range of costs: rents fuel and interests costs. But of course this bill deals with the issue around grocery and of course we've seen significant increases in grocery prices in recent history.I think it's important—just for the context of this bill which we're talking about tonight—that this should be seen as one of a part or suite of changes that need to take place if we are to make sure that New Zealanders are in a better position to be able to live lives and afford good food which is the hallmark of a good society. And I think it's important that other proposals that have yet to be tabled in this House are tabled in this House to make sure that we do address this big issue. And I'm talking about the issue of a mandatory code of conduct that the Commerce Commission has felt in its report needs to be put in place and needs to have some real teeth about it to be enforced. We also need to make sure that suppliers are treated appropriately—there have been serious concerns about some of the treatment that certain grocery retailers have been applying on suppliers of food and products to the grocery trade. We want to make sure that consumers get greater access to information and that the grocery regulator if it is a grocery sector regulator—which is a moot point because we haven't yet seen this; it was one of the considerations of the committee. We understand the bill will come through later in the year so we want to make sure that the regulatory power is appropriate and enforceable. So this bill deals with the final aspect of the Commerce Commission's recommendations which is about restrictive covenants and I think it's a pity that this bill is being rushed through the House. Obviously it was introduced under urgency on Budget night. The committee literally had I think 10 days to basically work its way through the proposed bill. We heard from five submitters and there are a number of submitters who made very compelling submissions. I particularly wanted to call out Katherine Rich and the grocery retailers association who did a very good submission but there are a number of other very good submissions that were helpful in the deliberation of the committee. And I think as a result we have probably ended up in a far better place than where we started on Budget night with a draft bill. The first thing that we were occupied on as a committee is around the issue of what covenants should be kept under this bill. And we heard from Katherine Rich particularly who identified a whole raft of covenants that grocery retailers have already put in place—and they are very varied. So we worked our way through the different types and the first question is: are we capturing all the appropriate covenants? And what we were concerned with in the original definition in the bill was a sort of limiting factor around how you define covenants. And to some extent we were particularly concerned about side letters. You might enter into an agreement in a land arrangement with a landlord to tenant a property but there might be a different agreement that deals with how you're going to pay the landlord which might be based on a turnover arrangement that may in fact be in a separate agreement. And then there might be a side letter which says if there are going to be changes to the planning laws in this area that you operate in and you have your supermarket or you own a mall then we require the landlord in this case to pose those changes in planning laws. And again that might be captured in another area of documentation. So the first thing was to make sure that the definition was broad enough to capture what was meant by agreement" and obviously the changed or amended wording captures and adds things like arrangements and other such technical terms to describe broadly agreements that may exist in varying forms between the grocery retailer and the landlord. So that was the first thing.The other thing related to this is the first right of refusal obligations and these are very significant arrangements where a grocery retailer—and there have been many examples of this that the Commerce Commission identified—will take a first right of refusal on using potential land that may become available in the future. It may even want to see that right after the supermarket is long gone and no longer occupying the premises. We were particularly concerned about those arrangements because that was another way of a grocery retailer potentially and in some cases actually stopping other competitors—other grocery chains—coming into New Zealand and setting up operations because there may be an arrangement that goes back many years that still applies and that stops the landlord from basically being able to tenant that area to a new competitor. Then we saw many examples—and Katherine Rich was particularly good on this—about what is meant by a "grocery retailer". And the definition was extraordinarily wide in some lease agreements. It extended to provision of insurance schemes and it extended to the sale of TVs and a whole raft of areas—restaurants cafes or anything that could be construed as a potential competitor—had been and has been written into many retail grocery lease agreements. And again what this means is the footprint that the grocery retailers are able to exert over "potential competitors"—and I'll say competitors in inverted commas because in many cases it was hard to construe how they might even contemplate being a potential competitor or existing competitor of a grocery retailer. So that definition was very very significant and we were concerned that we captured that and I think we have largely with the definition around covenants covered in the new section 28A and 28B. One issue that we turned our mind to was the issue around compensation. We were concerned that grocery retailers might say "Look this is a Government-imposed change to our lease arrangements that we've had in place with you landlord. We might want to see some compensation because effectively we've seen a loss of value through Government-imposed changes to our lease arrangement." We considered that very very significantly and for some period of time in the committee. We think this is an issue that is OK because what we don't want to see is retailers actually going to vulnerable landlords and trying to seek compensation.The other one—and this is a very significant one—is the power of the Commerce Commission and there were some discussions with the Minister about making sure that the Commerce Commission has the power to be proactive in monitoring these arrangements. At the moment the Commerce Commission often responds to complaints but we didn't think that that was sufficient. We think that the Commerce Commission first of all needs to have the ability to be proactive and secondly to have the resources to do that. And so we're looking forward to debating and discussing the Supplementary Order Paper that the Minister's put forward but I think we've landed in a pretty good shape and I want to acknowledge all the committee and officials but we'll be talking more in time about this."