edithatogo/nz-hansard-corpus huggingface dataset:
1. Question No. 1—Prime MinisterRAWIRI WAITITI (Co-Leader—Te Paati Māori) to the Prime MinisterORAL QUESTIONSQUESTIONS TO MINISTERSQuestion No. 1—Prime Minister1. RAWIRI WAITITI (Co-Leader—Te Paati Māori) to the Prime Minister: Well this is very rare we get the first question. So my question is to the Prime Minister. Does he stand by his statement that The Government will not introduce any major tax changes like a wealth tax or CGT in this Budget"; if so what action will his Government take if any to shift more of the tax burden from the poor to the wealthy?Rt Hon CHRIS HIPKINS (Prime Minister): Can I begin by acknowledging the tragic events at Loafers Lodge in Newtown and join with other members across the House in extending our condolences to those who have lost their lives and our complete support for our first responders who have been doing an amazing job on the scene there.I thank the member for his question. In answer to the first part of his question yes. In answer to the second part of his question I can confirm that the Budget will not contain measures that are designed to transfer more of the tax burden on to lower-income New Zealanders in order to provide tax cuts for those on the highest incomes as some have been suggesting.Rawiri Waititi: Does he agree with the need to shift the burden of tax from the poor to the rich in response to the recent report which is showing the wealthy paid only 9.4 percent in tax while the average person in Aotearoa is paying 20.2 percent; and if not why not?Rt Hon CHRIS HIPKINS: As I've already indicated there won't be significant changes in that area in this year's Budget. Parties will put forward their tax policies before the election. I can assure all members that the Labour Party will put forward its tax policy well before the next election; members will be able to make their own judgments based on that.Rawiri Waititi: Why will he not begin to reduce wealth inequity through common-sense changes to the tax system such as taxing capital gains and empty houses; is it because he is comfortable with the fact that the richest 2 percent own 50 percent of the wealth in this country?Rt Hon CHRIS HIPKINS: This Government is absolutely committed to improving the lot of people on the lowest incomes and I think our track record speaks to that. This year's Budget for example contains the funding to among other things increase benefits—something that has already been announced and acknowledged. It contains funding to increase superannuation something that has already been announced and acknowledged. This Government is absolutely committed to ensuring that lower-income New Zealanders are able to get ahead.Chlöe Swarbrick: Does this Budget also contain or perpetuate a tax system which is found to be deeply inequitable such that the wealthiest pay an effective tax rate of half that of the average New Zealander?Rt Hon CHRIS HIPKINS: I've indicated what tax changes the Budget does not involve such as the introduction of a capital gains tax or a wealth tax. For more detailed questions the member only has to wait two more days."
Salesa JennyREPORT OF THE COMMITTEE OF THE WHOLE HOUSECHAIRPERSON (Hon Jenny Salesa): Mr Speaker the committee has considered the Customs and Excise (Arrival Information) Amendment Bill and reports it without amendment. The committee has also considered the Self-contained Motor Vehicles Legislation Bill and reports it with amendment. The committee has also considered the Accident Compensation (Access Reporting and Other Matters) Amendment Bill and reports it without amendment. The committee has also considered the Grocery Industry Competition Bill and reports progress. I move That the report be adopted. Motion agreed to.Report adopted.The House adjourned at 9.56 p.m.
Bayly Andrew; Webb DuncanANDREW BAYLY (National—Port Waikato): Thank you Madam Chair. It's been an exciting night hasn't it? I referred to this clause 160 before at the start of the debate—I actually referenced it back to the functions but I'll take it up again: the appointment of a grocery commissioner. One of the things about this: you can write wonderful legislation with all the best intent but the reality is like all industries the grocery trade is a dynamic industry that will be changing evolving hopefully for the better but sometimes it may be for the worse—we don't know. But whatever the case is to be effective this legislation relies on having a grocery commissioner with the requisite skills to do the job. In my personal view and it's something that National's made very clear without a commissioner with the requisite skills and ability to robustly go and do his or her job then all of this good work in this bill is unlikely to result in substantial change.So my central point to the Minister in the chair Duncan Webb is: what assurance can he give the committee that the appointment of the commissioner will be to ensure that that person has an in-depth relevant market knowledge of the grocery sector? I don't intend it to be an offence or anything but to not make sure that that person gets appointed with other skills such as because they might be a very good lawyer or whatever—because I think the importance of this role particularly is to have the understanding of the sector and the way it operates and it is a large complex sector. So can the Minister give assurance to the committee that in appointing the commissioner—and it will be for him to make the recommendation—such a person will be appointed and we don't end up with someone who doesn't have those requisite skills?Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Yes.
