Tisch Lindsay: Commerce Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Tisch Lindsay: Commerce Amendment Bill — Second Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18320. Text is incorporated into the Bound Volume.] 
LINDSAY TISCH (National—Piako) 
: 
 Thank you Madam Assistant Speaker for the opportunity to share with colleagues this very important legislation. As Simon Power and Paul Swain indicated we were very much guided by the officials and I need to pass on my thanks to them for their expertise and guidance. 
It is interesting that probably the most controversial debate we had surrounded airports and whether they should be included in the Commerce Amendment Bill. Some argued that no they were a late inclusion and should have been left out. The airlines and Barnes Group which represented the airlines believed that they should be part of the regime. As Paul Swain has just shared at the end we decided they should be part of the disclosure of the bill. 
It is interesting also that this is only a second reading debate—and we do not get a chance to talk in the Committee stage—and that things like optimised deprival valuation methodology the value of assets the weighted average cost of capital and such things will have to come up at a later stage when we will be able to ask the Minister more about those particular aspects. Also the Commerce Committee has just concluded looking at an inquiry into the valuation methodology of State-owned enterprises. Just as we have talked throughout the debate on this bill about how assets should be valued we have also had that other inclusion with State-owned enterprises. 
As others have said this is very complex legislation. It has wide-ranging implications making it difficult for policy makers to predict the outcome. The question has been identified as being whether the Commerce Commission has the ability to implement the changes that we are looking at here. Does it have the resources? We will be watching very closely in terms of the regulations. We are after light-handed regulations. We believe in a self-regulatory regime so we will be looking very closely to make sure that the regulations are able not only to be enforced but also to be fair. 
New Zealand needs to focus on its commercial law and on fostering innovation and investment and we believe that this bill goes towards that. The bill also includes a wider range of regulatory tools with much lighter-handed options than previously existed and that is the point that I have just made. However the Government needs to be careful that it does not merely replace rarely used heavy-handed regulations which is what we have had. We want to make sure that those regulations that are being brought in are not too light-handed but in fact measure up. Good commercial law depends very much on sound and reliable implementation both by the independent agencies and by Ministers. 
This bill gives better incentives for infrastructure investment. Infrastructure businesses like electricity lines companies and airports will gain improved incentives to innovate and invest while consumers will be given protection from excessive prices and poor quality. Also the purpose statement of the bill gives a clear guidance to the courts and the regulator and the aim of this regulation is to promote investment. 
I want to move specifically to the area of the airports because I think that the three airports mentioned in the bill—Auckland Wellington and Christchurch—are at the forefront of investment. With tourism they are the gateways into New Zealand. We want to make sure though that there is fairness and equity in the way they operate. I for one have spent time with Auckland International Airport on the Business and Parliament Trust. I was privileged to have a 2-week secondment with it back in the year 2000 and again in 2003. 
Hon Clayton Cosgrove 
: 2 weeks? 
LINDSAY TISCH 
: Yes 2 weeks—1 week then a following week 3 years later. So I have seen the progress that that company has made and it is certainly a leader in what it does. When it comes down to looking at the fairness and equity that was proposed by the airlines and their representative Barnes Group it is important that the disclosure previously mentioned will actually operate. So they are being regarded as monopolies and the bill moves to make sure that monopolies do not exceed their responsibilities. 
In the case of airports one would say that they are not operating as a single till which was a phrase used constantly during the submission process. Each entity within the airports was operating and charging separately. So the point was that they should really be charging as a whole. The information that was supplied to the Commerce Committee indicated that some airport companies over-recovered in regards to airfield activities. They over-recovered in the charging under the Commerce Commission scenario based on historic cost of specialised assets and also under the Commerce Commission scenario of using the optimised depreciated replacement cost for specialised assets.  
In the bill the regulatory regime for setting airport charges moves into the Commerce Act. I will just quote here from one of the submissions because it probably crystallises and articulates quite clearly what the bill is designed to do. It requires the Commerce Commission to develop mandatory input methodologies covering matters such as how to value assets and treat asset revaluations for information disclosure purposes. Secondly it moves the current information disclosure requirements for the three airports that I mentioned before from the Airport Authorities Act to the Commerce Act and it strengthens the requirements and gives the Commerce Commission the responsibility for monitoring what those airports are disclosing. Thirdly it provides for a transitional review by the Commerce Commission where the commission thinks from its monitoring that an inquiry should be held to see whether some regulatory controls should be introduced. So airports will be able to treat information disclosure separately from pricing and will be able to continue to set prices as they see fit. If they do this at the price reset at 2012 the Commerce Commission could look at what they have done and if convinced that they are monopoly pricing could recommend to the Minister of Commerce that an inquiry be held. Inquiries take 2 to 3 years so it could be 2015 or later before anything is done to address a situation of gross overcharging that could be occurring. It is unlikely therefore that any changes would take place before 2016 or 2017. So those were the points that came up from the airlines in particular. 
On the other side of the equation of course were the airports which have argued that the current regulatory regime has been in place for 20 years; it has worked well so why change it? That was a strong argument that they put up. They also said that this would be a disincentive to major and new investment. If we go back to what the purposes of the regulations are which are contained in new section 52A set out in clause 4—I will not go through it because time does not permit—it clearly identifies what the nature of the legislation is designed to do. The airports also said of course that in some jurisdictions there were no regulations. They mentioned Scotland. They also mentioned that in the UK the Civil Aviation Authority was looking to take regulations off its Stansted and Manchester airports although it might be difficult in the Stansted case. They also said that Sydney has a deregulated environment. So those were strong arguments that came up from the airports. 
I guess where we are coming from is that we will be watching very closely these developments once the bill is introduced and the Act is in place because as Simon Power said we will be watching the role of regulations to make sure that they actually work. Although this legislation is replacing those heavy-handed regulations with much light-handed regulation we want to make sure that they are fair and equitable. Those are the points that I will be talking about and asking the Minister about during the Committee stage because we want to make sure that the Commerce Commission which is now going to be given a very important task is actually going to enact this legislation in the manner in which the select committee has worked very diligently to make sure is fair and equitable to all.