Good morning and a warm welcome to everybody to this month's latest instalment of Beehive to Business. My name is Matthew Allen.
I'm the Managing Partner of New Zealand Office of Alan and Clark. We're very proud to partner with the Chamber to bring together business leaders and others who are the key people who shape Wellington and New Zealand's public and private sectors. Today it's our pleasure to host the Honourable Scott Simpson, a Minister whose portfolios have an enduring impact on the wellbeing of New Zealanders and the competitiveness of New Zealand businesses.
Minister Simpson brings over 13 years parliamentary experience, a background in business leadership and deep knowledge of New Zealand's commercial and regulatory landscape. As Minister for ACC and Minister of Commerce and Consumer Affairs, Minister Simpson is responsible for areas ranging from workplace wellbeing compensation to business regulation, consumer protection and strengthening the integrity of our financial systems. I'm sure these issues resonate with everyone in this room, consultancies, SMEs, corporates and government agencies alike.
We know the Minister's been working on and may very well speak today about a number of priorities, including improving the ACC system for both employers and workers, enhancing competition and protections in financial markets, supporting initiatives to combat scams and fraud and driving updates to business regulations for greater efficiency and fairness. For those of us at Allen and Clark and other consultancies, these changes intersect directly for work we do, whether advising on regulatory reform, supporting strategic planning or helping transition new market practises into business as usual. So we're keenly interested in the Minister's insights into how government and business can continue to collaborate for a resilient, innovative and productive New Zealand.
So Minister, thank you for joining us. We're eager to hear your thoughts on your priorities across the various portfolios. Well, thank you Matthew and good morning everybody.
Nice to see you all bright eyed and bushy tailed this morning on what seems like it's going to be a very nice Wellington day, reminiscent a little bit of the beautiful Coromandel, the constituency that I have the great honour of. How many people are going to Coromandel this summer? Oh, not enough. Those of you that are, you get priority visitation rights and a cheap visa to the Coromandel from me as it comes across my desk.
Thank you Matthew, thank you for your sponsorship and your kind words. I've got a lot on my plate. Mandy, thank you very much for the facility here at the Chamber and for hosting.
Very much appreciate it. It was only a couple of weeks ago that I was here with David Seymour and Nicola Willis and we were talking about some changes to some legislation that we want to talk about a little bit later in my presentation this morning. But it's fair to say there is a lot on the go and we are a busy government.
My colleagues and I are determined to turn this country around in terms of making it more productive, of achieving greater and better outcomes for all New Zealanders and for ultimately making New Zealanders richer. And that means that we need a strong, growing, vibrant economy, one that is going to ensure that there are opportunities for New Zealanders in whatever their endeavours may be. And the business and commercial world of course plays an absolutely pivotal role in that dynamic in terms of achieving the goals that we want for New Zealanders.
Because if we don't have a strong, growing, thriving economy, and it won't come as any surprise to members of an audience like this, we can't ever hope to achieve all the things and aspirations that we want for our country as a first world nation. I've recently had an opportunity to travel at short notice to the UK, to London. In fact, it was literally a few hours after I was in this room a couple of weeks ago.
And it just struck me when I was in London how discombobulated the world is at the moment, how uncertain the world is at the moment, and how many risks and challenges the world confronts. So we aren't unique in terms of the issues that confront us, but how we choose to respond to those issues and how we choose to play our role is crucial, I think, to the wellbeing and future prosperity of New Zealanders. And actually we can't just ignore world trends, we can't ignore what's going on in other parts of the globe, and we can't anymore just rely on the fact that we are surrounded by the largest moat on the planet as some kind of strategic defence mechanism for us as a nation.
We do have to be participants and play our role. So coming back then to my role as Commerce and Consumer Affairs Minister. And Matthew, I'm going to spend most of my talk this morning about those policy issues in that portfolio.
I'm more than happy to come back on another occasion and talk to you about ACC because we'd have about a full day session on ACC, I think. There's a lot going on at ACC and a lot that needs to go on at ACC. But without diverging too much from the issues that relate to Commerce and Consumer Affairs, we'll leave ACC for another day.
