Faafoi KrisFUEL INDUSTRY BILLFirst ReadingHon KRIS FAAFOI (Minister of Commerce and Consumer Affairs) on behalf of the Minister of Energy and Resources: I move That the Fuel Industry Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 21 July 2020 and that the committee have authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House; and on a Friday in a week in which there has been a sitting of the House; and outside the Wellington area despite Standing Orders 191 193 and 194(1)(b) and (c).On 5 December 2019 the Commerce Commission released its final report on the retail fuel market study. The commission's reported indicated that fuel companies have been making persistently higher profits over the past decade than would have been expected in a competitive market that there is limited competition in wholesale markets and that this flows through to the retail market where there is wide variation in retail prices particularly between different regions. The report confirmed this Government's concern that consumers are paying higher prices for petrol and diesel than could be expected in a competitive market. The changes this bill will make will address that and we expect those benefits will flow through to motorists. The Government is introducing changes to the fuel industry to improve competition in the wholesale and retail fuel markets and cumulatively these measures are designed to promote greater competition for the long-term benefit of end users of engine fuel products.Consumers should be able to expect prompt action on such a significant area of personal expenditure and taking such action is still a priority for this Government. Even during lockdown consumers expressed strong concern about price drops in international fuel markets not flowing through to New Zealand retail fuel prices. We appreciate that there has been significant disruption to the fuel industry as a result of the COVID-19 response. However as the country recovers we expect the problems identified by the commission to persist and we believe that intervention to stimulate competition remains appropriate.The industry was consulted extensively in relation to the Ministry of Business Innovation and Employment's Fuel Market Financial Performance Study and in relation to the commission's market study and given that these issues identified by the commission in their market study seem entrenched and have significant impacts on consumers we consider that it is important to address these issues quickly through this piece of legislation. While I acknowledge that the changes in the bill will not have an immediate impact on the prices faced by consumers over time greater competition will deliver benefits to consumers.The purpose of the bill is to promote competition in the fuel market for the long-term benefit of end users of fuel products. The measures in the bill will increase the ability and incentive for dealers and distributors to make switches more frequently to increase competition between wages and other importers and make entry easier at the wholesale level and support the development of a more competitive fuel market. The bill introduces a number of changes to wholesale market arrangements in the fuel sector to improve transparency of pricing and to provide for rules to ensure that wholesale contracts are transparent and fair. These changes aim to increase wholesale market competition which should over time lead to lower fuel prices for consumers.The bill introduces a wholesale pricing regime known as terminal gate pricing" which requires wholesale fuel suppliers at a storage terminal to publicly post a price at which they will sell specified engine fuel to wholesale customers at that storage terminal on a spot basis. This regime will provide for greater transparency of pricing through requiring posted prices for spots of sales of wholesale fuel and could provide a source of fuel supply for potential new entrants to the retail fuel market.This bill provides for a regime governing contract terms between wholesale suppliers and their wholesale customers to ensure that contracts are fair and promote competition. These changes will improve the ability of distributors and dealers to compete and to switch providers. The bill also provides for a disputes resolution scheme to address disputes relating to wholesale market changes in an accessible independent and cost-effective manner. The bill introduces requirements for displaying certain prescribed information relating to the price of fuel at retail fuel sites. Requiring better display of information at retail outlets will assist consumers to compare prices thereby promoting competition in the fuel market. This bill provides requirements for fuel industry participants to collect and disclose certain information to enable monitoring of the fuel market and assist in determining whether competition is being promoted for the long-term benefits of consumers.The bill also provides powers for the Commerce Commission to enforce the new requirements including civil pecuniary penalties based on those in the Commerce Act 1986. Regulations will be required to bring the provisions of the bill into operation and will be developed as soon as possible alongside the passage of the bill through the House. The bill provides regulation-making powers to prescribe a significant amount of detail of the bill including terms and conditions for supply under terminal gate pricing details for contractual requirements requirements for consumer information relating to the price of engine fuels and information disclosure requirements. There will be opportunities for stakeholders to be involved in the development of these regulations.The Government expects that taken together the changes proposed in this bill will increase competition in the wholesale market and over time lead to lower fuel prices for consumers. I commend the bill to the House."