OnPoint by Keith Ng

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OnPoint: On Price Gouging

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  • Rich of Observationz,

    No economist I know has any interest in defending the rich.

    Gavyn Davies? Although ironically he's on the left of his profession. It's the kids in their first year at Treasury on $50k a year that are the wildest neo-libs.

    Back in Wellington • Since Nov 2006 • 4221 posts Report Reply

  • Matthew Poole, in reply to Jason Le Vaillant,

    could Gerry Brownlee step in and set region wide prices for items such as petrol and milk under the wide ranging powers he has?

    If it were a reasonably necessary or expedient step to assist with the response to the earthquake, then yes

    Only if there's a law that provides for setting of prices. His reach is limited to what can be done under existing legislation, he cannot invent entirely new powers. So he could order the issue of arrest warrants for anyone named Jason, but he could not order their execution because there is no power of capital punishment. He could order buildings torn down if they're not painted pink, or modify the rules for granting consents such that only buildings that will be painted pink are permitted, but he could not order existing buildings to be painted pink.

    If you can find a law that allows a Minister to set a price, then that would be what allows Gerry to set prices. It is not CERRA itself that provides the power, it is guilty only of assigning it to Darth Brownless.

    The pit from whence crawl… • Since Mar 2007 • 3733 posts Report Reply

  • Russell Brown,

    Surprised no one's cited this:

    Petrol and diesel prices are on the up - but not in Christchurch.

    BP and Mobil have increased petrol and diesel by 5 cents a litre, Caltex has increased 91 octane by 6 cents a litre, and Shell will introduce its increase tonight.

    However, reacting to last week's devastating 6.3 earthquake in Christchurch, Caltex has only raised prices in the North Island and BP, Mobil and Shell will not increase Christchurch's petrol prices.

    The increase means, on average, 91 unleaded at BP Connect sites would cost 207.9c outside the quake-hit city.

    AA PetrolWatch spokesman Mark Stockdale said it was a very commendable gesture from the oil companies to exclude Christchurch from the raise.

    "I don't think the people of Christchurch need to worry about the price going up any time soon," he told NZPA.

    How terribly irrational.

    Auckland • Since Nov 2006 • 17980 posts Report Reply

  • BenWilson,

    How terribly irrational.

    Fear not. Legions of arbitragers will sort it out, driving down to Christchurch to get us our cheaper fuel.

    Auckland • Since Nov 2006 • 8040 posts Report Reply

  • Sacha, in reply to BenWilson,

    Legions of arbitragers

    Ak • Since May 2008 • 15769 posts Report Reply

  • nzlemming, in reply to Sacha,

    I love the smell of petroleum in the morning...

    Waikanae • Since Nov 2006 • 1701 posts Report Reply

  • Jason Le Vaillant, in reply to Matthew Poole,

    His reach is limited to what can be done under existing legislation, he cannot invent entirely new powers.

    How do you reach that conclusion?

    Wellington • Since Feb 2011 • 7 posts Report Reply

  • Matthew Poole, in reply to Jason Le Vaillant,

    S6(4) says "an exemption from, or modify, or extend any provision of any enactment".
    That's what limits his power. Yes he can extend or modify provisions, but the provisions must already exist. He cannot create new provisions.

    The pit from whence crawl… • Since Mar 2007 • 3733 posts Report Reply

  • Jason Le Vaillant, in reply to Matthew Poole,

    S6(4) says "an exemption from, or modify, or extend any provision of any enactment".
    That's what limits his power. Yes he can extend or modify provisions, but the provisions must already exist. He cannot create new provisions

    IANAL, but 6(4) is an example of what the power in 6(1) "may" do. And 6(7) is quite explicit: "subsections (4) and (5) do not limit subsection (1)."

    Wellington • Since Feb 2011 • 7 posts Report Reply

  • Matthew Poole, in reply to Jason Le Vaillant,

    However, read as a whole the Act does not intend to make Gerry Brownlee into Parliament. Which is why the bit about existing provisions is important, since the overall import of the Act is to allow him to relax existing statutory limitations to assist with the reconstruction. Even a National government is leery about giving over its legislative powers to someone who's not Parliament.

    The pit from whence crawl… • Since Mar 2007 • 3733 posts Report Reply

  • Kyle Matthews,

    Fear not. Legions of arbitragers will sort it out, driving down to Christchurch to get us our cheaper fuel.

    Lol. Ben brought the funny.

    Since Nov 2006 • 6145 posts Report Reply

  • Jason Le Vaillant, in reply to Matthew Poole,

    However, read as a whole the Act does not intend to make Gerry Brownlee into Parliament. Which is why the bit about existing provisions is important, since the overall import of the Act is to allow him to relax existing statutory limitations to assist with the reconstruction. Even a National government is leery about giving over its legislative powers to someone who's not Parliament.

    I agree that relaxing existing statutory limitations was certainly one of Parliament's intentions. In particular, section 3 (the purpose of the Act) says that part of its purpose is to:

    (c) enable the relaxation or suspension of provisions in enactments that—
    (i) may divert resources away from the effort to—
    (A) efficiently respond to the damage caused by the Canterbury earthquake:
    (B) minimise further damage; or
    (ii) may not be reasonably capable of being complied with, or complied with fully, owing to the circumstances resulting from the Canterbury earthquake:

    Its purpose does include more general components, such as:

    (a) facilitate the response to the Canterbury earthquake:
    (b) provide adequate statutory power to assist with the response to the Canterbury earthquake:

    My understanding is that a court's view of the overall intent of an Act helps it to interpret the Act's specific provisions. (And purpose statements help courts by telling them what Parliament's intent was.) This is particularly important if a provision in an Act is unclear, or seems to conflict with another provision in the Act. However, even if an Act is understood as being primarily intended to do a particular thing, that doesn't override its specific provisions, and doesn't prevent its specific provisions from being misused by the Government or anyone else. (That is how the concept of "loopholes" comes about.)