But I want to just take you through a bit of a snapshot of some of the things that are on my policy agenda at the moment, some of the legislative change that is occurring, and some of the matters that are going to be crucial as we go through the next few months. I did a count just the other day. I think there are only 20-something, 21 or 22 parliamentary sitting days before the House rises for the year.
And then we'll be back probably in late January. And then the House will probably rise again, I'm suspecting, guessing, roughly, if past history is anything to go by, probably in sort of June or July. And then for people like me, it'll be full-time handshaking and kissing babies.
And so we don't have a big legislative window frame for achieving all the things that we want to achieve before the general election next year. So what are we doing? Well, back here only a week or two ago, I was in this room with David Seymour and Nicola Willis, as I said, and we were talking about economic growth. And we were talking about how competition and clarity and certainty around competition are important foundation stones of our regulatory and legislative environment.
And of course, like you, I know from my business and commercial days that business likes certainty. We like to know where the boundaries are, we like to know what the rules are, and we like to know how much parameter we have to work within those rules. So we mentioned at that meeting some changes, for instance, to the way that the Commerce Commission is going to be governed.\
Now, our Commerce Commission has, I think, done a particularly good job over a long number of years. But over those period of years, we have kind of kept asking the Commerce Commission to do more and more and more. And a lot of it's been not exactly ad hoc, but I kind of use the analogy, it's a bit like, you know, you have your first home and you're just starting out in life, and it might be a two bedroom home.
And then suddenly you've got a family, so you add a bedroom on, you might have another child, you add another bedroom on, then you put another garage on and you upgrade the bathroom and you do a new kitchen and things like that. And you just keep sort of adding bits to it. Well, that's kind of like we've been asking the Commerce Commission to do.
And we've got now, in terms of its governance and operational structure, a reasonably bespoke but non-traditional model where they are both managers and governance agents in their own right. And some of those lines of communication, some of the decision making, some of the challenges that the Commerce Commission has been asked to do, I think, are slowing them down. And not producing, for instance, decisions and results as quickly or as fast or as decisively as we might want in the business world.
So one of the things we're going to do is give the Commerce Commission a more traditional governance model and have an independent board and then a series of panels underneath it, subject matter panels, based very much on the UK model and other jurisdictions around the world. So that's a piece of work over the next year or so that will be coming into place. But we're also going to have a look at the Commerce Act, the first substantive review of the Commerce Act in probably about 20 years.
Things like creeping acquisitions we think need addressing. So creeping acquisitions are those ones where relatively small businesses over a period of time are purchased and absorbed by a larger entity and then suddenly you wake up one morning and one entity has a dominant market position. And there are a number of cases where that has occurred.
So we're going to give the Commerce Commission an ability to have a look back over three years to see what trends have been taking place in terms of a creeping acquisition. And then the other area that has started to be of some concern, again not unique to New Zealand, but the so-called killer acquisitions. This is where maybe a bright new sparkly competitor, maybe a new FinTech or something like that, might start up and may provide potential competition to a much larger player.
That larger player will sometimes literally just buy the new innovative smart little business while it's small and little and then close it down and effectively take out the potential for competitive marketplace initiatives to occur. So those sort of killer acquisitions we think that the Commerce Commission needs a better ability to investigate a lot of those. And then New Zealand has had some rules around predatory pricing for some time, but they haven't been codified in terms of a subjective test for predatory pricing.
And so we're going to give, in the Commerce Act, an objective test for predatory pricing. And you'll all be aware that over the years there have been a number of accusations of predatory pricing where a big competitor will, when a new market player, a smaller market player comes into the marketplace, the big one will just drop their price to the point where the little one literally cannot compete. Sooner or later the little one falls over or exits the marketplace because they can't find a space to live, and then the prices go up again and they stay up.
So that kind of predatory pricing we want to have an objective test more of the sort that we have seen in other parts of the country. And then finally, in terms of that review of the Commerce Act, there have been some real challenges in terms of what I call collaboration for a societal good. Now, an example that I've used in the past where businesses who on the face of it compete in the marketplace find themselves unable to come together and have a sensible conversation about an outcome that may be for the general benefit of society.
