Tremain Chris: Commerce Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Tremain Chris: Commerce Amendment Bill — Second Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18324. Text is incorporated into the Bound Volume.] 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to the Commerce Amendment Bill this evening as we move through urgency towards 12 a.m. The bill has a very strong focus on regulatory certainty and accountability which is very important to modern world-leading economies. Without regulatory certainty and regulatory accountability it is very difficult for companies involved in infrastructure like electricity line or gas line companies to have certainty in regard to investment. I will give the example of Vector Energy to provide members with some idea as to why world-leading regulation in this area is important. It has to do with Vector Energy looking overseas to refinance its balance sheet last year. A number of its directors went to the UK as I understand and looked to secure funding for gearing or leveraging the company’s balance sheet. The financiers whom they spoke to told them they would be required to pay a premium in terms of funding costs because it was felt that the regulation in New Zealand around those types of infrastructure was cumbersome and unwieldy. As a result they were required to pay a premium on the cost of funding for their balance sheet. Where do we think the premium for the cost of that funding ultimately ends up? Well it ends up in the cost of the distribution of power the cost of the distribution of gas the cost of all sorts of things within those infrastructural companies. At the end of the day it ends up with the consumer facing increased prices. 
There is no doubt that modern world-leading regulation in this area is critical. It will ultimately lead to better opportunities for our companies to fund themselves lower premiums for their interest rates and I think ultimately better prices for consumers. This is legislation that the National Party supports and I acknowledge the work of our team—particularly Simon Power and Gerry Brownlee—and I certainly know that members of the Opposition worked diligently on what is complex legislation to bring it to this point in the second reading and to have all parties with the exception of the Maori Party agreeing at this stage. 
For those who are listening to this debate the objective of the legislation was to provide a more effective more credible regime to address the potential exercise of market power where competition is not possible. We are talking about the likes of gas lines and electricity lines where to bring two or three players into the market is simply unrealistic and impossible. So we get these monopolistic organisations by the very fact that it is impossible to have competition there. The problem with monopolies of this nature is that we need to make them as efficient as possible and the danger is that without competition they become unwieldy and bloated and they increase the costs to consumers quite unnecessarily. 
The second objective of the legislation was to improve the certainty timeliness and predictability for regulated firms. I know that within my own electorate of Napier our lines company Unison has had significant problems with regulation. It has faced major changes in its prices or in the negotiation of its prices with uncertainty in the regulation and how it would value its capital assets. It has just been an ongoing nightmare for them. There is no doubt that the lack of certainty and the lack of clarity in the regulations have meant there have been higher prices for consumers than would otherwise be the case. 
The third objective of the legislation is to provide for incentives for regulated firms to invest in infrastructure and that is what we need to do. If we want a modern economy and if we are serious about growing the wealth of this nation and about lifting wages then there is no doubt that our basic infrastructure has to be world-leading. If the companies that are involved in this space are not investing in that infrastructure then we will not go forward. We will not have the types of infrastructural assets that New Zealanders believe are necessary for us to drive a modern economy. So providing those incentives is critical. 
The last objective of the bill is to minimise the regulatory costs involved in addressing changes and increases in prices and addressing the other regulations. There is no doubt that the compliance costs around this type of regulatory regime go into the millions of dollars for these companies as they address changing their prices with the Commerce Commission and the various other organisations that affect prices. Those are some of the key objectives in the bill. 
I will not take a long call as I was not involved in the select committee and it is indeed complex legislation when we come down to the detail. I just want to summarise effectively what I have said. Regulatory certainty and accountability is critical for these types of infrastructural assets within the country. It is great to see that this legislation is taking that step forward. It is providing certainty and clarity for these types of companies and I think that that is indeed a step forward and that is why the National Party will be supporting this bill. Thank you very much.