Speech: Commerce Amendment Bill

Tena koe Madam Speaker, tena tatou katoa.

The purpose of this Bill is to amend the Commerce Act 1986 in order to reform its regulatory control provisions to do with the important services of infrastructure providers of gas, electricity and airports.

As others have stated, it is a complex, technical piece of legislation and not easily understood particularly if you haven’t been a member of the committee.

I have always had some issues with the concept of ‘consumer’ or ‘client’ as if it is a meaningful term.

If we were to turn to the Oxford Dictionary to find out what a consumer is in real terms, it describes services, products “expected to have a long useful life”; goods, or as in consumerism, the preoccupation of society with the acquisition of goods”.

Well, in the Maori Party, we’re a little bit different and we talk mostly about people. A radical concept I know.

And so we have turned to the amendments recommended from the Commerce Select Committee to see, how have the people reacted towards the proposals to introduce even lighter non-price forms of regulation than were previously in force.

The purpose statement in Part four is to be amended to safeguard consumers from excessive prices.

There’s nothing that we would disagree with there. In explanation, the report commentary describes the inherent tension in the Bill – with some submitters more concerned with incentivising investment than consumer protection.

The so-called ‘solution’ is seemingly more to focus on profit and investment rather than as I said before to promote consumer protection.

And so the level of protection is not to ensure affordable prices, but to limit “their ability to extract excessive profits”.

Yet curiously, there is no definition of what is described or defined as excessive?

Failure of Consultation with the People

Madam Speaker, this one specific example is indicative of the emphasis in this bill which appears to be more about competitive markets more than it is with consumer protection.

I am reminded of the warning from American economist, Milton Friedman, who said, and I quote:

“Many people want the Government to protect the consumer. A much more urgent problem is to protect the consumer from the Government”.

One of the disappointing features of the consultation process that was undertaken for this Bill, was that although a total of 39 submissions were received, not one was from the end consumers that this Bill is supposedly to protect.

All of the submissions were from service suppliers and one from the Hon Justice Randerson of the High Court whom was consulted with for specific advice on appeal clauses.

And so, really how can one protect the consumer from the Government…if the people are not being heard in the first place.

Our belief in the Maori Party is that there needed to be some mechanism, other than submissions to select committee, to get feedback from consumers given their key role.

Maybe focus groups of consumers should be considered as an important mechanism for gaining the thoughts of consumers.

A Bill which ostensibly is to enable price and quality control, for the purpose of improving outcomes for consumers, should logically have sought the feedback of these people in the first place.

The Bill would look quite different if it had customers at the centre, and if they had been guaranteed some kind of voice in the process.

Failure to involve the people who are supposedly to benefit from the outcomes of competitive markets, is a huge risk which works to the benefit only of the corporations, the money makers rather than the unsuspecting public.

Another key issue, other than lack of robust consultation mechanisms, is the failure of this Bill – and indeed successive Governments, to adequately regulate monopolies following the privatisation process.

Dr Geoff Bertram, an economics lecturer up at Victoria University, has stated that privatisation has been notoriously unsuccessful in New Zealand.

It is his contention that there are many horror stories of big transnational organisations trying to buy up our infrastructure, and similarly monopolies who don’t care about service delivery, quality, affordability – just about their profit.

His conclusions, therefore, is that natural monopolies need to be kept on a leash – whether public or private. There is no escaping the need for proper regulation.

What we have seen, in successive Labour and National Governments, is that they have failed to adequately regulate monopolies following privatisation.

This has resulted, as we all know, in price increases, reduced service quality and rundown infrastructure.

I would recommend Members to read Jane Kelsey’s Critique of the Commerce Act, entitled Reclaiming the Future.

In that analysis, Jane described the Act as one of Labour government’s earliest moves towards light-handed regulation.

Her conclusion was that because New Zealand has such a permissive merger and acquisition regime, it needed a robust mechanism to prohibit anti-competitive behaviour. And her report concluded that this was lacking.

So, we in the Maori Party came to this Bill thinking the policy failure would be acknowledged; but it was not to be.

With the introduction of even lighter non-price forms of regulation, it will be less likely that price and quality will be regulated as there will be other options for the Commission to steer towards.

Madam Speaker, we believe that if you don’t have price regulation, well then you don’t really any have regulation. And we don’t consider that self regulation will work.

Our analysis of the amendments from the Select Committee further underline the effect of even lighter non-price forms of regulation.

So we will be opposing this Bill, on behalf of not the consumers and clients, but on behalf of the people.

Kia ora