Salesa JennyPart 5 MiscellaneousCHAIRPERSON (Hon Jenny Salesa): Members we come now to Part 5. This is the debate on clauses 160 to 190 and the miscellaneous provisions. The question is that Part 5 stand part.
Voting — Correction—Closure Motion on Part 3
Salesa JennyVOTINGCorrection—Closure Motion on Part 3CHAIRPERSON (Hon Jenny Salesa): Members before I call on the next member to take a call I need to correct the result of the vote on the question of the closure on Part 3. The result was announced as Ayes 111 and Noes 10; the correct result is Ayes 109 and Noes 10. The record will be corrected accordingly.
Webb DuncanHon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you Madam Chair. In respect to Mr Bayly's original question I just note that the 3 times the value" or the "10 percent of turnover" in clause 122 are alternatives. So it's not the higher of those two; the question is whether we can determine three times the value of the wrong in which case it's that—or it's 10 percent of the turnover.In respect of the fact that 10 percent of the turnover—or indeed $10 million—is a very large number it's really important to recognise firstly that that is the upper limit. So think of the worst possible conduct and the largest financial consequence of that conduct. So this might be a situation where by deception one of the players has stripped profits from the New Zealand public to the tune of billions of dollars right? Then obviously we have to have a significant disincentive and we know in these areas that if there's one wrong that's been detected there may often be other wrongs undetected so we need to have a proportionate disincentive. So those are high penalties at the upper limit but rightly so.In terms of Mr Watts' question relating to clause 147 I think he was asking about the $5 million limit and why it's there. There are of course other ways to resolve a dispute—if it falls outside of it whether that be through an arbitration in a private sense or using the High Court. So this scheme is very much tailored to ensuring a highly efficient and effective dispute resolution scheme that means that there's not some grinding process where the market power of the main retailers can in fact be used to grind down the people who have a dispute. And that $5 million limit was thought to be appropriate there.In terms of—Mr Bayly again touched on that—the section itself it is relatively clear. He sort of said "Is it the amount of goods that's in question? Or does it include marketing costs?" Well the question is how much is in dispute? I think the words are "What is the claim; the amount of the claim?" So that's the short answer to that question.In terms of eligible dispute obviously any regulations have to be consistent with the purpose of the Act. They are subject to the scrutiny of the Regulations Review Committee and rightly so. But in terms of what else might crop up we've talked about things like the use of logistics and supply chain as a lever to get excess profits. It could be anything along those lines. But again not for me to speculate what that might be."
Grocery Industry Competition Bill — In Committee—Part 4
Bayly AndrewANDREW BAYLY (National—Port Waikato): I'm just pausing because I want to give the Minister an opportunity to respond and I'm just looking at him. OK I'll move on and my good colleague here Simon Watts has just been referring to clause 147. I just want to refer specifically to clause 149 and this is the referral to a dispute resolution scheme. This was a change that the select committee put in place which enables the supplier or wholesale customer to refer matters to a dispute tribunal process provided as Mr Watts has just said it does not exceed $5 million.The first question I've got for the Minister is: how do you define the $5 million? If you have a contractual supply—and that might be for a long-term supply over the course of a number of years—would that preclude that arrangement if the total value of that long-term supply was more than $5 million? Or is the dispute figure what triggers the $5 million? And how do you define that? If you're talking about a particular supply arrangement and there is a dispute around marketing fees is the cost of the marketing fees the dispute—and therefore that's what's captured by the $5 million—or is it as Mr Watts was trying to indicate if you are supplying and the total value of the goods that you supplied for that week was less than $5 million you're OK? So the first thing: a bit of definition around that.The second one is about the three elements where the dispute can be referred and it rises from the performance or non-performance of the grocery supply code. The second element is in relation to the wholesale supply of groceries code or falls within … [the] eligible disputes prescribed by regulations". Now that always gives MPs who have been in the House for a while the screaming heebie-jeebies because that means no one in this House knows what the regulations might be and only the Minister who's sitting in the chair will know what those will be and publish them. Because of course regulations don't need to come back before the House nor in fact do they have to go back before the select committee. So I think it's probably important—the second question is: what might the regulation envisage and what might it preclude?—so we can get some sort of indication from the Minister about how that regulation framework would be drafted."
