Woods MeganFUEL INDUSTRY BILLSecond ReadingHon Dr MEGAN WOODS (Minister of Energy and Resources): I move That the Fuel Industry Bill be now read a second time. This bill introduces changes to improve competition in the wholesale and retail fuel markets. The bill is a much-needed response to the Commerce Commission's market study which concluded that fuel companies have been making higher profits than would be expected in a competitive market and there is limited competition in wholesale markets and this flows through to the retail market where there is wide variation in retail prices particularly between different regions. Taken together the features of this bill are designed to increase competition in the wholesale market and over time lead to lower fuel prices to consumers. The bill introduces changes to wholesale market arrangements in the fuel sector to improve transparency of pricing and to ensure that wholesale contracts are transparent and fair.The measures in the bill will allow dealers and distributors to switch suppliers more frequently increase competition between majors and other importers make entry easier at the wholesale level and support the development of a more competitive fuel market. The bill also introduces requirements for the display of the price of fuel at retail sites and requires some fuel industry participants to collect and disclose information to the commission and the Ministry of Business Innovation and Employment.The Finance and Expenditure Committee has examined the bill and has unanimously recommended that it be passed with amendments. I'd like to acknowledge and thank the members of the committee and its chair Dr Deborah Russell for their hard work and consideration of the bill. I'd also like to thank all those who made a submission on this bill. I support all the changes recommended by the committee and I'd like to briefly comment on some of the more significant changes that occurred at committee.The committee reaffirmed that it is necessary to allow the scope of the key term specified engine fuel" to be refined via the regulations. The regulation-making power allows different fuels to be added or removed from the list of specified engine fuels and to be regulated by the new regime. However the committee was concerned that the regulation-making power could be used to cover fuels that were never intended to be regulated by this bill. The committee proposed appropriate safeguards for regulation-making powers related to engine fuel. As a result the committee recommended inserting a provision to stipulate that the Minister when adding a new engine fuel to the list of regulated fuels must be satisfied that a significant proportion of the relevant engine fuel is used by motor vehicles.This change is important as it will prevent the use of regulations expanding the scope of the legislation beyond what Parliament has intended. Additionally clauses 19 21 25 and 45 empower the Minister responsible for the administration of the Act to make regulations regarding various features of the bill.Several submissions on the bill requested that it require the Minister to consult affected parties on regulations made under the bill. The committee has recommended clarifying in the bill that the Minister is required to consult with fuel industry participants and have regard to the purposes of the Act and its subparts where relevant before making regulations. This will ensure that regulations can only be made if they are necessary or desirable to promote competition for the benefit of consumers including providing transparency in retail fuel prices and monitoring the performance of engine fuel markets where relevant.Clauses 16 17 and 18 of the bill provide exemptions from new obligations in relation to wholesale contracts where a contractual provision is necessary to allow recovery of investments made by the supplier to support the reseller or to protect the reasonable interests of the supplier. Under the bill as introduced the burden of proof would lie with the plaintiff who would usually be the reseller or the Commerce Commission in proceedings related to one of these clauses. The committee has recommended that the burden of proof be reversed in proceedings under the Act that relate to these clauses. If relying on one of these provisions then the defendant and not the person bringing the proceedings must in the event of a dispute provide that the contractual provision is reasonably necessary. A wholesale supplier will be in a better position to satisfy this burden of proof than the Commerce Commission or a reseller as it would have access to the necessary information to support the exemption. The committee has also recommended clarifying that the bill does not enable price-setting through regulations. Submissions raised concern that the bill would allow the regulations to be used to control wholesale prices. The policy intent is to make price setting more transparent but it is not intended to set prices through this legislation. Requirements prescribed in regulations will only include aspects such as the form timing and process for posting of terminal gate price and requires to make clear how prices are calculated.It is important that this bill be passed without undue delay to signal to consumers in the fuel industry that this Government is serious about introducing more competition into the fuel market. Consumers should be able to expect prompt action on such a significant area of personal expenditure and taking some action is a priority for our Government. Regulations will be required to bring the provisions of the bill into operation and will be developed as soon as possible. The bill provides regulation-making powers to prescribe a significant amount of detail of the bill including minimum requirements for supply under terminal gate pricing details for contractual requirements information disclosure requirements and requirements for the display of prices including premium fuels. There will be opportunities for stakeholders to be involved in the development of these regulations. The changes proposed in this bill will increase competition in the wholesale market and over time lead to lower fuel prices for consumers. Accordingly I commend this bill to the House."