Seymour David: Telecommunications (Development Levy) Amendment Bill — First Reading Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeSeymour David: Telecommunications (Development Levy) Amendment Bill — First Reading Second Reading In Committee Third Reading[Sitting date: 21 May 2015. Volume:705;Page:3759. Text is incorporated into the Bound Volume.]DAVID SEYMOUR (Leader—ACT): I take great pleasure in responding to the previous speech by Tracey Martin and in particular to subclause (4)(a) of new clause 3A of one of the two Supplementary Order Papers currently on the Table Supplementary Order Paper 83. The assertion is that people of a certain philosophical persuasion should be in favour of supporting that particular paragraph because competition in a particular location is always a good thing. There is some quite interesting economic theory behind this particular topic relating back to the Nobel Prize winner who sadly died only a couple of years ago Ronald Coase. Ronald Coase won his Nobel Prize primarily for his work on the nature of the firm. The story of Coase will take us directly to the matter at hand in subclause (4)(a). Is competition the only value that believers in free enterprise and economic efficiency should pursue? Or is economy of scale also a particularly important virtue that we should want?Coase’s story was that he started as a socialist. He might well have found his place on the far left of New Zealand First but unlike those members he was a thinking man a very inquisitive man who knew to ask the right questions. What he did was he travelled from his home in England to at that time the centre of industry in Chicago and he asked the people at General Motors: “Why is it that in a capitalist economy you practise an island of socialism a firm where you have a dictatorship over a group of resources? Why do you do that when competition works so well? Why do you believe in so much economy of scale? Why might you 80 years hence be opposed to (4)(a) being inserted in this bill?”. And the answer—Chris Bishop: He definitely asked that.DAVID SEYMOUR: He may well have asked that question had he been able to anticipate such a silly speech from Tracey Martin but despite being a great man and a Nobel Prize winner Ronald Coase was not able to anticipate Tracey Martin. Few of us would have been able to. The answer that Ronald Coase got from asking the right question which eventually earned him a Nobel Prize was that firms should expand. The nature of the firm is that firms should expand up until the point where the marginal transaction outside the firm has greater transaction costs than the marginal transaction within the firm.This is something that is very very difficult to determine by statute. It is something that must be discovered in the market place and that is why the ACT Party is a believer in free markets but opposed to subclause (4)(a) in this Supplementary Order Paper. Interestingly in the course of this inquiry—I hope they are learning something there—Ronald Coase discovered transaction costs. Transactions costs are one of the most important things to understand when it comes to being a true believer in free markets and economic efficiency. I do not think we will see that level of sophistication or understanding in some seats across the Chamber but since I was asked that is why I am opposed to this Supplementary Order Paper. I do not believe that it will increase economic efficiency or the welfare of New Zealanders in respect of telecommunications. Thank you.