Watts SimonSIMON WATTS (National—North Shore): While the Minister's thinking of a response to that good question from my colleague Andrew Bayly I'd like to refer to Subpart 5 which is in regards to dispute resolution provisions within Part 4 of this bill—in particular clauses 147(1) (2) and (3). Clause 147(3)(a) outlines the scale of disputes that may be referred to the scheme. And it refers to disputes less than $5 million are within scope of this and then goes on to outline the other considerations. My question to the Minister is in regards to disputes that exceed $5 million: what is the expectation and the process and mechanism in order to deal with disputes of that scale? I think when one considers the cost of food and other goods that flow through the grocery industry the context around $5 million may seem a lot in this House but the reality is for some of our large suppliers that may only represent a day's worth of stock potentially depending on the scale and volume if you think about some of our large production entities. So how will we deal with entities and disputes in regards to exceeding that amount?The other aspect is in regards to dispute resolution in terms of how the Minister envisages this process working in terms of getting the parties around the table and whether there has been any consideration in the drafting of this clause in relation to other dispute resolution clauses that lie within other aspects of legislation—obviously outside of the grocery industry but any other industry aspects that have a similar context. So those are the two points in regards to clause 147 that I'd appreciate some context from the Minister.
Bayly AndrewANDREW BAYLY (National—Port Waikato): Yeah thank you Madam Chair. I think there's sort of two crucial elements in this part but the one I want to just turn to first—it's probably of lesser importance but important to understand—is the issue around maximum penalty which is referred to in clause 122. There's obviously different tiered penalties—clauses 123 and then 124 and 125. But I just want to refer to clause 122. The maximum amount of this—and this is subclause (3)—is a pecuniary penalty of $500000 for a contravention an attempted contravention or an involvement in a contravention by an individual. So that makes sense that it relates to an individual and I know the Economic Development Science and Innovation Committee was very keen and actually ensured that the level of penalty was similar to other pieces of legislation.The bit I just want to ask the Minister of Commerce and Consumer Affairs about is (b) in any other case the greater of—(i) $10 million; and (ii) either the amount referred to in subsection (4)(a)" and (b). Now subclause (4)(a) and (b) have two options—and remember this is the "greater of". The first one is under (a): if it can be readily ascertained and if the court is satisfied that contravention has occurred then three times the value of the commercial gain. So that one obviously is a judgment call around what is the level of commercial gain that the grocery retailers achieved and to put a three times multiple on it. Or (b): greater of 10 percent of the turnover the person that is liable to pay the penalty.Now it might be useful just for the Minister to talk about because if we're talking about the two existing players the turnover of those—and he might have those figures to hand and I'm hoping he does—what would be the turnover of those two companies currently and what does 10 percent represent? Because if you follow through on the maths I would imagine that 10 percent is a very large figure and the way this is drafted means that you end up at the greater figure. And so I'm just really keen to understand what the Minister believes that potentially that greater figure could actually be based on the current turnover of the two existing—well will be shortly—regulated grocery retailers. Hopefully he's got an answer."
Salesa JennyPart 4 Enforcement and dispute resolution and Schedule 2CHAIRPERSON (Hon Jenny Salesa): We come now to Part 4 which is the debate on clauses 113 to 159 and Schedule 2 Enforcement and dispute resolution". The question is that Part 4 stand part."
Watts SimonSIMON WATTS (National—North Shore): Thank you very much Madam Chair. I'd like to move to clause 53 of the bill in regards to Part 3 a clause that we haven't touched on yet. I'd be interested in the Minister's comments in regards to where the Commission must give report to the Minister and publish it". This clause in particular outlines that the final report which I questioned before in regards to clauses 52 and 54 which the Minister provided some response but not necessarily one that provided adequacy—refers to the fact that the final report on the inquiry to the Minister which must be submitted "as soon as practicable after completing it" which obviously makes sense but my question is in regards to this point. It refers to 53(1)(b) which is "at least 10 working days later publish the final report." I'm interested in whether—well that one looks to be a potential conflict in regards to those two specific clauses. How does point (b) in regards to the 10 working days later of publication of the report actually work in regards to that clause?The second clause I want to get into is clause 56 another clause that we haven't touched on yet this evening which is in regards to the Minister publishing the Government's response to this and as we've articulated earlier this evening around some of these reports which may be of scale and substance in dealing with issues in the public interest. In terms of what the Minister foresees in regards to what is a reasonable time after receiving the report that this final report is actually published are we talking weeks or months or years? Sometimes when we on this side of the House consider what is reasonable in terms of the provision of information which is in the public interest that information is not readily available. So some context around what the Minister expects in regards to 56(1)(a) would be appreciated and we'll leave it at that."