    I find it hard to see that, even under the most conservative reading, this Act couldn't be used to create provisions that go beyond mere relaxation or extension of existing statutory provisions. 6(1) is very general:

    The Governor-General may from time to time, by Order in Council made on the recommendation of the relevant Minister, make any provision reasonably necessary or expedient for the purpose of this Act.

    And there is even 6(3):

    The recommendation of the relevant Minister may not be challenged, reviewed, quashed, or called into question in any court.

    Wellington • Since Feb 2011 • 7 posts Report Reply

  • stephen walker,

    The recommendation of the relevant Minister may not be challenged, reviewed, quashed, or called into question in any court.

    orders in council are still subject to judicial review.

    tokyo • Since Nov 2006 • 628 posts Report Reply

  • Jason Le Vaillant, in reply to stephen walker,

    orders in council are still subject to judicial review

    I'm going to pretend momentarily that I understand constitution law.

    Yeah, there's probably a need to distinguish between a judicial review of an administrative decision and a review of an Order in Council that concludes it is ultra vires (and therefore invalid).

    Often judicial review considers an administrative decision (in this case, the recommendation of the Minister to the Governor-General) to examine whether the decision-maker followed the right procedures and properly considered all the factors they were supposed to consider in making that decision. If it turns out he or she didn't do so, the court asks the decision-maker to reconsider the decision. In the case of the law in question, a review of the recommendation is not possible due to 6(3).

    In saying that, I'd assume that despite 6(3) the Order in Council itself could be declared ultra vires (and therefore invalid) if it tried to do something that primary legislation doesn't allow it to do.

    So if that's right, you could challenge whether the conditions in 6(1) were met (the Order in Council was "reasonably necessary or expedient for the purpose of this Act") and you could also challenge the Order in Council if it did anything that 6(6) says it can't (e.g. it can't modify a requirement of the Bill of Rights Act). You just couldn't challenge the procedure and considerations required to make the recommendation under 6(2) (i.e. taking into account the purpose of the Act and consulting the recovery commission).

    Wellington • Since Feb 2011 • 7 posts Report Reply

  • Matthew Poole, in reply to Jason Le Vaillant,

    6(1) is very general:

    The Governor-General may from time to time, by Order in Council made on the recommendation of the relevant Minister, make any provision reasonably necessary or expedient for the purpose of this Act.

    The fact that there is anything more to the Act gives a lot of context to the intent. If the intent had been to let Brownlee do anything he wanted, they'd have stopped there because everything else would be superfluous. As I said, you have to read it as a whole (and judges are required to do so when interpreting) before trying to work out just how far Gerry can go.

    The pit from whence crawl… • Since Mar 2007 • 3733 posts Report Reply

  • Dismal Soyanz, in reply to Russell Brown,

    How terribly irrational.

    Sometimes PR works to the benefit of consumers. In this case, the oil companies want to be seen to be doing their bit for Christchurch. Somewhat ironically, this the market at work - not wanting to destroy goodwill (and thus future sales) for the sake of short-term profits.Given the recent (in terms of decades) history of high profile problems with oil companies around the world, the oil companies are likely putting considerable effort into making sure that they do not incur bad publicity.

    Wellington • Since Nov 2010 • 168 posts Report Reply

  • Matthew Poole, in reply to Dismal Soyanz,

    I think Russell's comment was a directly sarcastic response to discussions about how the market is failing to work in Christchurch because if it were functioning rationally petrol would be $4/L.

    The pit from whence crawl… • Since Mar 2007 • 3733 posts Report Reply

  • Russell Brown, in reply to Matthew Poole,

    I think Russell’s comment was a directly sarcastic response to discussions about how the market is failing to work in Christchurch because if it were functioning rationally petrol would be $4/L.

    Quite. But Dismal makes a useful point. This is the market working in the real world – where goodwill is important to future profits – just not “rationally” as we’ve been invited to believe.

    Auckland • Since Nov 2006 • 17980 posts Report Reply

  • Sacha, in reply to Dismal Soyanz,

    In this case, the oil companies want to be seen to be doing their bit for Christchurch.

    Corporates are still run by people, and they do often want to do the right thing rather than just maximise profit at all costs (or even making PR calculations about future goodwill). I wouldn't want to be too cynical about motivations. Small businesses particularly are a crucial part of all our communities and they'll be essential for rebuilding to succeed.

    Ak • Since May 2008 • 15769 posts Report Reply

  • Dismal Soyanz,

    Yes. I did read RB's response in that light Matthew,.and I wasn't disagreeing with him in the least. Just elaborating on the irony of the call for a market-price based response in contrast to an actual market based response.

    Wellington • Since Nov 2010 • 168 posts Report Reply

  • Dismal Soyanz, in reply to Sacha,

    True and I expect that there is a very strong element of that in the oil companies' decision. But it's not the only element. Because the two factors (personal empathy and corporate responsibility to shareholders) point in the same direction, the response of not pushing up prices is kinda a no-brainer. However, if the two were in opposite directions, I'm not so sure that the personal empathy would win out. The corporate veil is more than just a legal construct.

    Wellington • Since Nov 2010 • 168 posts Report Reply

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