They've had concerns and worries about whether they are going to breach cartel rules, whether they're going to breach some of the very strict rules about competitors talking to each other and so forth. Now, it's right and proper that we should have those rules, but there are occasions, and a good example happened in my electorate during the Cyclone Gabriel situation where suddenly all the cell phone towers were taken out. Now, I would argue that in a case like that, it makes sense and it's not going to be a risk to overall competitiveness if the various telcos talked to each other about the best way of getting those cell phone towers back working, how they get the system up and operating again.
And there was another example, it actually did get resolved eventually, but I can remember when I was in opposition and the party's environment spokesperson, the Packaging Forum, some of you will know the Packaging Forum, they are a group of businesses that are interested in usually fast moving consumer good type products. They wanted to come together to talk about how to reduce single use plastic in packaging. Now, I think most of us in this room would think that that's probably a conversation worth having, but for them, before they could do that, they needed to get approvals, they needed to spend a lot of money on legal advice and all those sorts of things.
So we're going to make it a little easier for businesses where there is a demonstrable societal good or a community good for them to come together and have a chat about conversations of that sort. So I think that's a good thing. So that's the changes to the Commerce Act.
Surcharges, those pesky little coffee stained, often handwritten signs on your machine that when you go and buy your date's gone and your cup of coffee. Now, we're going to ban those. And you might say, well, why are we going to ban those? Well, we're going to do that because we take the simple view that the price you see on the shelf should be the price you pay at checkout.
Now, there are a range of new and exciting payment transactional technologies coming at New Zealanders very quickly. Those of you that travel overseas or have lived overseas will be very familiar with some of the FinTech opportunities that are coming. And I'm going to talk about open banking in a minute or two, but they're coming at us quickly.
Other jurisdictions like the United Kingdom, the EU, Australia is going to do the same sort of thing. They've already banned these surcharges because they see, as do we, that you can't really have an economy where you go, you see a price on the shelf for something you want to buy, and then you get to the checkout. And depending on what methodology you use for transacting, you're going to be charged a different price.
I think that's going to create ultimately more and more confusion. And I would argue that for businesses, they choose which kind of transactional model they use. And they either incorporate the costs of those transactional models in the course of their business, just as they do with rent or wages or electricity or anything else, or they choose not to offer that transactional model.
And so we're hoping that legislation is in the House at the moment, it's before the select committee, and we've made it clear that if we can get that legislation passed sooner than, and operative sooner than May of next year, we will. And I'm hopeful that we might be able to have a surcharge-free summer this year, if we can get our way through that. One last thing on that subject of surcharges, I just want to make the point that as part of their analysis of what's called interchange fees, that's the pricing model that sits behind the electronic transactional stuff for credit cards and bank cards and so forth.
Commerce Commission estimate that New Zealanders are spending about $150 million a year on these surcharges. They estimate that up to $65 million of that is actually overcharge, is actually where the merchant may be being charged 1%, but they're charging you maybe 2% or 2.5%, and literally just taking a margin to the bottom line. I don't think that's fair, and I don't think that's the way it should be.
So if nothing else, we will be saving New Zealanders that overcharge percentage in their transactions with businesses. Open banking will be with us and here, hopefully, by about the 1st of December. So you'll remember, many of you, that we passed the customer data legislation in March of this year, and that is effectively a framework that provides for entities to share customer data and for customers to have their data shared with a trusted third-party authorised provider.
Now, again, those of you that have lived overseas or been overseas recently will have seen some of this open banking technology in other countries. New Zealand is relatively late to the game on open banking. The legislation that we've passed just provides a framework, and then what the plan is is that you will then have a series of bespoke regulations for different sectors in our economy, and it just happens that banking is the first one.
So we'll be promulgating those regulations very soon, and the plan is that the big banks are going to have open banking available and ready by early December, and then KiwiBank probably halfway through next year. They literally are a smaller entity. They literally don't have the same resource capacity that the bigger banks have to get it up and running a little faster.