Bayly Andrew; Brown SimeonANDREW BAYLY (National—Port Waikato): Point of order Madam Chair. Well (a) you can't make two closure motions and secondly you can't preface it with Madam Chair".CHAIRPERSON (Hon Jenny Salesa): Sorry?ANDREW BAYLY: Just in relation to that closure motion on this particular part of the bill. My understanding is that (a) a person can't make two closure motions particularly following one another and the second thing is you can't preface the closure motion by saying "Madam Chair"; you stand up and say "I move that this motion" whatever. But the member who chose to make that closure motion didn't do it in an appropriate manner.Dr Tracey McLellan: Speaking to the point of order. I believe Madam Chair that I said "Madam Chair" to get the call and said nothing else after taking the call apart from the correct words of the closure motion.CHAIRPERSON (Hon Jenny Salesa): That's right. She did call out. There was no one else that actually took a call within those few seconds and she was the one who first called out "Madam Chair" so she was getting my attention.Simon Watts: Madam Chair?CHAIRPERSON (Hon Jenny Salesa): Are you taking a point of order?Simon Watts: No; just a call.CHAIRPERSON (Hon Jenny Salesa): I've accepted the closure motion though. So the question is: is someone asking for a vote to be called?SIMEON BROWN (National—Pakuranga): Point of order. I'm not sure how you can accept a closure motion which wasn't put to you correctly.CHAIRPERSON (Hon Jenny Salesa): She did actually put the point of order to me correctly. She called out "Madam Chair" which—SIMEON BROWN: The process is "point of order I move that the motion be now put." not "point of order Madam Speaker".Camilla Belich: Speaking to the point of order. Madam Chair you will be aware as all members of this House will that often when we're seeking the call we need to make the call to the Chair or the Speaker on multiple occasion and this is indeed what happened in this instance.CHAIRPERSON (Hon Jenny Salesa): The Speaker's ruling is that she is allowed actually to call out my name before she seeks the closure motion but it can actually be asked for again—the closure motion."
McLellan Tracey; Salesa JennyDr TRACEY McLELLAN (Junior Whip—Labour): I move That the question be now put.CHAIRPERSON (Hon Jenny Salesa): The question is that the question be now put.
Webb DuncanHon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you Madam Chair. I thought I should just round off some of those questions while we're winding up here. Look Mr Watts in respect of some of your questions you asked me to look forward to a future and it's really not appropriate on a hypothetical for me to speculate about what the commission might do. Then you talked about what is a reasonable time—in respect of I think it was clause 52. Once again it's entirely circumstantial in terms of the time for a draft to be out there for responses. It's not a consultation; it's a draft being published and then people submitting. If it's a short document not very long; if it's a long document a long time. And in respect of clause 54 which was the presentation you need to do your time on the Regulations Review Committee because presentation is a very formal thing where it's simply the provision of the document to the Clerk of this House and there's not really much involved in it at all other than that.In respect of Mr Smith's comments around the wholesale market and dynamic competition I think it's a really good point that dynamic competition is what we want to see—competition that doesn't stand still; a market which is rapidly changing—and I think you're right that we do need to absolutely keep an eye on it. That's one of the reasons why the commission will have a role to play in essentially maintaining the code and keeping it up. In terms of large suppliers obviously that's something that was before the select committee and that's why the commission does have a power essentially to carve out those large suppliers from the arrangements so that those very large suppliers could exert market dominance. The commission can carve those out to ensure that that dominance isn't affected.
Bayly AndrewANDREW BAYLY (National—Port Waikato): This is an exciting and probably the most important part of the bill so it's well worth spending a bit of time on it. I want to return to clause 82 When suppliers may opt out". Obviously this lays out essentially four options for suppliers. And I just wanted to understand what the Minister's view was around this because I think there's some anecdotal evidence already starting to occur or become available that larger suppliers are choosing to opt out of the wholesale arrangements. Of course this bill provides for it. Many of those companies are very large and in many cases global international-based companies who supply a range of food products to the New Zealand market. And I suppose the question really is: is the Minister concerned that those very large significant suppliers are choosing to opt out and many increasingly choose to opt out which means this bill only really captures the smaller suppliers and therefore does it undermine the concept that the whole raison d'être of putting in place a wholesale arrangement was that if you were a new competitor to the market you could easily go in and replicate those wholesale arrangements across all the range very quickly and therefore be able to get up and running on equivalent competitive terms? So the big question is: is he concerned that there might be a trend that we see many of those very large suppliers not actually participating in this market and therefore undermining the whole purpose of this part of the bill?"
