Bayly Andrew; Webb DuncanANDREW BAYLY (National—Port Waikato): Thank you Madam Chair. Well this part is probably the most contentious part of the bill because what this part does is it legitimises and in fact encourages the regulated grocery retailers to move into wholesaling. And if this works well and it allows third parties to come into the market that would be a great outcome. But the reason why this has probably got the most concern and certainly some of National's concerns about this part is if it's wrong and we don't end up getting a better outcome then what we've done is enabled the supermarkets the large supermarkets to increase their bandwidth from retailing right back into the wholesale chain. So there's an underlying assumption the Government has adopted in this bill that by regulating this you will get a better outcome and the jury's obviously out until we see that occur. That's the first point. I'd just be interested to get the Minister's reflections on why he believes this will be effective. It's the difference from what is sought to be obtained which is making products more available to a wider great group of competitors but what assurance can the Minister give us that this will actually occur and we're not here in five years' time looking at this and saying Well that didn't work."?The second thing: the Minister made a comment about Costco and other competitors coming into New Zealand. One of the things I think I understand is that Costco actually hasn't had to rely on these wholesale provisions to get established. And clearly they've got an operation in West Auckland and hopefully they're going to roll out more operations across New Zealand. But I think that Costco if my understanding is correct has shown that actually a large competitor—Costco has always been mentioned; ALDI is another one—can actually enter the current market contrary to the Minister's assertion that it's really difficult by actually just entering into direct relationships with suppliers because they're of a scale that suppliers want to offer them goods and services. So I just want to remind the Minister that that is the situation and so his assertion before that this would encourage that—what I'd suggest to him is it's already occurred without the effects of this bill coming into play.Just a related question is what is the Minister's view around the logistics and supply arrangements that come with this natural extension back into wholesaling? Does the Minister believe that the commerce role will extend to making sure that their logistical and wholesaling warehousing arrangements are also subject to oversight by the Commerce Commission or is that not part of the remit of the Commerce Commission because you cannot talk about wholesale supply without actually also talking about the logistics and the warehousing of those products because obviously they're bought bulk and then distributed and we're trying to set up an arrangement around that. So I've got some more questions but I just want to leave those three points there.Hon Dr DUNCAN WEBB (Minister of Commerce and Consumer Affairs): Thank you Madam Chair. In respect to the suggestion of a wholesale duopoly this bill does anticipate that possibility and lays it off. In particular this bill will encourage commercial wholesale by Foodstuffs and Woolworths but it also includes several safeguards to stop a wholesale duopoly which include protections for the ability of suppliers and wholesale customers forming trading relationships and also of course probably most importantly monitoring by the Grocery Commissioner to see if that looks like it's emerging. And of course the backstop: the fact that the commission can impose regulations appropriate regulations to address that should it be seen as emerging.I'm not quite sure really what the point is around Costco and the fact that it's entered and I think the suggestion was that this wasn't related to the grocery reforms the market study the removal of land covenants and the fact that this Government has at last created an environment where competition is on the horizon and people like Costco are happy to come in.In terms of those other logistics and supply chain questions one of the things in the Supplementary Order Paper that is scattered throughout it is the inclusion of ancillary services which would capture things like cold storage or trucking services that an operator might use to gain advantage when they can't price the goods themselves in any particular way. So they are drawn in for pretty much exactly that reason."