So I'm really excited by the potential that the open banking model provides. The opportunity for disruption to occur is huge, and I like that. I think that that's a wave, a tsunami, if you like, of new, innovative, smart technologies that are going to come and be presented to New Zealanders in a way that most of them yet don't have an idea or a concept of what it might mean or how good it will be.
So, as I say, first cab off the rank is banking, and then we've indicated that the second cab off the rank will be the electricity sector. And, again, we'll create some regulations around electricity, but what it will mean is that customers will be able to have their electricity usage information shared. It'll be much easier for you to swap and find information between one electricity provider and retailer or another.
I don't know if some of you have tried it. It's relatively easy at the moment to do comparisons, but not nearly as easy as I think it could be. And there's been a lot of talk recently about electricity prices.
So, open electricity is coming next. And then I'm open to bids as to what might be the next sector. So, if you have some thoughts about where we should go next, then please do come and see me afterwards, and I'm very keen to engage on a conversation about what might be next.
But there are a range of other sectors of our economy that I think could benefit by some openness in terms of customer data and customer information. When I was presented with this role and the Prime Minister rang me up and said, Scott, I'd like you to be the Commerce and Consumer Affairs Minister, what he didn't tell me was, and, of course, you say yes to those sorts of conversations, but what he didn't tell me was that the role encompassed the lead government minister for anti-scam work. I've had to correct a few of my colleagues.
I'm not the scam minister. I'm the anti-scam minister. And New Zealanders, sadly, are susceptible and victims to financial scams, romance scams, identity scams, a whole range of scams in increasingly large proportion.
There are a range of numbers out there about what the dollar value is each year, but conservatively it's about $200 million. I've seen some estimates that put it as high as nearly $2 billion a year. And the reason the numbers are a bit hard to know for sure is because many people who have been scammed are either too embarrassed or just don't want to talk about it or whatever.
So what we do know is that scams are a real thing. They're not going to go away. And the New Zealand market is actually considered by the bad players quite an easy target.
We are generally quite polite and kind people. We usually, as Kiwis, give people the benefit of the doubt. I have a colleague, not a parliamentary colleague, but a work colleague, whose father was scammed not so long ago.
And when this person asked the father, well, why did you click on that link, Dad? The answer from the father was, well, it would have been rude not to. And that may be a little bit of a generational thing, but it also speaks to New Zealanders' kind of general niceness. And that makes us susceptible because we are not by nature cynical or suspicious people, and we usually like to take things at face value.
But increasingly in our world, taking things at face value causes potential risk, financial and otherwise. So one of the things that we've done is been working closely with our Australian colleagues and also Singapore. We think that as a small player in a big global marketplace, we're better to get buy-in on anti-scam activity if we work in collaboration with some of our partners and if we use our collaborative might, if you like, to achieve some results.
So, what we've done is we've created the first ever New Zealand Anti-Scam Alliance, and that's a collaboration of a range of businesses and entities that are involved in what's referred to as the scam ecosystem. Now, usually it's a bank that is the last port of call when the money actually disappears out of your bank account. But it's often not the bank that is the starting point for a scam.
Often it comes through a message that you've received on your telco device, or it's come through a social media platform or a digital platform or something like that. And there are a range of other players in the scam environment. So what the Alliance is doing is bringing those groups together, along with enforcement agencies, police, internal affairs, and also some of the NGOs, Netscape and NetSafe and people of that sort, and bring them together to see how we can work collaboratively together to reduce the risk of New Zealanders being scammed.
Now, will we ever be able to reduce that risk to zero? No. Can we try and minimise it? Yes. Could we try and force a whole range of things? Yes, we could.
But I take the view that initially anyway, let's try and work through a collaboration and see how we get on with trying to reduce things. And some of you may have noticed already that there has been, since the Alliance was formed, an increase in the amount of advertising coming from organisations like banks and telcos already, warning people, advising them, teaching them what to do and what not to do and all those sorts of things. I'd like to think that part of the Alliance work has been to achieve that.
The good news is that the Alliance has not cost the New Zealand taxpayer any money. It's a collaboration. The entities are self-funding it.
