Consumer Law Reform Bill: First Reading

Mr Speaker, I move that the Consumer Law Reform Bill now be read a first time.

I nominate that the Consumer Law Reform Bill be referred to the Commerce Committee.

The National Government is committed to a brighter future for New Zealanders. This includes a strong commitment to strengthening and building our economy.

A brighter future is a future where New Zealanders from all backgrounds and walks of life have the opportunity to better themselves, and to achieve the living standards they aspire to through hard work. And it is a society where we have the resources and laws to protect the most vulnerable.

The Consumer Law Reform Bill before us today is one of the policy initiatives that will help to achieve this goal. It is a key element of National’s 120-point Economic Development Plan. Strengthening and building our economy requires a series of good policy decisions and reforms, and this is one of them.

For consumers, ineffective laws may mean a lack of information and choice leading to poor purchasing decisions. Ineffective laws may also mean that consumers are not provided with avenues to have their problems with goods and services resolved and their rights protected.

In contrast, confident consumers who demand high quality goods and services, make good choices, and seek satisfaction when their purchasing expectations are not met are an essential component of effective markets. Effective markets, in turn, drive competition, innovation, and economic growth.

Consumer law reform is part of the Government’s commitment to improve the quality of regulation. The Government’s regulatory reform agenda seeks to have in place laws which are sound and relevant. Laws which have become out of date and need to be worked around are a compliance cost for businesses and consumers.

I would like to take this opportunity to thank the Ministers who were previously responsible for this Bill – Heather Roy, John Boscawen, and Simon Power. Their hard work has resulted in a much-needed piece of legislation which will be welcomed by consumers.

OBJECTIVES

The main objectives of the Bill are to strengthen consumers' rights, to simplify business compliance, and to make consumer legislation more accessible and understandable for both consumers and businesses and to have effective and enforceable consumer laws.

Another key objective of the Bill is to update and modernise consumer legislation. The three main consumer laws - the Fair Trading Act, the Consumer Guarantees Act and the Weights and Measures Act - are all sound but have not been amended in over 20 years.

Over the same time period, there have been many changes to the way consumers transact with businesses. As a result, our consumer laws are not adequately dealing with a number of modern transactions such as Trade Me-style auctions, supermarket self-service systems, door to door and telephone sales using credit cards, and the sale of extended warranties.

A further objective is to achieve harmonisation with the Australian Consumer Law, as appropriate, in accordance with the Government’s agenda of a Single Economic Market with Australia. I would like to acknowledge the support that has been received from our Australian Ministerial colleagues and their officials in the policy development for the Consumer Law Reform Bill.
Australia and New Zealand have both undertaken significant reviews of consumer law at the same time and this has allowed for some real time harmonisation of our laws. The Australian Consumer Law came into effect fully on 1 January 2011. We have been able to take advantage of their legislative developments and they have put in place provisions which are substantially the same as our consumer guarantees.

MAIN FEATURES OF THE BILL

I will now outline some of the main features of the Consumer Law Reform Bill.
Broadly, the Bill amends the Fair Trading Act 1986, the Consumer Guarantees Act 1993 and the Weights and Measures Act 1987. The Bill also provides for a new Auctioneers Act and repeals four other pieces of consumer legislation.

First, the Bill will add purpose clauses to the Fair Trading Act, Consumer Guarantees Act and Weights and Measures Act. The first part of the purpose clause for each Act will be the same, saying the purpose of the Act is to contribute to a trading environment in which trading is fair, there is effective competition; and consumers and businesses participate confidently.

These words emphasise that consumer laws are strongly principles based. They provide the framework for consumers and businesses to conduct trade. The purpose clauses reflect that these laws are about delivering positive outcomes for both consumers and businesses and effective markets.

Second, the Bill makes fundamental changes to the Fair Trading Act. These include provisions that a person must not make an unsubstantiated representation. Traders and retailers must have reasonable grounds for any claims they make.

New, modern provisions are added to the Fair Trading Act relating to layby sales, unsolicited goods and services, conduct at auctions, extended warranties and uninvited direct sales. For example, rules surrounding direct sales, such as door-to-door or telemarketing sales, will now apply to all types of transactions over $100, including cash and credit.

The Bill will also give the Commerce Commission a wider range of enforcement tools, to enable it to more effectively monitor and enforce the Fair Trading Act.

As some members will know, I have a personal interest in the new auctions conduct provisions. These have the objective of making the rules and consumer protections that apply to auctioned goods clearer.

The third area of reforms relates to the Consumer Guarantees Act. Until now, goods sold by auction and on sites like Trade Me have been exempted from the Act. Sales by professional traders using Trade Me-style auctions will now be covered. However, there is still an exemption for second hand goods sold at auction by a registered auctioneer.

There are provisions in the Bill concerning the acceptable quality of electricity and gas. The Consumer Guarantees Act is amended to provide that retailers may seek indemnity from distributors when consumers raise quality issues.

There are also provisions in the Bill to provide that the service guarantee in the Consumer Guarantees Act applies when using carrier services such as couriers and there are associated amendments to the Carriage of Goods Act requiring a carrier must offer contract for carriage at the limited carriers liability or declared value risk.

The Bill also provides for an increase in the limited carriers liability from $1,500 to $2,000. I am aware that there is some concern about whether this increase has been set at the right level and I would like to invite the Commerce Committee to give particular attention to this matter.

Fourth, providing consumers with access to redress is just as important as providing consumers with rights. I have particular interest in ensuring that consumers who have problems with the goods or services they have purchased, have accessible and free or low-cost dispute resolution available to them.

I am pleased to say that the Consumer Law Reform Bill extends the scope of the Disputes Tribunal to consider section 9 of the Fair Trading Act. The Disputes Tribunal will play an important role in providing low cost access to justice in cases of misleading and deceptive conduct by traders.

Fifth, the Weights and Measures Act regulates accuracy of weighing and measuring instruments. The Act will be updated and extended to provide for new retailing approaches such as supermarket self-checkouts and to ensure that consumers can see weighing instruments and recorded weights in order to be satisfied there are no weighing anomalies.

Sixth, the Bill also provides for a new Auctioneers Act which will require auctioneers to meet a number of minimum standards, included accounting for the proceeds of an auction and displaying their licence.

Two matters that are not included in the Bill but were considered by officials and are covered in the Regulatory Impact Statement are unfair contract terms and unconscionability. I would like to invite the Commerce Committee to also consider examining whether the Fair Trading Act should provide for these protections.

These are included in Australian Consumer Law and many other jurisdictions provide for these protections. It is important that New Zealand also properly examines whether they should be included in our consumer laws.

Strong and relevant consumer laws are important for both consumers and businesses. Consumer laws are part of the fundamental legal infrastructure that helps markets operate efficiently and effectively. Working alongside and supporting competition law, consumer laws underpin all business to consumer market transactions.

As a consequence it is critical to ensure consumer laws are working as intended and remain relevant in the face of changes to the ways in which markets operate and consumers and businesses transact.

Confident consumers help to create a competitive business environment and a productive and innovative economy. The reforms contained in the Consumer Law Reform Bill will be a significant step forward for consumer law and regulatory reform in New Zealand.

Mr Speaker, I commend this bill to the House.