ACT Party Press Release:
The Commerce Commission’s preliminary finding that there is a lack of competition in the fuel market will be used as an excuse for the government to unleash new regulation on yet another industry.
The government has already banned offshore oil and gas exploration and plastic bags and plans to introduce industry-wide collective employment agreements. Labour appears to want to dictate what entire industries can charge and how they do business.
The Commission’s finding is no surprise after the prime minister pre-empted the outcome by saying consumers were being ‘fleeced’.
In October last year, the government along with National voted to give the Commerce Commission enormous powers to demand information from whole industries without a specific allegation to respond to.
The way that the legislation was rushed through to undertake a particular market study, with the PM predetermining the outcome, confirmed ACT’s worst fears that the Commerce Amendment Bill was being misused for political purposes.
New Zealand already has great difficulty with bureaucracy. Too much red tape and regulation prevent us from raising productivity. Complying with a market study, a high stakes exercise where companies are put under subpoena for detailed data, will be enormously expensive and add to the culture of bureaucracy and compliance over innovation and production.
Even if the government’s regulation of the fuel market cuts the importer margin by a quarter – or about 8 cents – it will not make a huge difference to petrol prices. Between September and December last year alone, the cost of 95 fluctuated by 37 cents. Taking a quarter of retailers’ revenue would send them bankrupt but save only 8 cents in the dollar.
The likely outcome is that a new layer of bureaucracy will make business more difficult and have little impact on the price of petrol.
No doubt both Labour and National think they can make goods cheaper for consumers, but both parties misunderstand the problem. The real problem with New Zealand’s economy is a lack of scale to support more competitors. We live in a sparsely populated country with five million people.
ACT stood alone in opposing this legislation and we are proud to stand for sensible economics and high-quality public policy.