Smith DamienDAMIEN SMITH (ACT): Thank you Madam Chair. Just on the principle of clause 19 ACT normally is against any level of excessive bureaucracy but I am beginning to think that you may have to become the Minister of Groceries" full time Mr Webb to actually just see how the relationship between under "wholesale offerings to wholesale customers" the Minister and the commission will actually work. If you look at the clauses on pricing; range quantity and frequency; quality; and commercial relationships there's a lot of stuff there. In principle how dynamic would that be and how would the players in the market interact with the commissioner and yourself on that aspect?"
Webb DuncanHon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you Madam Chair. In respect of Mr Watts' contribution once again I don't think it's really for me to speculate on a hypothetical of what might happen in the future in respect of an inquiry and what responses a commission which is an independent entity—what suggestions to changes and policies local government or central government they might make. So that's entirely speculative and I won't engage in that.In respect of Mr Bayly I think Mr Bayly's real question down to the nuts and bolts of it is: would this bill enable some enforced structural change such as divestment? This bill is about regulating the industry not about breaking it up. So I don't think that this bill equips the commission or the Minister through the second power which Mr Bayly referred to to require the divestment of any particular assets or any other fundamental structural change to the market itself.
Bayly AndrewANDREW BAYLY (National—Port Waikato): Yeah thank you. I just refer back to the Minister of Commerce and Consumer Affairs' earlier response where he said basically he was very reluctant that any utterances in this Chamber might be used as a guiding principle if there were a court case or whatever—I think that was the implication—and therefore that's why he wasn't prepared to say what might be the process for implementing or initiating the regulatory backstop. But I did ask about what would be the range of measures that the Government and he as the Minister might contemplate in a regulatory backstop situation because I think it's very important. I would hasten to say that the former Minister of Commerce and Consumer Affairs has made comments around the possibility or not of requiring sale divestment of operations. But I gave three examples: operational separation or management separation through to sales through to just more regulation. So I think it would be useful for the Minister to be clearer about what might be ruled to be acceptable and perhaps what would be ruled not to be acceptable as an option that could be pursued under the regulatory backstop.Related to that under clause 79 I note that the bill provides that the Minister—the way that I read it—may propose contrary to the recommendation of the commission to make a recommendation of Order in Council—obviously subject to the commission giving written advice. But this means we've got a new Minister who suddenly determines yes they do want to require the supermarkets to sell off a whole lot of their chains—would that be possible under clause 79? Is that what clause 79 provides for? So again I think the question that I asked earlier in the context of what clause 79 lays out—what is the Minister's expectation and even sort of the boundaries of which he might contemplate if he did go down the situation of imposing a regulatory backstop?
Bayly Andrew; Webb DuncanANDREW BAYLY (National—Port Waikato): Thank you Madam Chair. Just two things—the first one is about the regulatory backstop that the Minister referred to earlier. Can the Minister lay out what his expectations are of the possibilities of the regulatory backstop? There's an assumption that it will require more legislation more regulation. And of course having been through this bill there is a significant amount of legislation already provided for. What further regulation would he envisage to take place if there was a regulatory backstop imposed? And does that go to the extent of requiring operations to be divested—so that's one option; separation of operational arrangements between wholesale and retailing operations both at a profit or company structure or whatever that might be; or is it just in his mind tightening up regulations even further and if so what potential areas? I'm just very keen that the Minister lay out for everyone what a backstop means.Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Those two themes are in fact quite closely related because they're both asking about the exercise of ministerial discretion. In respect of the inquiry question and time I think the really important point is that that depends entirely on what the inquiry is into. It could be a short discreet matter—that could be a matter of weeks—or it could be a very complex and deep matter which may be many months or possibly more. So it's entirely impossible to say what that would be.In respect of what would be the relevant considerations or when would further backstop regulation be triggered or when would the inquiry be launched I'm very aware that the words spoken in this Chamber sometimes are used as guidance in making those decisions and one thing I certainly would not want to do is fetter that discretion. We know that any decision along those lines is reviewable. The basis upon which those decisions are made must be rational using relevant considerations and bear a rational connection to the outcome sought. But other than that it's not for me to place fetters on a future Minister whether from this side of the House or the other side of the House.
