John Small: Speech to BusinessNZ, 21 May 2025

Change makers

New Zealanders will not become better off without change. To paraphrase Albert Einstein: more of the same won’t cut it.

Today I want to talk about the Commission’s new attitude to change and how that is showing up in practice. I’ll get to the outward facing effects shortly, but let me start with some of the internal changes at the Commission — in the way we think, operate and communicate. Here are a few relevant waypoints:

• In October 2023, before the last general election, we finalised a new set of four organisational values that are already proving to be very helpful touchstones for us in our work. I want to emphasis one of these today: Rukuhia te wāhi ngaro — we are curious, future-focused and courageous.
• Last year we absorbed a material reduction in the budget for our general markets work, adopted an explicit increased risk appetite, significantly over-committed and delivered on our major-litigation budget and gave effect to clear enforcement priorities.
• This year we are cutting our internal timelines for delivery of work and further ramping up our communications and engagement performance. We are focused on pace and better explaining the impact of competition and fair trade on the economy in a way that resonates with New Zealanders and their expectations of us.
• We are also awaiting the outcome of a review of our governance and effectiveness, and engaging with the Ministry for Regulation’s review of telecommunications regulation.

I mention these things to emphasise two points:

1. We live and breathe change, internally, all the time, and;
2. We are change makers at heart – most of the items on that list are things we initiated ourselves.

The Commission started life in 1986 as a cross-economy regulator of competition and fair-trading laws, and that remains our core function. However, along the way, we have collected responsibility for operating bespoke regulatory systems in several sectors, all of which have competition and consumer protection at their core. And we are currently gearing up for new work in the water sector and preparing to hand our consumer credit functions over to the Financial Markets Authority (FMA).

Just as our scope changes over time, so too does the nature of the sector-specific regulatory systems themselves. I use a life-cycle metaphor to think about these changes. Let me give you a few examples to illustrate this point:

• The Commission has become adept at standing up new regulatory functions in recent years. This phase involves building internal capability, developing good working relationships with regulated parties, clarifying expectations, publishing guidance, setting priorities and identifying outcome indicators against which we will report and be held accountable.
• We are reasonably tolerant in posture in the first phase of a new regulatory regime, because we understand that the regulated parties are themselves adjusting to the new environment.
• This tolerance abates over time, and it becomes particularly scarce if a regulated party consistently fails to comply.
• Our focus can also change over time, in line with sector developments. To take a couple of examples:
  • We have several active de-regulation moves underway in parts of the telecommunication sector where a combination of technological and commercial developments suggest regulation is no longer warranted.
  • And in the regulation of monopoly infrastructure, as a result of recent experience we have taken a more active interest in asset management planning by infrastructure firms.

A key feature of this sector-specific work is that we are engaging with the same firms and people repeatedly. Over time, as you would expect, we come to understand each other better.

There is inevitably tension in the relationship, because it is our role to constrain their conduct. But even in this context, a mutual commitment to respectful professional relationships builds trust over time.

I’ll turn now to our general markets (economy-wide) work, where the nature and focus of our work also changes over time as business models evolve and new pressure points arise. Two examples will suffice.

Valocity

Valocity is a software platform developed in New Zealand that allocates property valuation work to valuers. It is about 10 years old, is the market leader in New Zealand and is now expanding internationally. Just the kind of innovative business we need to be developing here, right? Well, almost.

• Our concern was that the way the platform worked effectively eliminated price competition between valuers for full market valuations (FMVs), which are the ones where the valuer needs to physically inspect the property.

I won’t bore you with what happened next, but instead draw your attention to our media release ( 239 KB, PDF ).

• Last year, we became aware that Objective’s timelines for local authorities to commit to new contracts allowed insufficient time for them to consider alternative software solutions in development.
• Again, I’ll spare you the details of how the sausage was made and just point you to the outcome, which is that Objective agreed to extend the deadline by an amount that met our concerns.

These two cases have some commonalities:

• They concern innovative digital business models,
• There were serious risks to competition in important markets,
• As a result of proactive and commercially astute work by the Commission,
• The outcomes were positive change, with clear benefits for New Zealanders and;
• All without litigation.

Now, as proud as I am of the Commission’s work on these two matters, I would not like you to leave thinking we shy away from serious litigation, so let me briefly remind you of our recent action against Winstone Wallboards, makers of GibBoard. We allege that Winstone used retroactive rebates to damage competition, ultimately leading to consumers paying higher prices. This is the most significant non-cartel competition litigation the Commission has filed in a long time.

I’ve talked so far about our two main types of work: operating regulatory systems and enforcing competition and fair-trading laws in all markets. Another strand involves more entrepreneurial change-making and I’ll briefly give you two examples.

• In banking and payments we continue to agitate for changes that promote competition. When one focuses on more competition as the outcome, it becomes clear that better regulation is key.
  • Sometimes better means less regulation, such as the Reserve Bank opening up ESAS access to more parties.
  • Sometimes better means more regulation, such as controlling the API call pricing of banks.
• In the electricity sector, we’ve deepened our working relationship with the Electricity Authority through the Energy Competition Task Force. Again, the desired outcome is more competition from a broader range of participants. And again, better regulation is key to achieving that outcome.
  • Sometimes it is about enabling, such as the co-design with industry of standardised flexibility products that are now being traded;
  • Sometimes it may require an element of compulsion, such as our interest in promoting a level playing field between gentailers and others.

I hope that’s given you a bit of insight into the changes we are driving from the Commission and some of the things we’ve been up to recently. When you look at what we do, we are most definitely change-makers.

We are all in this together. A well-functioning economy is a positive-sum phenomenon. Consumers need and value firms that are efficient and innovative, so those are the ones that thrive.

The Commission is part of the economy’s maintenance crew – oiling the wheels, removing blockages and adjusting settings. We have huge respect for you as entrepreneurs, managers and consumers. We are tough when necessary but fundamentally we all want the same thing: a thriving economy.