And we haven't, so far, had to legislate. And so I think that's a good win so far for New Zealand Incorporated. So we'll watch that and see how it goes.
On that subject, of course, this week is Cyber Smart Week. And one of the things that we are increasingly aware of is how vulnerable New Zealand businesses are to cyber attacks, to international attacks on your systems. And we have that all too often.
A scary statistic comes from the National Cyber Security Centre. And I wanted to get this right because it showed that over 50% of small to medium businesses experienced a cyber attack in the past six months. Over 50% of SMEs in the last six months had a cyber attack.
Now, that is, I think, pretty scary. Some businesses are better prepared to defend themselves from a cyber attack than others. But those that aren't in a position to defend themselves ultimately pay a very high price, whether it's just merely disruption to their day-to-day business activity or whether it is real financial loss and vulnerability to the attackers.
So if I have any advice to any of you on this matter, please make sure that you are up to date with robust defence mechanisms. Invest the money and time and energy in making sure that your systems are protected and that you have up-to-date defences. Because if you don't, you're going to be vulnerable.
And I think that is something that many businesses are still probably not giving nearly enough attention to. I want to just finish talking about what some people think are quite dry matters. But as Commerce Minister, I think they're very exciting.
And that's some of the reforms that are currently before the Parliament in terms of financial services reforms. There are currently three pieces of legislation before the Parliament, before the Finance and Expenditure Select Committee, and that committee is due to report back later this month on these three pieces of legislation. So the broad thrust of them is to streamline systems, to make businesses have a more easy, simple, effective methodology for doing business.
The idea is to have as little government intervention as is humanly possible, but at the same time provide the necessary guardrails and protections for both businesses and customers and consumers alike. So the first of these pieces of legislation, and there's somebody in the Parliamentary Council Office, these are the people who draft the legislation, they come up with the names for legislation as well. So don't blame me, but apparently it follows some kind of protocol.
I have yet to work out what the naming protocol is, but the naming of legislation can be quite, how can I put it politely, I don't want to offend the PCO people because they're very good people, they do remarkable work, but jeepers, they come up with some pretty kind of bland names for legislation. So the first one is the Financial Markets Conduct Amendment Bill, and that simply streamlines the Financial Markets Conduct Regulation, and it gives the FMA some new regulatory tools and hopefully will remove some unnecessary compliance costs. And so that's that one.
And then we've got the Credit Contracts and Consumer Finance Amendment Bill, affectionately referred to as the CCCFA. We've got some matters that frankly need tidying up. That piece of legislation, when it was first created back in 2015 I think it was, created some very strict rules and protocols for lenders that meant that there were some issues.
It got tidied up in 2019, but there are some legacy gaps that I think need still addressing for that period between 2015 and 2019. So again, that's another piece of legislation that's aimed to create a bit more certainty in the marketplace, but also with a view to reducing some costs. And then the third piece of legislation is the Financial Services Providers Amendment Bill, and that's a kind of parliamentary council office code for the organisations that provide our dispute resolution scheme services.
And we think it's just time to tidy that up and improve some effectiveness and efficiencies in terms of dispute resolution. So that's a very quick snapshot of some of the work that is currently on my agenda. There's a whole lot more coming, but I'd have to take you outside and shoot you about, if I was to release information like that at this stage, but it's coming, and as I say, the only real constraint to some of the work that we have at the moment is just working its way through what I call the parliamentary sausage factory, the legislative sausage factory.
We have a process that requires parliamentary scrutiny. That's right and proper, and it also means that His Majesty's loyal opposition can slow things down if they wish, and that's also right and proper, and that means that we have correct and appropriate due diligence and scrutiny of legislative change and process. So, look, on that note, I'm going to sit down, draw breath, and shut up, but wanted to thank you again, Mandy, to the Chamber.
Matthew, thank you for your support and kind words. I tried to bribe him early on. He said he's going to introduce me, and I said, well, will $5 change? He said, not nearly enough.
But it was pretty good. I've still got my $5 note, and so that's all right. But the work that you do in your businesses, with your teams, as part of the economy of New Zealand is crucially important.