Watts SimonSIMON WATTS (National—North Shore): Thank you very much Madam Chair. I'd like to move to clause 48 in Part 3 which is in regard to the commission's inquiries a new area that we haven't traversed so far this evening. But I must acknowledge the Minister for his responses to the questions that we are asking and for doing so in a diligent manner even though some of the responses don't necessarily meet the threshold. But anyway we are engaging in some form of to and fro which is appreciated. My question in regards to clause 48(1) in particular is around how the commission's inquiry is initiated and the consideration and criteria around that. I would appreciate it if the Minister could provide some context in terms of how he envisages what the threshold is around the triggering of that inquiry and what are some of the considerations that would be considered. It says there if required to do so by the Minister"—so giving us some context around at what point would the Minister consider it taking into account the significance of such an exercise and the impact of that both in terms of the entities under review but also the other parties. The second aspect in regard to that inquiry is to look at clause 48(2) around the duration. So I'm interested to hear from the Minister in terms of providing context around how long the Minister would envisage such an inquiry taking. Are we talking about it being a year long or two years or three years or more sort of short and sharp? Just a bit of context around that taking into account the burden of such processes and actually as a result of those inquiries in regards to potential recommendations what the Minister's expectations would be around how the translation of the recommendations—including those reports—will actually translate into action that will actually derive changes that the consumer may or may not see as a result of that piece of work. Thank you."
Lee Melissa; Webb DuncanMELISSA LEE (National): Thank you Madam Chair. I'd like the Minister of Commerce and Consumer Affairs to look at Part 3 clause 38 Regulated grocery retailer must ensure transparent pricing under wholesale agreement". The issue that I'd like to bring to the Minister is whether he actually believes that the practice that I'm going to sort of iterate for him is in fact transparent or fair and should that continue and how would that be made fairer or more transparent?One of the things that actually happens with the big multimillion-dollar - making supermarkets who also own the supply wholesale business is that they spread their costs by—for example they have Countdown or New World all over the country and they may from their own warehouse supply to those supermarkets up and down the country which are trucked to those places. But instead of charging different pricing for each truck that gets delivered to let's say Invercargill or to Hamilton or Waipukurau they spread the cost evenly so that the cost is sunk and the business shares the costing so that it's sort of not unfair for those more remote places to pay a higher transport cost. For example when cyclones happen and bad weather hits they often helicopter groceries to those remote places and that cost is shared right across the business. So in order to actually insist on their wholesale methods being more transparent in how they are calculated is it really fair to say that well it's spread right across their business. Now that new entrants come in—let's say Costco wants to be part of the business that buys wholesale food—should Costco benefit in that sharing of that spread for transport costs for example? Do you think there is a better way to make that cost more transparent and fair?Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): In respect of Mr Watts' contribution the commentary around lockdown policies isn't relevant to this debate and didn't feature in the Commerce Commission market study.In respect of the honourable Melissa Lee's contribution it's not for me to say what transparency is; that's the role of the Commerce Commission when those decisions are made. I won't venture into a specialist area tonight."
Watts SimonSIMON WATTS (National—North Shore): I wanted to come back to the responses from the Minister in regards to my questions in clause 18(2)(b)(i). The response given referred to the concept of the reasons for these reforms being because of the super-profits that these grocery entities are making and referred to numbers I believe around $1.5 million or so. My question is quite simple: does the Minister believe that the policy decisions by this Government in order to restrict people to only shop at the supermarkets during the lockdowns in Auckland and not allow consumers to shop at butchers greengrocers and small retail outlets led to an inflation of the revenue and the profitability of the entities of which the Minister has just articulated in his response to my question: the reason for this reform is because of those super-profits.My challenge to the Minister is: actually the reason why these entities in the period which is under review have made significant profits is because of Government policies that have led to a cost of living crisis in this country and the Government policies that led to a restriction of consumers only being able to shop at these supermarket entities. So I don't think it's unreasonable to see that there is a little bit of a problem here in regards to the basis for the reforms actually being the result of this Government's policies. And I'm interested in whether the Minister accepts that or if not what factor if any did those policy responses make in regards to the profitability of these entities?
Bayly Andrew; Webb DuncanANDREW BAYLY (National—Port Waikato): Yeah thank you Madam Chair. I think I'll leave my good colleague to respond to the other bit but the Minister has not addressed the issue around own-brand pricing and the assertion that own-brand pricing has little difference in the price paid to the supplier. I just want to clarify that that's what the Minister believes because if that is the case I think the Minister perhaps needs to get out and talk to a few more people because that is not the situation. So there's been a deliberate reason why own brands were excluded and I'm very keen to understand from the Minister why he as the Minister thought that there should be a differentiation?Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): It'd be helpful if Mr Bayly could show me where in the Supplementary Order Paper version of the bill own brands are referred to as excluded because the Economic Development Science and Innovation Committee addressed this matter.
