SpeechDAMIEN SMITH (ACT): Thank you Madam Speaker. I rise on behalf of the ACT Party on the Grocery Industry Competition Bill and this was the day for Mr Duncan Webb as the new Minister of Commerce and Consumer Affairs to roar like a lion through this industry because that's what it would take to actually increase competition. He had the opportunity instead of choosing regulation to actually understand what competition is in this sector and he hasn't had the ability tonight to discuss supermarkets and how they should actually be interacting with new entrants to come into this country. At the moment let's take the bill as it exists and the bills that have passed and if you take the supermarket that already exists they have removed all restrictive covenants they've already calculated and displayed unit pricing—they've gone digital with that. They've created a wholesale business unit and they've signed agreements with customers and they're working to the code of conduct and they're actually working to the Grocery Commissioner's vision. So that's what happening but it's not actually creating any competition. ACT has actively been following the Commerce Commission's market study process investigating retail grocery competition. We keenly support as a party measures that would facilitate greater competition in this sector by lifting barriers to entry which leads to customer benefits via pricing and choice over the long term and that's what's missing from Labour's vision and the Green Party's vision. In 20 years' time will we actually have a new supermarket chain in this country? That's a question to think about and when Naisi Chen is popping down in 20 years' time to get noodles for her party or James Shaw and Ricardo Menéndez March are popping down to get a nice juicy steak with a bottle of Pinot noir will they actually be in another supermarket chain or will it be just the same ones? I would argue that it would be the same ones given the fact that at the moment there are so many barriers to entry in this country. ACT opposes this bill on the ground that for a new international grocery to enter the New Zealand market at any reasonable scale this is just not helped by this bill. The National Party needs to have a look at this and address the fact that at least regulation—currently not excluding zoning rules and consenting processes—make it so close to impossible that it might as well have actually been legislation founded to stop competition in this country. So ACT has disagreed with the Commerce Commission's draft report. There were flaws in its analysis and opportunities earlier on to strengthen competition by focusing on easing regulatory and legislative barriers to entry—matters noted in chapter six of that report. But in backing a New Zealand initiative ACT warmly welcomed the commission's final report focused on easing regulatory barriers to entry which actually said that unless structural change occurred in the industry there would be no new competition introduced to New Zealand. The grocery industry bill revisits matters that were less favoured in the Commerce Commission's final report while ignoring measures more fundamental to enable real entry. Worse the bill's recommendations will actively discourage entry by international grocers while potentially running afoul of international trade agreements. We urge that the bill be withdrawn or rewritten in favour of measures recommended by the Commerce Commission that will mitigate real barriers to entry and enable greater competition. If the Government does not recommend that the bill be withdrawn it must at least make or recommend changes to the bill that might reduce some of the worst harms it will otherwise cause. Tex Edwards said that there's a level of fantasy surrounding this bill and I think he's right. His view is that only a breakup of the two supermarket groups would needed to entice a third like-for-like challenger and this could bring down grocery prices. But actually it's more sophisticated than that. To get a Lidl or another supermarket chain here involves a complete strategy by the Overseas Investment Office and the Government to be friendly and open for these businesses to come here. And I'll point out a few barriers in entry to that actually happening.Relatively few sites in New Zealand are sold for use in grocery retail. Organic growth on sites is already happening because the institutions that are the existing supermarkets have already got their hands on that. Then you move on to local councils where city planning and zoning has intended to set zoning to accommodate the number of grocers that planners believe its neighbourhoods might need rather than the numbers that might enable effective competition. In doing so they're effectively and invariably creating conditions enabling local monopolies. And that's the issue when you drive your car down the road: who is in that area? Is it a monopoly? Is it competitive?New Zealand's planning system considers competition as a harm to be mitigated rather than a boon to be encouraged. If resource consents can be secured a full-service grocer will also need to seek an alcohol licence. They can expect opposition from the local health officials the police community groups and the Green Party. Is it actually possible for a potential international entrant due to regulation and market structure to set up here?This was a day for Mr Webb to at least open the door to go back to the drawing board and emphasise easing zoning and consenting barriers against entry. Why can't he turn around and tell Land Information New Zealand (LINZ) which operates the Overseas Investment Office that entrance for retail grocery chains is in the national interest? In a period of cost of living crisis this Government has moved as slow as Mr Robertson in a lamington race on a big spoon. We have now a situation where food prices are actually inflationary and margins by the grocery supermarkets have remained the same—so inflation has been caused by another route here. Otherwise an international applicant would see the Overseas Investment Office which I do in a lot of cases as a source of potential risk.The breakup of cartels of existing connected property owners who collude with councils to set anti-competitive zoning rules to frustrate entry in their local areas is a must as well. So the Government must ask itself LINZ and the Commerce Commission to give a clear line to entry without interference. We also urge that the Economic Development Science and Innovation Committee seeks input from the Ministry of Foreign Affairs and Trade (MFAT) on potential trade implications on this bill. Australia simply could raise Government-to-Government concerns for one of the supermarkets that is Australian-owned. I don't think anybody's thought about that at the committee. And should the United States succeed with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership Costco's potential inclusion as a regular grocer could also create issues that would make already difficult negotiations trickier.Finally and more substantively the compulsory wholesale access regime as described in the legislation would make it incredibly risky for new entrants and new entrants should not be bound by this mechanism. It's a new barrier to entry and Dr Webb has taken a communist view that this is a good thing and it's not. So then we may—may—get a third New Zealand - wide player with market power leading to competition and reduced prices.Intended measures proposed in this bill risk increasing the cost to grocery consumers. Compulsory wholesale access regimes are particularly risky and the Commerce Commission recommended against them. So ACT urges the Government to take up measures to reduce barriers to potential entry in the draft Natural and Built Environment Bill and the Spatial Planning Bill to instruct the Overseas Investment Office to approve grocery applications involving retail grocery and to consult with MFAT on potential trade implications and other options that won't do much harm.I'm going make a prediction today: a new entrant if they can get the right to set up locations will easily have over $100 million capital tied up in sites it's purchased with having no clue when it might actually be possible to start building grocery stores. Try planning a distribution network when you can't tell when different stores might be allowed to open. So the Overseas Investment Office has its hurdles and if you have more than a trivial amount of foreign backing and you want full-service stores you need to get a liquor licence and permits and process. So it's hardly a surprise that international retailers like ALDI and Lidl have decided New Zealand is not worth the pain. Costco is a different business model with three new sites but it's a not a full-service proposition.So we've asked the Minister to put a stop on this bill. And we've asked the committee—even with the job it's done it hasn't done the job of providing long-term benefits over the 20-year view. And I guarantee you we will be going to the same supermarkets unless we change those things. So the ACT Party opposes this bill. We encourage everybody to oppose this bill and to create trading environments where businesses can participate with confidence and have a positive effect over 20 years towards reducing prices or maintaining stability for the New Zealand consumer.