Key John: Third Readings 
Key John: Third Readings 
[Volume:609;Page:6929] 
JOHN KEY (NZ National—Helensville) 
: I rise on behalf of the National Party to oppose the legislation. Before I start on the issues let me say to Mr Peck that that was a wonderful speech of sorts but his attacking Mr Franks in such a manner was incorrect and totally inaccurate. He is not backed up by the New Zealand Law Society either. Mr Peck can call Mr Franks lots of names if he likes but I suggest he read the ruling from the Law Society which sets out quite clearly that the view he just gave the House was incorrect. 
This legislation as Mr Franks said was introduced with good intentions. It is laudable in many aspects but in my opinion it has the look about it of law of unintended consequences. It is likely to create more issues and more claims than before. Mr Catchpole said it would tidy up a lot of loose ends. I highly doubt that statement will prove to be correct over time. The legislation as everyone is probably aware by now seeks to amend four critical pieces of New Zealand’s consumer legislation. They are the Commerce Act the Consumer Guarantees Act the Fair Trading Act and the Sale of Goods Act. It attempts to define electricity water gas and computer software as goods and services. 
The very question we need to ask ourselves is whether this legislation is the right way of addressing those goods and services and whether in fact they are goods and services. The Law Society tells us very clearly they are not. It says that although the society supports the idea and supports the objective the concern simply is that extending the definitions of goods services and suppliers in specific Acts is not the most effective way of achieving that. One of the very reasons the Law Society drew that conclusion is that it went to the Consumer Guarantees Act and looked at the specific provisions that would now apply to the likes of electricity water and gas if they were defined as a good. 
I refer members to what the ongoing liability is when something such as electricity is defined as a good. It will carry with it a guarantee as to title. I know that the House and the country are going through a lot of debate at the moment about title of specific aspects of New Zealand and I recognise that. But electricity is not a commodity not a good that is likely normally to carry a title. Nor can it necessarily have a guarantee as to its fitness for a purpose. We saw the problem with applying that definition to water. There are lots of ways that water can be defined. For instance most New Zealanders would understand what defining potable water and drinking water as a good means but there are various grades of water that may be acceptable to one consumer but not acceptable to another. Water that is used for mass irrigation may be acceptable at one level but not another. Water used to fill a swimming pool may be acceptable at one level but not another. Similar are the guarantee that goods comply with a sample of the goods or the guarantee as to repairs and spare parts. It is simply not practical to apply those definitions under the Consumer Guarantees Act to water and electricity as this law attempts to do. 
One of the reasons I said earlier that I believe this law will be a law of unintended consequences that brings about the rulings required by judges the Law Society and the courts of New Zealand is simply that the Consumer Guarantees Act requires that an objective test of a reasonable consumer is defined. That is a very broad and woolly statement if I may say so. For instance it is understood that a reasonable consumer would not expect a gold-plated supply of electricity. One of the issues that came up for discussion last night in the Committee stage was the practicality of this. Is one consumer the same as another consumer when it comes to the continuity of supply of electricity for instance at a dinner party? 
Hon Judith Tizard 
: You would bring that up. 
JOHN KEY 
: I did bring that up. I thought it was a good point and I thought I would raise it again. I slept on it and I still think it is a good point. 
Another instance would be continuity of supply of electricity for fridge-freezers. The response from the Government in putting up this legislation and attempting to have it passed is that this legislation is the way to deal with that problem. I say it is not the most simple and effective way. There is a far more logical way to deal with that problem—that is by relying on third-party insurance. 
Mr Franks pointed out what will happen and he is quite correct. There is no free lunch. Every single consumer in New Zealand will have to pick up the tab in the same way that consumers will pick up the tab for the Government’s recently announced back-up electricity generation. That is not free. It is going to cost $200 million and all consumers in New Zealand will have to pay for it irrespective of whether they want it. There are lots of other mechanisms that could be applied in this consumer legislation but we are using a sledgehammer to crack a peanut. 
I turn to the issue of computer software for just a moment and its definition as a good. Mr Benson-Pope stood up and said it was silly to disagree with its definition as a good despite the Law Society having said it did not believe it was a good ruling. Mr Benson-Pope said the equivalent was a book—that one could pick up a book. Well there is no reason to define computer software as a good because what are we defining? Is it the CD-ROM that one buys and puts in one’s machine or the actual equipment and the licence to run that particular service? I say the same could apply to a DVD or a CD. What are we defining as a good? 
I turn for a moment to the likely costs of this legislation. There has been quite a lot of discussion in this House about the potential cost to local government and that cost will certainly be passed down to consumers. Amounts in the order of $400 million to $750 million have been bandied around. When news of this legislation hit the media it met with very realistic assessments. The  
Nelson Mail 
 stated: “Water study carries costs”. The  
Southland Times 
 stated: “Upgrade will cost”. The Christchurch  
Press 
 stated that the council was preparing for a huge water upgrade that will cost consumers. 
There are many ways to address issues that face this country. I recognise that the intention of this legislation was to look at defining electricity and other commodities as a service so that people could not contract out and the full vertical supply chain could be addressed. I recognise that consumers do have demands in terms of the supply of water and electricity. This legislation is not the best way of addressing those issues. There are other ways of doing it that would add more clarity more simplicity and I believe less cost.