Watts SimonSIMON WATTS (National—North Shore): It's always a pleasure when the Minister of Commerce and Consumer Affairs articulates that the Government are proponents of a free market and more competition and all of those aspects—if only that was the case.But let's take a look at clause 18(2)(b)(i). This is in regards to the overview of regulation of wholesale supply of groceries. It articulates the requirement of one or more of these regulated entities to have what is referred to as a framework which provides transparency about how these retailers will make decisions about prices range quantity frequency terms and conditions—all regulated aspects. In regards to that—gosh that sounds like a blast from the past if you go into Eastern Europe in terms of the Government dictating the frequency of how many cauliflowers you can sell in Ōrewa. The Hon Mark Mitchell—good to have you here.But the question really for the Minister in regards to that framework is that in reality how does the Minister see that is going to work in practice? Is it genuinely going to be able to get to that degree of minutiae around the range of—well let's talk about some products you can buy at the local supermarket. Maybe eggs—free-range eggs of course; we're not into caged eggs. Free range. But there's a huge variation in terms of the range of the size of the eggs and all other factors around it. But is it going to get into that degree of detail? And I know that because I do the weekly shop on a Sunday just for the record. Damien Smith's looking at me going Are you sure?" But no I do do the weekly shop. And is—Andrew Bayly: Oh does he?SIMON WATTS: What was that Mr Bayly?Andrew Bayly: I just wondered whether you did do the weekly shop.SIMON WATTS: Can I just clarify that that's not a question for the Minister but he can answer it if he wants. In regards to that framework how is it going to work in practice?The other point around this is in regards to the compliance costs on these wholesale entities in regards to meeting these obligations. Who will bear the cost in regards to the obligations around meeting those wholesale frameworks and the frameworks that I've referred to? What is the estimated cost that the industry as a whole will bear as a result of this increased regulation? And has there been any consideration or assessment in regards to the additional cost burden that may be placed upon the industry and what that will result in in terms of price increases for that carton of a dozen eggs that you pay at the counter when you come up? [Interruption] Sorry what was that?Sam Uffindell: If you can find them.SIMON WATTS: If you can find them—and that may be an issue in some parts of the country I acknowledge that. Thank you to the member for Tauranga there articulating some good challenges of what is faced by many communities. But interested in context around the cost that is imposed and whether any assessment or analysis will be done in terms of flow-through to the consumer."
Smith Damien; Lee MelissaDAMIEN SMITH (ACT): Madam Chair thank you. I know the Minister only shops at Moore Wilson's and I do look forward to taking him to Costco. Actually I've courted Moore Wilson's as well just assessing the competition myself.But he didn't answer my question about whether the advisers and himself can show anywhere in the world where compulsory Government pricing is an effective tool in increasing competition—the question of the night.MELISSA LEE (National): Thank you Madam Chair. It's a very quick one in relation to the answer that the Minister gave. I'm wondering if that changes if the supplier had a specific reason like for religious purposes that perhaps it was a halal issue or a cultural issue that they oppose a particular wholesaler to supply to other people for those particular reasons.
Smith Damien; Webb DuncanDAMIEN SMITH (ACT): Minister do you believe that forcing supermarkets to act as wholesale suppliers to their competitors—would it discourage international food retailers from entering New Zealand and if not why not? Is the Minister concerned that requiring supermarkets to act as wholesale suppliers to their competitors would encourage existing New Zealand retailers to raise their prices to cover losses they may incur as a result? Finally in any socialist or capitalist country in the world has the Minister or his advisers identified anything that shows that compulsory Government pricing is an effective tool of increasing competition?Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): To the Hon Melissa Lee it is an interesting point as to whether a supplier can require that their products whatever they be should be permitted to only have been sold through particular outlets. If it's you know Nike or Lululemon there's probably not too much concern but when you have a duopoly for food such—I think they used to be called soulless agreements—sole supply agreements are problematic because they tie up the market. So in fact the fact that a supplier if they want to sell into Foodstuffs might also find themselves appearing in The Warehouse might not be a perfect outcome for that supplier but I think we need to hold front and centre that this is about having fair agreements both at the supplier end but more importantly at the consumer end. If that means that that's the outcome so that we get cheaper prices at the checkout then that's what will happen.Mr Damien Smith: will it discourage international investment? Well I'll tell you what discourages international investment: the vertically integrated duopoly we've got now. It's an absolutely impregnable market and up until this Government commissioned this Commerce Commission market study there was no movement whatsoever and now we are seeing movement. What this does is it facilitates entry so anyone can come to New Zealand or start up in New Zealand and without having to have the barrier of standing up an entire supply chain can be competitive. That's because of the strength of their market position through the vertical integration of logistics supply chain and retailing. In terms of compulsion on prices there's no compulsion in this legislation.