We are, of course, a nation of small businesses, and that means that the role that our businesses play are fundamental to, as I said right at the beginning, the wellbeing, the future prosperity of all New Zealanders. And you can be assured that the current government, this coalition government, has at its core an unshakeable desire to make New Zealand a more prosperous, wealthy nation with a stronger, more vibrant, thriving, growing economy so that we can all achieve the things that we want as a first world nation. Thank you very much.
I'm happy to answer questions if there are any. Thanks, Mandy. Thank you, Minister.
So you're not going to get to sit down and relax just yet because we do run a short question time, and we've got people online who may have some questions as well. So we'll just ask a couple of questions, and I'm sure you'll have answers to them. And if not, you can take people outside and check them.
So Christy, have you got a question for us? Yeah, cool. Let's start there. This is from Gemma.
Your predecessor was keen to do a review of Part 4 of the Commerce Act. Do you have any intention to do that? And or if response to the Electricity Market Review would be helped by Part 4 changes, is there a path to apply for Mac and Hock Part 4 changes? OK. So the short answer is a good question.
It's topical at the moment because this week the Commerce Commission has released a decision relating to airports and capital expenditure from airports, and they've made some recommendations. So I've made it clear that Part 4 is not something that we will be addressing in this parliamentary term. But in the future, the answer is probably yes, but I wouldn't want to put a time frame on it.
Great. Excellent. Is there anyone in the audience that would like to ask a question? Yes? Have we got a microphone? Yeah.
Or are you happy to stand up, please? Yeah. Oh, there you go. Blake's got one just there.
Thank you. Ben Craven from iDrew Partners. Hey, I saw Andrew Vance's article on Saturday about fair trading reforms.
What can you tell us about those, what's on the agenda and what's not? Yeah, that's another good question. Fair trading is something that I think we would all take as a given, that we want to have an environment that provides for a fair trading regime. But I think that over time, some of the matters that we have in our legislation currently have been overtaken by time.
So, Andrea was getting a bit ahead of herself. That's not unusual for her. But the Minister of Economic Growth and Finance and myself are keen to pursue some matters on that.
So, we will be working with people like Business New Zealand, with Retail NZ and organisations of that to have a look at some of those areas. My late father used to say, you can't believe everything you read in the newspaper. That, by the way, is doubly true for digital news.
But I think just watch this space. It's not nearly the issue that I think Andrea was trying to paint in her story over the weekend. But let me just give you an example of an area that I think is a bit out of... that does need a little bit of dressing.
It's about the penalty regime. So, we have some of the penalties for breaches of the Fair Trading Act are now low to the point where a breach of the Fair Trading Act, even if a very high penalty was applied, would still mean that potentially there was a commercial advantage to breaching the Act. Now, I don't think that's right.
I think you do need to have a sense of proportionality and you do have to have a penalty regime that is meaningful and acts not only as a deterrent, but acts in a way that is going to be relevant given the size and scope of the business involved. I hope that helps. Any other questions? I'm always reminded... Some of you will know of my predecessor, Sandra Gowdy, in Coromandel.
And Sandra was a strident, opinionated MP, which is nothing wrong with that. But I can remember going to a meeting where... You know how you go to a meeting and they have an AGM and they give you the minutes of the last meeting? And so I went to the AGM and Sandra had been the guest speaker at the previous meeting, or the previous AGM, so the Secretary was reading out the minutes of the previous AGM and there's a line in it that the Member of Parliament gave an address and then answered questions to her satisfaction. LAUGHTER Which I thought was kind of... Anyway, Mandy, thank you very much.
Thank you, Minister. Really appreciate it. APPLAUSE Excellent.
Thank you. Thank you, Minister. So, as the Minister mentioned, he was here probably three weeks ago, I think, and we had a really nice day on the day that he visited and it's been pretty terrible since.
And it's beautiful again today, so we might have to have him back in a couple of weeks just to make sure we get regular sunshine. Thank you very much and thank you to our members in the room and online and, yeah, have a wonderful day. Thank you.
