Tisch Lindsay: Credit Contracts and Consumer Finance Bill — Third Reading 
Tisch Lindsay: Credit Contracts and Consumer Finance Bill — Third Reading 
[Volume:612;Page:8897] 
LINDSAY TISCH (NZ National—Piako) 
: 
 There have not been any major changes to the credit contracts that we have operated under for many years. The bill provides for the repeal of the Credit Contracts Act 1981 and the Hire Purchase Act 1971. This has come about because over time we have seen changes—the deregulation of the finance industry and the role that computerisation and technology have played. The concepts of the Hire Purchase Act and the Credit Contracts Act were relevant for the 1960s and 1970s but today of course they have gone by the by. 
The bill does refer specifically to individuals and persons as opposed to business. One of the shortcomings that we found in this bill is that it is silent on business. It does not relate to business enterprises yet it is our view that businesses are very much affected by credit contracts and by the way that individuals who enter into contracts can now cancel those contracts and get out of them. On the other side the creditor who has supplied the services and provided the finance can be worse off. I will cover that more specifically later on. 
There are other shortcomings that came to light during the Committee stage. I never got a response. I asked a number of questions. In fact I spoke on each part in the Committee stage and I put some specific questions to the Minister about the shortcomings that we saw. It was interesting that Government members would not take a call either. They were not prepared to stand up and answer the queries I had yet this is a Government bill. 
The first issue that I want to draw the House’s attention to an issue that I spent some time on is clause 24 “Right to cancel consumer credit contract”. Subclause (1) states that “A debtor under a consumer credit contract may cancel the contract by giving written notice ...” and that 3 days’ notice is required. Well that is fine and that will be allowed. But if we were to take that further and look at what happens if those goods that have been taken are used within those 3 days the contract is cancelled and those goods are returned we see there is no provision in the bill for compensation. We had some very good submissions that were made by the New Zealand Law Society and the New Zealand Retailers Association. They said that if someone purchases some goods and then the contract is cancelled it is a fact that goods depreciate immediately and in some cases by 25 percent. A 25 percent depreciation is not uncommon; that is what can happen. Yet the creditor the retailer the wholesaler or whoever it is—the person who has provided the goods—at that stage is left out of pocket because the bill is silent on the whole issue of compensation. 
That issue comes up in clause 27 which is another clause that I was concerned about and spoke in the Committee stage about. It concerns the effect of cancellation of a consumer credit contract Specifically clause 27(1)(e) states: “unless the contract otherwise provides the debtor is liable to pay to the creditor—(i) any reasonable expenses necessarily incurred by the creditor in connection with the contract and the cancellation of the contract; and (ii) if property is returned to a creditor that has been damaged while in the possession …”. That is fine. I have no difficulty with that whatsoever. But the point that I make here is that no compensation will be paid for the loss of value. 
The classic example and the one that I used during the Committee stage is that if a person goes into a car yard and buys a new car what happens as soon as that car is driven out of the yard? The value of that car is diminished. If that person wants to resell that vehicle he or she will not get back what was paid. I made that point during the Committee stage and the Minister was not prepared to take a call and nor where Government members; they were not prepared to explain why when we had had those submissions from the New Zealand Retailers Association and the New Zealand Law Society those provisions were not included. 
Another shortcoming in the bill that I believe needs to be reiterated for future reference is that as we heard earlier from the Hon Tony Ryall and Gerry Brownlee it is a possibility that the Government will come back in a short time and by way of statutes amendment legislation want to make some changes. Another concern that I draw members’ attention to is the hardship provisions. They enable debtors to alter credit contracts. Examples could be because of illness injury loss of employment or loss of a relationship. There could be a number of reasons why one would want to alter the contract. But the provisions do not apply if one has exceeded the credit limit or been in default of a payment. They do not apply to that. 
If the creditor does not agree to a course of action that the bearer is proposing it could be that the debtor goes to court. This is where we move into the area of cases being taken to court. There will be huge compliance costs. This Government is renowned for increasing costs. That is its hallmark. In the last 4 years compliance costs have been increased at every turn. One area that we identified in the course of the Committee stage was the costs involved and the inability really of the creditor to enforce a contract. If the debtor decides that the creditor is not playing ball he or she has the right to take the case to court and we will end up with a huge compliance cost regime. 
Another clause that caused me concern was clause 111. In every piece of legislation that the Government brings in it seems to be hell-bent on doing things by way of Order in Council—that through regulations it can increase costs. That is what clause 111 talks about—that the Governor-General by Order in Council can make regulations for the purposes stated. Well it is just another way to increase the tax take. It is just another way to add compliance costs on to those businesses and those individuals who are finding it extremely difficult. Gerry Brownlee articulated very well the issues about the disposable income of people and the extra costs that will be incurred. It is interesting that the  
National Business Review 
 of 3 October states: “Spring of discontent. Businesses seething privately over high taxes and galloping compliance costs”. 
Simon Power 
: What did they say about Margaret Wilson? 
LINDSAY TISCH 
: There you go. It says: “Ministers may think they are reducing them but in fact business groups”—and we have plenty of examples of business groups and others—“are saying that those things are getting out of control.” So that was an issue that we identified and talked about. The Minister was not prepared to take a call at the time about clause 111 “Regulations”. 
Mark my words: within a very short time this Government will want to make amendments to this legislation by way of statutes amendment legislation to streamline the process that we are going through now. We are concerned about that and we are flagging it now. Although the concept of the bill is fine and there are some minor changes that actually improve the position—and we have no disagreement with that—there are still the shortcomings I have mentioned of compensation and of regulations and the way in which they can be applied. The other area of major concern that the bill does not allow for is brokerage fees and that is another story in itself. But if full disclosure is wanted—and that is what the bill states—then brokerage fees should be included. They are not included and that is a major shortcoming of the bill.