Clark DavidGROCERY INDUSTRY COMPETITION BILLFirst ReadingHon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Grocery Industry Competition Bill.ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Grocery Industry Competition Bill be now read a first time. I nominate the Economic Development Science and Innovation Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 23 March 2023.In the year to June 2019 food was the second-largest expense for New Zealand households with an average spend of $234 per week—or 17 percent of weekly expenditure. Households with lower incomes often spend an even higher proportion of their income on groceries.The Commerce Commission's market study found systemic competition problems in the grocery sector. The retail grocery industry which is dominated by the duopoly—Foodstuffs and Woolworths—is worth around $24 billion annually. The commission concluded that supermarkets are making an excess profit of between $365 million and $430 million per year. That's $1 million per day at the most conservative estimate straight out of the pockets of hard-working everyday Kiwis. Put simply consumers are not getting bang for the buck at the checkout because the duopoly avoid directly competing with each other on price. That of course has other flow-on effects—for example families are missing out on new grocery products and services because businesses in the sector do not have the incentives to invest and innovate.It's also important to note that many suppliers are nearly powerless in negotiations with the supermarkets because they do not have other buyers of a similar scale. Too many small grocery suppliers have had their business aspirations crushed when one or both of the duopoly has effectively exercised market power steadily reducing how much they will pay and then threatening or even delisting a supplier entirely.So the Government's already moved decisively to improve competition in the retail grocery sector. We passed the Commerce (Grocery Sector Covenants) Amendment Act 2022 which banned competition-stifling restrictive covenants on land and exclusive covenants on leases such as in shopping malls. That should free up over 190 sites that could not previously be used for competing grocery retailers.The Grocery Industry Competition Bill I'm introducing today is intended to further improve competition in this sector which is important for every Kiwi family. It'll provide a platform for more existing retailers to expand their offerings and compete with the duopoly and also potentially for a new entrant to come into the market and compete nationwide.I want to cover a few of the more important changes that the bill makes in a little more detail. The bill establishes the role of a Grocery Commissioner to hold the sector to account. The Grocery Commissioner will be within the Commerce Commission and will report on the state of competition starting 12 months after the bill comes into effect as well as monitoring the wholesale supply regime—another task that they will be required to do. That will ensure that the reforms are being implemented and consumers are getting the fairer deal that we think they should get.The bill implements a wholesale supply regime. One of the key issues the Commerce Commission found in its retail grocery market study was that retailers are being hindered from entering the market because they couldn't buy wholesale groceries. That inability to buy wholesale groceries means they can't compete on price—because they can't get them at the price that wholesale suppliers are available to others—and they also can't supply the range because as we know dairies these days struggle to get the fresh fruit and vegetables at a reasonable price as well as the range of goods baked goods and other things that supermarkets can provide—and if they're not provided at a reasonable price people stop going to those stores.So the duopoly's been given plenty of warning. The situation's well known—I think New Zealanders know it; I think people in this House know it—but we have said if they fail to adequately open up their wholesale market voluntarily at fair prices this Government will make it happen for them.So the bill is a trigger. It will allow the Government to step in and require wholesale supply on regulated terms if required. Creating the regulatory backstop shows just how far this Government is prepared to go to break the hold the duopoly have on Aotearoa New Zealand's retail grocery market.As I've said often the duopoly is well advised to get on and negotiate in good faith wholesale arrangements that support effective competition—there's nothing to stop them doing that today. If they don't do that we will have no problem stepping in to make it happen for them.This bill also implements a range of supplier-focused protections and a dispute resolution scheme for suppliers and wholesale customers. The supplier protections include a grocery supply code protections against the use of unfair contract terms and the ability to allow suppliers to collectively bargain with major grocery retailers. These mechanisms should together stop the major grocery retailers using their bargaining power to unfairly push costs and risks that they are better placed to bear on to the suppliers of the goods that they sell.As I've mentioned the Commerce Commission found that the major grocery retailers are earning excess profits due to a lack of competition of at least $1 million a day. These are profits beyond the ordinary profits you'd expect a business to make. It's excess profits; excess return on capital. It's effectively a wealth transfer coming out of the pockets of everyday Kiwis. That's $1 million let's remember each and every day coming out of ordinary Kiwis' pockets and going into the hands of the duopoly and those fortunate enough to be in the duopoly club.This bill signals how serious the Government is and how far we will go to see a more competitive market with new grocery retailers. We've already ensured that grocery retailers can be set up now—they can set up shop; new grocery retailers can come in—by having access to suitable sites. And now we're making sure they can buy the wholesale groceries they need to stock the shelves in those new sites that they can set up.We are putting in place an effective regulatory regime and a Grocery Commissioner with the powers necessary to monitor the conduct of the duopoly promote competition and take enforcement action where needed. These are important steps for ensuring Kiwis can buy groceries at affordable prices and can shop for the range of products they demand.I very much look forward to the committee's consideration and their report back to the House on this bill. I'm very proud of the work that has been done on this bill. I want to thank the officials who have so actively engaged already on it. As I've said I do very much look forward to the committee's work. I look forward to this whole Parliament supporting a bill which will address what we see as an anomaly—currently—a situation where ordinary Kiwis are deprived of money that should be in their pockets due to excess profiteering by the duopoly. We're determined to make this change and so I commend this bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.