Lee MelissaMELISSA LEE (National): Thank you Madam Chair. Earlier when I was talking about the growers whether it's actually green- or brown-potato growers—I think this section probably is where it fits because it is actually about the wholesale supply. I think that when my colleague Andrew Bayly talked about that particular—actually I think we were thinking similar things in that we actually want equitable ways that our suppliers could have their view and their produce marketed. As Andrew Bayly said—I think it was Turners and Growers that you were actually thinking about a long time ago—I remember going to Turners and Growers and actually putting hands up early in the morning to bid for those vegetables. They even had flowers there as well. But in terms of wholesale supply of groceries I think what we want to see is a framework that provides transparency and it actually says that in clause 18(2)(b)(i). We just want to make sure that the retailers will make decisions about price range quantity and frequency in terms of conditions.The question I actually had for the Minister of Commerce and Consumer Affairs was that concerns were raised with me that sometimes growers don't necessarily want their produce to be sold at a particular retailer for whatever the reason. If they actually supply to an entity—some of these grocery retailers are also wholesalers as well and when they actually supply they currently only wholesale to their own market. But if they're actually opened up so that they have to supply wholesale to other retailers then they would have a problem with that. I think the question that I actually had earlier for the Minister fits into this section and I wonder if he could potentially address the concern of some of these growers who actually are brought into this scheme. But if they don't actually open up—if their goods are not actually opened up to other people who are actually purchasing through the wholesale entity that they had a deal with initially to only supply to a particular market—they could actually be in trouble.
Dean JacquiPart 3 Wholesale supply of groceriesCHAIRPERSON (Hon Jacqui Dean): Members we come now to Part 3 and this is the debate on clauses 17 to 112 Wholesale supply of groceries". The question is that Part 3 stand part."
Bayly Andrew; Webb DuncanANDREW BAYLY (National—Port Waikato): Thank you. So I'm just looking at—I presume you were referencing clause 12(2)(a) is that correct Minister? I presume that's what you're referring to where the commission can change the code as you just referenced (a)—Hon Dr Duncan Webb: 12A.ANDREW BAYLY: 12? Clause 12(2)(a)?Hon Dr Duncan Webb: I was referring to clause 12A—large A"—of the Supplementary Order Paper.ANDREW BAYLY: Oh it was the Supplementary Order Paper; sorry. OK fine.Just on clause 12(4) which states "The grocery supply code may apply to and impose duties on" I presume that duty is not a financial duty but actually an obligation to change practices—just to check that.Just coming back to clause 13—and my colleague Melissa Lee raised this point earlier—one of the big things about the supply code is making sure that there's adequate arrangements in place to be fair and equitable between suppliers and the grocery retailers. And one of the big issues is transparency around pricing. I think it comes under the supply code but one of the issues—and Melissa Lee spoke about greengrocers you know vegetable crops etc. and traditionally there's been a market for them in places like the fresh food markets in Auckland—for instance at Mount Wellington—that operated for many many years. And there'll be other parts around the country that operated so there was always a very transparent pricing arrangement so people knew what the demand was and what the supply was and ultimately what the price was on particular days.With the move progressively towards suppliers being required to bid to supply supermarkets and the pricing and the lack of transparency around the volume being offered and the pricing that was ultimately accepted and bid by the suppliers the only groups that have access to that information are the operators of that bidding framework which is the regulated grocery retailers at the moment. Does the Minister expect that the supply code will deal with the issue about making sure there's greater transparency around when suppliers have to bid to supply the regulated grocery retailers that there is transparency around the amount of volume bid and the final price and the price offered? So that's a very very important point because if the grocery supply code doesn't deal with that then the lack of transparency is a remaining issue in the industry.Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you Madam Chair. The content of the supply code other than its broadest of outlines as already mentioned isn't really an appropriate topic here. It's still being worked through. But if Mr Bayly has views on what the content of that code might be I'd be very happy to hear them in another forum."